The developer proposing Metro Walk, a project planned for a 20-acre lot zoned for up to 498 apartments in Canyon Country, is asking city planners about a deal that might help them get out of the affordable-housing component in the plan.
Metro Walk originally was pitched by New Urban West in
December 2020 as a walkable, transit-friendly community that would split the 20.4-acre lot, near Lost Canyon Road and Sierra Highway, into four planning areas, with hundreds of apartments and townhomes.
Tuesday’s talk in front of the City Council Development Committee — Santa Clarita Mayor Pro Tem Laurene Weste and Councilman Jason Gibbs — involved new requests from the developer that was having problems making the approved plans work.
Original plans
Area No. 1 was to be 179 market-rate apartments in two four-story buildings; Area No. 2, 119 market-rate senior apartments in a four-story building; Area No. 3, 49 deed-restricted affordable housing for seniors and one manager for the four-story building; No. 4, 150 for-sale condos.
In December 2023, Jonathan Frankel, vice president for New Urban West, got approval from the Santa Clarita City Council to lower the number of units, saying the apartment component just wasn’t working out.
In order to move the project along, he said, he would need to turn the apartments in planning area Nos. 1 and 2 into 93 and 44, respectively, for-sale townhomes, reducing the number of homes created in the project by 161, which the City Council approved.
During Tuesday’s meeting, Erika Iverson, senior planner for Santa Clarita, explained the latest request came from the developer’s contention that they’re unable to get funding for the affordable component of the project.
“Now, given market constraints on financing and insurance for multifamily construction, the developer is looking to make a change,” Iverson said, “so they want to add single-family detached condos and duplexes to the allowable use types.”
New plan
The plan would essentially eliminate planning areas for the project, and while it wouldn’t change the minimum number of homes built, the developer was asking about the potential for a waiver to get out of the 49 affordable units.
Jason Crawford, community development director for the city, said the developer indicated a desire to build the affordable component, but has been denied several rounds of state grant funding for the project.
“The developer has made two attempts so far to get tax credit financing for the affordable apartment building, but they’ve been denied both times,” Iverson said.
Crawford said the developer should know in four to six months if the request in the latest release of state housing funds is successful.
“But if they’re not successful, they do want to be able to address the affordable component, but also see the specific plan area get built out,” Iverson said, regarding the current plan’s requirement for the housing. “So they’re asking for flexibility to pay an in-lieu fee rather than construct the affordable units. Their proposal is $800,000 for those 49 affordable units.”
Within the current plan, the developer already has 150 townhomes under construction, which means it has nearly 30 more units in the first planning area before it needs to start the affordable housing construction. In light of that deadline, Iverson said the developer Is also asking for construction to reach 240 homes before that trigger is pulled.
Considering incentives
Crawford mentioned apartments and affordable housing as a growing challenge, as financing and insurance becomes much more difficult for such projects. Regardless, the state housing laws require local governments to incorporate such plans into their housing elements.
The 49 units would reduce the city’s buffer in its housing element to 93, which has to do with California laws that govern how many homes a city must have planned for approval to be legally compliant with its housing element.
That’s where an in-lieu fee could come into play.
Right now, an in-lieu fee is not something the city has on the books, Crawford said at the meeting. But as the city works to address the challenges created between the demands of the state law and the local marketplace, it’s likely something the council will be considering.
“We looked at comparable cities that we often compare ourselves to,” he said, adding three were found that offered an in-lieu fee to a developer based on the square footage of livable space.
Thousand Oaks charges a little over $25 per square foot. Ventura charges a little over $38, he said. Glendale charges $55. The money would be intended to incentivize another developer to build the affordable units.
The offer from New Urban West worked out to just under $30 per square foot for 49 affordable housing units expected to be about 550 square feet in size, which Striplin said was so low that another developer would probably laugh if offered that to build affordable units.
Crawford said the actual cost for converting market-rate units into affordable ones is closer to around $100,000 per unit.
Gibbs said through his work as the Santa Clarita Valley representative on the L.A. County Affordable Housing Solutions Agency, or LACAHSA, he has pushed for more project financing for cities that would address this funding gap.
“So what I keep pushing down there is, if it’s $100,000 to turn a regular townhome into an affordable townhome,” Gibbs said, “then that should be the impetus of LACAHSA, to provide that funding to cities to do those conversions.”
Marketplace challenges
City Manager Ken Striplin said the fee was something the city would continue to work on with the applicant.
“They’re in a tough spot because the state pushes affordable housing,” Striplin said, “but they don’t provide the financing side.”
Crawford also mentioned a unique challenge that the developers were having that was not really within the control of New Urban West.
One challenge the state identified in funding the affordable component for Metro Walk is the lack of a nearby retail center, Crawford said. That’s considered an important aspect in planning for residents who have mobility challenges.
The project was slated to be adjacent to the Vista Canyon project, a large-scale mixed-use transit-friendly development that hit financial trouble, requiring the developer, Jim Backer of JSB Development, to default on a $24 million loan.
The project remains unfinished, with the developer citing the difficulty with financing and changing market demands, which are impacting not just housing plans.
“In the office market and retail market right now,” Backer said in a February 2024 interview about the project and marketplace challenges, “even the things that everyone thinks we should be doing are having a tough time in the financial world because of the higher rates and the inflation.”
The post City discusses in-lieu fee for affordable housing appeared first on Santa Clarita Valley Signal. ...read more read less
