A long-vacant Riverside Housing Authority property will be sold to Grapevine Development LLC for $1, clearing the way for 10 affordable apartments within a larger mixed-use development.
The City Council, acting as the Housing Authority Board, unanimously approved the sale and development agreement Tuesday following a public hearing that drew no speakers.
The apartments will be built at 2882 Mission Inn Ave. as part of a 64-unit project that includes 54 additional homes on adjoining former redevelopment agency property at 2731-2871 University Ave.
Two of the affordable apartments will be reserved for households earning no more than 50 percent of the area median income. The other eight will be restricted to households earning no more than 60 percent of the area median income. All 10 must remain affordable for 55 years.
Councilmember Sean Mill, who serves on the council's Housing and Homelessness Committee, said committee members had been waiting more than two years for the project to reach the full council.
"It's going to transform underutilized public property into new housing that we most definitely need in the city," Mill said before making the motion to approve the agreement.
Councilmember Philip Falcone said the project provides further evidence that affordable housing is being developed in Ward 1.
"This is again proof that when people come down here and tell us that there's no affordable housing happening in Ward 1 ... that it's fake news, it's misinformation. Ward 1 has the most," Falcone said. "So to all the news agencies in our city that love to share misinformation that we don't build anything ... this is another strike against that because this is proven that it does happen."
The city-owned property is valued at $245,860.76. Selling it for $1 represents a land write-down that city officials plan to count as a local contribution toward the federal HOME Investment Partnerships Program.
The affordable portion of the development is expected to cost about $5.7 million, according to the staff report. Grapevine plans to assemble the funding through a roughly $1.86 million private loan, $2.26 million in low-income housing tax credit equity, $900,000 from the HOME program and $250,000 from the state's Permanent Local Housing Allocation program.
The financing plan also includes a $250,000 deferred developer fee and about $178,000 in equity from Grapevine. Some of the proposed public funding would return to the council for separate consideration.
Councilmember Chuck Conder questioned the project's cost, noting that $5.7 million divided among 10 apartments comes to about $570,000 per unit.
Housing and Human Services Director Michelle Davis said prevailing-wage requirements, consultant expenses, legal fees and the work required to secure multiple funding sources contribute to the development cost.
Councilmember Steven Robillard said the total also reflects the subsidies needed to keep the apartments affordable rather than charging market-rate rents.
The project has been years in the making, according to the city staff report.
Riverside's former redevelopment agency acquired the seven University Avenue parcels in 2006 and the Mission Inn Avenue property on behalf of the Housing Authority in 2008. A single-family home on the Mission Inn property was destroyed by fire and later demolished.
An earlier agreement with a Grapevine affiliate was approved in 2019, but escrow was canceled after the developer failed to submit a required security deposit, according to the staff report.
The city issued a new request for proposals in 2021 and received five submissions. Grapevine was selected as the preferred developer, and a council committee unanimously authorized staff to negotiate with the company in April 2022.
The California Department of Housing and Community Development acknowledged in 2023 that Riverside had complied with state surplus land requirements for the proposed sale, according to city documents.
Under those requirements, the 10 affordable apartments must be completed and receive certificates of occupancy before certificates may be issued for the remaining 54 homes. Construction on the two portions of the project may proceed at the same time, according to the development agreement.
The Successor Agency and the countywide oversight board approved a separate agreement for the University Avenue properties in January, according to the city staff report.
Tuesday's vote completed the agreement needed to transfer the Housing Authority's Mission Inn Avenue parcel and establish the affordability requirements for the 10 units.
Councilmember Clarissa Cervantes recused herself from the vote because of a financial interest involving a campaign donation from an entity tied to the developer.
