Healdsburg City Council members on Monday gave their blessing to an alternative plan to make the development more attractive to developers in today's real estate market.
"We're trying to find a way to move this forward," said City Manager Marjie Pettus of the vacant and incomplete condos on Grant Street just west of the
"When we first approved the development plan for this project, we had no idea the bottom would fall out of the housing market," Councilman Jim Wood said.
"Now we have to react to the current conditions -- this is a way to react," Wood added. "It's important to get this project finished and occupied."
Work on the project stopped in March 2010 after the bank foreclosed on the properties and the former developer declared bankruptcy. So far, 12 of the originally planned 39 units have been built but only two are finished -- the other 10 need interior work,
Under the new plan, the sale price for two moderate-income "affordable" units in Phase I of the development would be lowered by about $140,000 each in order to make them accessible to low-income families.
Healdsburg's Housing Trust Fund will make up the $280,000 difference -- or $140,000 times two -- between the current maximum "affordable" sale price of about $392,400 and the new proposed maximum of $252,300.
Because of the struggling real estate market and lower housing prices, the old "moderate-income affordable" price was not seen as attractive to potential buyers since it is too close to the cost of a market-rate home that would not carry any deed restrictions, said Steve Reilly, a marketing consultant with Land Advisors Organization, a Bay Area company chosen by the project's bankruptcy receiver to work with Healdsburg on attracting a new developer.
"The affordable units have deed restrictions that limit their appreciation," Reilly said. "The bigger the delta is between the affordable units and the market-rate units, the more they are opened up to a wider audience."
As per deed restrictions for the Grant Street Village affordable units, buyers would own their homes but not the land, and they would not be able to sell their homes for a profit.
Land will be owned in perpetuity by the Housing Land Trust of Sonoma County, which will also be in charge of administering the eligibility list and other details of the affordable units.
"In this market, we need to figure out a way to have workforce housing that is thoughtful and current," said Dev Goetschius, the Housing Land Trust's executive director.
"It's really about being present in the moment and making sound economic decisions that ensure that the city is acting in the best interests of the community and also meeting its housing needs," Goetschius said.
Reilly said Monday's approval by Healdsburg City Council of the alternative plan for affordable units clears the way for him to start marketing the project to potential developers.
"I'm going to start a full court press with a goal is to get it in the hands of a developer by the first quarter of 2012," he said. "If that happens, it's possible it could be completed by spring of 2012."