By Robert Schussel, Ph.D
To read the response to this article from Anjela Ponce, President of Integrity housing, see the link at the end of this article.
Integrity Housing is proposing to purchase and invest approximately $1.5 million to rehabilitate
the Seabreeze Apartments using tax-exempt bonds. Pursuant to state law, the bond financing requires approval from the City to allow the transaction to move forward (even though the City has no financial responsibility for the bonds) . Services (Social worker, classes etc.) offered by the applicant are only offered until the bond is paid off (estimated to be 10 years).
Seabreeze apartments is a 184 unit residential complex located at 100 Larissa Lane (South Vallejo near 900 Porter St) . There are 64 one bedroom units and 120 two bedroom units . 71 units (38%) are being subsidized by HUD (Dept of Housing and Urban Development). These 71 apartments are reserved for families with 50% or less AMI (Area median income) whose household income for a family of 4 is $38,500 or less. The HUD contract is renewed annually. Integrity Housing is a nonprofit developer that owns and operates it properties. www.integerityhousing.org
A previous request to approve the purchase of Seabreeze Apartments by a different developer in March 2013 was not approved by the City Council. That project proposed converting all 184 units to be affordable to households at or below 60% of area median income (AMI), which was determined to not be in the best interest of the community.
Subsidized Housing is housing in which a government agency provides financial assistance to help keep housing affordable. As noted above, this means a household is paying no more than approximately 30% of their income for housing costs.
Affordable Housing means a household pays approximately 30% of their income for rent.
AMI (Area Median Income)
The 2014 AMI (100%) for a family of four in the Vallejo,
Fairfield area is $76,700. The AMIs are revised annually.
For Vallejo, a family of four (a 100% AMI) is estimated to be able to afford a rental of $1,918 per month. In Vallejo,the average current market rate rental is estimated to be approximately $1,400 for a family of four.Rental Rates
Below are the current rental rates and those proposed by Integrity Housing.
Currently, the only income restrictions are for the 71 HUD subsidized units.
Under the Integrity Housing agreement all of the units will have income restrictions that will probably be enforced for 10 years.
Staff stated that “the maximum income requirements for these units [market rate] include salary ranges for cerificated teachers with the Vallejo Unified School District ,Vallejo city employees including entry level police officers…..as well as many other local employers”.
However, a family of 4 could afford a rental of $1,533 (versus $1,380 market rate at Seabreeze) with an AMI of 80% and $2,205 (versus $1,400 market rate at Seabreeze) with an AMI of 115%.
|Current rates||1 bedroom||income requirement||2 bedroom||income requirement|
|HUD (subsidized)||$936 (22 units)||$30,700 max||$1,184 (49 units)||$38,350 max|
|Market rate||$1,195 (42 units)||$43,000 minimum||$1,400 (71 units)||$50,400 minimum|
|Proposed rates||1 bedroom||income requirement||2 bedroom||income requirement|
|HUD (subsidized)||$936 (22 units)||$30,700 max||$1,184 (49 units)||$38,350 max|
|80% AMI||$1,195 (18 units)||$49,100 max||$1,380 (31 units)||$61,350 max|
|115%AMI||$1,195 (24 units)||$70,610 max||$1,400 (40 units)||$88,205 max|
Services to be offered
For the 10 years or so while the bonds are being paid off, Integrity Housing has stated it will be offering services such as: Service Coordinator, After School Programs, Educational Classes and possibly Health and Nutrition Programs, and Social Programs. They state they will also offer Volunteer Assistance, Advocacy for residents and be ADA compliant.
However specificity for some services is lacking. Below are those areas that were emailed to Integrity Housing and Staff but not responded to in the Staff Report.
Security guards — hours and days they will be available?
Community meeting room –how large will it be and its availability to residents?
7 to 9 computers available to students and residents. What hours are computers are available?
Need a Statement–Computers will be serviced etc. so that they are in working order and have software that students and residents will need for homework/training
Training in the use of the computer and, how to do on-line searches etc. should be available.
A simple rule for determining whether more social worker time is required
(for example if a social worker is scheduled to work a maximum 18 hours per work is averaging 16 hours of sessions a week the scheduled maximum number of hours is increased by 5 hours.
Developing a day care program in cooperation with the other large complexes in the area.
Criteria to determine whether a Summer programs for children be made available for a given Summer
Comment and concerns
1. Once again an applicant waited until within the last few weeks of a deadline by the bond issuing agency to hold a hearing. This last minute strategy may be designed to limit the number of concessions the applicant needs to make.
2. After the last TEFRA (tax exempt bond) hearing for Seabreeze, City staff had promised to develop specific requirements that an applicant must meet. Unfortunately it does not appear that this promise has been kept.
3. The applicant’s (Integrity Housing) obligations will only last for 10 years or so. After that time services to those in subsidized apartments end. This does not help our long term social and economic problems.
4. Much is being made that after the bond is paid off the applicant will be attracting higher income residents. However, other than vague statements no plan is being offered for how to attract those with higher incomes. The higher income residents that Seabreeze would like to attract are able to afford more expensive apartments that offer more amenities etc.—so why would they flock to Seabreeze?
5. Vallejo’s market rate housing is more affordable than most of the Bay area. What we lack is having higher earners to pay more taxes and help draw more businesses to our community. We should be putting more effort into projects that attract these individuals.
6. The lack of specificity for issues such as security is troubling. The City will have no recourse if these issues (see list above) are not dealt with prior to any approvals—once again the applicant will be able to do whatever they want and Vallejo will pay the price for any lack of due diligence.
7. Attachment B in the Staff Report showing an increase ($24K) in taxes from Seabreeze is misleading. $16,900 welfare tax exemption is not included. Also it is not known whether their taxes will be calculated on the sales price of the property or a lower figure based on revenues.
The Final Thoughts
I urge people to come to City Council on Tuesday and ask that the applicants request for tax-free bonds not be approved
Approving this Bond measure puts another nail in the coffin of economic development for South Vallejo for another 10 years. When businesses see the large concentration of below average incomes in an area they are reluctant to build retail or other developments there. South Vallejo will not be able to attract development as long as the City is willing to concentrate lower income individuals in large housing complexes, a housing model that is not good for the residents either.
Does Vallejo want to be the capitol of tax exempt financing? Normally tax exempt bonds are meant to increase the housing supply. Tax exempt bonds should not be used to increase the selling price of Seabreeze and give the seller a greater profit with public monies. This arrangement is good for the investors, and lousy for the citizens.
The City needs to demand that services to residents continue as long as subsidized housing exists in this property.
Finally. Is having 38% of the residents in a building be at 50% AMI or lower, good for the residents or our community? City Council needs to develop public policy guidelines that requires low income housing be distributed throughout the City rather than be concentrated.—201 Maine is a good example of why concentrating lower income people is not good for a community.
I would hope that City Council will limit the percentage of subsidized units ( ideally to 25% or less) in a housing complex and start to require a higher percentage be residents who have above average AMI’s. Experiences in other cities suggest that when mixed income housing is done properly it is better for the community overall.