Elk Grove approves $2 million loan boost to independent living project at church site
A planned affordable independent living development on the grounds of an Elk Grove church will receive millions of dollars more in loan help to move the project forward.
Elk Grove City Council extended an additional $2 million Wednesday to the Cornerstone Village project on a 5-0 vote. The 84-unit, 4-acre development at Light of the Valley Church on Bruceville Road just south of Laguna Boulevard includes 21 units for intellectually and developmentally disabled adults and has been a centerpiece of Elk Grove efforts to grow its affordable housing portfolio.
Another nine units would be home to the previously unhoused, along with a mix of 53 apartments for working families.
The loan is atop the more than $3.4 million the city council approved in December 2021. City leaders Wednesday also stretched the project’s loan commitment from October to the end of 2024.
Developers still anticipate a 2025 opening date, envisioning the development to be part of a “single community” with Light of the Valley.
Wednesday’s approval of the loan increase and extension landed at a critical time for both a project under a fast-approaching July 12 deadline to apply for new financing and a city fighting California Attorney General Rob Bonta’s lawsuit over its track record on affordable housing and eager to add to its inventory.
Elk Grove has about 2,300 affordable housing units, city officials have said. But Elk Grove needs to build more than 4,200 units of housing for very-low and low-income families this decade, according to a regional housing needs analysis by the Sacramento Area Council of Governments.
“Looking at the uniqueness of Cornerstone Village, that’s a good mixed-housing project and it’s part of a bigger picture of what we want to see in Elk Grove,” Councilman Rod Brewer said in support of the loan and project, adding that its residents will “have a sense of belonging” in the community. “This makes perfect sense.”
The project’s developers estimated about 2,100 intellectually or developmentally disabled adults reside in Elk Grove. Many are in the city’s lowest income bracket and are largely priced out of Elk Grove’s costly and competitive rental market.
The new loan to Cornerstone developer John Stewart Co. will allow the project developers to apply for more than $10.4 million in state housing funding, as well as open the door to apply for yet millions more in additional tax credit funding in 2024 for the $54 million project.
Developers have said rising interest rates and “exponential” increases in builder’s risk insurance pushed project costs higher, according to a city staff report. They said a new city loan was the only way Cornerstone could compete for crucial state Housing and Community Development funding through its Multifamily Housing Program.
Without Elk Grove’s help, “the developer would likely not be competitive in securing funding for the project,” city staffers said in their report.
At more than $5.4 million, the city’s total loan to Cornerstone is among the highest the city has made for its recent affordable housing projects, including $5 million loans toward the 98-unit Bow Street and 96-unit Gardens at Quail Run I sites. Only the 296-unit development, The Lyla, under construction on Bruceville Road north of Laguna Boulevard and three times the size of Cornerstone, has a higher loan at $6 million.
“I don’t like the city having to put more funds toward any type of project, but for these unique circumstances, it’s worth it,” said Councilman Darren Suen.
But Elk Grove will not have to tap into its general fund to extend the loan, say city officials. Though all but $7 million of the city’s nearly $24 million affordable housing fund is already committed to projects including Cornerstone, The Lyla and a pair of city-owned sites, city leaders saw enough headroom to sign off on the loan.
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