Modesto hopes to land 79-unit house constructing in downtown

For the first time in about a half dozen years and only the second time in about a half century, Modesto could have a major housing development in its downtown.

The city is working with affordable housing developer Visionary Home Builders of California on a six-story building on Seventh Street between I and J streets. The project is next to the Old St. Stanislaus Catholic Church and near the heart of downtown.

The Seventh Street Village project consists of 79 one-, two- and three-bedroom apartments. The ground level would have 5,000 square feet for a Head Start program, community center and leasing office. The developer hopes to land a small grocery selling meat and produce in an additional 5,000 square feet on the ground level. Parking would be on the ground level and second floor.

Modesto officials will ask the City Council at its Tuesday meeting to commit $7 million of the city’s affordable housing money to the project and to apply with Visionary for $50 million from California’s Affordable Housing and Sustainability Program.

The program funds housing that is close to bus routes, bike lanes, rail and sidewalks (and pays for that infrastructure as well) and is near jobs and amenities. The goal is to reduce greenhouse gas emissions by giving people alternatives to driving.

The $50 million breaks down into a $15 million grant to Modesto and a $35 million loan to Visionary.

Modesto would spend $9 million on downtown infrastructure, including sidewalks and bike lanes with shade trees and an upgrade of the bus route that passes by the project.

It would spend $6 million to provide the Altamont Corridor Express with a zero-emission locomotive to replace an older one. ACE is expected to bring Bay Area commuter trains in 2026 to the downtown Transit Center, which is near the proposed Seventh Street Village.

The Affordable Housing and Sustainability Program expects to announce in August the projects it will fund. It has $750 million in its latest round of funding. “I think we will have a competitive application,” interim Community and Economic Development Director Jessica Hill said.

“Visionary has been doing this for a long time,” said Visionary CEO Carol Ornelas when asked about the likelihood of getting funding. She added the state awarded Visionary $43 million this year for two other affordable housing projects.

Ornelas said her Stockton-based nonprofit has been building affordable housing for 40 years. It owns and manages the rental properties. Its website lists 26 what it calls affordable housing communities, primarily in Stockton. Its communities include Almond Terrace in Ceres and Oak Haven Senior Apartments and Oak Leaf Meadows in Oakdale.

Visionary has two more projects in Stockton under construction.

Ornelas said it would need $20 million to $30 million in state and federal tax credits to complete the financing for Seventh Street Village. (Visionary still is determining the project’s final cost.) Construction could start in spring 2024 if Visionary is awarded the tax credits in December and would take 18 months.

Ornelas said Visionary would reapply in March if it is not awarded credits by year’s end. She expects it would receive the credits if it is awarded the $35 million state loan. Investors buy tax credits. Affordable housing projects receive the proceeds, and investors reduce their tax obligations with the credits.

Little housing growth in downtown Modesto

The city has been trying to bring new housing into downtown for years.

The last major development occurred in 2016 when the 49-unit Tower Park Apartments opened at 17th and G streets. The last big development before that dates back to the 1974 opening of Ralston Tower. Both properties provide affordable housing for seniors.

While providing desperately needed affordable housing, Hill said Seventh Street Village would be a catalyst for more housing, including market rate housing. She said the project would prove to other developers that housing works in the city center.

If funded by the state, the Seventh Street Village would have 12 one-bedroom, 35 two-bedroom and 32 three-bedroom apartments. Ornelas said it could be home for about 300 people.

The apartments are for households that make 30% to 80% of what is called the area median income. Ornelas said 16 apartments are for households making 30%, 18 for households at 40%, 17 at 50%, 14 at 60% and 12 for households making 80% of area median income. She said two apartments are for live-in managers.

As an example, Orenlas said for a family of four, the range is from $23,910 annually at 30% of the area median income to $63,760 at 80% of the area median income. She called this workforce housing because the majority of households will have members who are working.

The rents are subsidized through state and federal programs and tenants typically pay 30% of their income for rent.

Ornelas said Visionary is under contract with the owners of the four parcels it needs for the project. One parcel would be set aside as a retention pond with the goal of eventually building more affordable housing. The project totals nearly nine-tenths of an acre.

One parcel has a triplex with two families living in it. Ornelas said they are protected by state law and would be provided with relocation benefits or the option of living at Seventh Street Village if the project moves forward. Another parcel has a closed auto body shop, and the others are vacant.

Road diet replaces street closure plan

Ornelas said she is not aware of any opposition to the project but said there were concerns about closing Seventh Street between I and J for a plaza in front of the building. She said those plans have been scrapped and instead the street will be modified with a road diet, a type of traffic-calming measure that slows cars and encourages walking and bicycling.

“We appreciate the enthusiasm of the community, as well as the city’s,” she said. “There is a need out there for affordable housing. I really feel they (city staff) have taken this head-on. They want housing for Modesto.”

Hill said the city has wanted Visionary to build in Modesto for a number of years. She said the home builder approached the city after it announced in December it had $10.6 million in federal and state funding for affordable housing.

The $7 million for this project is from that. Hill said that so far, no one else has requested the remaining $3.6 million.

Hill has said she believes the $10.6 million is the most the city has ever put together for affordable housing. Modesto hoped that announcing the funding would encourage developers to seek state funding.

This story was initially revealed March 13, 2023, 5:00 AM.