PAHC Press Corner

HOUSING: Low-Income Housing May be Saved

Owner of Sheridan Apartments agrees to sell to housing corporation

PALO ALTO WEEKLY - Publication Date: Friday Jan 16, 1998
by Elisabeth Traugott

The Palo Alto Housing Corp. and property owner Sam Webster have come to an initial understanding over the nonprofit group's bid to purchase the Sheridan Apartments. On Tuesday, Webster signed a letter of intent agreeing to pursue a purchase agreement that would allow the PAHC to buy the 57-unit low-income complex for $5.1 million.

Although both parties still have the chance to back out until a purchase agreement is signed, Marlene Prendergast, executive director of the housing corporation, is optimistic.

"It's the first step," Prendergast said. "It really says we are of the mind to go ahead." There is one crucial piece of the puzzle left to fit, however, she added. "The big question will be getting the funding."

The apartments, near the California Avenue shopping district, had originally been slated to sell to a new owner last year, a move that would have meant the loss of subsidized rent for about 70 seniors and other people. The housing corporation, however, stepped in to try to preserve the complex's low-income status.

In order to finance the purchase, Prendergast said the PAHC will need to seek out funding from a variety of sources, including tax credit allocations, a HUD-insured loan and city subsidies.

The Palo Alto City Council has reserved $1.1 million in existing federal Community Development Block Grant funds for use in preserving the Sheridan apartments for low-income residents. The federal Department of Housing and Urban Development has informed city officials that the city will be penalized if federal money in city coffers is not spent soon.

This year's allocation of CDBG funds--which is down 6 percent from last year's--is $733,000. The maximum additional amount that could be allocated to the Sheridan purchase is $470,000, although there are many other agencies that have shown an interest in the money.

If the money were to be dedicated to affordable housing, the city would prefer to put money toward the purchase of an existing building rather than toward buying vacant land because of the high cost of land locally, said Senior Planner Cathy Siegel.

Webster initially rejected a PAHC offer of $5 million for the apartments made last summer. A purchase agreement was initiated instead with local developer Tod Spieker for $5.8 million, but Spieker withdrew his offer after pressure from the city over his intention to push rental rates back up to market levels when Section 8 funding expires there in April 1999. Many residents of the complex are elderly or disabled.

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