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City Gives Thumbs Up to Funding for Affordable Housing

City Gives Thumbs Up to Funding for Affordable Housing

Sale of Bonds Would Provide Up to $55M for Projects

BY MANDY JACKSON

Staff Writer

San Diego has announced a new pool of money for developers who build affordable housing.

The city will sell bonds in order to provide up to $55 million in low-interest loans to developers. The bonds will come from tax revenue generated by redevelopment.

On Jan. 28, the San Diego City Council approved a notice of funding availability, which announced the $55 million funding capacity to the development community.

“We think it’s going to be a terrific addition to affordable housing funding,” said Jim Silverwood, president of Affirmed Housing, an affordable housing developer in Escondido.

“We’re planning on submitting our funding requests in the first quarter of this year,” Silverwood said.

The notice was officially released Feb. 3. On Feb. 20, the city plans to hold a conference where developers can learn more about funding requirements.

The city will begin accepting applications March 3 and start funding projects within 30 to 45 days, said Hank Cunningham, the city’s director of community and economic development and assistant executive director of the Redevelopment Agency.

The $55 million is expected to help build 2,185 units over two or three years.

Silverwood thinks it’s a realistic number. Based on the formula Affirmed Housing uses to request assistance from other sources, more than $54 million would be needed to fund that number of units.

The developer is generally able to leverage $25,000 per unit from multiple government programs.

Family Housing A Priority

Both rental and for-sale housing anywhere in the city will qualify for San Diego’s new funding. Housing for families, such as three-bedroom and larger units, are a priority.

The projects can be strictly for low- or moderate-income people, or they can have a mix of affordable and market-rate units.

Bud Fischer, a developer and property owner, said there will be a lot of competition for the $55 million the city is offering to developers since it is open to the entire city, not just redevelopment areas. Fischer is doubtful it will provide much relief for developers.

“It’s nothing I would probably plan for,” he said.

Fischer is a partner in Trilogy Real Estate Management Inc., which owns and manages various properties, including single-room occupancy hotels.

Fischer plans to develop 398 housing units in 12 stories in Downtown San Diego. He said 75 percent will be affordable to people earning 50 to 80 percent of the area median income.

In April, Fischer will request tax-free bonds and tax credits from state and federal government sources. The Redevelopment Agency has already agreed to provide a $6 million loan for the $40 million project.

Development rules have become so restrictive in San Diego that Fischer said the project is his first development attempt in 10 years.

“If I didn’t (already) own the land, I probably wouldn’t be doing it,” he said.

The Olson Co., a Seal Beach-based housing developer, recently completed a project with affordable homes without financial assistance.

“It doesn’t always work this way,” said Tony Pauker, managing director of the Olson Co.

Pauker said Orange Walk was built in an older neighborhood that many developers may overlook, so the cost of land was lower than it would have been in most locations. The 51-unit project is on 3.5 acres at Orange Avenue and 54th Place in the El Cerrito neighborhood of eastern San Diego.

Because the homes are attached, requiring less land, they could also be built more affordably, Pauker said.

Construction began in late 2001 and was completed in December. Units were priced from $182,000 to $259,000, but were not restricted to low-income buyers.

According to Multiple Listing Service data from the San Diego Association of Realtors, the median price of a home in San Diego County was $343,000 at the end of December.

Olson will soon begin building Sycamore Walk, a 120-unit project next to the high-priced Santaluz master-planned community east of Fairbanks Ranch. Through an agreement with the Housing Commission, 70 of the units will be affordable to people earning 80 percent of the area median income.

Programs such as silent second loans for homebuyers and assistance with land costs for developers help with the development of affordable homes, Pauker said.

“All of that helps in making the project work,” he said. “If we can lower the costs to build, that’s great. If we can assist the buyers, that helps, too.”

According to Pauker, speeding up the time it takes to get projects approved would also help cut development costs.

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