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Tuesday, Mar 19, 2024
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Construction Agencies boost commitment to affordable housing



Construction: Housing Commission Puts Up $19M to Help Rehab

Developing affordable apartments can be a tricky numbers game. For many developers, it’s not a bet they’re willing to take.

However, companies willing to sort through the various funding programs find there is always a demand for their apartments, even when the economy is not doing well.

The San Diego Housing Commission is providing $19.5 million in loans and bonds that will be used for affordable housing construction and rehabilitation totaling $170.4 million. The 13 apartment complexes make up 1,513 units in the city of San Diego, which are or will soon be under construction.

Escondido-based Affirmed Housing Group is developing a 106-unit project in the Otay Mesa area called Nestor Family Apartments, for families earning between 30 percent and 60 percent of the area’s median income.

The $13.2 million project is being funded by federal low-income tax credits and private financing, along with a $2.63 million loan from the housing commission. Affirmed Housing expects to begin the yearlong construction process by early 2002.

Jim Silverwood, president of Affirmed Housing, said the affordability level for the apartments the company develops and rehabilitates differs, depending on the requirements of the cities it works in, since city funding is often a part of its projects.

New York-based The Related Cos. is involved in Department of Housing and Urban Development preservation deals. The company takes on properties HUD financed 30 years ago and preserves them for the next 55 years.

The Related Cos. is working on rehabilitations of the 310-unit Coronado Terrace in Nestor, and 262-unit Vista Terrace Hills in San Ysidro.

Coronado Terrace renovations will cost $29.6 million, and the housing commission will provide $1.4 million. Vista Terrace will cost $28.8 million, with a $1.2 million housing commission contribution.


Helping Nonprofits

The apartments will be gutted, getting new cabinets, flooring, light fixtures, appliances and other upgrades. Several additions are made to the apartment complexes, like computer labs, community centers and social services. The Related Cos. usually partners with local nonprofit organizations to provide social services.

“It’s hard for the nonprofits to do it on their own,” Reiner said.

The Related Cos. works on the HUD projects with assistance from the California Housing Finance Agency, which issues tax credits for the development of low- to moderate-income housing. The Related Cos. makes its profits from the sale of the tax credits. Fannie Mae buys the 4 percent tax credits from The Related Cos., which usually amounts to $1 million to $1.2 million, Reiner said.

Chelsea Investment Corp. is working on Market Square Manor, a 200-unit apartment project in Downtown’s East Village, with Senior Community Centers of San Diego. On the 92-unit Harvey Mandel Villa, Chelsea is working with St. Vincent de Paul on studio apartments for low-income workers.

Senior Community Centers provides health and nutrition to low-income seniors in San Diego.

Funding for the $18 million Market Square Manor project is in place, including $1.6 million from the housing commission, $2.2 million from the Centre City Development Corp., the city’s redevelopment arm for Downtown San Diego, and additional funding from federal low-income tax credits.

Harvey Mandel Villa will cost $10.7 million. The housing commission will contribute $2 million, and the CCDC will provide $115,000.

James Schmid, president of Chelsea, said low rents would not be possible without multiple funding sources.

So far, Schmid said, about 500 seniors are on the waiting list for the units, which should be completed in early 2003. With low-income projects like these, he said the demand is usually three, four or five times the number of units available.


Working Downtown

San Diego-based Barone Galasso & Associates Inc. has received funding from the housing commission for its $22 million Island Village, on the southeast corner of 12th Avenue and Market Street.

Tax-exempt bonds approved by the California Housing Finance Agency will pay for about half of Island Village, according to Michael Galasso, president of the company.

The housing commission is providing a $3.6 million loan. Barone Galasso will pay the balance. Construction began in January and is expected to continue until March 2003.

Galasso said the 280-unit project will provide a new concept called “living units,” which are larger than a single-room occupancy unit, but smaller than a studio apartment.

Rents at Island Village will be $500 to $600 per month, affordable to people earning 60 percent of the area median income. Galasso said usually 10 renters show interest for every one unit available in his company’s affordable housing projects.

San Diego Housing Commission CEO Elizabeth Morris said the 13 projects that recently received the commission’s assistance used up the last of the agency’s fiscal 2002 funding for developer loans. Morris said that means there won’t be any more money for funding new construction until July.

The housing commission has asked the City Council for permission to commit funding to projects for the next fiscal year.

It used to be that some government funding programs were going unused because they weren’t well known.

“By now, those who have made this their business are really maximizing those funding sources. Competition’s pretty fierce with the sources that have been out a while,” Morris said.

While there is some softening in the luxury apartment market, Morris said there are few vacant apartments around the city.

“A recessionary economy offers some development opportunities at the lower end (of the apartment market). In a softer economy, you can buy land or buildings for a lower price,” she said. “Investing in affordable housing is a pretty safe place to put your money. There’s always going to be a demand for rents at the lower end of the market.”

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