SR Press Democrat: City seeks funding to develop foreclosure properties

By MIKE McCOY THE PRESS DEMOCRAT: 7/12/2009

Twenty acres once planned for market-rate housing in Santa Rosa’s southwest and southeast quadrants — projects now in foreclosure — are being targeted by city officials for potential development of nearly 400 low-income apartments.

The City Council on Tuesday is expected to apply for $80 million in federal stimulus funds to purchase the three parcels and provide builders with the bulk of money needed to construct affordable housing.

Besides providing housing for the city’s poorest residents, the proposal could generate 550 construction jobs, said David Gouin, the city’s economic development and housing director.

The $80 million is being sought from a $1.9 billion federal package established so that states and local governments could acquire and develop abandoned and foreclosed residential properties. Santa Rosa’s ambitious request represents 4 percent of the $1.9 billion available nationwide.

“What are our chances? We have no idea,” said Nancy Gornowicz, the city’s economic development and housing manager. “They could give us all of it, part of it or none of it.”

Gouin said California and a few other areas in the country may have a competitive edge because of loan default rates.

“We are suffering the most from foreclosures and we anticipate HUD (Housing and Urban Development) will consider that,” he said.

Since the stimulus package was passed by Congress in February, the city has been asking real estate agents, banks and land owners what foreclosed properties might become bank-owned, the criteria the city must meet to qualify for the federal funds.

The search has resulted in three properties being selected for the proposal. They are:

-- Kawana Terrace — 2.8 acres on Kawana Terrace once planned for 39 homes by Das Homes. The property has been taken back by Exchange Bank.

-- Village Gardens — 8.7 acres on the southwest corner of Sebastopol Road and Boyd Street once planned for 110 condominiums by Christopherson Homes. The lien-holder is Wells Fargo Bank.

-- Sundance Village — 8.3 acres at the western end of Sebastopol Road originally proposed for 51 homes by MetroPacific Properties. The lien-holder is Comerica Bank.

Gornowicz said the city does not know the asking prices for the properties.

Two of the properties are in the city’s southwest section, an area that some residents have complained is being forced to accommodate a excessive share of the city’s low-income housing.

“We are sensitive to that,” said Gornowicz.

But she also said that the two Sebastopol Road projects have roads and utilities installed, giving them a greater chance of meeting federal stimulus-spending deadlines.

“We looked at which projects would be the closest to shovel-ready,” she said, noting that the city would have to spend half the money within two years and all of it within three.

The amount of money allocated, if any, would determine whether the city proceeds with one, two or all three of the projects, or none at all.

The developments would be intended for the city’s lowest-income residents, individuals and families making between 30 and 60 percent of median income. For a family of four that would represent a combined $24,050 income for a family of four at the 30 percent level and $48,120 at the 60 percent level.

The possible addition of nearly 400 units for very-low income residents is critical to meeting state-mandated housing goals. These goals outline how many very-low, low and affordable residential units must be built in each city and county in the state.

From 1999 through 2006, nearly 4,100 lower-income units were built in the city, the third-highest total among the 101 cities in the nine-county Bay Area.

While Santa Rosa easily met its low- and moderate-income housing goals, it fell more than 900 units shorts of the amount of rentals to accommodate very-low income residents.

Community Development Director Chuck Regalia said the three parcels, which already have city-approved plans to develop 208 homes and condominiums, would have to be rezoned to accommodate the 396 apartments the city wants.