Affordable-Housing Project Gets Bankrolled

SAN DIEGO—Wakeland Housing and Development Corp. has closed on $52 million of construction financing from US Bank for Atmosphere, a $79.3-million affordable- and supportive-housing development in Downtown San Diego. The project, set to break ground March 31, is on a site that has been vacant for more than a decade.

The development is composed of studios to three-bedrooms for tenants who earn between 30% and 60% of the area median income. Rent will range from $394 to $1,191 a month, and construction is expected to be complete in February 2017. Suffolk Construction of Boston is the general contractor and Joseph Wong Design Associates is the architect.

US Bank's financing assists Wakeland in developing the 205-unit, 12-story apartment complex, which will include 51 supportive-housing units for individuals with special needs, including formerly homeless, and will have an on-site learning center where residents can access workforce development training and financial literacy workshops. There is also ground-floor space for a small retail store or café that has yet to be leased.

According to Richard Shea, market manager for US Bank's affordable-housing lending division, “Atmosphere provides safe, high-quality housing at what had simply been a vacant lot in Downtown San Diego. It is located in close proximity to stores, public transportation and other resources to help low-income or homeless individuals to integrate into the vibrant surrounding neighborhood.”

Some of the financing will be replaced during development with a $44-million tax-credit equity investment through the community development subsidiary US Bancorp Community Development Corp. to complete a financing package that also includes funding from the San Diego Housing Commission, Civic San Diego, Mental Health Services Act program of the California Housing Finance Agency.

Ken Sauder, president and CEO of Wakeland, says, “Wakeland began working on the development and financing for Atmosphere in 2009, and when the State of California took away redevelopment a few years later, the future of this project became uncertain. Without US Bank's financing in place, coupled with other state and city sources, we wouldn't be breaking ground today.”

Previous developers had attempted to redevelop the project over the years to no avail, according to US Bank. In the mid-2000s, several developers attempted to build condominium projects at the site. The result of these failed attempts was a site with a huge hole that was both an eyesore and a hazard. In 2009, Wakeland entered into a purchase-and-sale agreement and began working with the City of San Diego's redevelopment agency to fill the hole and acquire the property for affordable housing. After the dissolution of redevelopment in California in 2013, the site was transferred to the city's redevelopment successor, Civic San Diego, which worked with Wakeland and other public and private organizations to pave the path for Atmosphere.

Waheed Karim, VP in San Diego for US Bank's affordable-housing lending division, tells GlobeSt.com, “There's tremendous demand for affordable housing in Downtown San Diego—one of the most expensive rental markets in the country. Atmosphere is affordable for working families and low-income individuals and located in a vibrant, amenity-rich neighborhood. It will also have a positive effect on Downtown as a whole by providing a high-quality housing option, coupled with essential supportive services, for homeless or those at risk.”

Karim adds that at US Bank, “we have groups that specialize in and exclusively fund affordable housing projects across the country. We're one of the most active banks in the sector in Southern California. In Downtown San Diego alone, we've committed approximately $400 million in loans and equity investments in affordable-housing projects since 2008.”

As GlobeSt.com reported earlier this month, collaborators on a combination market-rate and affordable residential project under construction in Buena Park, CA, told GlobeSt.com exclusively that CRE should take note of how residential projects can invigorate local economies. Click here to read more on that subject.