By Ben van der Meer – Senior Reporter, Sacramento Business Journal
Feb 27, 2024
The Grace in Downtown Sacramento, a 41-unit project in its financing phase, has been designated workforce housing through a program with the Capitol Area Development Authority.
WILLIAMS & PADDON ARCHITECTS & PLANNERS
Reflecting a new initiative by the Capitol Area Development Authority — and a subtle shift in the housing market in Sacramento’s urban core — three urban infill housing projects will be aimed at workforce housing.
One project, Studio 30 at 500 16th St., is already under construction, while the other two, Grace and Esperanza, are lining up financing, said managing partner John Vignocchi of development firm Urban Capital LLC.
“For us, it’s a finance thing,” he said. “We’re able to get higher returns with lower rents by using this program.”
Under the program with CADA, Urban Capital receives a $25,000 loan for each project at 3% interest, and a 55-year regulatory agreement for the properties to have rents at 80% to 120% of area median income. The loans are repaid in a year, while the developer gets a break on property taxes by having the property designated as affordable housing.
Rents at 80% of AMI, which would be about $56,900, are well below what’s typical in market-rate projects, especially in Downtown and Midtown Sacramento. But market-rate projects have also seen less demand in the last year or so, a factor that led Vignocchi to consider the CADA program instead, he acknowledged.
Vignocchi said CADA’s program allows him to provide “missing middle” housing units, also sometimes known as workforce housing. Studio 30 will have 15 studio units at up to 80% AMI and five studios and 10 one-bedroom units at up to 120% of AMI.
Grace, at 620-628 15th St., would have 10 studios at up to 80% of AMI and one studio and 30 one-bedroom units at up to 120% of AMI. Esperanza, at 424 12th St., would have 32 studios at up to 80% of AMI and 54 studios and 46 one-bedroom units at up to 120% of AMI.
“It’s a great tool when you’re looking at doing missing middle and privately financed affordable housing,” Vignocchi said. His firm is partnering with Pacific Housing Inc. as its nonprofit partner on all three projects.
Urban Capital’s projects are the second time CADA has put money toward designating a new project as workforce housing, after carrying out a similar agreement last year with Urban Elements Inc. for the 75-unit The Kind Project apartments south of Downtown Sacramento.
CADA is a joint agency between the city of Sacramento and the state of California to manage and oversee development on state-owned lands near the Capitol. The agency also assists with private development projects within its footprint.
Danielle Foster, CADA’s executive director, said the agency wants to support housing of all kinds in the urban core, including affordable and workforce.
“We continue to have funds for this program and are asking for developers to apply,” she said, after Urban Capital was the only firm to answer a request last fall for possible projects to fund. “We are definitely trying to provide housing at all income levels.”
*CADA, Urban Capital designate three projects as workforce housing – Sacramento Business Journal https://www.bizjournals.com/sacramento/news/2024/02/27/cada-urban-capital-infill-projects.html