City Council committee considers workforce housing proposal

Santa Clarita City Hall, as pictured on February, 26, 2020, is located on the 23900 block of Valencia Blvd. Dan Watson/The Signal

The Santa Clarita City Council Development Committee heard a presentation Wednesday morning about a proposal to convert 278 market-rate apartment units into “workforce housing” intended for middle-income workers, such as first responders, teachers and nurses. 

Michael Villegas, the city’s community preservation officer, told Councilwoman Marsha McLean and Councilman Jason Gibbs of the Development Committee that the city had received multiple inquiries from developers over the past few weeks to create workforce housing in Santa Clarita. 

City staff received one formal proposal by Standard Cos. to purchase apartment buildings in The Madison at Town Center in Valencia and The Retreat in Newhall. The developer estimated the deal would be $110 million.  

“From a financial standpoint, there’s more of an upside than a downside,” said City Manager Ken Striplin, noting that the city would own the debt-free investments after 30 years despite local public agencies losing out on tax revenue from the properties. 

The purchase proposed by Standard Cos. would be financed using government bonds through a joint powers authority (JPA) between the city, the developer and another JPA, which would issue the bonds. 

The proposed workforce housing differs from affordable housing, which typically reduces rents to those who earn around 50% of the area median income, according to Villegas. 

Instead, the proposed workforce housing will include rent-restricted units for tenants whose incomes are 80%, 100% and 120% of the AMI. Under the proposed rent structure, a one-bedroom unit at The Madison would cost $2,102 — instead of the market rate of $2,390; a two-bedroom unit would cost $2,366 instead of $2,755. 

Annual rent increases would be capped at 4%, and units would be converted into workforce housing after a lease for an existing market-rate unit ends to prevent displacement, Villegas said. 

Santa Clarita has not developed workforce housing, while all but one affordable housing project — The Oaks — is intended for seniors. 

McLean requested that city staff return to the Development Committee at its next meeting, which may occur next week, with a one-page summary containing the project’s benefits and proposed rental rates. 

Regardless of whether the Development Committee recommends moving forward with the Standard Cos. proposal, Villegas told The Signal that the committee could ask city staff to search for similar opportunities for workforce housing in the city if it wants to explore that option. Any proposal would go through a public process, he added. 

Striplin told the council members he’s confident that residents, especially those who own property along Magic Mountain and McBean parkways, would push back against the proposal. 

“We might get pushback because of the perception,” Striplin said, noting the possibility that residents may equate affordable and workforce housing. He added that residents who own may also argue that workforce housing would devalue their properties. 

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