Construction on a brand new affordable housing community has just been completed and residents are beginning to move into The Crossings at Escondido. The 55 unit complex has taken the place of a crumbling Elder Place neighborhood in the Mission Park area of the city.
The complex is the 20th that the city of Escondido has built for low-income residents, part of a new strategy to develop such projects in areas where they replace neighborhoods notorious for gangs, drugs and violence.
There were more than 200 applicants for the 55 units. The Crossings comprises 38 two-bedroom, two-and-a-half-bath townhomes, 15 three-bedroom, two-bath flats, and two four-bedroom two-bath flats. The Craftsman style development has amenities that include on-site playgrounds, green open space, barbecue area, picnic benches, a community room with a computer lab and a police substation. It has been developed by Urban Housing Communities (UHC) LLC, a for-profit affordable housing company and designed by KTGY Group, both based in Irvine.
The development is a public-private partnership between the city of Escondido and UHC and it received about $2 million in federal tax credits.
Aside from the tax credit, funding for the project came in the form of ARRA (American Recovery and Reinvestment Act) funds to the tune of $2.4 million and a permanent loan of $1.9 million from the California Community Reinvestment Corp. Wells Fargo (NYSE: WFC) bought up UHC’s nine percent tax credit and became an equity partner in the project.
Funding from the city comes from its redevelopment agency rather than its general funds. California state law stipulates that cities have to spend one-fifth of redevelopment revenue on affordable housing.
The project cost a total of $20 million.
UHC is a family run firm, begun by brothers Doug, John and David Bigley.
The Bigleys formed the company in 2003 as an affordable housing development partner of Morgan Stanley (NYSE: MS) and Bank of America Community Development Corporation, specializing in multifamily and senior housing facilities in California and Hawaii.
“We’re one of the most active affordable housing developers in California, we’ll be completing nine projects this year,” said CEO Doug Bigley.
This is the company’s first project in San Diego, which came about when they met with Escondido officials to discuss the city’s housing needs.
They used a local general contractor, Competitive Edge in Escondido, with the aim of providing local jobs. They worked with the city to rename the street as Mission Grove Place.
The first step in the process was to acquire 13 properties that existed on Elder Place, mostly three-plex and four-plex structures inhabited by tenants that John, UHC’s chief operation officer, referred to as “bad elements.”
The owners were mostly absentee landlords and their properties were either in foreclosure or short sales. There was absolutely no on-site management.
Today however, it’s a completely different scenario. In addition to developing the complex, the Bigleys also provide on-site support customized to the needs of low-income tenants, such as health and wellness services, through a nonprofit that acts as social coordinator.
“We won’t do a site that won’t allow on-site management. This dovetails with the services we offer tenants. It’s tough to police such an area. What turns a community around is ownership – we believe in being very active owners, participating in events with the tenants,” said Doug, who worked for SunAmerica (Nasdaq: FGI) as their tax credit buyer, which led to the idea for forming UHC.
The Bigleys focus on what the end user’s experience is going to be when it comes to setting design goals for such projects.
“A lot of companies have failed in this business because they approached affordable housing as last resort housing. But we look at green standards, adequate parking and facilities,” said Doug.
He gave the example of how they would never do three-story walk-ups. Instead, they place townhomes over flats, so tenants don’t have to walk up three flights of stairs.
While KTGY was the architect on the project, the Bigleys’ design team looked at everything, established design standards, selected lighting, floor plans and a color palette.
John explained that many of their projects achieve LEED standards -- but the company doesn’t seek certification because of the added cost -- with features such as tankless water heaters, which also benefits the tenants with lower utility bills
“We start by designing a user-friendly unit. If we tried to shrink costs by reducing open space or storage, it would be a disservice to the tenants. We keep an eye on functionality,” said John.
Doug pointed out that some developers want the most cost efficient unit, but they don’t realize that the cost curve stays flat at the top when you grow a unit by a little bit.
In other words, the marginal cost of adding more space to a unit, with a wider walk-in closet or additional storage, does not push up the total cost by all that much.
The neighborhood around The Crossings is a mix of single-family homes, apartments and a school. Pubic transportation is a couple of blocks away and retail stores are within a half-mile’s distance.
As the newest kid on the block, it stands out from its neighbors.
“Back in the day, it used to be a vibrant area, but it deteriorated over the years. This project helps revitalize an area of the city that needed a facelift,” John said.
Nagappan is a San Diego-based freelance writer.