San Jose, Calif. – Tierra Encantada embraces several smart-growth principles to uplift its neighborhood and to provide housing for people earning as little as 30% of the area median income (AMI).

The 93-unit development is a mixed-use project in a key neighborhood revitalization area. It utilizes existing infrastructure, features green-design elements and is close to public transit lines and major freeways.

The approximately $24 million project also features a design that reflects the neighborhood’s large Latino community.

Built by Community Housing Deve-lopers, Inc., a local nonprofit, Tierra Encantada provides a new focus on a major San Jose street that hasn’t lived up to its potential. The project opened in December 2004.

“It is a prototype development that the city was looking for,” said Bill Zavlaris, senior project manager at Community Housing Developers, which has developed about 2,000 units of housing since 1979.

Funding included $13.3 million in equity from 9% low-income housing tax credits allocated by the California Tax Credit Allocation Committee and syndicated by Simpson Housing Solutions. The city of San Jose provided a $5 million loan. The project also received a $500,000 grant from the Federal Home Loan Bank of San Francisco through its member Heritage Bank of Commerce. Citibank provided the permanent loan, and Wells Fargo the construction loan.

The apartments, which target families earning between 30% and 60% of AMI, are located in several four-story buildings that are constructed on top of a post-tension slab podium, with 10 apartments, retail and parking underneath.

Most of the units have two or three bedrooms, but there are also several one-bedroom and four-bedroom apartments. Thirteen units are targeted for families earning no more than 30% of AMI; 10 at 40% of AMI; 52 at 50% of AMI; and 18 at 60% of AMI. The rent for a two-bedroom unit at 30% of AMI is $748 per month.

In a unique move, the developers will build 12 for-sale affordable townhomes next to the apartments, starting this year, said Ron Morgan, president of Community Housing Developers. Tierra Encantada residents will have priority for the townhomes, allowing them to make the move to homeownership.

The site used to be home to Mark’s Hot Dogs, a local landmark. Built in the 1930s, the business operated out of a structure shaped like a giant orange, making for a popular roadside attraction that recalls a bygone era. The historic structure presented a unique challenge, but the developers were able to relocate the business.

Energy-efficient features at Tierra Encantada include solar panels that power the public spaces and are estimated to save about $5,000 in the first year’s energy bill.

Tierra Encantada is also a transit-oriented project, close to downtown and major transit lines. Valley Transportation Authority is providing discounts for bus and light-rail service.

Since the development of this project, there are new plans for market-rate housing nearby.

Working with MBA Architects, the development team made sure to have a high-quality design that is appropriate for the neighborhood, Zavlaris said. In one touch, the group had a local artist design a metal gate plus decorative fencing that are inspired by the nearby Mexican Heritage Plaza; they surround a children’s play structure.

Tierra Encantada

Developer: Community Housing Developers, Inc.

Total units: 93

Affordable units: 93, including 13 for families earning no more than 30% of the area median income.

Unique features: The project, which incorporates several energy-efficient measures into its design, features solar panels that provide power for all the common areas. Developers relocated a landmark hot-dog stand that was on the site.

Key sources of financing

Equity for 9% low-income housing tax credit equity provided by Simpson Housing Solutions: $14 million

Citibank permanent loan: $7.8 million

City of San Jose loan and grant: $5 million

Federal Home Loan Bank of San Francisco, Affordable Housing Program grant, through Heritage Bank of Commerce: $500,000

Total development cost: $27.3 million*

*revised after publication of article