U.S. Subsidy for Senior Apartment Project Could Be in Jeopardy

The City Council has unanimously backed construction of 136 apartments for low-income seniors, but the approval this week may be too late to guarantee a $10-million federal subsidy that is key to the project’s future.

The apartments are part of a 43-acre Madera Road housing development that also would include the city’s largest assisted-living facility for the elderly and 75 single-family homes. The developer, Kaufman & Broad, is set to receive a $10-million subsidy for the apartments, which are considered the project’s linchpin.

But documents and interviews show that the subsidy is based on old plans, and that the current apartment plan would not have been eligible for the subsidy last year because it lacked a mandatory planning approval. The company also may have missed a key deadline that could result in the revocation of the federal support.

The subsidy, in the form of federal tax credits, is intended to support low-income housing projects. Developers who receive the credits can sell them to investors to raise cash for construction.

Winning those tax credits is difficult, said Elissa Dennis, a San Francisco-based consultant to nonprofit housing developers.

“If some projects that have received financing haven’t been playing by the rules, that means other eligible projects lost out,” Dennis said.

“We have plenty of clients who applied for good projects last year who did not get funded and were not able to do the project this year or possibly can’t do it ever,” she said.

Kaufman & Broad’s credits represent about one-quarter of the total 1997 allocations for affordable housing projects.

According to state regulations, the Madera Road project needed to have all local development approvals, including general plan amendments and zone changes, before it could receive tax-credit reservations.

Because it is a “very-high-density” project in a “high-density” zone, the plan for senior apartments needed a zone change to move forward, city planners say.

It received that approval Monday, nearly a year after developers applied for the $10 million in tax credits.

Kaufman & Broad project manager Tom Erickson contends that the timing of the zone change does not upset the tax-credit financing because it was not needed for the apartment portion of the project.

“I could go build that [apartment] project today without any modification of the existing approvals,” Erickson said.

City planners disagree, however. The very-high-density apartments required a zone change, said city planner Bob Cottle.

Walter Liang, executive director of the Tax Credit Allocation Committee, a state agency that administers the federal program in California, said the project had all local approvals when it received the credits last September. But that determination was based in large part on a March 1997 letter from Simi Valley that city planners say was tied to old plans.

City planners say they wrote the letter to confirm that the Madera Road project had the zoning approvals needed to build high-density senior units, but planner Dulce Conde-Sierra said the letter was not based on Kaufman & Broad’s current plan and its very-high-density zoning.

The current plan--which Kaufman & Broad presented only after receiving tax credits--needed a zone change, Conde-Sierra said. “We certainly didn’t know about it [the new plan] when we wrote this letter,” she said.

Told that the city’s letter described outdated plans, Liang said his staff would look into the matter.

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Apart from the questions about the application, the Kaufman & Broad project may have missed a June deadline to secure the tax credits.

According to officials at the tax credit committee, the project needed to have all local approvals subject to public comment by June 5. Liang said the committee is still reviewing a packet that Kaufman & Broad submitted June 5, nearly two weeks before Monday’s City Council decision.

Project manager Erickson, however, said the project had the necessary approvals well before the deadline. He denied that the company submitted a packet in recent weeks.