Petaluma approves additional funds for low-income senior housing

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Petaluma officials agreed this week to allocate additional dollars to the only affordable housing project in the city’s pipeline, more than doubling their outlay in a development that has suffered setbacks due to the ever-growing challenges facing the construction economy.

The Petaluma City Council on Monday moved forward on a $1.5 million commitment that would help PEP Housing close a funding gap for its forthcoming project at 951 Petaluma Blvd. South.

Citing increasing costs, many of which have been attributed to labor shortages, rising tariffs and growing demands during a housing crisis that was aggravated by destructive wildfires, PEP executive director Mary Stompe said their building estimates jumped by over $2 million in one year.

Thanks to the council’s support this week, the project can move forward, she said, with construction for the $26.7 million project starting in October.

“This will truly be a beautiful home for 53 veterans and seniors with our very first wellness center, a dog run, beautiful views of the Petaluma River, a spectacular community room and much more,” Stompe said in a statement. “This project has been 13 years in the making, and it’s finally becoming a reality.”

The nonprofit, which provides low-income housing for seniors, is building a 54-unit development on a 1.3-acre city-owned property along the Petaluma River. The complex, known as River City, will be Petaluma’s first permanent housing project for senior veterans.

To support PEP, the council turned to returns from housing loans on previous projects as the primary funding source. By the start of the next fiscal year in July, the city will have a $906,000 balance of HOME funds, which is a federal assistance program through the U.S. Department of Housing and Urban Development.

The source of the remaining $594,000 was not finalized this week, but the council was agreeable to using some of its projected $2.3 million balance of in-lieu fees to complete the request. The fees are collected from housing developers that don’t designate at least 15 percent of their property for affordable units.

The city has already invested approximately $1.4 million in the venture, which is derived primarily from land value, said Housing Administrator Sue Castellucci.

PEP was selected out of three candidates in a search for affordable housing projects in spring 2017.

“I am so thankful that the council supported our funding request and our project can move forward,” Stompe said.

Arriving at this week’s commitment was not easy, though. At a hearing last month, several council members were wary of a hasty approval, concerned that a rare transfer of additional dollars might deplete the city’s limited housing funds, and strain fiscal partnerships with other local nonprofits.

Stompe was critical of the staff report published in advance of the Feb. 25 meeting, claiming that updated financial documents and key details had been left out.

As a result, the council held off on OKing the transfer that night, leaving PEP with weaker applications as deadlines for federal subsidies approached.

With PEP’s project progressing toward construction, city officials are looking ahead to additional discussions on housing this year.

In addition to policy talks at the council’s goal-setting session next month, the city is pursuing a settlement with the Department of Finance that could return nearly $2.7 million in affordable housing funds.

Some $1.7 million of restricted in-lieu funds are also being negotiated for with the State Controller’s Office. Both sums are tied to the contentious end of redevelopment agencies.

“The bigger question now is what are we doing next?,” Councilman Kevin McDonnell said. “(The city) has a nice balance on several dollar values, and they decline in value as we don’t expend them. If we have our operating monies for each of the various operating needs secure, I think we really have to get on the future (projects today).”

(Contact News Editor Yousef Baig at or 776-8461, and on Twitter @YousefBaig.)

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