Neglected Property in Oakland Reemerges as Polished Affordable Housing Community

Oakland, Calif.–It was a market-rate apartment community in a pleasant neighborhood of Oakland, Calif., yet passersby winced at the sight of it. But Affordable Housing Associates stepped in as the new owner and, having just completed a comprehensive rehabilitation of the three-story building at 401 Fairmount Ave., completely reinvented a property that had been the worst on the block as one that fits right in and accommodates an underserved segment of the rental market—affordable housing.

AHA acquired 401 Fairmount, originally developed in 1960, in 2007 with plans to convert the dilapidated, 35-unit residential facility into a quality affordable housing community for low-income renters, including a frequently overlooked sub-segment of that population: the formerly homeless with severe mental illness and persons living with HIV/AIDS. Given the poor state of the building, AHA knew at the outset that it would have its hands full, yet the non-profit development corporation was undeterred. “It was poorly constructed to begin with,” Susan Friedland, executive director of AHA, tells MHN. “Additionally, it was a soft-story building, so it was susceptible to earthquakes. We saw the need to buy it and transform it into nice, safe affordable housing. We also liked the idea of buying in a really nice neighborhood because we don’t always get to do that.”

In this nice neighborhood, however, affordable housing would be a new concept. “Neighbors were cautious because they had seen the building being mismanaged for so long. So we did a lot of outreach; we pledged to be a good neighbor. We built trust and confidence from the beginning and kept them involved.”

Ultimately, the affordable housing plan was a concept that was well received. A well-cared-for affordable housing property trumped a dilapidated market-rate apartment building. In addition to bringing the structure up to seismic code, AHA replaced worn stairs and walkways, upgraded wheelchair accessibility, replaced the roof, renovated the façade and spruced up the landscaping. “Now the neighbors say it looks so much better.”

As it turned out, getting the neighbors onboard did not even rate as a challenge compared to navigating the inhospitable waters of the credit crunch. Its sudden and fierce grip debilitated the real estate market across the board. All had been well in the world of real estate financing in 2007, but the glory days of lenders doling out loans as if they were candy came to an abrupt and devastating end later in 2008. The plan for the rebirth of 401 Fairmont would not be free; it carried an $11.5 million price tag.

“We had eight different financing sources, and every single one had some complications,” Friedland says. “What saved us was we were able to secure construction and permanent financing from Wells Fargo and obtain stimulus funds to substitute for the state funds that had been frozen. Also Enterprise stuck with us.” Despite the tumultuous economic climate at the time, AHA was still able to count Enterprise Community Partners Inc., a provider of capital and expertise for affordable housing development, as a financial partner in the redevelopment endeavor. And by procuring an additional $20,000 here and another $10,000 there from a number of sources—including the City of Oakland, the Mental Health Services Act, Alameda Count, the Low Income Investment Fund and the Northern California Community Loan Fund–AHA managed to cull the necessary funds to move forward with the project.

In addition to facilitating a long list of renovations, AHA decreased the number of units at 401 Fairmount from 35 to 31 to make room for a few residences that would better suit families, and to incorporate a new community room and manager’s office. Additionally, AHA went green on the project, which features the architectural vision of Bay Area-based firm Asian Neighborhood Design. Among the steps taken to achieve greater sustainability, the structure’s energy efficiency was enhanced with the swapping out of single-pane windows for new dual-paned replacements, as well as the installation of a rooftop solar hot-water system to assist the traditional water-heating system in the preheating and storage of H2O in an insulated tank.

Much of the greening of 401 Fairmount, a participant in the Build it Green for Existing Multifamily pilot program, was financed with the assistance of Enterprise Green Communities.

Environmental friendliness is just one new aspect of the recently reintroduced multifamily property. Accommodations for low-income individuals combatting severe mental illness and persons living with HIV/AIDS, is another. The supply of affordable housing across the country is insufficient; the supply of affordable housing for the aforementioned groups is sorely insufficient. Much to the delight of those in need, six of the residences at 401 Fairmount are reserved for low-income renters with severe mental illness, and another four are designated for individuals with HIV/AIDS.

“People with severe mental health issues have high barriers to housing,” Friedland notes. “They may not have good credit; the applications can be a challenge; landlords can be discriminatory. It can be overwhelming. And for people living with HIV/AIDS, many are dependent on affordable housing due to a decline in income or the inability to work at all as a result of their condition. Our purpose is to identify community needs and serve people who are left out of the market.”

At 401 Fairmount, there are no vacancies.