The next phase of a project to increase affordable housing in Winston-Salem is facing a projected multimillion-dollar funding gap.

On Tuesday, the board of commissioners for the Housing Authority of Winston-Salem (HAWS) received an update on the Choice Neighborhood Initiative.

The project involves the revitalization of the Cleveland Avenue neighborhood. It consists of five phases and will result in more than 400 new mixed-income, affordable housing units.

HAWS Executive Director Kevin Cheshire says the projected funding gap for the second and third phases of the initiative is $11 million due to inflation. This affects 114 units.

"There's three main drivers - there's increased construction costs, there's increased interest rates and there's increased insurance premiums," Cheshire says. "Those are really the three main drivers of the increases that we're seeing."

Cheshire says they are applying for grants and an increase in tax credit equity to address the potential shortfall.

An update on the Choice Neighborhood Initiative is expected to be presented to city council on Monday.

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