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City leaders rejected a developer's plan to build 73 homes in the largest subdivision under construction in Santa Rosa, calling the proposal a "bait-and-switch" that would leave the city without the low-income housing it was promised.

Meritage Homes of California wants to start building the second phase of 138 single-family homes approved for a former Christopherson Homes subdivision off Aston Avenue in the southeast section of the city.

But because of the way the original subdivision was broken up in foreclosure, the current developer doesn't own the piece of property that was set aside for the 24 units of affordable housing associated with the project.

Instead, Meritage is proposing to restrict some of its smaller 1,400-square-foot homes for moderate-income families. A family of four in Santa Rosa is considered moderate income if it makes 120 percent of the median income, or $99,100.

But that didn't sound very affordable to Councilman Jake Ours.

"In this particular case, I think there's a bit of a bait-and-switch going on," Ours said. "We're not getting affordable units, and until we can get that, I don't' think I'll vote for this."

City staff had come up with a compromise they hoped would make the best of a bad situation.

The city approved Christopherson Homes' 162-unit Daunhauer Ranch subdivision at 1600 Aston Avenue in 2003. Because the project was more than 15 acres, the city required 24 of the units be built on-site as a low-income apartment complex. A separate entity, Alderbrook Properties, was established to develop the affordable units.

But when home values plummeted, Christopherson Homes, once the largest homebuilder in the county, defaulted on the main portion of the property. In 2010, Meritage Homes bought the property where single-family homes were planned from Wells Fargo Bank, but it did not purchase the parcel approved for the affordable units.

A previous council in 2012 signed off on a deal allowing nine of the 65 housing units in phase one to be set aside for moderate-income families. But this time the deal faced greater scrutiny.

"I feel like I'm getting backed into a corner and I don't like it," Councilman Gary Wysocky said.

Council members expressed a preference for the original plan. But City Attorney Caroline Fowler pointed out that city staff was trying to find a way to keep a project that creates jobs and builds affordable homes moving forward.

She also stressed that Meritage Homes didn't own the property where the affordable units were planned.

"We can't force them to build low-income housing on a site that they don't own," Fowler said.

Keith Christopherson, former owner of the now-defunct Christopherson Homes, said he still hopes to build the affordable units, but needs some help. He said he hopes Meritage will help him finance the deal.

But Wysocky said he doubted the separate apartment parcel would be developed anytime soon.

"That's going to stand alone for a long time, I fear," he said.

Housing advocate David Grabill noted that the need for moderate-income housing has lessened since housing prices have tumbled, stressing that low-income housing is where the real unmet need is.

"You've got to hold their feet to the fire," Grabill said.

Ultimately, the council instructed Meritage to sit down with Christopherson to see if the two groups could find a way to get the low-income units built. They requested an update in 30 days.