On a block dotted with blight and auto-related businesses, land at Blackstone and McKinley avenues in central Fresno soon could be transformed into an affordable housing complex.
Most of the cost of the project would be taxpayer funded. As a result, the $38 million project has some city leaders pondering its worth. City Council members will have an opportunity to weigh in on the pros and the cons at this week’s meeting on Thursday.
“This new development really fits the vision of the new Blackstone corridor as associated with the new General Plan,” said Jake Lingo, vice president of Integrated Community Development, the project developer.
The four-story, mixed-used project will feature commercial space on the ground level. There will be 88 apartment units above on a 7,500 square-foot pad. According to Lingo, the first floor will be used by Clinica Sierra Vista as a medical clinic and possibly as senior center rented to the city for $1 a year.
The math on the project is troubling to some councilmen. Eighty-eight units at $38 million averages $432,000 per unit to build.
“That just doesn’t make sense to me,” District 2 representative Steve Brandau said.
Another local builder of affordable housing says he isn’t surprised that people are raising their eyebrows about the cost.
“It definitely is a sticker shock for Fresno,” said Preston Prince, executive director of the Fresno Housing Authority.
How Project is Funded
A total of $30 million comes from state grants and loans, with some coming from Cap and Trade money. The developer will front $3 million on the project and eventually will be paid back.
It is the city’s share that councilmembers will discuss Thursday (Dec. 7). The current amount stands a little north of $5 million, which is the combined total of city loans, fee exemptions and a pass-through of grant funds proposed for the project.
The largest of those is a $2.2 million loan from the Housing Successor’s Low and Moderate Income Housing Asset Fund. Some $600,000 of that loan would come from the city’s General Fund and paid back within five years.
An additional General Fund contribution of $500,000 is included in the proposal, as well. That money was earmarked in the last city budget for affordable housing projects, according to Terry Cox, chief of staff to councilmember Esmeralda Soria. Cox said those funds originally came from a state economic development grant. Soria supports the project.
But councilmembers Clint Olivier and Garry Bredefeld have taken to the radio airwaves questioning how public dollars are being spent.
Energy Standards, Prevailing Wage Escalate Costs
Integrated Community Development has built similar affordable housing units. One opened in Selma in 2013. Another in Atascadero opened last week. Lingo says they were built for similar costs to the proposed Fresno project.
Lingo says the high price tag reflects state requirements. Among them: building at a LEED Gold Standard, a system used to evaluate energy efficiency. Also, there are costs associated with relocating existing businesses from their sites on the west side of Blackstone, between McKinley and Home avenues.
“The state has certain goals they want to see met. If we don’t agree to do these things, we exclude ourselves from getting these funds. It’s kind of a double-edged sword,” Lingo told GV Wire.
“I understand, ‘Look why are these units so expensive to build?’ Well, they are not, if you were just to do a typical affordable housing development with tax credits. If you want to bring in a significant resource of funds … you have to check these boxes. You have to agree to go above and beyond what the building code is and do all of that at prevailing wage.”
Prince also has noticed rising costs for his agency’s projects. He says the improved economy means it’s harder to find contractors because they are in high demand.
Buy Homes Instead?
Brandau has an alternative.
“At $435,000 per apartment unit, we could buy them a house in northwest Fresno; buy them a car and motorcycle and a year’s worth of groceries,” he said. “This is not a great use of taxpayers’ money.”
Prince and Lingo agree that buying and rehabbing units is a great idea—if state leaders want to go that route.
“Now, on its face, when you compare $400,000 for a unit to an existing single-family home in Fresno, it’s extremely expensive. I totally agree,” Lingo said. “But, the problem is, there is not a program at the state that currently exists, that you can qualify for this investment and come and buy homes.
“If there were, that would be fantastic. I think it is something people should potentially take to their state leaders as a program to enact. But there is not a program for that.”
Affordable Housing Shortage
Ultimately, the goal is to help those who struggle to afford housing. According to a state report, Fresno County is 41,251 affordable units short of demand.
“There’s a need to build more housing. (The challenge) is to create ways to leverage the public investment locally to bring in private dollars and other resources to grow the volume of housing that we have,” Prince said.
Eligibility for affordable housing is determined by income level and the number of people in a household. It is based on the Area Median Income. Of the 88 units, 18 will be set aside for those making 30% of the median income, 35 at 50% and 34 at 60%. Fresno County’s median income ranges from $42,000 for a single person to $69,500 for a six-person household.
According to city staff reports, a three-bedroom apartment in the proposed development could rent for as low as $615 monthly.
Five Votes Needed for Approval
The council, which will meet as the Successor Agency to the Redevelopment Agency, is scheduled to discuss the item Thursday at 1:30 p.m. in council chambers. A supermajority of five votes is needed to approve three different loans and the financing plan.