Monday, March 21, 2005

The Solano Affordable Housing Foundation - Meeting needsNonprofits fill affordable housing project requirements in Fairfield & Benicia

Article Launched: 03/19/2005 08:19:51 AM

Meeting needsNonprofits fill affordable housing project requirements

By Barbara Smith/Business Writer

In an era when cities are scrambling to meet state-mandated affordable housing quotas, nonprofit organizations are filling a niche some for-profit developers often can't or won't.
The Solano Affordable Housing Foundation, for example, is completing Union Square II - a $5 million major rehabilitation project in Fairfield. About 10 years ago the same group built a Head Start day care center for families who live in the Sunset Creek community, a low-income apartment project in Fairfield, said Lark Ferrell, project manager in Fairfield's office of planning and development.

"Nonprofits are wonderful mechanisms for developing affordable housing in our community - that's their speciality," Ferrell explained. "They're not in it to make big bucks, they're in it to provide affordable housing."

Most nonprofit developers generally take a comprehensive look at the needs of the growing number of very low-income to working class segment of society and the community as a whole.
Examples are Mercy Housing, which helps families build their own homes through "sweat equity." And Berkeley-based

Resources for Community Development has partnered with Caminar on new construction projects in Fairfield for households with special needs. There's a real need in the social service component, Ferrell said.

"It takes very special individuals to do this type of work," Ferrell said.
Also, if there's a problem in the neighborhood that needs to be cleaned up, the nonprofit developer is in it to do so and help improve the community. "That's where the nonprofit niche is just excellent," Ferrell said. "A developer would look at what is the bottom line, and for some projects that's not the question to ask."

Ferrell said there are wonderful for-profit developers, too, but they definitely need to have a "project pencil." That doesn't always help people with critical cases, such as the very, very low income, people with disability issues or the homeless. Solano Affordable Housing Foundation was created in 1990 for the specific purpose of increasing and preserving the supply of affordable housing in Solano and surrounding counties, said Dennis McCray, executive director.
"It was created by a coalition of political, business and social leaders in the community, all of whom were concerned about the cost of housing starting to increase much faster than people's ability to pay," he said.

The best way to look at Solano Affordable Housing Foundation is as you would any developer, but with a public purpose, McCray said. The foundation recently received the "Sponsor of the Year" award from Oakland-based Merritt Community Capital Corporation, a large regional syndicator of equity for affordable housing in California. Merritt, also a nonprofit, works with the foundation in that it solicits capital to the project from investors who wish to shelter their income.

The way it works is equity comes from the sale of tax credits - a credit that companies can take on their tax returns by contributing capital as equity to affordable housing projects, McCray explained. The foundation applies for a tax credit allocation, then goes to the syndication market for investors. The tax credit program has been around since 1987 and has bipartisan support from Congress. It both provides low-income housing and the ability for investors to shelter their income, McCray said. "It really works out quite well," he said, noting the foundation has raised more than $78 million in debt and equity financing for affordable housing.
The fact that nonprofits can handle the complexities of financing affordable housing is another bonus in working with nonprofits, said Rachel Hazlewood, Fairfield's economic development project manager.

"The sophistication is quite amazing," Hazlewood said. "They have to structure these deals working with layers of funding. They all have different funding sources with different requirements, so it's quite challenging."

Hazlewood is particularly impressed with the 2004 completion of Burgess Point, a 56-unit new affordable rental complex in Benicia built by the foundation. Burgess Point is a $12 million project and consists of one-and two-bedroom apartments and three-bedroom townhouses. The complex is located on a prominent hilltop in Benicia and has commanding views of the Carquinez Strait. It was financed with a combination of tax-exempt bonds, tax credits, and subordinate loans from the Benicia Housing Authority.

"It is lovely," Hazlewood said. "It's got this beautiful view, and has a lot of amenities."
Union Square II was financed the same way but with loans from the Fairfield Redevelopment Agency. It will consist of one, two, three and four-bedroom apartments.

Both Union Square 11 and Burgess Point are targeted to families earning 60 percent or below the median income adjusted for family size in Solano County. For a family of two, income cannot exceed $35,460. For a family of four, the limit is $44,340.

McCray said the apartments are always rented quickly. "There is basically a waiting list of people who are looking for housing that is priced where they can afford it, and there isn't that much when you get to the 60 percent level," McCray said.
Generally the foundation tries to find pieces of land that have the right general plan designation and proper zoning.

"Then, the municipalities are pretty much committed to allowing that use," he said. However, they will work with neighborhoods to mitigate issues, as they did the Benicia project. They moved the buildings as far away as they could from existing housing, he said.
"We had some neighbors that were very unhappy in the beginning, but now that we've completed the project, I've heard no objections," McCray said.

The Solano Affordable Housing Foundation is planning future housing in Solano County.
"What we're looking at in Suisun is an acquisition rehabilitation project, and in the cities of Fairfield and Vacaville, it is new construction projects," McCray said.
Barbara Smith can be reached at

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