The city upped an existing $6 million construction loan by $2.5 million Tuesday night to build 69 affordable apartment units in South Davis.
New Harmony would offer nine one-bedroom, 33 two-bedroom and 27 three-bedroom rentals.
The developer is Sacramento Yolo Mutual Housing Association, a public charity. It asked for the additional funding to give New Harmony a competitive edge in applying for federal tax credits. Projects that have significant public funding contributions have a better chance at receiving tax credits, the association said.
Only 75 projects out of 272 applications — 27.5 percent — were awarded tax credits last year, said Danielle Foster, the city’s housing and human services superintendent. The New Harmony project, at the southwest corner of Cowell Boulevard and Drummond Avenue, was approved a few years ago, but struggled to compete for state and federal funding, Foster said.
The total project cost is estimated at $20.4 million. Of that, Davis’ contribution — from city and redevelopment funds — is almost $10 million when the land dedication value, land loan amount and a pre-development loan and are factored in.
Sacramento Yolo Mutual Housing Association also secured $680,000 in public funds in the form of a federal bank home loan.
In all, the public funds make up 51.6 percent of the project cost, which is about $1.2 million less than the initial estimate due to competitive contractor bidding, Executive Director Rachel Iskow said.
The Davis City Council and Redevelopment Agency board of directors, which seat the same members, voted 4-1 to increase the loan amount at the meeting Tuesday night, but not before a discussion about cost and benefit.
While the council majority felt the project deserved to move forward, Councilman Stephen Souza said he could not support it due to cost. Souza preceded his vote with an explanation that he while he had “supported every single affordable housing project” during his time on the council, he was at his “breaking point because the cost is so high.”
He said he understands the need for affordable housing, but New Harmony is too expensive and the city’s priority should be to figure out how to do more with less.
“At this point in time we have very little resources, very little land left,” he said. “There’s a saying, ‘If it ain’t broke, don’t fix it.’ Colleagues, it’s broke. We need to fix it.”
Mayor Pro Tem Rochelle Swanson supported the project, although she said she agreed with all of Souza’s concerns. She asked if the project budget could be stretched to build more units if it were not for some of the more expensive eco-friendly design elements.
Iskow said the “green” design meets state requirements and is necessary for getting tax credits.
Two mutual housing association board members spoke at public comment, saying they know first-hand the need for affordable housing in Davis.
Mindy Romero said her family was able to stay in Davis and her children attend quality schools because they got into an affordable home. Romero said there are plenty of others who are on a “waiting list currently and I’ve met some of them.”
Chrisana Newbury said her family, too, was fortunate to live in an affordable home in Davis. Meanwhile, others must live in “sub-standard” conditions or move away, she said.
There are 1,800 affordable housing units in Davis — about 790 are ownership units and 1,010 are rentals. Of the 1,800 units, 1,100 were built with sustained affordability under a recent policy change by the City Council. Previously, affordable projects allowed increases in equity so that the homeowner had financing options for college tuition, retirement or other costs.
César Chávez Plaza on Olive Drive, which opened in 2007, was the last affordable rental project built in Davis. All units are one-bedroom apartments.
Moore Village in Wildhorse, which opened in 2005, was the most recent affordable rental project that featured family housing — one- to three-bedroom apartments.