Stretched thin on money for one of its affordable housing projects, the Housing Authority of San Luis Obispo (HASLO) teamed up with Transitions-Mental Health Association (TMHA) to bridge the funding gap.
Despite receiving $2 million in American Rescue Plan Act (ARPA) funds and the city of SLO’s Affordable Housing Fund combined, HASLO paused construction of a 40-unit, low-income housing project at the old Maxine Lewis Homeless Shelter site on Orcutt Road. The Maxine Lewis Apartment project is still short on money because of rising interest rates, soaring construction costs, and diminishing tax credit prices.
“It takes a village to get affordable housing projects to the finish line,” HASLO Executive Director Scott Collins told New Times on Jan. 9.
Hours later, Collins and HASLO had a solution to the money problem from the SLO City Council. In a unanimous vote, the City Council approved reallocating $300,000 from a TMHA affordable housing project to the Maxine Lewis Apartment plan.
In 2022, TMHA received that sum in ARPA funds from SLO for the Palm Street Studios project. TMHA Community Engagement Director Michael Kaplan told New Times that the nonprofit purchased a home with the intention to convert it into eight units of supportive housing for TMHA’s Housing Now program.
“However, we are many months away from beginning the necessary remodel and new construction, and we learned from the city of SLO and HASLO that the Maxine Lewis project might be jeopardized if they were unable to show some matching funds,” he said. “We were only too happy to help our colleagues, as it’s a great project.”
Kaplan added that city staff told TMHA it’ll be first in line for future funding now that the $300,000 grant switched hands.
With the Jan. 22 escrow date on the Maxine Lewis Apartment project fast approaching, HASLO’s Collins said that other streams of money also converged to plug funding holes.
“HASLO will put forward between $400,000 and $500,000 of our money to help close the financial gap (in addition to what the city of SLO and SLO County funds),” he said via email on Jan. 10.
HASLO also shifted money from its own projects. At its Jan. 9 meeting, the SLO County Board of Supervisors unanimously greenlit reallocating $1.4 million in ARPA funds from a HASLO affordable housing project in Arroyo Grande facing extended delays.
“The Orcutt Road affordable housing project is ‘shovel ready’ and is in jeopardy of losing $1,172,101 in approved annual federal tax credits if escrow for financing does not close in January 2024,” the county staff report read.
Though fluctuations in the interest rates, construction costs, and tax credits aggravated funding problems for the Maxine Lewis Apartment project, at one point it faced the potential loss of another one of its grants altogether. In 2023, the project almost lost $937,086 in Community Development Block Grant money based on interpretations of who the controlling entity of those funds would be.
U.S. Rep. Salud Carbajal (D-Santa Barbara) stepped in to write a letter in support of HASLO’s project to the secretary of Housing and Urban Development (HUD). HUD responded to Carbajal in December 2023 detailing a way the grant money could be used for an alternative structure related to HASLO’s project.
With the funding streams now in place for the Maxine Lewis Apartment project, Collins said he expects construction to start in February, and the residential units will be open to people facing homelessness and low-income groups by the end of 2025. Δ
This article appears in Volunteers 2024.