The city of Guadalupe is one step closer to breaking ground on another affordable housing complex aimed at providing homes for farmworkers, after approving a change to an existing development agreement.
The development, called Guadalupe Court, is located at 4202 11th St. on a 3-acre lot. The project, estimated to cost $15 million, will consist of 38 units, including a mix of two- and three-bedroom residential units, a community room and offices for staff and other service providers.
The proposed units will be divided among three separate two-story buildings that are surrounded by parking areas and an access road that has two separate driveway entrances onto 11th Street. The project also will include 83 parking spaces.
Average rent is estimated to be around $800 to $1,000, depending on each occupant's household/resident income.
Guadalupe Court “will provide the city with a valuable affordable housing resource to support the needs of extremely low, very low, and low-income community members, provided at least one member of the household is an active, retired or disabled ‘farmworker,’” according to a city staff report.
A change to the development agreement, passed Jan. 9, comes at a crucial time for the city, given its longtime financial struggle and need for affordable housing, necessary for a community whose residents mainly work in the agricultural farming industry.
“There’s a broad definition of ‘farmworkers’ who wish to live at Guadalupe Court,” said John Fowler, CEO and president of Peoples' Self-Help Housing, who is building the complex. “Anyone whose job is in any way related to the agricultural industry, whether they work in an office or out in the fields, it doesn’t matter. We just request that at least one person in the household was or has to be employed in that line of work.”
After the city approved the project in November 2014, the Cabrillo Economic Development Corp. was onboard to construct Guadalupe Court, but in June 2017 opted to sell the property to Peoples' Self-Help Housing.
The Guadalupe City Council approved the sale Jan. 9.
When the Cabrillo Economic Development Corp. owned the property and was ready to jump-start a housing project, developers agreed to pay the city a fee of $23,000 with a 2-percent hike annually for 30 years. That payment, imposed in lieu of property taxes, would have resulted in $933,000 to the city.
However, after Peoples' Self-Help Housing took over the property, its officials argued the original fees should be waived since the nonprofit organization's projects are exempt from state property taxes.
“Peoples' Self-Help Housing has built 50 housing complex sites and we never paid property taxes because we’re exempt,” Fowler said. “Problem is, Guadalupe really needs money, and they said we needed to pay $23,000 a year to approve this project. Unfortunately, USDA won’t allow that kind of expense, so we had a bit of a dilemma there.”
Peoples' Self-Help Housing then worked with the city to establish a one-time project development payment of $515,181.58 to offset the impacts of the project on public infrastructure and facilities, Fowler said.
“The city definitely needs revenue, so by paying this one-time payment upfront, they can achieve their financial goals,” Fowler said. “We were able to find an answer that works for both entities.”
Although the payment issue was sorted out, City Council members remained concerned that the housing was limited to farmworkers, Guadalupe city attorney Philip Sinco said.
“There are a lot of low-income residents living in the area who could benefit from this who might not be farmworkers," Sinco explained.
Since the project needed at least $3 million from the U.S. Department of Agriculture, developers had to meet the requirement for funding that ensures at least one occupant in the household must be working in the agriculture industry.
“I understand that some city councilors were worried about limiting Guadalupe Court to just farmworkers, but unfortunately funding for this is tied to certain requirements set forth by the USDA, which doesn’t allow us to produce any other housing,” Fowler said. “Funding determines the rules.”
Fowler said the project will provide more farmworker housing that is sorely needed.
As an example, he cited Riverview apartments, a low-income housing project that includes 80 units. The complex is fully occupied with a waiting list of about 350 people who need homes.
Funding the project
The next step for Peoples' Self-Help Housing, according to Fowler, is to apply for special tax credits in an effort to secure money from the state to build the $15 million development.
Fowler estimates they may be able to secure tax credits up to $11 million or $12 million, which then could be sold to an investor who could claim those tax credits on his or her tax returns.
Once developers sell the tax credits on the market, they can convert those credits "close to dollar-for-dollar value, so we'll get that $11 million investment when we sell those credits,” Fowler explained.
Peoples' Self-Help Housing then will borrow $2 million to make up the difference needed.
With the $2 million loan, $3 million grant from the USDA and $10 million from tax credits, “that’s how we’ll pay for the $15 million for Guadalupe Court, and then establish low rents for Guadalupe Court in the future," Fowler said.
On Tuesday, the City Council will review its revised housing development agreement, transferring property rights from Cabrillo Economic Development Corp. to Peoples' Self-Help Housing now that escrow has closed, Sinco said.
Once accepted, approve and adopted, the agreement will take effect 30 days later.
Peoples' Self-Help Housing will find out in June if the tax credits are approved, Fowler said. With an approval, the organization could break ground as early as October.
“If we calculate the scheduling throughout the next several months, we estimate that it’ll take us only about a year and a half to build Guadalupe Court, which is super fast,” Fowler said. “We definitely hope to finish the project by February 2020.”
In the meantime, city officials will negotiate right of ways with property owners to construct sidewalks around the project.
“We’ll also make sure and work with the Police Department to ensure kids who live there will have a safe route to school,” Sinco said. “They definitely will, one way or another.”
Sinco said he believes the project will help everyone involved, from the city to the farmworkers.
“It’s going to be a well-run, managed complex. I know from personal experience Peoples' Self-Help does great work, and they always provide a great service to people with low income, and Guadalupe needs it so badly.”