News
Poway, nonprofit to buy Oak Knoll Road apartment complex
By: Andrea Moss - Staff Writer
North County Times
Published 2/25/2008
The city has found a way to increase the local supply of homes set aside for low-income residents without actually building anything.
The city is teaming up with Escondido-based nonprofit Community HousingWorks to buy the Oak Knoll Villas apartment complex at 12509 Oak Knoll Road for $7.3 million. When the sale closes at the end of March, the city will help the agency remodel the 35-year-old development, which has 52 apartments.
Those units ---- all two-bedroom, one-bath apartments ---- will be rented to low- and very-low-income residents at subsidized rents ranging from $746 to $903 per month, city housing manager Ingrid Alverde said last week. Complex manager Bob England said the units currently rent for $1,025 per month each.
People who make no more than 60 percent of the area median income each year will be eligible to live in the subsidized apartments, Alverde said. For a family of four, that translates to no more than $42,120 using 2007 figures, she said, adding that the numbers are revised annually.
The $7 million to $8 million conversion project became possible in October when officials with the state Department of Housing and Community Development agreed that if Poway buys and renovates a run-down apartment complex, then offers those units to low-income people, the apartments can be counted toward affordable-housing goals the state has set for the city.
The concession is important because state officials have said the city must set aside enough land to accommodate 501 new homes for low- and very-low-income residents between now and 2012 as part of the city's "fair share" of affordable housing.
Several new affordable-housing developments the city helped build in recent years have reduced the total number of additional "affordable" homes Poway must plan for to 290.
The city has several similar projects in the pipeline. Even so, city officials have said meeting the state goal will difficult because Poway is running out of land on which to build.
The ability to turn existing homes into affordable housing will help solve that problem.
"It was a very big deal 'cause it's very difficult to get approval (for such conversions) for a couple of reasons," Alverde said last week. "It took quite a bit of work on the part of ourselves, our planning department, the developer (Community HousingWorks). But we were successful in getting their approval to do this."
She cited timing as one example of the difficulties she was referring to. To get state approval, Alverde said, cities must be able to show they are ready to proceed with a specific purchase. Potential partners, however, often are reluctant to get involved in such projects unless they know the state will approve them, she added.
Poway also missed a July 2007 deadline for lining up the contracts for Oak Knoll Villas' acquisition and rehabilitation. Alverde said the state agreed to waive the deadline because the city was able to show that the project nonetheless will be finished by July 2009 as required by the state.
A first for Poway
The affordable-housing goal is part of a housing plan Poway and every other California city is required by law to file with the state every five years. Each city must show how it plans to meet the state-set goals, though actual construction is not required.
The state also provides no money to help provide homes for low-income residents. Doing so usually falls to the cities and nonprofits because commercial developers typically avoid such projects because they are difficult to make a profit on.
Turning existing homes into affordable housing is something cities across the country have done. Poway has never tried it before, but city officials began seeking state approval to take on such a project last year.
Alverde said the effort started paying off when city officials learned longtime Poway resident and Oak Knoll Villas owner Valerie Quate was looking to sell the complex. Community HousingWorks expressed interest in being involved in a local conversion project about the same time, Alverde said.
The agency has already successfully turned several old apartment complexes in Escondido and other North County cities into homes for low-income residents in recent years. Community HousingWorks also owns and manages several of Poway's affordable-housing developments.
Community HousingWorks' asset manager Rosemary Strabrawa could not be reached last week for comment. But Cathy Creswell, deputy director of the California Department of Housing and Community Development's housing policy division, said state officials see such projects as an important part of the options for increasing the supply of affordable housing available in a community.
"It is absolutely appropriate and good public policy to take your existing housing stock and keep it in good shape and make it affordable, because the more of your housing that you maintain, the less you'll have to replace," Creswell said. "So we think (the Poway project) is terrific. It shows that the city is being proactive."
Alverde said Poway will loan Community HousingWorks as much as $8 million to cover the purchase and remodeling expenses. The agency could end up leasing the property back from the city or owning it outright, depending on the final deal worked out between the two, she said.
Relocation help available
Either way, Community HousingWorks has agreed to keep the complex's rents below market rates for years to come, said Alverde.
Money for the city's loan will come money the city receives from a so-called tax increment, which is the difference between original and new property tax revenues in a redevelopment area, where property values typically go up as new projects are finished. State law requires at least 20 percent of the increment to be spent on affordable housing.
Plans call for Oak Knoll Villas to get a new, more-modern-looking roof, new stucco and paint, and drought-resistant landscaping.
Several residents at the complex declined to be interviewed about the conversion. England, who has lived at and managed the property for 25 years, said the majority of the tenants are Filipino, Iranian or Korean families who are hard workers and longtime residents.
"They're good, good people," England said, adding that they are aware of the sale. "They're just waiting to see what happens."
City planner Patti Brindle said half of Oak Knoll Villas' apartments will be earmarked for low-income residents and half for those with very low incomes after the renovations are finished. Existing residents whose annual incomes fall into those categories will be eligible to stay in their apartments, Alverde said.
Those who make too much money to qualify will get help finding new homes as well as financial settlements to cover their moving costs plus the difference between their current and future rents, for two to three years, said Alverde.
City officials are especially thrilled about receiving state approval for the conversion project, she said, because it dovetails with a city goal to fix up Oak Knoll Road. Last year, the City Council gave the go-ahead for Poway to replace an old sewer line under the road, then install sidewalks, curbs, gutters and other improvements along its length.
Residents in that area have been lobbying the city for several years to make such changes on Oak Knoll Road. The sewer line replacement work is scheduled to start later this year.
Alverde said city officials hope the road improvements and Oak Knoll Villas' makeover will spur neighboring properties' owners to fix up those up as well.
"Many of those properties are 30 to 40 years old, and they really are ready for some upgrades," she said.
