By Jondi Gumz
A 2017 state law that created a $75 recording fee on real estate documents to fund affordable housing is providing Capitola with $481,732, which may be tapped by the nonprofit MidPen Housing to build 52 affordable rental apartments at 1098 38th Ave.
The property, formerly the site of convalescent home Capitola Manor on nearly 2 acres, was sold in 2016 for $5.2 million.
MidPen Housing acquired the property on March 10, according to city staff, and approached City with a request for a $250,000 loan for predevelopment planning costs.
MidPen decided on a 100 % affordable multifamily project and hired Architects FORA of San Jose to design it.
The Capitola loan would be allocated this way: $200,000 for architectural design, $32,000 for civil and survey costs, and $19,800 in geotechnical reports and testing.
MidPen expects the City would consider providing additional funding in the future, according to Capitola Community Development Director Katie Herlihy.
MidPen has built rental apartments in Watsonville at two former farm labor camps and family apartments in Aptos, and is building multi-family housing at 1500 Capitola Road in Live Oak and at a former motel in Santa Cruz.
All of these are designed as 100% affordable.
In her staff report, Herlihy said Capitola options to fund a loan for predevelopment costs for affordable housing.
1098 38th Ave. • Google Maps Image
One is the Permanent Local Housing Allocation Fund created by Senate Bill 2, the Building Homes and Jobs Act . Another is the Housing Successor Agency (formerly Redevelopment) funds.
In May, Capitola was awarded $481,732 in PLHA funds for 2020-2022, which can be used for predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, and rental housing that is affordable to extremely low-, very low-, low-, or moderate-income households, including necessary operating subsidies.
Capitola anticipates an award of $149,426 for 2023 and 2024.
In the first round, Santa Cruz County was awarded $1,811,203 and the city of Santa Cruz $452,837, Watsonville $1,546,047, Scotts Valley, $0.
Capitola also has about $2 million in the Housing Successor Agency fund due to a recent loan payoff.
These funds may be used toward new construction of an affordable housing development to households earning 80 percent or less of the area median income — $132,800 for a family of 4.
During the June 22 City Council meeting, MidPen will introduce their team and provide a conceptual overview of the proposed project. If there is conceptual support for the project, staff recommends the City Council direct staff to prepare a loan agreement for $250,000.
If a local government does not take advance of the funds for housing, the money revert to the Housing Rehabilitation Loan Fund for the state’s Multifamily Housing Program or for technical assistance to local governments.