REGIONAL REPORT

WEST

Urban Village

BY DONNA KIMURA

AFFORDABLE HOUSING FINANCE • NOVEMBER 2007

SAN JOSE, CALIF.—For Colleen Lamarr, the new apartment she shares with her two young daughters means no longer commuting more than an hour to work. Lamarr and her girls are one of the 300 families that have moved into Corde Terra Village, the newest affordable housing development in San Jose.

The justice systems clerk for the Santa Clara County Probation Department was regularly on the freeway for an hour and fifteen minutes or longer to get to work and then again to get back home. Now, her commute is 20 minutes, and she can spend more time with her kids.

“It’s a godsend,” said Lamarr, who had “applied for everything” before finding out about Corde Terra Village.

The three-bedroom apartment is a big deal for her. The new community is a big deal in many other ways.

With 300 units, the $78.5 million project is the largest affordable housing development in San Jose, the 10th-largest city in the nation.

The project, at more than 515,000 square feet, was also the fourth-largest construction project in the entire region, according to a recent report by the Silicon Valley/San Jose Business Journal. The largest is a giant office development with seven eight-story buildings.

Corde Terra Village also received one of the largest low-income housing tax credit (LIHTC) awards in the country in 2005, according to sponsors, which resulted in JPMorgan Capital Corp. making its single-largest LIHTC investment, at approximately $33 million.

Most importantly, the community fills a huge void. The apartments were leased in 30 days. “This demonstrates how desperately affordable housing is needed in the community,” said Robert Emami, president of ROEM Development Corp., the local firm that built the community.

The family apartments are also part of a bigger plan. Along the perimeter of Corde Terra Village, ROEM has built 43 single- family, market-rate homes that sell for between roughly $600,000 and $700,000. More than half have been sold. The company is also building a 200-unit affordable seniors housing development nearby.

To create the new apartments, the support of city, county, and state agencies was needed. The extent of the public-private partnerships involved is one of the project’s most noteworthy aspects. “It went to the next level,” said Marcus Griffin, ROEM’s director of finance.

The collaboration helped the project target families earning no more than 45 percent and 50 percent of the area median income. The one-, two-, and three-bedroom apartments have monthly rents between $851 and $1,346.

The joint effort begins with the land underneath the project. Construction began in 2005 on property that was part of the county fairgrounds. Santa Clara County committed 12 acres, valued at about $18 million, for the development through a 75-year lease at a below-market rate. In addition to rent, the county will receive 50 percent of residual cash flow.

The deal allows the county to generate revenue, raise the market value in the area with new development, and address the glaring need for affordable housing, said Blanca Alvarado, a member of the county Board of Supervisors. She is credited with being an early champion of the deal.

The county has built a new $30 million health-care clinic in front of Corde Terra Village. It will also provide a $1.45 million loan to the neighboring affordable seniors housing development.

An affiliate of the Housing Authority of the County of Santa Clara is the managing general partner. Having a nonprofit general partner allows the team to be exempt from paying hundreds of thousands of dollars in property taxes.

When the housing authority gives tours of its housing developments, they will begin at Corde Terra, said Alex Sanchez, executive director of the housing authority. “First impressions are everything,” he said.

The California Housing Finance Agency issued tax-exempt bonds to provide a $40.4 million construction loan and a $24.2 million first mortgage with a 40- year term and a 5.7 percent interest rate.

The city of San Jose provided a $20.7 million subordinate loan with a 40-year term and a 4 percent interest rate. The city will receive 35 percent of residual cash flow as repayment. No hard debt-service payments are required.

The development would not have happened without the cooperation of all the different parties, said San Jose Mayor Chuck Reed.

The end result is a development that shows “affordable housing can go in any neighborhood and be an asset,” he said, standing in the project’s landscaped courtyard, between a swimming pool and a large, stylish community room.

The development is made up of seven buildings constructed on top of an underground garage that can accommodate approximately 550 cars.

“This is one of the most handsome developments that I’ve seen across the country,” said Patrick Nash, managing director of JPMorgan Capital Corp., the LIHTC investor. The firm invested in the project because it liked both the San Jose market and the sponsor, he said.

The project also fits in with JPMorgan’s strategy of trying to identify larger investment opportunities, Nash said. (AFFORDABLE HOUSING FINANCE is a publication of Hanley Wood, LLC, which is owned by affiliates of JPMorgan Partners.)

Hudson Housing Capital was the LIHTC syndicator. The project had a long gestation of about seven years, but ROEM and its partners stuck with it to create a high-quality development, said John Zeiler, CEO of Hudson, noting that two 4 percent LIHTC reservations were merged to create efficiencies.

Like San Jose, Corde Terra Village is a diverse community. About 80 percent of the residents are Vietnamese, reflecting the city’s growing Asian population. San Jose, with the largest Vietnamese population of any U.S. city, saw the number of those residents swell from about 8,000 people in 1980 to nearly 80,000 by 2000.

The trend continues. Santa Clara County gained more Asians than any other county in the nation, nearly 18,000, from 2005 to 2006, according to the Census Bureau.

The new apartment community also has Latino, Caucasian, and other residents.

Services at the community include English classes, access to translation services, an after-school homework center, computer classes, and a full gym.

In addition to being steps away from the new health clinic, the apartments are located next to an elementary school and sports field.

Lamarr said the development looks and feels like the area’s market-rate complexes.

For many of the residents, it is home.