Santa Rosa supports purchase of upscale apartment complex for middle-income housing

Santa Rosa officials have backed a state agency’s move to purchase a large upscale apartment complex near Coddingtown Mall, a first-of-its kind deal meant to create more middle-income housing and one that could lead to the city itself owning the property within two decades.

Under the pending deal, the California Public Finance Authority would buy the Annadel apartments on Jennings Avenue using public bonds. A purchase price has not been disclosed for the more than 380-unit complex, owned by Scottsdale, ?Arizona-based Wolff Co. The property’s most recent assessed value is about $44 million, according to the Sonoma County Clerk-?Recorder-Assessor’s office.

Santa Rosa’s cooperation was needed to allow the purchase to go forward, city officials said.

“The city’s interest is to continue to provide housing solutions and to address households that are rent-burdened,” said Megan Basinger, the city’s housing and community services manager.

The City Council approved the proposal Tuesday on a ?5-0 vote, with Ernesto Olivares absent and Vice Mayor Chris Rogers abstaining.

Existing tenants would not be displaced by the deal, which is in escrow and could close by early 2019, according to Basinger.

The deal reflects Santa Rosa’s search for another way to create and sustain affordable housing - and not just for low-income residents. It comes as city leaders and their allies are promoting a $124 million housing bond for the November ballot that supporters say would help build new homes and house seniors, veterans and people displaced by the 2017 wildfires.

The fires destroyed more than 3,000 homes in the city, or 5 percent of the available housing stock.

Pursuing a middle-income housing project is a new concept for Santa Rosa, Basinger said, as the city generally focuses its housing efforts on low-income households, those earning 60 percent and below of the area median income.

“Middle-income households are often those that are exposed to the most volatile rents,” she said.

Santa Rosa’s support for the Annadel apartments purchase includes a provision that would give the city the option to buy the complex 15 to 35 years from the date of bond issuance for the initial transaction. Santa Rosa would assume the remainder of the project’s debt and be liable for other fees and costs, according to a copy of the proposed purchase option agreement.

The Annadel apartments were built within in the past five years and include units ranging from one to three bedrooms. Rent starts at about $1,900 for a one-bedroom apartment and can be much higher for larger apartments and shorter leases, according to the apartment complex’s website.

It remained unclear Tuesday how the proposed sale came to be. Representatives of Wolff Co., which owns at least one other Santa Rosa apartment complex, did not respond to multiple requests for comment.

The California Public Finance Authority, or CalPFA, “is interested in acquiring 1020 Jennings Ave., in order to further our mission in providing public benefit statewide,” according to Scott Carper, a program administrator. The agency was created by government officials in the San Joaquin Valley in 2015 to support housing projects and related economic development initiatives.

Santa Rosa joined ?CalPFA in September - a necessary step for this project because CalPFA could not issue bonds for projects in the city limits otherwise, according to Basinger.

The Annadel is considered market-rate housing and touts its “luxe amenities designed to complement your Sonoma County lifestyle” on its website.

If CalPFA’s purchase goes through, “some of the units” will be restricted to households earning from 80 to 120 percent of the area median income, according to Carper.

“This segment of the population generally does not benefit from the creation of affordable housing units,” he said.

Carper did not respond to a follow-up email asking how many of the Annadel’s units would be subject to the income restrictions he described. Basinger said the income restrictions could apply to all units, perhaps with carve-outs for housing for property managers who live on site.

“Tenants are not going to be displaced,” she said.

Catalyst Housing, a Bay Area-based firm, is working with CalPFA to acquire the property. A representative of the company would not comment Tuesday on the pending deal.

As part of its development of the Annadel apartments, Wolff spent $1.1 million to build the adjacent Finali Park, named for a family that farmed the land there for decades.

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