Jack London Gateway, a proposed 60-unit affordable housing development for seniors in Oakland, Calif., is among the projects receiving a reservation of low-income housing tax credits (LIHTCs) in the state this year.
California’s second round of allocations topped off a busy few months in the West. The California Tax Credit Allocation Committee approved its latest round of tax credit reservations in September, with State Treasurer Bill Lockyer announcing more than $47 million in state and federal credits being awarded to developers to construct more than 3,000 units of affordable housing.
Jack London Gateway received the credits on its third attempt, a sign of how competitive the program is in the state. The housing development will be part of a larger mixed-use project that includes an existing neighborhood shopping center.
The developer is the Oakland-based nonprofit East Bay Asian Local Development Corp. (EBALDC), which is working on the project with JLG Associates, LLC, the partnership that owns the shopping center.
In an unusual move, the four-story building will use light-gauge steel framing, which is typically seen in taller developments. The move made sense as developers compared construction and lumber costs earlier this year, said Karoleen Feng, project manager at EBALDC. Initial estimates showed the metal framing saving about 10 percent over wood framing costs.
Jack London Gateway will have 57 one-bedroom units and three two-bedroom apartments.
To make its tax credit application more competitive, EBALDC also worked to make sure more of its other financing for the project was in place, Feng said. In addition, the common areas and hot water heating will be powered by solar energy.
The growth of green building techniques and sustainable design is one of the industry’s biggest trends, especially in the West, said Caleb Roope, president and CEO of Idaho-based The Pacific Cos., which develops affordable housing across the West.
The firm’s Gateway Village development in Farmersville in California’s Central Valley also won a reservation of tax credits in the recent allocation round. The 48-unit development will feature a photovoltaic system, with the goal of keeping the residents’ monthly electric bills to about $10 each, Roope said. California is providing good incentives for sustainable design, he said. Gateway Village, which received reservations of $909,899 in federal credits and $3.1 million in state credits, scored eight points in its tax credit application for sustainable- building methods.
In the state’s two allocation rounds this year, 69 developments received nearly $77 million in 9 percent LIHTCs. An additional $71 million was awarded in state housing credits.
The tax credit market has calmed down from a year ago when prices to developers were falling, said Ron Orgel, co-founder and managing director of Phoenix Realty Group, a national real estate investment firm that syndicates tax credits as well as co-develops projects.
Much of the news in the West and the rest of the country has turned to the turmoil in the credit markets, which is making it harder to get loans. “Deals that were tight are no longer feasible,” Orgel said.
In addition, some properties that were envisioned as condominium properties no longer work in today’s market, he said.
In San Diego, a condo project canceled by KB Homes is being reimagined— using much of the same design—as a 23-story, 229-unit affordable housing development by Affirmed Housing Group, which reportedly was able to purchase the downtown land at $4.4 million.
The Centre City Development Corp., the organization that oversees downtown redevelopment, is poised to provide the project with $34 million, the group’s largest investment in affordable housing. That equates to about $150,000 per affordable unit. The total development cost is estimated to be $88.7 million.
Under the plan, after 60 years, ownership of the building would be transferred to the redevelopment agency.
In other California news, the state Department of Housing and Community Development in July announced the distribution of more than $290.6 million in Proposition 1C and Proposition 46 funds to 44 counties. Proposition 1C is the $2.85 billion housing band passed by voters in November 2006, and Proposition 46 is a $2.1 billion bond approved in 2002.
Moves across the West
Other states were also busy with making their 2007 LIHTC reservations.
The New Mexico Mortgage Finance Authority reserved $4.2 million in LIHTCs to six developments throughout the state. State officials called the recent round one of the most competitive in the last 10 years, with requests totaling $11 million.
The Idaho Housing and Finance Association reserved $3.5 million in tax credits to 10 developments this year that will provide 252 tax credit units. Six of the projects are family housing, and four are elderly housing, according to reports. (Look for a state-by-state guide to LIHTCs and tax-exempt bonds in the December issue.)
In Seattle, Mayor Greg Nickels wants to expand a program that allows developers to build taller buildings in exchange for affordable housing units. These zoning incentives were adopted in early 2006 for the downtown area. Nickels is looking at expanding the incentives to other neighborhoods.
Under the program, developers who want to increase the height limits on residential buildings would have to include affordable units as part of their project or pay into a fund to create affordable housing or neighborhood amenities.
Rents on apartments built under the proposal would be affordable to households earning up to about $50,000, while the sale price of condominiums would be affordable to households earning up to $63,489. Rental and homeownership units would be required to remain affordable for 50 years.
At this point, the proposal wouldn’t change existing neighborhood zoning but would be incorporated whenever a significant zoning change is adopted in the future, reported city officials.
The Seattle City Council is also reviewing a proposed program that would provide a 12-year tax exemption on the residential portion of any new apartment building in which between 20 percent and 25 percent of the units are set aside for individuals earning up to $49,000 or families earning up to $62,300.
In Nevada, the Las Vegas Housing Authority opened its first new public housing development for families in more than 20 years. It is also significant because it is the first time that the housing authority has developed public housing with funds other than money from the Department of Housing and Urban Development (HUD). The $16 million, 60-unit project was financed with LIHTCs and HUD funds. MMA Financial was the tax credit syndicator.
Named after Otto Merida, former housing authority chairman and executive director of the area Latin Chamber of Commerce, the development has both single-family homes and duplexes. Each apartment has its own garage. Monthly rents range from $369 to $883.