Council secures funds for senior housing project
$9 million loan approved in June to build $42 million complex
Some last-minute maneuvering by the San Jose City Council before the end of the year ensured that money to build housing for seniors will be available when the time comes, despite a recent federal tax overhaul.
City leaders approved a $9 million loan in June 2017 to help finance a $42 million affordable senior housing complex planned for a site at Leigh Avenue and Southwest Expressway.
Tenants of the proposed 63-unit Leigh Avenue Senior Apartments would include homeless and low-income residents 62 or older. Seniors currently make up Santa Clara County’s fastest growing demographic in the overall population and among the homeless.
Nonprofit Abode Services would provide case management services to one-third of the tenants in units reserved for the homeless. The county would provide in-home supportive care to another third of the tenants, who are expected to pay no more than 30 percent of their monthly income.
About 7,000 square feet for dental or medical offices would be added at ground level to generate sales tax revenue for the city.
Although housing advocates fear the new tax law signed by President Donald Trump will gut plans to build thousands of affordable housing in California, two federal programs key to the construction of such homes — low-income housing tax credits and tax-exempt private activity bonds — survived the chopping block.
But the new rules could cut federal funding for subsidized housing throughout the state by 20 percent, leading to a loss of 4,000 potential units and approximately $500 million in projects, according to the nonprofit California Housing Partnership. Last year, about 20,000 subsidized homes and apartments were built and renovated in the state with the help of such programs. About 1.5 million additional subsidized housing units are needed to meet statewide demand, the housing partnership estimates.
In a preemptive strike, City Council members voted at their final meeting of the year to allow an exception to a city policy so bonds could be issued for the Leigh Avenue Senior Apartments. Housing department director Jackie Ferrand-Morales had urged the council in a staff memo to “authorize an exception to allow (California Housing Finance Agency) to issue bonds for the project to eliminate the risk of the project failing to secure tax exempt bonds and four percent tax credits, due to the special circumstance caused by the pending federal tax bill.”
The exception would help project developer First Community Housing take part “in a limited time opportunity to obtain tax credit financing for the Leigh Avenue Senior Apartments project.”
The low-income housing tax credit hinged on the private activity bonds surviving, as staff noted that the credit “can only be awarded to the development if 50 percent or more of the project is funded using tax-exempt private activity bonds.”
“Approval of these actions will allow California Housing Finance Agency to issue bonds for the Leigh Avenue Seniors development,” Ferrand-Morales said. “This will eliminate the risk of the project being unable to secure private activity housing bonds and four percent tax credit financing, caused by the potential elimination of the program as contained in the proposed federal tax bill.”
First Community will also seek an additional $9 million from the $950 million Measure A affordable housing bond approved by voters last year. Developers expect to have blueprints finished early this year and to break ground on construction in the fall.
“This will eliminate the risk of the project being unable to secure private activity housing bonds and four percent tax credit financing, caused by the potential elimination of the program as contained in the proposed federal tax bill.”
— Jackie Ferrand-Morales, housing department director