Farmworkers find family-friendly housing at unique development

By Genevieve Rajewski

Valle del Sol in Stockton, Calif.

(Affordable Housing Finance, August 2005) Stockton, Calif. – Agricultural workers with large families will now be able to live in Stockton year-round, thanks to the newly constructed Valle del Sol complex.

The $16.1 million development is one of the first California projects to tap both U.S. Department of Agriculture’s Rural Development (RD) funds and federal low-income housing tax credits (LIHTCs).

Expected to be completed this month, the mission-style development will offer 36 two-bedroom, 27 three-bedroom and 13 four-bedroom apartments.

Twenty units are targeted for households earning no more than 60% of the area median income (AMI), 12 for those earning no more than 50% of AMI, 30 for households earning no more than 40% of AMI, and 12 for families earning no more than 30% of AMI. Two market-rate units are reserved for on-site managers.

Project-based rental assistance from RD will fill any gap between the 30%-of-income limit that the farmworkers pay for housing and their rents. The subsidy is renewed every five years.

“Without the RD rental subsidy, there would be a huge burden on farmworkers because their income is so very low,” said Carol Ornelas, CEO of nonprofit developer Asociacion Campesina Lazaro Cardenas (ACLC). “We were fortunate to [receive assistance] for all [74] units. It is very hard to get, as [RD] only allocates subsidy for so many units per year.”

A variety of financing sources was required to bring the complicated project to fruition.

The bulk of the project’s financing came from $11.7 million in equity from Alliant-Newport, which paid 84 cents per dollar for the 9% LIHTCs and the state LIHTCs.

Valle del Sol also tapped several low-interest funding sources. These included a $2.3 million loan through the California Department of Housing and Community Development’s Joe Serna Jr. Farmworker Housing Grant program, a $932,948 HOME loan from San Joaquin County, a $413,384 loan from the Federal Home Loan Bank of San Francisco’s Affordable Housing Program, and a $750,000 loan through the RD Sec. 514/516 Farm Labor Housing Grant and Loan program.

In addition, Bank of America provided a $9.7 million construction loan.

“The 1% interest rate on the RD loan is allowing us to finance a larger loan and not add stress to the cash flow,” noted Ornelas.

The county Board of Supervisors was instrumental in getting the project off the ground by approving the donation of a three-acre parcel and by helping ACLC arrange to purchase an adjacent lot.

When lease-up begins, the apartments are expected to rent quickly. The first rental complex of this type to be built in San Joaquin County in 20 years, Valle del Sol is also one of the few developments to provide four-bedroom apartments. Usually only single-family homes in this area have that many bedrooms.

Also certain to make Valle del Sol attractive to families is its community center, where residents can access free Head Start day care, job training and placement services, computer classes, and health services.

And the development is close to public transportation, a school, a library, a park and two highways that lead to the foothills where many residents will work.