Sacramento’s apartment rental market continues to grow
Another major apartment building is moving forward in midtown Sacramento. Unlike some others being built nearby, this project is going to include a significant stock of affordable units.
The city Planning Commission approved the design of the six-story apartment building at 17th and S streets at its meeting last week. Developed by the Capitol Area Development Authority and CFY Development, the building will have 159 apartments and retail on the ground floor facing S Street. It will replace a block-long vacant lot that has been empty for decades.
The complex will have tenants from a wide range of income levels, according to the developers. Construction is expected to begin this year.
“Our intention is to build one of the most socioeconomically diverse communities in the region, one that not only provides market rate housing and affordable, low-income housing, but that also provides housing for what we call the ‘missing middle’ – the large portion of the workforce that can neither afford market rate rents in an urban setting like downtown Sacramento nor qualify for traditional affordable housing,” said developer Ali Youssefi with CFY. “This has been an elusive segment of the population to build new housing units for in downtown, but I think that we have figured out the way to do it.”
The development team is seeking financing and tax credits that would make 32 units available to tenants making no more than 50 percent of the area median income. Based on 2017 state tax credit restrictions, the rent for a studio apartment for tenants in that income range would be $650. Rents for one-bedroom apartments would be $696 and $835 for a two-bedroom unit. Those rates could change before the project is completed.
Another 32 units would only be available to people making 120 percent of the area median income. That is still below what is considered “market rate” or high end.
The city of Sacramento and its housing authority are working to help finance the project with funds dedicated for affordable housing and economic development.
“Our best chance to deliver workforce affordability is this project,” said Councilman Steve Hansen, who represents midtown. “That we are able to clean up a contaminated site and put in a large number of affordable units right in the heart of midtown, it’s a huge success. We have not given up on delivering affordable housing units, even as tough as it is. We are trying everything we can.”
Housing affordability is expected to be a priority for Mayor Darrell Steinberg and the City Council this year. Steinberg announced in his State of the City address on Thursday that he wants to form a multi-billion dollar investment fund for affordable housing, infrastructure and cultural amenities. That fund could be backed by a new sales tax.
A report by apartment listing firm RENTCafe released this month showed rents in Sacramento increased 8.8 percent in 2017 – the biggest jump of any midsize city in the nation. That increase meant that tenants spent an average of $1,260 more on rent over the course of 2017 than they did the previous year.
The analysis also determined that “an insufficient stock of apartments” in Sacramento has contributed to a 50 percent rent increase over the past five years.