Modesto seeks $3.8M from state for apartments for low-income homeless youth

Modesto will ask California for nearly $3.8 million for the purchase, rehab and other costs associated with turning a downtown office building into a 14-unit apartment complex for low-income young people who are homeless or at risk of being homeless.

The City Council at its Tuesday meeting voted to submit Modesto’s application to the California Department of Housing and Community Development’s Project Homekey, one of the state’s initiatives to house homeless or at-risk people.

The council vote was 5-0. Councilwoman Jenny Kenoyer was not at the meeting, and Councilman David Wright, an insurance broker, recused himself out of an abundance of caution because one of the insurance companies he represents insures the office building.

Gov. Gavin Newsom announced Sept. 9 the project’s second round, which provides $1.45 billion to house people, including grants to local governments to purchase and convert hotels, motels, vacant apartment buildings and other properties into permanent housing.

Modesto is assured of funding as long as its application scores high enough.

The state evaluates applications on such factors as a property’s proximity to services including bus lines and grocery stores. Modesto Community Development Manager Jessica Hill said the city should know within 45 days of submitting its grant whether the state will fund it.

Modesto is partnering with the Center for Human Services on its Project Homekey application. CHS operates two emergency shelters for young people. It would own the building and provide residents with services such as counseling and help finding employment. CHS would hire a property manager for the building.

Ex-councilman one of the owners

The building is at 1208 Ninth St., is 7,446 square feet, and would be converted into five one-bedroom and nine studio apartments. The property manager would live in one of the apartments.

Former Councilman Brad Hawn and his wife are one-third owners of the property. They and two other couples bought it in 2004. Hawn serves on boards that work to reduce homelessness and has worked with Modesto and other local governments and nonprofits on projects to reduce homelessness.

The consultant the state is providing the city to help it apply for Project Homekey funding told The Bee in December that she did not see a problem with the Hawns’ ownership because the city would get a third-party independent appraisal for the building, the state funding would cover no more than the property’s appraised value, and Hawn is not the project’s decision maker.

Center for Human Services Executive Director Cindy Duenas brought the building to the city’s attention. Duenas has said the property is ideal because of its proximity to services, its history of serving young people (the county had operated a youth drop-in center there) and it’s the right size for CHS’s first permanent housing project.

City providing $500,000 for project

Modesto’s breakdown of project costs includes $780,000 to acquire the building, $90,000 for predevelopment costs, $2.22 million for the rehab of the building and $500,000 for contingencies. The city also is seeking $706,500 to subsidize the building’s operations over several years.

The subsidies can be used to pay utilities, maintenance, management fees, taxes, licenses and for supportive services for the residents, according to information on the Department of Housing and Community Development’s website.

Modesto also is lending the Center for Human Services $500,000 for the project from its Permanent Local Housing Allocation. The allocation is state money the city receives for affordable housing.

The Center for Human Services on Thursday was awarded a $914,00 allocation from the Stanislaus Community System of Care toward subsidizing the project’s operating costs. The system of care’s members include local governments, nonprofit organizations and homeless service providers.

The project is for people 18 to 25 years old whose income is no more than 30% of the area median income. For instance, that is $15,000 for a one-person household, according to the presentation at Tuesday’s City Council meeting.

The rents would be subsidized to ensure they are affordable, and the project is required to remain affordable housing for 55 years. Potential residents would have go through the local coordinated entry system, which helps people who are homeless through assessing their needs and referring them to services.

‘A really good direction’

Duenas said the project could provide housing for up to about two dozen people, from a single person to a couple to a single parent with a child.

Hill told council members that Modesto expects to submit its application Jan. 31 to meet the deadline for early applications and expects to be notified that the project will be funded by March 17. The state has an aggressive timeline for Project Homekey. Hill said construction would start March 17 and be completed within eight months.

“I really like this project,” Councilman Chris Ricci told Hill at Tuesday’s council meeting. “This is a really good direction. Excellent work. My question is are there other opportunities for us to take advantage of with this sizable grant opportunity out there? We have this unfathomable (gulf) of need for this, for housing.”

Hill said city staff members are working with affordable housing developers who want to partner with the city on another Project Homekey application. And she said the city is vetting two potential project sites.