Sacramento, Calif.—The ambitious Phoenix Park development
is set to rise in the midst of what has been one of the most
troubled housing subdivisions in the city.
After a two-year legal process and behind-the-scenes work,
construction recently began on the approximately $80 million
rehabilitation project that will turn 116 buildings that are
four-plexes with a total of 464 units into 360 new apartments for
low-income families and seniors.
Housing and Redevelopment Agency (SHRA) has secured 20 sources
of funding, including low-income housing tax credits, to take on
Their efforts are an example of what one housing authority is
doing to take control of a bad neighborhood.
Long known as Franklin Villa, the development has been one of
the most notorious in the city, with some of the highest crime
rates in Sacramento. SHRA officials said that about 40% of the
residents were under 14 years old, and 71% of its families were
extremely low income.
Franklin Villa was a difficult project for city leaders to get
their hands around because of its large size, fractionated
ownership and the lack of common management. Not only did every
building have a different owner (mostly absentee landlords), but
many of the units were also individually owned because the project
had been developed in the late 1960s as condominiums for
"You had the potential of every unit being owned by someone
else," said Janet Rice, SHRA's assistant director of special
projects and the project manager of Phoenix Park.
Multiple homeowners associations were also in existence, and
officials continue to work with neighborhood representatives, added
Beverly Fretz-Brown, director of policy and planning for SHRA. She
serves as president of Norwood Avenue Housing Corp., the managing
general partner of Phoenix Park.
During the mid-1980s, the housing had fallen into severe
disrepair, and the property became plagued with crime and poverty.
Since 1994, more than a dozen social services organizations and
local agencies have provided various services for residents,
including job training, child care and adult education.
A major step toward transforming the neighborhood, however,
occurred in 1998 when the Sacramento City Council adopted the
Franklin Villa Revitalization Plan. A year later, city officials
partnered with the Department of Housing and Urban Development (HUD) to
allow SHRA to purchase vacant FHA-foreclosed units in the area.
A joint powers agency created by the city and county of
Sacramento, SHRA owns 3,600 units of public housing and is one of
the largest landlords in Sacramento. The agency administers about
11,700 rental-assistance vouchers per month.
The next turning point came in 2001 when city leaders adopted an
implementation strategy to reverse the social and physical
deterioration of the community.
Since then, SHRA leaders have negotiated with hundreds of owners
to buy the 464 units or have moved to acquire the property through
eminent domain proceedings. At the end of last year, they had
orders of possession for all of the units.
While the hunt for the homeowners was going on, SHRA was also
searching for the funds necessary for the massive deal. It recently
closed on the major pieces of financing.
A significant component of the financing is housing tax credits-
$25.8 million in federal credits and $4.7 million in state
credits-awarded by the California Tax Credit Allocation Committee last
LLC, syndicated the tax credits. It is one of the company's
"We are thrilled to be playing a major role in the
revitalization of this community and were thoroughly impressed with
the level of commitment on the part of the Sacramento Housing and
Redevelopment Agency and the numerous local agencies who
participated," said Catherine Talbot, principal at MMA Financial.
"Phoenix Park would not have been possible without this group of
dedicated individuals who have devoted significant resources and
time over the years to bring the deal to fruition. One of our
investors in the property, HSBC Bank, ultimately invested because
of their comfort with the scope of work, the ability of the
development team and the community involvement."
Because of the size of the project, the financing had to be
divided into two parts, according to Laurie Share, president of LB
Share Associates in Sausalito, Calif., a finance and development
consultant on the project.
The tax credits are the key financing for the first 178 units.
For the remaining units, officials will apply to the California
Debt Limitation Allocation Committee for tax-exempt bonds this
year. They have also received a commitment for $1 million in
Affordable Housing Program funds through the Federal Home Loan Bank of
San Francisco through Union Safe Deposit Bank.
Other financing for the project included $9.1 million in a
deferred-payment loan from the state Department of Housing and
Community Development through its Multifamily Housing Program
and $2.5 million from the HELP (Housing Enabled by Local
Partnerships) program from the California Housing Finance Agency. The city of
Sacramento has also committed $24.2 million in HOME, Community
Development Block Grants, local trust funds and redevelopment tax
Bank of America provided a key $6 million secured line of credit
to finance the predevelopment activity. Citibank provided a $22.9
million construction loan and a $9.1 million permanent loan.
"Everyone had to come together and understand the project and
support the project and be willing to take a portion of the risk of
the project," Rice said.
As a result, one of the lessons from this deal is that
government agencies can step up and take back a bad neighborhood,
Because the project is large and unique, a key was assembling
the right team, including the various financing partners, who could
be involved in the two-part plan.
One way to help mitigate the risk was to establish a high level
of reserves, Share said.
SHRA had never done a deal of this size but made it work, she
Not everyone is as enthusiastic. Jon Coupal, president of the
Howard Jarvis Taxpayers Association, doesn't dispute that there is
a housing crisis in the state. He is, however, concerned about the
use of eminent domain and the loss of the properties from the tax
roll. Overall, he supports the use of vouchers so that there isn't
a concentration of low-income families in a neighborhood.
There will be no public housing units at Phoenix Park, but 80%
will be project-based Sec. 8. HUD provided a waiver to allow the
large number of Sec. 8 units to be in the development. The rest of
the apartments are tax credit units.
The development used to feature all two-bedroom units, but
Phoenix Park will provide a mix of one-, two-, three- and
four-bedroom apartments. Bigger apartments are needed for the large
families at the site. In some cases, two families had been sharing
a single apartment.
SHRA officials estimate that half of the Franklin Villa
residents will return to Phoenix Park. A thorough screening process
will be used. In addition, The John Stewart Co. is managing the
property. The firm is expected to bring strong management to the
property, which had been lacking.
Residents are expected to move into the first of the new
apartments at the end of the year.
As the project moves into the construction phase, officials say
the name of the project is fitting. The development is rising up
from the ashes.
"I'm excited about what this means to the community," Rice said.
"The residents there do have hope and are anxiously waiting for the
Phoenix to soar."