Central Valley government agency jumps into Sonoma County housing market
The new owner of Santa Rosa’s Annadel Apartments may have backed away from a deal to develop Sonoma County’s former community hospital campus on Chanate Road, but it is still aiming to expand in the North Bay.
The California Community Housing Agency, a government entity created by local officials in the heart of the San Joaquin Valley and staffed by Bay Area consultants, issued nearly $200 million in tax-exempt bonds to acquire the 390-unit Annadel complex south of Coddingtown Mall in April.
The agency won over Santa Rosa officials with the promise it would expand the supply of affordable housing at no direct cost to the city. As long as CalCHA owns the Jennings Avenue apartments, any new tenants moving into the complex cannot earn more than 120% of the area’s median income.
It arrived in Santa Rosa as the city was seeking to dramatically increase its affordable housing stock, which falls well short of state goals, particularly for Sonoma County’s poorest residents.
Even so, most of CalCHA’s proposed rents at Annadel are barely lower than what the average tenant was paying before its purchase. New renters can expect to pay up to 40% of their incomes to live in the 5-year-old complex, which boasts a wine bar, saltwater lap pool and fitness center with Peloton bikes.
To sweeten the deal for Santa Rosa leaders, CalCHA gave the city the option to buy Annadel after 15 years and offered to supplement the city’s affordable housing initiatives with surplus revenue from the apartments’ rents — once the bonds are paid off a few decades from now.
The unique deal gives Santa Rosa “all of the upside,” said Jordan Moss, a Larkspur-based consultant working with CalCHA on the Annadel project. He spoke in late July at a workshop hosted by the City Council in Petaluma, where the Central Valley agency and its consultants see more opportunities to issue bonds for affordable housing projects.
“This really was (a) first-of-its-kind transaction,” said Moss, founder of Catalyst Housing Group. “This had never been done anywhere before, this structure, the use of governmental bonds in this way.”
The pitch to Petaluma reflected the ambitions of a new, little-known agency headquartered in Kings County, about 250 miles southeast of Sonoma County. Despite the distance, the agency hopes to expand its footprint in the housing landscape of the North Bay and in dozens of cities and counties in the Bay Area and across California, including $115 million in bonds recently issued for a Fairfield housing project.
Healdsburg is on its radar. In August, Kings County supervisors approved $14 million in bonds for a future senior living facility at 16977 Healdsburg Ave., expected to break ground in early 2021.
CalCHA issues tax-exempt bonds as a government entity formed by the Kings County Board of Supervisors and the Kings County Housing Authority, which is overseen by the board of supervisors and staffed by a consulting firm, Walnut Creek-based GPM Municipal Advisors. For affordable housing projects like Annadel apartments, CalCHA’s bonds will be paid off by rental income over the next 30 years or so.
The same players in 2015 formed the California Public Finance Authority, or CalPFA, which has issued more than $1 billion in bonds, not only for affordable housing but hospitals, schools and a sports and equestrian complex in Southern California.