EL CERRITO -- Sponsors of a major low-income senior housing project planned for a prime location on San Pablo Avenue have hit a few financing snags with the dissolution of state redevelopment agencies and cuts to federal affordable housing construction programs.
Hayward-based Eden Housing, developer of the $26 million, 63-unit project to be built next to City Hall, was to receive a $350,000 loan from El Cerrito's redevelopment agency under the terms of the original negotiating agreement with the city.
But that was before the state dissolved city and county redevelopment agencies in early 2012 and so-called successor agencies were charged with distributing funds that were committed to projects before the dissolution.
Uncommitted money controlled by the agencies had to be returned to county auditors to be redistributed to local agencies in the form of property tax.
The state Department of Finance so far has denied El Cerrito's successor agency permission to direct $250,000 of the original $350,000 to Eden.
The state is saying that the money was not sufficiently committed to the project before takeover of redevelopment, according to Woody Karp, the project manager for Eden.
"The total loan amount was $350,000, and we have been trying to get the Department of Finance's approval so the loans can be released," said Hilde Myall, El Cerrito's housing program manager.
Eden and its project are facing other problems stemming from cuts in federal funding for low-income housing, a result of congressional efforts to balance the budget, Karp said.
"There's less money federally and no redevelopment, so those sources are harder to secure," he said. "We're competing against other worthwhile projects for shrinking sources of funds."
Despite the hostile environment, Karp said Eden has obtained $620,000 in federal Community Development Block Grants and $150,000 from the federal HOME Investment Partnership Program, administered by the county.
But, the key component, amounting to about 50 percent of the backing for the entire project, will be federal tax credits purchased by corporations.
Karp said Eden must line up the public funding in advance of applying for the credits because, under federal law, construction must begin at least 180 days after the credits are obtained.
The credits are essential for low-income housing developers because the loans they receive from the purchase of the credits can be paid back over 55 years.
"When we apply for tax credits, we have to know that with the award of the credits that the project is fully funded and ready to go," Karp said. "We have to get all these other sources committed before we apply."
Currently, Eden aims to have all the outside funding in place to apply for and secure the tax credits in March of next year so it can begin construction the following November, Karp said.
"If we are not successful (with the Department of Finance) it will not derail the project," he said. "But, because of the competitive nature of applying for funds, (the process) is taking longer than we would have liked."