Arroyo Grande has spent more than $1 million on affordable housing plan. When will it be built?
More than 60 units of affordable housing in Arroyo Grande got a step closer to construction Tuesday evening.
The Arroyo Grande City Council voted to give the Housing Authority of San Luis Obispo $630,000 from the Affordable Housing Trust Fund to pay for rising project costs on a planned 63-unit affordable housing complex at 700 N Oak Park Boulevard
Located across the street from A.J. Spurs at the corner of North Oak Park Boulevard and El Camino Real, HASLO’s project has been on the receiving end of two grants from the city in the past year, after receiving $448,370 from the city’s Affordable Housing Trust Fund in July 2023.
“I’m just excited about the HASLO project, and also happy that the city of Arroyo Grande can increase the funding through the Affordable Housing Trust Fund,” council member Kristen Barneich said during the meeting. “We do collect these fees, these in-lieu fees, for affordable housing, and so it’s really exciting to see this used for something that’s going to house so many families.”
HASLO executive director Scott Collins said delays of this kind are nothing new in the world of affordable housing, particularly with larger, more expensive projects.
“We were in the queue for tax credits to fund the majority of the project,” Collins said in an email to The Tribune. “We had several other projects that were ahead in the pipeline, including the Morro Bay (Rockview at Sunset), Toscano, Bridge Street Phase 1 and Maxine Lewis projects. It is common for affordable housing projects to take 2-3 years after project approval to pull together the necessary funding.“
Will new funds push project over the finish line?
According to the staff report, the project has been in the approval pipeline for more than three years, gaining approval from the Planning Commission in May 2021.
The project merges a set of lots at the corner of North Oak Park Boulevard and El Camino Real to make a lot large enough to make room for a set of three residential buildings.
The buildings will contain 30 500-square-foot one-bedroom units, 17 750-square-foot two-bedrooms units and 16 950-square-foot three-bedroom units, and will serve households with an annual income at or below 80% of San Luis Obispo County’s median income, according to the 2021 staff report
Project amenities include a 1,342 square-foot community room and 1,178 square feet of commercial space, along with 83 parking spaces and four motorcycle parking spaces.
Collins said in total, the project will cost around $38.9 million, drawing its funding from donations, HASLO’s own fund and tax credits.
The initial $448,370 the city gave to the project in 2023 was used to fully pay for permitting costs, including the site plan review, inspection, utilities, development impact fees and state mandated fees, according to the staff report.
However, the project has been in limbo the past three years as inflation pushed construction and labor costs higher, moving the goalposts for how much time and money would be needed to finish the project, Collins said.
While the most recent disbursement of $630,000 will significantly close the funding gap the project has faced since 2021, it’ll also help HASLO apply for Low Income Housing Tax Credit funding from the state, which prioritizes sharing state funds with projects that receive local financial backing, according to the staff report.
“Since receiving a tax credit award and construction bids, there is a $1.7M gap,” Collins said in an email. “The gap is driven by tax credits value being lower than expected, and the cost of construction being higher than anticipated.”
Though the contribution will cut the balance of the city’s Affordable Housing Trust Fund from $858,000 to $228,000, the city has only received one other recent request for funds from the trust since 2017, and no other current projects are eligible for the funding, according to the staff report.
What happens next?
Collins said HASLO will cover remaining project costs with its own funding. The organization must approve the project no later than Nov. 20 to secure additional tax funding, according to the staff report.
With the tax funding deadline approaching, HASLO intends to close on the project soon and begin construction in early December, Collins said.
