'A Huge Need for Affordable Housing' in Bay Area

The largest projects underway include Valencia Gardens in San Francisco's Mission District and Easter Hill Housing in Richmond. Cinnabar Commons, a 245-unit affordable family apartment complex in San Jose, is slated for completion in December.

By Mary Forgey

Despite the growing gap between rising wages and rising home costs, there are some bright spots in the affordable-housing construction arena in the Bay Area.

Valencia Gardens, a $48.3 million affordable family and senior housing project will replace 246 dilapidated and blighted housing units with 260 affordable homes for low-income families and seniors. The project should be completed next summer (photo courtesy of Nibbi Bros.).

Nibbi Bros., a San Francisco-based general contractor, has completed several projects, including North Beach Place, a 341-unit affordable housing project in the Lower North Beach area that was built last year as a joint project with San Francisco-based Cahill Contractors. The project was designed by Barnhart Associates and Full Circle Design, two San Francisco-based firms.

"North Beach Place was a horrible old housing project," said Joe Olla, Nibbi's director of business development. "Now it is a beautiful [mixed-use] community with a Trader Joe's on the ground level."

Affording a home in the costly Bay Area is becoming even more difficult as the economy continues to improve. In fact, San Francisco is the nation's most expensive city for housing, according to San Francisco City and County's new Consolidated Plan.

Only 13 percent of people living in the Bay Area can afford to buy a median-priced home, which is currently about $677,850 and has been rising every month, said Leslie Appleton Young, the chief economist for the California Association of Realtors. These prices, combined with other factors, have created "a huge need for affordable housing in the Bay Area," she added.

Current projects

Nibbi broke ground in March in San Francisco's Mission District on Valencia Gardens, a $48.3 million affordable family and senior housing project. The development will replace 246 dilapidated and blighted housing units with 260 affordable homes for low-income families and seniors. The homes will include 20 one-bedroom units, 98 two-bedroom units, 88 three-bedroom units and 14 four-bedroom units.

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The development will include a community center, learning center with a multipurpose room, computer lab, day-care center and space for property management. The project should be completed in summer 2006.

Plaza Apartments, a nine-story low-income housing project on Howard Street in San Francisco, is another Nibbi project under way. The $16.5 million mixed-use, low-income housing development is being run by the Public Initiatives Development Corp., a nonprofit development subsidiary of the San Francisco Redevelopment Agency. The architecture team for the project includes two San Francisco-based firms: Leddy Maytum Stacy Architects and Paulett Taggart Architects. Plaza Apartments is considered a supportive housing project, which means that some long-term housing for qualified homeless people will be offered, Olla said.

Meanwhile, R.D. Olson Construction, an Irvine-based general contractor, broke ground late last year on a $21 million affordable housing project in Fremont. Maple Square Apartment Homes was designed by Irvine-based KTGY Group and will be a 132-unit, Craftsman style project in the Centerville neighborhood of Fremont. The project is expected to revitalize what is considered a lackluster section of the neighborhood, said Tommy Marcum, R.D. Olson's project manager.

"There is a real need for this type of housing," Marcum said. "These jobs can be straight-ahead work. This one is, so far. They don't have to be more difficult. But, we're just pouring foundations and slabs, so things could change."

US Properties Fund, a Roseville-based general contractor, has begun construction on Avian Glen Apartments, an 87-unit residential rental community in Vallejo. Irvine-based KTGY Group Inc. is the project architect. Foster City-based Wilsey Ham Engineering is civil engineer and Ripley Design Group Inc. in Walnut Creek is the landscape architect.

Plaza Apartments, a nine-story low-income housing project on Howard Street in San Francisco, is a $16.5 million mixed-use, low-income housing development of the Public Initiatives Development Corp., a nonprofit development subsidiary of the San Francisco Redevelopment Agency (photo courtesy of Nibbi Bros.).

Affirmed Housing Group, headquartered in San Diego, is the developer of the $23 million project, slated for completion next month. The apartments will provide about 80,000 sq. ft. of affordable housing to Vallejo's workforce earning 30-60 percent of the area's median income. The hillside complex consists of 11 one-bedroom, 39 two-bedroom and 37 three-bedroom apartments. The two-story Craftsman-style buildings feature wood framing and tuck-under parking garages. Additional on-site parking provides one space for each unit and additional resident and guest parking spaces.

Another Nibbi project currently in progress is Easter Hill Housing, a $65 million neighborhood revitalization project in Richmond in the East Bay. Construction began in April 2004 and should be complete in late 2006. San Francisco-based Michael Willis Architects is the designer. The developers include the Richmond Housing Authority, McCormack Baron Salazar and EM Johnson Interest.

Nibbi has torn down 237 rental units and will build 117 affordable family rentals in phase one of Easter Hill. The entire project will consist of 217 affordable rental units and 84 for-sale homes. There will also be a community/management building, day-care center and outdoor recreation areas and swimming pool. The development will include a community center, learning center with a multipurpose room, computer lab, day-care center and space for property management. The project should be completed in summer 2006.

"This project is unique in that it is not pure rental," Olla said. The project could represent a new trend toward affordable housing projects that include opportunities for home ownership, he added.

In San Jose, Nibbi is also working on Cinnabar Commons, a 245-unit affordable family apartment complex. The $35 million project was designed by San Francisco-based Levy Design Partners and is slated for completion in December.

A business in the black?

Nibbi's Olla said that building affordable housing can be a profitable part of a general contractor's business.

"It's been a good segment of our business, but the prospects are thinning," he said. Financial limitations are affecting the developers, he added. Tax credits are not there anymore, although a recent ruling by the state's Department of Industrial Relations allows some low-income building projects to avoid paying prevailing wages.

Cinnabar Commons in San Jose is a 245-unit affordable family apartment complex. The $35 million project was designed by San Francisco-based Levy Design Partners. The general contractor, San Francisco-based Nibbi Bros., is scheduled to complete the project in December (photo courtesy of Nibbi Bros.).

Section 8 projects-government-sponsored projects that provide housing for low-income families through a voucher program-seem to have run their course, Olla said. He added that U.S. Department of Housing and Urban Development work is also vastly less than it once was.

Then there are the problems associated with projects that are partly funded by nonprofit organizations or government agencies. There are lots of government requirements that include a mountain of paperwork, and that has driven some contractors out of the field, Olla said.

But, private development is still a force in the low-income market, Olla said, and some contractors know how to capitalize on this. "So, for us, it's still a strong market," he said. "We have been doing this so long that we know the right subs to use to make a project run efficiently."

Despite the challenges, Olla does see a future in affordable housing construction.

"Non-profit developers are smart-they will make things happen," he added.

Changing Regions

Affordable housing is scarce even for families with average incomes.

"Affordable" depends on where you live," said Appleton Young, the chief economist for the state's Realtors association. The high cost of available housing is forcing people to move east of the Bay Area, she added.

"This quest for affordable housing has reinvented Sacramento over the last 15 years," she said.

"It's starting to remake the face of the Central Valley, south of Sacramento all the way to Bakersfield. It has reached maturation in the Inland Empire outside of Los Angeles where you now have a large population that has a diversified economy and provides not only a full spectrum of job opportunities but is actually building higher-end executive housing because the economy has grown to support the housing."

An area's economic growth is attached to family locations, Appleton Young said.

"It's really where the young households can afford to live that determines this growth, and more and more the answer to that question is 'Not in the Bay Area,'" she added.

"I think Sacramento and the Inland Empire are great casebook studies of how powerful the demand for entry-level housing is and how the economy responds around it."