Project to rebuild at burned Journey’s End site gets tax credit boost

A plan to build 94 new affordable homes for seniors got a major boost in the form of federal tax credits worth a total value of $40 million, more than two-thirds of the cost of the project.|

A project to build 94 new affordable homes for seniors on the site of the burned Journey’s End mobile home park has secured critical support in the form of $40 million worth of tax credits.

The highly coveted federal tax credits come after the rebuild project, which is planned to eventually have 532 homes, didn’t pass initial muster for the state’s Tax Credit Allocation Committee — and after a communication mix-up that came close to running out the clock on the project. The project is still in search of a market-rate developer to build the bulk of its new homes after the initial investor group dropped out last year.

When the state officials who award hundreds of millions of dollars annually in federal and state tax credits made their latest round of awards last fall, they didn’t initially favor the rebuild of Journey’s End, the Santa Rosa mobile home park that closed after most of its 162 homes burned in the Tubbs fire.

Since the October 2017 disaster, a cohort of developers had assembled, working with the property owner to figure out a future for the 13-acre park at 3575 Mendocino Ave., north of Kaiser Permanente’s medical campus.

The Santa Rosa City Council in late 2020 approved a plan that calls for 162 new affordable homes — replacing the coaches lost in the wildfire — as well as 370 market-rate apartments.

But the state tax credit committee, chaired by Treasurer Fiona Ma, initially didn’t grant the request by the Journey’s End developers for about $4 million in tax credits. Instead, the rebuild project went to the top of a waiting list, in case any extra credits became available.

After it became clear that the state still had about $5 million credits to spare, the Journey’s End request was granted in full, Ma said Tuesday evening in a phone call. She acknowledged advocacy by elected officials and community members as part of the reason for the award.

“We got a lot of calls about this particular project because it was damaged by the fire and it was displacing a lot of residents,” Ma said.

The low-income housing tax credit is one of the main ways the federal government fosters the creation of new affordable housing, which typically charges lower rents to tenants and returns lower revenues to owners compared to market-rate properties. A 2019 congressional report noted that these credits act as key subsidies for projects “that otherwise may not be financially feasible or attractive relative to alternative investments.”

A $4 million tax credit award may not sound like a huge deal for large housing projects, which typically cost tens of millions of dollars to build. But because the credits have a 10-year life span and provide annual tax benefits, a $4 million award would have a market value of $40 million — and while nonprofits such as Burbank Housing are exempt from income taxes, they can sell these credits to private investors, who can realize the tax benefits.

Because of their expanded market value, the credits are “huge” for the Journey’s End project, said Larry Florin, the CEO of Burbank Housing, which is heading the affordable development part of the Journey’s End project with another nonprofit developer, San Francisco-based Related California.

In fact, the $4 million award, once its full $40 million value is realized on the tax credit market, will amount to more than two-thirds of the cost of the Journey End rebuild’s first phase, a 94-unit rebuild estimated to cost $56 million, Florin said. He gave Ma, who leads the tax credit committee, "a lot of credit“ for the award.

“She did the right thing,” Florin said. While Burbank and Related are continuing to look for the final bits of funding they need, Florin said he hoped to break ground in September.

The Journey’s End rebuild’s chances of receiving tax credits got a boost in 2019 when U.S. Rep. Mike Thompson, D-St. Helena, authored successful legislation that secured $1 billion in tax credits for affordable housing in disaster areas such as 3575 Mendocino Ave. Ma and Florin both heaped praise on Thompson, who called the project “a big win for our entire community.”

“This will help address the affordable housing crisis in our region that was exacerbated by the recent fires and will be a critical steppingstone in our recovery process,” Thompson said in a statement.

The market-rate development is proceeding separately after the withdrawal of its initial investment partnership, a group headed by Darius Anderson, a lobbyist and developer who is managing member of Sonoma Media Investments, which owns The Press Democrat.

The owner of the Journey’s End site, Ramsey Shuayto, confirmed Tuesday night via email he was still looking for a market-rate developer.

The tax credit award took place over a month ago, but because of a communication error between the treasurer’s office and the developers, Florin said his team didn’t find out that they had actually made it off the waiting list until shortly before Christmas. That's about a week before the year-end deadline for tax credit recipients to submit the necessary paperwork and a substantial deposit of a few hundred thousand dollars, but Ma confirmed that Florin’s team managed to meet that cutoff.

“In the scheme of things, it’s not a big deal,” Florin said of the mix-up.

You can reach Staff Writer Will Schmitt at 707-521-5207 or On Twitter @wsreports.

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