Santa Paula Times

Council splits but okays acting as hearing sponsor for Santa Paulan bond

February 02, 2007
Santa Paula City Council

The Council split after acting as the hearing body for a bond measure tied to housing area low-income seniors.

By Peggy KellySanta Paula TimesThe Council split after acting as the hearing body for a bond measure tied to housing area low-income seniors. The public hearing was on the proposed issuance of up to $10 million in revenue bonds for the purpose of financing the acquisition and rehabilitation of 150-unit Santa Paulan Senior Apartments on Santa Barbara and North 4th streets. The Council had to decide whether or not to act only as a sponsor for the proposal without assuming any financial liability for the bond.Seeking the bond was Cabrillo Economic Development Corporation (CEDC), and a spokesman said that the bond - which would enable CEDC to buy out its partner and make some improvements - would assure affordability of the units for 55 years. The city brokered a deal for CEDC to provide $16,000 in lieu of property tax lost annually due to the nonprofit status of the project.The Santa Paulan, completed about 15 years ago, offers two-bedroom, one-bedroom and studio apartments at the complex that features a swimming pool and community room. The Council considered the issue at the January 16 meeting.Councilman Ralph Fernandez said he was concerned with the approximately $9 million bond, which would represent $150,000 per unit. “I did some numbers myself” to find how the numbers were determined, he noted. “I don’t think you can buy a $150,000 unit in Santa Paula.”A CEDC representative said that the Santa Paulan is not classified as market rate because of its deed restrictions and rental rate capped at 50 percent to 60 percent of area median income. “If it was a private apartment complex it would be a different” type of transaction, noted City Manager Wally Bobkiewicz.“It still takes city services to maintain it even through it’s not market rate,” and if the complex was market rate the city would receive the property tax cut anyway, said Fernandez, who urged caution about generating revenue that would cover the cost of services.“Up to this point, the project hasn’t generated any funds” returned to the city, said Bobkiewicz.
“I hate to refer to my previous life,” but Councilman Bob Gonzales, the former police chief, noted that the Santa Paulan “used a significant amount of public service” from the police and fire departments. In addition, “This facility came to light to the Council” from tenants who complained of a rent increase. Gonzales said he heard that rents had been increased to market rate.Rents are increased each year, said the CEDC representative, including the most recent 3.5 percent increase. For tenants utilizing Section 8 the agency assumed the increases, said Karen Flock of CEDC, and there were no vacancies due to the boost.Several Santa Paulan residents addressed the Council and urged that they adopt the measure. “If CEDC does not stay with us” and provide affordable housing, “there’s going to be a lot of folks in serious trouble,” noted one.Councilman Dr. Gabino Aguirre noted that the issue is a “very simple policy question... do we continue to take care of those who require and need” affordable housing. CEDC has agreed to help offset the city’s loss of property tax revenue, and Aguirre noted that, as a nonprofit, CEDC could not use profits, as would a private company. “We are talking about low income and seniors,” said Aguirre.Gonzales questioned the city receiving $16,000 and not the $18,000 based on the appraisals.“This is heading for a no vote,” said Mayor Ray Luna before he called for a break. Back in session, CEDC offered to raise the PILOT to $18,000 annually.Gonzales said he is “sensitive” to senior housing issues, but “some have said that CEDC got a big office somewhere else,” and he urged in the future that “CEDC come to the plate and hit a homerun,” and provide even more funding to offset services.The Council voted 4-1 to sponsor the bond, with Fernandez casting the lone nay vote.