The Fresno City Council has conditionally approved by consent agenda on Thursday a nearly $6.2 million loan for a proposal by developers Ed Kashian and Sal Gonzales to bring new affordable housing units to the Fancher Creek area.
FCTC Family LP — represented by Gonzales and Kashian, according to city documents — proposed building 120 multifamily apartment units in southeast Fresno, called Sarah’s Court Apartments, that would be dedicated affordable housing for at least 55 years, through the state’s Low Income Housing Tax Credit program.
The LIHTC program provides developers tax credits that they can then sell to the private market to help fund the project and subsidize lower rents, typically for those who make 60% or below the area median income. Those who buy the credits receive a tax write off.
But the process for getting the tax credits is very selective as the state awards a limited number each year. Typically, projects that are selected must show a funding commitment from local governments as well, according to Phil Skei, assistant director of Planning and Development for the city of Fresno.
The city’s commitment of up to $6.18 million, through a 55-year term loan with an annual interest rate of 3%, is conditional on the developer’s project receiving low income housing tax credits from the state. Otherwise, the deal is off.
The city had made a conditional commitment of up to $3 million in June 2021 to the same project, so the developers could apply for the tax credits in July, but the project did not receive the tax credits in that round.
The developers then sought the nearly $6.2 million — a higher financial commitment from the city — in order to be more competitive. This new loan amount would increase the cost per unit to roughly $50,000 compared with the previous commitment of roughly $25,000 per unit.
Skei said one of the scoring criteria for LIHTC applicants is the level of funding commitments from local governments.
“One of the places where the city of Fresno could make a difference in sort of swinging the scales,” Skei said. “is by increasing our local commitment within reasonable parameters in order to help that applicant get awarded, and ultimately get that project built in our community ASAP.”
The new round of applications for tax credits is due in March.
The $6.18 million would come from the city’s HOME Investment Program and Permanent Local Housing Allocation funds. According to city documents, the project at 200 N Salma is one of four developments that was approved in June 2021 to receive money from those funds.
Over the past year, the city has committed millions of dollars towards more affordable multifamily housing in the city by providing funding for projects such as The Link and The Clinton Avenue Apartments. The city also committed money to the development of affordable single family homes as well.
Kashian and Gonzales could not be reached for comment as of Friday afternoon.