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Resolution Authorizing the City Manager to Enter into an Agreement with Landmark Asset Services Inc. for Loan Forgiveness to Preserve Affordable Housing
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Department: |
Housing & Neighborhood Services |
Meeting Date: |
3/3/2026 |
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Contact Name: |
Rachel Schuler |
Public Hearing: |
No |
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Contact Phone: |
910-341-3237 |
Advertising Date/Advertised By: |
N/A |
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Attachments: |
Attachment #1: Resolution; Attachment #2; Landmark Request Letter; Attachment #3: Revised Debt Analysis; Attachment #4: Previous Resolution Authorizing Partial Loan Forgiveness |
PURPOSE:
The purpose of this resolution is to consider a request by Landmark Asset Services, Inc. (“Landmark”) for $258,000 in debt forgiveness to help support the costs of installing an automatic fire sprinkler system as part of the James A. Walker Apartment Rehabilitation Project (“Project”).
BACKGROUND:
James A. Walker Apartments (“Apartments”), located at 1020 Rankin Street, was repurposed in 1990 through a public-private partnership with the City of Wilmington to provide affordable housing for local low-income seniors.
In January 1990, the City of Wilmington issued three loans totaling $432,620 to assist Landmark with the acquisition and rehabilitation of the Apartments. The loans were issued with 40-year maturity dates, and with the intention to forgive the debt if the units retained affordability for low-income households. Several years later, a $15,000 repair loan was issued with a maturity date of January 2043.
To complete the substantial rehabilitation of the Apartments, Landmark has been awarded Low-Income Housing Credits (“LIHTC”) from the North Carolina Housing Finance Agency (“NCHFA”). This rehabilitation project will address all outstanding City of Wilmington Code Enforcement violations and extend the building's useful life by substantially renovating the units, replacing all mechanical systems, modernizing the elevator, rebuilding the windows, and replacing the roof. The proposed Project will continue to include 37 units of affordable housing for senior households, ages 55+, with incomes ranging from $31,600 to $43,320. The Project includes one-and two-bedroom apartments, including 2 fully accessible ADA units. Rents will be affordable for residents and will vary depending on the number of bedrooms and tenant income.
After completing a feasibility analysis, the Landmark discovered that the amount of existing debt would be unsustainable for the Project’s size. In May 2024, Landmark requested that the City of Wilmington consider forgiving some of the existing debt, specifically: a) the $15,000 repair loan; b) the $174,500 acquisition loan; and c) the accrued interest on the rehabilitation loan. In May 2024, Landmark offered to pay off the $215,000 rehab loan principal and the $43,000 repair loan for a total of $258,000. Any commitment to forgive and/or pay off would be contingent upon the Project securing all required funding and the issuance of a building permit.
City Council approved a loan forgiveness resolution at the May 7, 2024, meeting. As the project has progressed, including securing a tax credit investor, lender, and general contractor, the team has been working through the development process. Two bids were received, exceeding the fixed project budget. This is primarily due to the desire to install a sprinkler system in the building, which was priced at $450,000 because of the building's design. This is approximately 15% of the entire $3,000,000 renovation budget for a total development cost of approximately $6,350,000.
Due to the increase in cost, Landmark is requesting Council consider additional debt forgiveness. The request is to agree to forgive the remaining $258,000 in loans. While this loan forgiveness amount will not cover the total cost to install the sprinkler system, Landmark will provide owner capital for the balance of the fire suppression system, in addition to any other cost overruns incurred during construction.
By utilizing the LIHTC program, these affordable apartments will begin a new 30-year affordable compliance period. During the 30-year affordability period, the NCHFA will conduct inspections at least once a year to assess program compliance and physical deficiencies. As was the 2024 loan forgiveness action, any commitment to forgive the requested loans is contingent upon the imminent project closing in March. This contingency helps protect all parties’ interests and ensures that the project starts construction.
budget
BUDGET IMPACT:
None. Payments were not due on this loan as long as they remained in compliance with affordability requirements.
recommendation
RECOMMENDATION / ACTION REQUESTED:
Passage of the attached resolution is recommended.