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Demand for ‘middle income’ housing drives San Francisco North Bay apartment deals

Deals for larger multifamily properties in the North Bay have been hot for similar reasons why deal-making has been sizzling for single-family homes in the region.

And helping to fuel these apartment-complex purchases are public-private partnerships that link investments floated by cities and counties to carving out housing for the middle-income resident. These households are called the “missing middle” because their earnings are too much to qualify for conventional subsidized housing but deemed too little to afford market-rate dwellings.

One of the latest examples of such deals is Park Crossing Apartments in Fairfield. On Dec. 14, Sares Regis Multifamily Funds sold the 200-unit complex at 2100 W. Texas St. for $83.5 million, or $417,000 a unit. The buyer was an affiliate of California Statewide Communities Development Authority, a 33-year-old Walnut Creek-based joint powers authority that’s sponsored by the California State Association of Counties and the League of California Cities.

The organization’s Community Improvement Authority in 2020 launched a workforce housing program, which sells bonds for local governments to fund purchases of rental housing, which is put under rent restrictions tailored for middle-income households, or those that earn 80% to 120% of the area median income, or AMI.

Park Crossing was acquired via the issuance of $113.95 million in essential housing revenue bonds. The property was 97% occupied at the time of the acquisition, had been getting market rents. The property was built in 2006 with market-rate amenities: a swimming pool, spa, fitness center, billiards room and media room, clubhouse with fireside lounge, and gated access.

Now one-third of the units will be reserved for households earning 80% of the AMI, a third for those earning 100% and the remaining third for households making under 120% of the AMI, according to Opportunity Housing Group, a Danville-based real estate company that is administrating the property. The company was founded by the principals of Blake Griggs Properties, which previously in the North Bay worked on the Marin Gateway shopping center in Marin City, according to its website.

Existing tenants in acquired apartment complexes at the time of sale are allowed to stay, an Opportunity Housing Group spokesperson said.

“Our innovative workforce housing program provides housing for the essential workers in our cities, which is a demographic that is consistently overlooked both in traditional market-rate and affordable housing development,” said Lauren Seaver, president of Opportunity Housing Group.

Opportunity Housing Group and California Statewide Communities Development Authority also teamed up on another North Bay property. This past fall, the 180-unit Waterscape Apartments complex at 3001 N. Texas St. in Fairfield was purchased for $70 million via $84.3 million in essential housing revenue bonds.

Last year, California Statewide Communities Development Authority also acquired Acacia Apartments and Vineyard Gardens in Santa Rosa.

A similar organization to California Statewide Communities Development Authority is the California Community Housing Agency. It was started by Kings County several years ago to fund housing acquisitions for local governments via bonding.

Larkspur-based Catalyst Housing Group, which acts as administrator for many of the acquisitions by the California Community Housing Agency, has completed over $2 billion in such deals, involving more than 4,000 units. Such properties the 2-year-old company has helped acquire include 198-unit Summit at Sausalito.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

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