EXECUTIVE SUMMARY
HOUSING COMMISSION
EXECUTIVE SUMMARY SHEET
MEETING DATE: October 16, 2020 HCR20-096
SUBJECT: Preliminary Bond Authorization for Fourth Corner Apartments
COUNCIL DISTRICT(S): 9
ORIGINATING DEPARTMENT: Real Estate Division
CONTACT/PHONE NUMBER: Colin Miller / 619-578-7429
REQUESTED ACTION:
Take the initial steps to issue Housing Authority of the City of San Diego tax-exempt
Multifamily Housing Revenue Bonds and taxable bonds to facilitate the construction of a new 75
-unit affordable housing development at 4021, 4035, 4037 and 4061 Fairmount Ave (Fourth
Corner Apartments). Once completed Fourth Corner Apartments will comprise 75 units
(including a manager’s unit) that will remain affordable for families earning between 30% and
60% of the area median income, and remain similarly affordable for 55 years.
EXECUTIVE SUMMARY OF KEY FACTORS:
• The proposed development is a 75-unit, transit oriented, affordable family rental housing,
new construction project that will located at 4021, 4035, 4037 and 4061 Fairmount Ave
street in the City Heights neighborhood of Council District 9.
• The development includes 55 two bedroom and 20 three bedroom apartments. All units
(excluding the manager’s unit) restrict rents to 30 – 60 percent of San Diego Area
Median Income.
• Wakeland Housing and Development Corporation is the developer, and is seeking
preliminary approvals to issue up to $27,000,000 in tax-exempt Multifamily Housing
Revenue Bonds and up to $5,800,000 of taxable bonds.
• No Housing Commission loan proceeds will be provided to this development.
• Total development cost of the development is $40,519,820.
• Staff requests the Housing Commission Board recommend to the Housing Authority
approval of the following steps:
o Issue a bond inducement resolution for up to $27,000,000 in Multifamily Revenue
Bonds and $5,800,000 of taxable bonds, totaling $32,800,000.
o Authorize an application to the California Debt Limit Allocation Committee.
o Approve a financing team of Squire Patton & Boggs as Bond Counsel and Ross
Financial as Financial Advisor.
o Request the City Council hold a Tax Equity and Fiscal Responsibility Act public
hearing to adopt a resolution approving the issuance of the tax-exempt bonds.
• If approved, the developer could commence construction in July 2021 and complete
construction by December 2022.
Item 102
REPORT
DATE ISSUED: October 8, 2020 REPORT NO: HCR20-096
ATTENTION: Chair and Members of the San Diego Housing Commission
For the Agenda of October 16, 2020
SUBJECT: Preliminary Bond Authorization for Fourth Corner Apartments
COUNCIL DISTRICT: 9
REQUESTED ACTION
Take the initial steps to issue Housing Authority of the City of San Diego tax-exempt and taxable
Multifamily Housing Revenue Bonds to facilitate the construction of a new affordable housing
development at 4021, 4035, 4037 and 4061 Fairmount Ave. (Fourth Corner Apartments) in the City
Heights neighborhood, which will consist of 74 units affordable for 55 years for low- and extremely
low-income families and one unrestricted manager’s unit.
STAFF RECOMMENDATION
That the San Diego Housing Commission (Housing Commission) recommend the Housing Authority of
the City of San Diego (Housing Authority) and the San Diego City Council (City Council) take the
following actions, as described in this report.
Housing Authority:
1) Approve the following preliminary steps to issue Housing Authority tax-exempt Multifamily
Housing Revenue Bonds to facilitate the construction of a new affordable housing development
at 4021, 4035, 4037 and 4061 Fairmount Ave. (Fourth Corner Apartments) in the City Heights
neighborhood, which will consist of 74 units affordable for 55 years for low- and extremely low-
income families and one unrestricted manager’s unit:
a. Issue a bond inducement resolution (Declaration of Official Intent) for up to $27,000,000 in
tax-exempt Multifamily Housing Revenue Bonds and up to $5,800,000 in taxable bonds
supporting the development of Fourth Corner Apartments by a limited partnership formed by
Wakeland Housing and Development Corporation;
b. Authorize an application (and subsequent applications, if necessary) to the California Debt
Limit Allocation Committee (CDLAC) for an allocation of authority to issue tax-exempt
private activity bonds in an amount up to $27,000,000 for Fourth Corner Apartments; and
c. Approve the financing team of Squire Patton & Boggs as Bond Counsel and Ross Financial
as Financial Advisor; and
2) Authorize the Housing Commission’s President & Chief Executive Officer (President & CEO), or
designee, to execute any and all documents that are necessary to effectuate the transaction and
implement these approvals in a form approved by General Counsel and Bond Counsel, and to take
such actions as are necessary, convenient, and/or appropriate to implement these approvals upon
advice of General Counsel and/or the Bond Counsel.
It
em 102
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 2
City Council:
Hold a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing and adopt a resolution
approving the issuance of Multifamily Housing Revenue Bonds in an amount up to $27,000,000 to
facilitate the development of Fourth Corner Apartments.
SUMMARY
A development summary is included as Attachment 1.
Table 1 – Development Details
Address
4021, 4035 4037, 4061 Fairmount Ave.
Council District
Council District 9
Community Plan Area
City Heights Area Planning Committee
Developers
Wakeland Housing & Development
Corporation
Development Type
New Construction
Construction Type
Type IA and Type VA
Parking Type
67 spaces
Housing Type
Affordable Transit-Oriented Development,
Family
Lot Size
23,766 square feet
Units
75
Density
137 units/acre
Unit Mix
55 two-bedroom, 20 three-bedroom
Gross Building Area
128,048 square feet
Net Rentable Area
74,343 square feet
The Development
Fourth Corner Apartments is a 75-unit, transit-oriented, new construction, affordable housing
development, located on a 23,766-square-foot lot incorporating 4021, 4035, 4037 and 4061 Fairmount
Ave., San Diego, CA 92105. The development is a partnership between Wakeland Housing and
Development Corporation, an experienced San Diego-based developer of affordable housing, and Price
Philanthropies, a San Diego-based philanthropy focusing on improving the lives of City Heights residents.
A vacant commercial building is on one of the subject lots (4061 Fairmount Ave.), which will be
demolished as part of the development.
Once completed, Fourth Corner Apartments will be composed of 75 rental units in a single wood-frame
structure, sitting atop a first-floor concrete and steel parking structure. Fourth Corner Apartments will
continue The Price Charities’ focus on larger units, with bedroom accommodations for the larger family
sizes common in San Diego’s center city. Fifty-five of the units will feature two bedrooms, and the
remaining 20 will feature three bedrooms. Of the 75 units, 74 will remain affordable for 55 years to low-
and extremely low-income families with income between 30 percent and 60 percent of San Diego Area
Median Income (AMI). Construction types will include Type 1 concrete and steel on the first floor,
supporting four stories of wood-frame construction.
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 3
The project site is located near the intersection of Fairmount and University Avenues in the heart of City
Heights. Within a 10-minute walk are The Price Charities Building, a seven-story office complex, the
County of San Diego Administration Building and multiple nonprofit and public agencies providing
medical, dental, youth-oriented, public benefit supports and other services to households with low or
moderate income. Nearby amenities include multiple restaurants, grocery stores, pharmacy options, the La
Maestra Community Health Clinic, Rosa Parks Elementary School, The City Heights Recreational Center,
and the public library.
Because the development site is adjacent to or within a short walk of several major bus lines, including the
San Diego Metropolitan Transit System’s (MTS) Rapid I-15 express service, residents will be encouraged
to incorporate mass transit as part of their transportation plans. Developers plan to include 67 parking
spaces for its 75 apartment units.
Project Sustainability
Fourth Corner Apartments will be built as Green Point Rated with an anticipated Gold Rating standard
and will comply with the CTCAC minimum energy efficiency construction standards for new
construction. The project’s features will include: Energy Star-rated efficient appliances, dual-glazed
windows coated for limited solar heat gain, low-energy lighting, HVAC systems that utilize energy
efficient heat pumps, use of Low Volatile Organic Compound (VOC) paints and stains for interior
surfaces, and the roof design is focused on optimizing square footage to allow maximum area to install
the Solar Photovoltaic system. The designed Solar Photovoltaic system is intended to offset the house
load, including all or part of domestic hot water. Water conservation will be promoted via low-water-use
fixtures in kitchens and bathrooms, low-flow toilets, and low-water- use native-plants landscaping with
water-efficient irrigation controls
Development Team
The development team will be led by Wakeland Housing and Development Corporation, a nonprofit
developer founded in San Diego in 1998. The project sponsor is Wakeland Price Fourth Corner LP,
whose managing general partners is Wakeland Price Fourth Corner LLP, a subsidiary of Wakeland
Housing and Development Corporation (Wakeland).
Wakeland currently has more than 5,600 units of affordable housing in its portfolio in 40 communities
throughout California. The Housing Commission has worked with Wakeland on several successful
projects. Recently completed projects include the 44-unit Beacon Apartments, 205-unit Atmosphere
apartments, and the 132-unit scattered sites City Heights Ten rehabilitation project.
A Developer Disclosure Statements for Wakeland is provided as Attachment 3.
Wakeland plans to use Dess Partners as the architects and Sun Country Builders as the general
contractor. Dess Partners is an architecture firm with a track record of completing multifamily
residential, mixed-use, commercial, and historic infill developments in San Diego. Recent projects
include Kalos Apartments and the 10
th
and B project. Founded in 1979, Sun Country Builders is an
experienced, Carlsbad-based builder of multifamily housing. They are a frequent general contractor
partner for affordable housing developers across Southern California and have extensive experience
working with low-income housing tax credits and tax-exempt bond-financed developments.
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 4
Fourth Corner will be managed by ConAm Management Corporation (ConAm). Established in 1975,
ConAm is a nationwide management company with a management portfolio of approximately 53,000
units in more than 26 metropolitan areas. ConAm is experienced in property management, marketing,
leasing, maintenance, renovations, and tax credit developments. ConAm manages 34 developments for
CHW. CHW’s Asset Management Department will oversee ConAm.
Other members of the development team, including the administrative general partner, the tax credit
investor, any limited partners, and the construction lender, will be determined prior to final bond
approval and the close of construction finance as required.
Table 2 - Development Team Summary
ROLE
Developers
Owner/Borrower
Managing General Partner
Administrative General Partner
Tax Credit Investor Limited Partner
Architect
General Contractor
Property Management
Construction and Permanent Lender
Financing Structure
The Fourth Corner Apartments development has an estimated total development cost of $40,519,820.
Financing for the project will include Multifamily Housing Revenue Bonds, private bank debt, 4 percent
federal low-income housing tax credits, a land contribution from Price Charities, and a $14,250,000
contribution from Price Charities.
No Housing Commission loan proceeds will be provided to this development.
Estimated permanent sources and uses of financing are provided in Table 3. The developer’s project pro
forma is provided as Attachment 4.
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 5
Table 3 – Fourth Corner Apartments Estimated Sources and Uses of Financing
Financing Sources
Amounts
Financing Uses
Amounts
Per Unit
Permanent Loan
$8,798,000
Land acquisition:
$4,330,000
$57,733
4% Tax Credit Equity
$13,321,820
Construction costs
$25,594,764
$26,927,388
Contingency
+ $1,332,624
$359,032
Total construction
$26,927,388
Price Charities
Contribution
$14,250,000
Financing costs
$2,115,058
$28,201
Price Charities Land
Donation
$4,150,000
Other soft costs
$3,337,711
$44,503
City permits and
impact fees
$2,145,000
$28,600
Developer’s fee
$1,400,000
$18,667
Reserves
$264,663
$3,529
Total Sources
$40,519,820
Total Uses
$40,519,820
$540,264
Developer Fee
The planned net cash developer fee shall be $1,400,000 in compliance with CTCAC and CDLAC
regulations.
On April 25, 2017, the Housing Authority approved the “Request for Approval of Updated Developer
Fees” (Report No. HAR17-011; Resolution No. HA-1727). That report approved certain developer fee
guidelines for multifamily loans and bond issuances. Attachment 1 to that report stated: “Developer Fee
[for] 4% tax credits, in project costs: 15% eligible basis….” The developer is proposing a $2,840,281
preliminary developer fee associated with the residential portion of development, which complies with
HAR17-011. The proposed fee is in conformance with the “Request for Approval of Updated Developer
Fees” guidelines approved by the Housing Authority on April 25, 2017.
Prevailing Wages
The proposed project is not subject to payment of state or federal prevailing wages.
Development Cost Key Performance Indicators
Housing Commission staff has identified development cost performance indicators, which were used to
evaluate the proposed development. The key performance indicators listed in Table 4 are commonly
used by real estate industry professionals and affordable housing developers.
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 6
Table 4 – Key Performance Indicators
Development Cost Per Unit
$40,519,820 ÷ 75 units
$540,264
Housing Commission Subsidy Per Unit
NA
$0
Acquisition Cost Per Unit
$4,330,000 ÷ 75 units
$57,733
Gross Building Square Foot Hard Cost
$26,927,388 ÷ 128,048 SF
$210
Net Rentable Square Foot Hard Cost
$26,927,388 ÷ 74,343 SF
$362
Project Comparison Chart
Multiple factors and variables influence the cost of developing multifamily affordable housing,
including but not limited to project location, site conditions, site improvements needed, environmental
factors, land use approval process, community involvement, construction type, design
requirements/constraints, economies of scale, City impact fees, developer experience and capacity, and
amenities necessary to gain tax credit approval.
Table 5 shows a comparison of the subject property and other developments of the same construction type.
Table 5 – Comparable Development Projects
Development
Year
Construction
Type
Unit
Prevailing
Wage
Total
Development
Cost
Per Unit
TDC
SDHC
Subsidy
Gross
Building
Hard
Cost per
Square
Foot
Subject –
Fourth Street
Apartments
2020
V over I
75
No
$40,519,820
$540,264
$0
$210
East Block
Family
2019
III
78
Yes
$41,579,692
$533,073
$0
$214
Keeler Court
2019
V
71
Yes
$35,692,466
$575,941
$0
$304
Ulric Street II
2020
V
60
Yes
$32,004,521
$533,409
$67,9177
$301
Factors having an upward effect on the residential cost per unit for Fourth Corner Apartments include
higher construction costs tied to its infill location within a dense urban area, the relatively large size of
the units (150 square feet larger than TCAC minimums), greater than average number of bedrooms per
unit, and parking accommodations that exceed regulatory requirements to address community concerns .
Despite these factors the gross building hard cost per square foot compares favorably with similar recent
developments.
Proposed Housing Bonds
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 7
The Housing Commission utilizes the Housing Authority’s tax-exempt borrowing status to pass on
lower interest rate financing (and make 4 percent low-income housing tax credits available) to
developers of affordable rental housing. The Housing Authority’s ability to issue bonds is limited under
the U.S. Internal Revenue Code. To issue bonds for a development, the Housing Authority must first
submit an application to CDLAC for a bond allocation. Prior to submitting applications to CDLAC,
developments are brought before the Housing Commission, Housing Authority and City Council.
Housing Authority bond inducement resolutions must be obtained prior to application submittal, and
City Council TEFRA resolutions must be secured no later than 30 days after application submittal.
These actions do not obligate the Housing Authority to issue bonds.
The developer plans to submit a bond allocation application to CDLAC in November 2020 for a January
2021 bond allocation meeting; however, if necessary, staff will submit additional applications to
CDLAC to secure a bond allocation for the development.
The developer will be seeking a CDLAC bond allocation of approximately $23,200,000 The developer
proposes to have the Housing Authority issue the bonds through a tax-exempt private placement bond
issuance. The bonds will meet all requirements of the Housing Commission’s Multifamily Housing
Revenue Bond Program policy and will fully comply with the City of San Diego’s (City) ordinance on
bond disclosure.
The developer proposes that the bonds will be used to provide construction and permanent financing for
the project. Housing Commission staff will later return to both the Housing Commission and Housing
Authority for approval of the final bonds and transaction documents. A general description of the
Multifamily Housing Revenue Bond Program and the actions that must be taken by the Housing Authority
and by the City Council to initiate and finalize proposed financings are described in Attachment 5.
Staff recommends assigning Squire Patton Boggs as Bond Counsel and Ross Financial as Financial
Advisor to work on the development. The proposed financing team members have been selected in
accordance with the existing policy for the issuance of bonds. Financial Advisors and Bond Counsels are
selected in accordance with the Housing Commission’s Bond Policy.
AFFORDABLE HOUSING IMPACT
Under the proposed bond financing, Fourth Corner Apartments would restrict eight units to households
with income at or below 30 percent of the San Diego Area Median Income (AMI), 15 units at or below
45 percent of AMI, 30 units at or below 50 percent of AMI, and the remaining 21 affordable units at or
below 60 percent of AMI. The affordable units will be restricted for a 55-year term.
Table 6 – Fourth Corner Apartments Affordability & Monthly Estimated Rent Table
Unit Type
AMI
Number of Units
Gross
Rents
2BR/2BA
30%
6
$780
2BR/2BA
45%
11
$1,170
2BR/2BA
50%
22
$1,300
2BR/2BA
60%
15
$1,560
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 8
3BR/2BA
30%
2
$901
3BR/2BA
45%
4
$1,351
3BR/2BA
50%
8
$1,501
3BR/2BA
60%
6
$1,802
Manager
NA
1
-
Total Units
-
75
-
Development Schedule
The estimated development timeline is as follows.
Milestone
Fourth Corner
Housing Authority Preliminary Bond Authorization and City
Council TEFRA Hearing
November 10, 2020
Planning Commission Hearing
January 2021
CTCAC/CDLAC application
January 2021
Start Construction
July 2021
Complete Construction
December 2022
FISCAL CONSIDERATIONS
The proposed funding sources and uses approved by this action are not included in the Fiscal Year (FY)
2021 Housing Commission Budget. Approving this action will increase the FY 2021 total budget.
Funding sources approved by this action will be as follows:
Bond Issuance Fees - $82,000 (.0025 bond issuer fee x $,000,000)
Funding uses approved by this action will be as follows:
Administration Costs - $82,000
Approval of the bond inducement and TEFRA resolutions does not commit the Housing Authority to issue
the bonds. The bonds would not constitute a debt of the City. If bonds are ultimately issued for the
development, the bonds will not financially obligate the City, the Housing Authority or the Housing
Commission because security for the repayment of the bonds will be limited to specific private revenue
sources of the development. Neither the faith and credit nor the taxing power of the City or the Housing
Authority would be pledged to the payment of the bonds. The developer is responsible for the payment of
all costs under the financing, including the Housing Commission annual administrative fee, as well as
Housing Commission Bond Council and Financial Advisor fees.
COMMUNITY PARTICIPATION and PUBLIC OUTREACH EFFORTS
On August 3, 2020, the Fourth Corner Apartments project was presented before the City Height Area
Planning Committee. The projected was approved by 15 to 1 vote.
KEY STAKEHOLDERS and PROJECTED IMPACTS
October 8, 2020
Preliminary Bond Authorization for Fourth Corner Apartments
Page 9
Stakeholders include Wakeland Housing and Development Corporation, Price Charities, and the residents
of the City Heights communities. The project is anticipated to have a positive impact on the community,
as it will contribute to the quality of the surrounding neighborhood and create 74 new affordable rental
homes for families with low income.
ENVIRONMENTAL REVIEW
This activity is not a “project” and is therefore not subject to the California Environmental Quality Act
(CEQA) pursuant to State CEQA Guidelines Section 15060(c)(3). This determination is predicated on
Section 15004 of the Guidelines, which provides direction to lead agencies on the appropriate timing for
environmental review. This action does not constitute approval of a project. Approval will occur once the
environmental review has been completed in accordance with CEQA Section 15004. This action will not
foreclose review of alternatives or mitigation measures by the public as part of the CEQA process. The
proposed actions are approval of preliminary steps to issue bonds and do not constitute approval of the
development activity or authorization for the issuance of bonds. Future actions to consider and approve
development entitlement approvals related to the future development of the site will require additional
review under the provisions of CEQA by the lead agency. Processing under the National Environmental
Policy Act (NEPA) is not required as no federal funds are involved in this action.
Respectfully submitted, Approved by,
Kwofi Reed
Jeff Davis
Kwofi Reed Jeff Davis
Housing Programs Manager Executive Vice President & Chief of Staff
Multifamily Housing Finance San Diego Housing Commission
Real Estate Division
Attachments: 1) Development Summary
2) Site Map
3) Developer Disclosure Statements
4) Developer’s Project Sources and Uses Pro forma
5) Multifamily Housing Revenue Bond Program
You may review docket materials in the “Governance & Legislative Affairs” section of the San Diego
Housing Commission website at www.sdhc.org