City Approves $6M to Fund New Affordable Housing

The City Council approved an initiative late Monday night in a 4-0 vote to contribute $6 million toward the building of 12 affordable housing units at 4043 Irving Place, a new 28-unit Spanish style apartment building set to be completed in April 2013.

"The goal we adopted in our City's General Plan is to create mixed-income developments, rather than to concentrate low-income housing all in one place, and we think that's the right thing to do. We have an obligation under state law to create low- and moderate-income housing," said Councilman Scott Malsin at the City Council meeting, who also mentioned that the city is required to create 71 more moderate-income units by 2014--per the city's housing element.

"The rental covenants we acquire through this proposal lock in a long term opportunity for families in the low- and moderate- income brackets to be able to afford to live in Culver City."

Under the development of businessmen Silvestre Gonzales and George Mitsanas, the units are designated for three-person households who collectively make less than $50,000 annually for the low-income apartments and less than $67,000 for the moderate. Priority for renting the units will be given to city and school district employees and those on the redevelopment agency "Rental Assistance Program" list.

The City Council, acting as the Redevelopment Agency, agreed to fund $6 million, with $3.36 million in the form of a 30-year loan at 1.5 percent interest and the balance as a grant to 4043 Irving Place, LLC—the development company building the project. The $6 million will come from the Low/Moderate Income Housing Fund, which will be left with a balance of $10 million.

Another $8 million to build the project will have to be raised from a "construction loan and developer equity from other businesses and properties," said Peter Hillakas, a member of the development team.

Despite the council's approval—Councilman Andrew Weissman recused himself because he owns property near the approved building--the city's action spurred objections from residents who attended Monday's meeting.

During the public hearing, many residents expressed concern that the development company will not maintain the property and expressed fears that the project will require evern more redevelopment funds.

"I want this project to succeed; I don't like to live next to a hole in the ground. The figures that the city and the developers make me think this is going belly up. The city will be living next to a hole in the pocketbook," said Michael Miller, a neighbor to the construction site. He added that he believes the project is unlikely to obtain additional funds from a bank loan.

Resident Steve Martin accused the City Council of acting in self-interest. Another resident, Terry Kelin said, "This is clearly a failing project. If this proposal passes, it will be us handing over our property to a private developer."

Other residents said that they feared the Redevelopment Agency is subsidizing low-income housing units at a rate higher than surrounding cities.

But Keyser Marston Associates—the redevelopment agency's financial consultant for the project—said that Culver City's $402 subsidy per square foot of building area is comparable to that of other cities.

Similarly sized projects in West Hollywood are subsidized at rates ranging from $330 to $372 per square foot and in Santa Monica at $410 to $560, Keyser Marston said.

In response to residents' objections, Mitsanas said: "We have a tremendous amount of experience, whether it's through third-party management companies or our own management company.

"We will develop a plan before construction commences for community outreach to make sure that those neighbors closest to our project understand the different phases of construction and in hopes of minimizing the disruptions caused by construction."

While the vote was unanimous among the council members who voted, they nevertheless expressed concern and had some stern warnings for the development team.

"This is a very difficult decision for me," said Mayor Christopher Armenta. "Like everyone else, I do support affordable housing, but that's not the issue here. It's the financing of the project that's the issue here.

"My concern is that, should the project be built, and your revenue doesn't come in, we're stuck with a project that goes back to the bank."

Councilman Scott Malsin said, "You'd better do this project right, and I sure hope that you take care and are as careful and respectful of the neighborhood as possible. Go out of your way, please; bend over as far as you can to make sure it's good for them to live with.

"Do a good job for Culver City, please."

Construction for the project will begin in October 2011.