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Healdsburg to buy 23-unit apartment complex to preserve affordable housing for low-income tenants

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Healdsburg is acquiring a $5 million apartment complex on Prentice Drive, ensuring the property will remain affordable for its mostly low-income tenants.

The Healdsburg City Council last week unanimously approved the purchase of the 23-unit Monte Vina Apartments, agreeing to chip in $1 million to maintain the below-market rents on the one- and two-bedroom apartments. The city also will provide a $275,000 loan to partner Burbank Housing, allowing the nonprofit to make immediate upgrades to some units at the complex at 1302 Prentice Drive.

To buy and manage the property, Burbank Housing will then apply for a state tax credit to cover the property’s remaining $4 million purchase price.

The purchase agreement concludes months of exclusive negotiations between city officials and the owner’s real estate agent. The city is expected to close on the property in mid-June.

If finalized, it would mark the first time the city has spent funds from Measure S, a tax on hotel visitors approved by voters in 2016 to increase the city’s affordable housing supply, to preserve units for low-income families. The purchase was heralded as a win for the city in its efforts to boost its number of affordable units in Sonoma County’s priciest real estate market.

“In real estate, nothing’s done and there’s no celebrating until we’re done,” said Mayor David Hagele, who works in commercial real estate financing. “With this vote, we definitely step forward with caution, but definitely confidence, and I think that’s big for us.”

For tenant Edith Vargas, the city’s acquisition was a relief.

She and her husband, Jorge Ramirez, 37, feared someone would purchase the property and increase the rent, forcing them to search for another place to live in an already tight housing market.

Before moving into the complex about five years ago, Vargas, a cook, and her husband, a grape picker, rented a room in Windsor from Vargas’ cousin, but they were forced to move when her cousin lost her home in the economic downturn.

When the couple found out their Healdsburg complex was up for sale, Vargas, 37, grew worried she and their two children, Oliver, 8, and Daleyza, 2, may have to move to Oaxaca, Mexico. She said they previously had to uproot their older daughter, Nancy Ramirez, now 19, from the local school system, and doing so again with their younger children was not a choice they wanted to have to make.

“They’ve grown used to Healdsburg,” Vargas said in Spanish. “It’s great that the city is supporting us, that they are helping families that actually need help. It’s going to be a good opportunity us. I’m so happy.”

The council decision comes two months after several Latino families in a low-income Piper Street apartment complex had their leases terminated. The eight-unit complex had been purchased for $2.96 million by a Marin County couple who planned to upgrade the units and start charging market rate. The city and buyers are in negotiations to try to keep some of the other residents in the complex.

In July 2015, a Larkspur investment firm paid $2.9 million for a 21-unit apartment complex next to Monte Vina and evicted the mostly Latino tenants to update the units and charge higher rents.

In both cases, community members and low-income housing advocates called on the city to step in and help the displaced residents — many part of the local wine and hospitality workforce vital to Healdsburg’s economy.

Monte Vina’s $5 million price tag is nearly twice what it sold for in 2007, according to realtor.com.

The $43,500 per unit the city will spend to keep the current tenants housed and the complex affordable for the next 55 years is a bargain compared to the cost of finding land and building new apartments, said Stephen Sotomayor, Healdsburg’s housing administrator.

“Because there’s limited space available for multifamily housing, the opportunities that pop up that give us a chance to preserve what’s already affordable is one of the least expensive ways that we can keep affordable housing,” he said.

A 2017 UC Berkeley study reported that building new affordable housing in California can cost as much as $425,000 a unit. With planned renovations to Monte Vina, built circa 1977, each apartment will cost about $250,000.

“This is exactly the kind of project that the community and the community housing committee have been hoping for, praying for, working for,” said Healdsburg resident Deb Kravitz, 54. “It’s a phenomenal step.”

City officials last week said Healdsburg fell three units short of meeting its state-mandated progress for developing affordable housing. The city hit or exceeded the requirement in all but the “very low” category for area median income by January 2018.

However, the city last month approved the Mill District, a large-scale redevelopment project on the site of a former lumber mill that will include an upscale hotel, shops and a 40-unit affordable housing complex for low- and very low-income tenants that will be built by early 2021.

The eight units for very-low-income tenants at the Monte Vina complex also will help Healdsburg hit its regional housing requirements by the 2023 deadline, Sotomayor said.

“We are a city that is doing it right,” Hagele said. “We have shown again and again that we are leaning in when it comes to housing issues here in Healdsburg. I look forward to this one closing and doing what we can to help other cities follow this model.”

You can reach Staff Writer Kevin Fixler at 707-521-5336 or kevin.fixler@pressdemocrat.com. On Twitter @kfixler.

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