The City of Santa Monica has approved $8.3 million in funding for a new affordable housing development at 14th and Michigan by developer EAH Housing.
Total costs for the project are estimated at $29.5 million and the money recently approved by City Hall is for land acquisition, closing and predevelopment costs. An additional round of city funding is expected once permits for the project are in process with a total projected contribution of about $14.8 million.
EAH submitted a Housing Trust Fund application to the City of Santa Monica earlier this year for a proposed supportive affordable housing development of approximately 41 studio residences targeted to very low-income persons experiencing homelessness. The project will include one two-bedroom on-site manager’s residence.
Santa Monica provides “gap financing” through the Housing Trust Fund. Affordable housing developers must first exhaust other financing options before approaching the city for the remainder of the costs.
While affordable housing projects do take on small traditional loans from banks, the majority of their funding comes from other sources and it’s the elimination of the need to repay large mortgages enables developers to charge below market rate rents.
“The proposed City subsidy would be leveraged by approximately $8,756,000 in tax credit equity from the Low Income Housing Tax Credit program, $4,486,000 in California Multifamily Housing Program funds, and a $1,508,000 bank loan. The combined leveraging totals 50% of the estimated development cost,” said the city in approving the loan.
Tax credits are issued to nonprofits by who are able to sell those credits to for-profit companies to offset their tax bills.
In approving the loan, officials said the project provides needed housing in the Pico neighborhood, an area without an existing facility.
“Existing supportive housing developments are located in the Wilshire/Montana, Sunset Park, Oceanfront District, and downtown areas,” said the city’s approval document. “Given the proximity to transit (both the Expo Line and bus routes), bike lanes, schools, supermarkets, parks, and other services, the proposed development would provide new affordable housing opportunities for very low-income households as well as convenient access to valuable community amenities.”
While the Santa Monica contribution is considered a loan, the terms of the deal do not require the borrower to repay the money unless the building starts to turn a profit. Additional local funding will be available once the land is acquired and the permitting process begins.
“The City’s anticipated permanent loan is $14,837,000 or $353,262 per residence or $345,047 per bedroom,” said the document. “The estimated total development cost is $29,587,000 or $704,452 per residence or $688,070 per bedroom. The development cost includes rehabilitating an existing historic building for common area amenities such as community room, laundry room, and private meeting space.”
EAH has several projects in the local pipeline and has worked in other parts of California and Hawaii.
EAH will hold a community meeting at 6 p.m. on Monday June 3, 2019 at Virginia Avenue Park, Patio Room. This is the first of two meetings and is intended to be an information session/community design meeting. EAH will introduce the project and the design team.
Meeting participants will be presented with early stage conceptual designs and will be able to give feedback on the design, size, units and other proposed programming.
In February Council approved $15M from the fund for another project in the Pico neighborhood. The cluster of 55 units on 14th street will be available to households that make between 30 - 80 percent of the City’s median income.
A meeting for the 14th Street project will be held Tuesday night at the Virginia Ave. Park Thelma Terry Building, 2200 Virginia Ave, from 6:30 - 8 p.m.
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