Purchase saves affordable apartments in Redwood City

“The idea is to help the people whose building is being sold and where they can wind up in a situation where they’re evicted, to help them stay in their communities,” Sanchez said. 

A large proportion of lower income residents tend to live in older housing stock that may only have a few units, Sanchez said. These properties are often owned for a long time by individuals who tend to keep their rents lower because they know their tenants, he said. 

“They’re more community minded,” Sanchez said. “These assets are what we’re trying to preserve.” 

HEART was founded in 2003 as a public/private partnership among the cities, the county, and the business, nonprofit, education and labor communities to create more affordable housing. It does so primarily by pooling money for developers and first-time home buyers loans. So far, HEART has invested more than $27 million to fund 1,632 homes. HEART is primarily a capital investor in this effort, and hires property managers to maintain these sites, Sanchez said.

Too often, Sanchez said older housing units are purchased by private equity funds who “squeeze every cent they can out of the building” and ultimately do few minor improvements but raise rents dramatically. 

Typically, affordable housing developments can cost more than $1 million per unit. Cost per-unit is estimated to be less than half of that for this inaugural acquisition by HEART, Sanchez said. 

While preservation efforts don’t necessarily add new units to the market, it does protect current tenants who could be on the brink of displacement, which would ultimately exacerbate the housing crisis. 

“Every unit we can preserve makes a huge difference in the life of those tenants there,” Sanchez said. “They don’t have to worry about displacement, they don’t have to worry about paying half their income towards rent.” 

Even as affordable units get approved throughout the county, more NOAH units are lost to “profit-maximizing” investors, Sanchez said. 

“It’s less expensive to keep someone housed than it is to find new housing for them,” Sanchez said. “We’re building hundreds, thousands of units across the county, and if we lose that many through the sale of these NOAH properties, we’re not making headway.” 

Often, the need for housing can “feel like a mountain you’re never going to get over,” Sanchez said. 

“It could be depressing and you wonder if it’s worth it, but every single unit counts,” Sanchez said. “We can’t get bogged down by not being able to have dramatic improvements.” 

The Redwood City apartment is located on the 400 block of Stambaugh Street in downtown, and was acquired through HEART funding, the city and a bank loan. The goal, Sanchez said, is to make it so the majority of acquisitions are funded through private investors. 

With this inaugural purchase for preservation, HEART hopes to seek potential investors who “consider what’s called a double bottom line” of both making a fair rate on return while giving back to the community. 

“People have to trust that you know what you’re doing, they have to see it demonstrated,” Sanchez said. “With this first acquisition, we believe it proves our model works. We believe we demonstrate the capacity to do these, so our next step is to raise capital to do more.”