In an effort to preserve affordable housing units in Redwood City, nonprofit HIP Housing is forging partnerships with a variety of stakeholders to purchase an affordable apartment building at 1512 Stafford St.
The San Mateo-based nonprofit is well on its way toward acquiring the 7,700-square-foot building near the Caltrain tracks, less than a mile north of the city’s downtown, after the Redwood City Council chipped in one-third of the $3 million needed to acquire the property last week. The council approved a nearly $1.1 million loan from the city’s affordable housing fund toward the project, which is expected to preserve affordable rents for the seven apartments and Mo Music, a small business offering music lessons to children.
HIP Housing Executive Director Kate Comfort Harr knows pooling funds from multiple sources is critical to preserving the rapidly shrinking affordable housing stock in the Bay Area. Combined with a loan from county half-cent sales tax revenue, contributions from private donors and a loan from a private bank, among other sources, the city’s loan facilitates a creative strategy for maintaining affordable units in a market where such housing options are increasingly limited.
“We’re very excited about this opportunity because it really shows a collaboration between the city, county and seller,” she said.
The nonprofit’s purchase of the property will preserve affordable rents for the four households at or below 80 percent of area median income, or AMI, one household at 50 percent of AMI, one household containing a family of four at 120 percent of AMI and Mo Music, which currently leases 1,500 square feet of commercial space there. The nonprofit confirmed it has negotiated a five-year lease with Mo Music, which has been located there for 10 years, upon close of escrow. One apartment unit will be vacant when escrow closes, and the nonprofit has stated its commitment to finding tenants falling into the low- or very-low-income brackets as units become available, according to a staff report.
Acquiring the Stafford Street property and keeping rents for tenants in the space is an example of preservation housing, one strategy the nonprofit has focused on to make sure residents in need of affordable housing aren’t at risk for displacement as below-market-rate apartment complexes are bought and converted into higher rent properties. Though preserving affordable units is lauded for preventing displacement at a lower cost than building new units, the effort is more difficult to use federal housing dollars, which often require all tenants to be at 80 percent of area median income or below, said Comfort Harr.
For nonprofits such as HIP Housing looking to preserve affordable housing, identifying funding sources with fewer requirements is a key component to moving forward with such projects, known for their myriad zoning and funding restrictions. This is one of the first of several to benefit from the city’s affordable housing impact fee, which allows the city to charge developers of new residential and commercial developments to help fund the provision of affordable housing units in the city.
Assistant City Manager Aaron Aknin said close to $4 million would be collected in the fund by the end of the summer to support preservation projects like the one at 1512 Stafford St. and as well as new affordable housing units, among other efforts to increase and maintain the city’s affordable housing stock.
Comfort Harr also noted the importance of working with a seller committed to preserving affordable homes.
“To make these preservation projects really work, you have to have a seller that’s willing to work with you,” she said.
Not only does it take time to identify a group of funding sources, but HIP Housing competes with for-profit developers capable of quickly purchasing sites with cash. Comfort Harr said any advance notice about potential sellers gives the nonprofit a shot at preserving affordability.
To update the building, the nonprofit is slated to do minor renovations, including improvements of two units in need of new windows and paint, in the first year after escrow closes.
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