A city-sponsored, low-income housing complex in Petaluma is going to receive much-needed upgrades for the first time in nearly two decades thanks to some financial reshuffling that will extend its affordability requirements by several decades.
The Petaluma City Council on Monday voted unanimously to authorize an agreement with affordable housing developer Burbank Housing, who will oversee the rehabilitation of Old Elm Village, an 87-unit apartment complex on Sandy Lane that was built in 2001 with low-income housing tax credits.
The project will be paid for by a maneuver known as resyndication, which allows owners of affordable housing properties to seek a new allocation of low-income housing tax credits with a development partner, who then accepts the credits in exchange for funding the rehabilitation.
It’s a move that local officials have now done six times for the eight properties that the city helped develop before redevelopment agencies were dissolved by the state in 2012.
The latest resyndication will extend the affordability restrictions that protect the property’s low-income renters through 2075. The requirement was initially scheduled to expire in 2032.
“That’s important for a city like Petaluma where we can’t build affordable housing but we can keep the housing we have,” said City Housing Administrator Sue Castellucci.
Rents at Old Elm are restricted to households with no more than 80 percent of the area’s median income, according to city officials. Once the rehab is completed, the average affordability will not exceed 59 percent of the area’s median income.
According to Data USA, Petaluma’s median household income is $80,907, which means the average qualifying residents would need to earn $48,000 or less per year once the project is completed.
The city currently has two outstanding loans on the property, totaling approximately $2.6 million. Under the pending agreement, the term would be extended by 55 years from the end of the rehab project.
The combination of the tax credit equity and tax-exempt bonds left a funding gap of $1.1 million to complete the renovations, which includes major building systems upgrades, new appliances, full exterior re-painting, and the implementation of several energy and water conservation measures throughout the complex.
The city intends to pay for that new loan by using the nearly $2 million cash proceeds from a previous resyndication agreement with Burbank in 2015 for upgrades at Park Lane Apartments.
Although residents will have to deal with the inconvenience of ongoing construction at the property, rents will not be increasing, Castellucci said.
(Contact News Editor Yousef Baig at email@example.com or 776-8461, and on Twitter @YousefBaig.)