California Workforce Housing Residents Getting Luxury Amenities
By Mark Fogarty
5 min read
Ambitious Project Converting High-End Units to Middle-Income
An ambitious joint venture is planning $2 billion in “middle-income” or workforce housing development in California. And in an unusual aspect of an effort that is targeting both new construction and existing housing, many of these middle-income workers will have units with luxury amenities.
How is that being accomplished? That’s because the joint venture, between California providers Standard Communities and Faring, has come up with the concept of converting more expensive rentals into housing affordable to those between 80 percent and 120 percent of area median income (AMI). The venture also will be constructing new rental housing units, as well as these conversions.
“A lot of what we’re doing is converting luxury multifamily into workforce housing through this program,” says Jeff Jaeger, Standard Communities’ co-founder and principal, referring to a state public-private partnership structure designed to facilitate the creation of middle-income housing.
“We’re taking existing luxury units, built actually cheaper than what it would cost to build true affordable housing now, and then we’re coming in after the fact and converting it into workforce,” he says.
Asked if this unusual concept is a new development in housing, Jaeger says, “It is new. It really hasn’t been done elsewhere.”
But Jaeger can see the concept taking off elsewhere around the Golden State. “We are working on programs to incentivize developers to build market-rate housing that can then have the option of converting into workforce housing,” he says.
More than $400 million in capitalization has been raised through bonds, and three conversion developments have been announced with 650 rental units among them.
The joint venture, called Standard-Faring Essential Housing, consists of “the partnership of two firms that are a combination of what it takes to produce quality workforce housing in California,” he says.
“Faring is an industry leader in Southern California in entitlement and land development, and Standard Communities is an industry leader in providing quality affordable and workforce housing across California.
“We have known each other for a long time,” he adds.
Huge Need for Education and Development
“There’s a huge need to educate cities and city planning departments, which really coincides with the development expertise of Faring, combined with Standard Communities’ ability to execute and bring about affordable housing,” he says.
Why the emphasis on workforce housing? “The need is enormous,” Jaeger explains. “The need is almost larger than the need for affordable housing, just because the incomes we’re targeting here are between 80 percent and 120 percent of AMI and that’s really one of the most underserved populations in the state.”
The effort is aimed primarily, but not exclusively, at “the public workers of California: teachers, firemen, police and other workers that are just above the bandwidth of affordable housing and are struggling to find first homes and affordable rental properties in the state,” Jaeger notes.
“By focusing on middle-income housing, California cities can ensure that essential workers, such as first responders, hospital and healthcare staff, and teachers, can afford to live near their jobs in the communities they serve,” says Jaeger.
Seniors, as well as workers may benefit, the executive notes.
“We would like some of it to target seniors as well. There’s no reason we can’t target them under this program,” according to Jaeger.
Initial developments in the project include Link Apartments in Glendale and Renaissance at City Center and Union South Bay Apartments, both located in Carson. All of these projects have been conversions. Both Glendale and Carson are located in Los Angeles County.
The total number of units in Standard Faring Essential Housing hasn’t really been quantified yet, says Jaeger, who estimates it will be in the thousands over the next 18 to 24 months. Average size of the developments will be more than 150 units apiece. Unit sizes will range from studios to three bedrooms.
A Lot of New Construction Planned
“The projects typically are going to be high-quality new construction projects,” he says, as well as those luxury rehabs, providing residents with the amenities usually found in luxury housing.
What’s the geographic area that will be targeted? “The whole state, focused on infill markets that are struggling with the missing middle,” he says.
Bonds will be the financing mechanism, through multiple agencies, like the California Statewide Development Communities Authority and the California Community Housing Agency.
“Standard is among the very few investors with previous relationships with all of them given our extensive experience in affordable housing,” says Jaeger.
In the May issue of Tax Credit Advisor, Standard Communities’ acquisition and rehab of Foothill Villas Apartments in San Bernardino was featured. This rehab featured an extensive greening of power sources designed to save residents up to $1,000 per month on their utility bills.
Based in New York and Los Angeles, Standard has a national portfolio of more than 11,500 apartment units, including approximately 10,500 affordable and workforce housing units. It has completed more than $3 billion of affordable housing acquisitions and rehabilitations nationwide to date.
Based in West Hollywood, CA, Faring manages projects spanning multifamily, office, retail, hotel, medical office and self-storage properties.
