Michaels, LINC Housing Kick Off $23M Affordable Seniors Housing Project in Oakland

The Michaels Development Company and LINC Housing Corporation will soon add 119 rental residents to West Oakland's affordable housing pool.

Oakland, Calif.—The Michaels Development Company and LINC Housing Corporation will soon add 119 rental residents to West Oakland’s affordable housing pool, now that the team has commenced construction of Red Star Apartments. Designed by architectural firm KTGY Group, the $23 million endeavor will produce a visually appealing building on what had been a hazardous site.

Location is always a key element to success for any development, and Red Star will not disappoint. “We’re building in a transit-oriented district that is right next to the BART station, and that’s a win-win for everybody,” Dave Lukens, vice president of Michaels Development, tells MHN. “It’s going to increase ridership and it’s going to be great for our residents. They’ll be literally within walking distance to the Bay Area Rapid Transit station, so they can be mobile and enjoy a good quality of life.”

Easy access to downtown Oakland, nearby San Francisco and other popular destinations via public transportation is not the only amenity that will enhance quality of life for Red Star’s tenants. The apartment community will feature a computer center and a state-of-the-art recreation center, as well as outdoor offerings. There will also be something for both residents and neighbors to enjoy—3,000 square feet of retail space. “Retail space, leasing offices and common project amenities at the first floor blend with the walkable street scene of the adjacent Mandela Gateway development,” Keith Labus, KTGY principal and lead designer for Red Star, tells MHN. “Red Star’s sustainable design and close proximity to services, shopping, cultural amenities and transportation further increase affordability and quality of life for our residents who have few affordable housing options.”

People may say looks aren’t everything, but, well, they certainly don’t hurt, and Red Star will look nothing like the Red Star yeast factory industrial building that once occupied the site. In keeping with the current architectural tone of the neighborhood, the architecture firm went with a classic California contemporary style. “The design is typical of a KTGY design product and they do a fantastic job,” Lukens said. “With the design, the goal is always to make sure that when we’re doing a development; we don’t want people to be able to point and say, ‘That’s low-income housing.’ This product is not only functional, but also aesthetically pleasing.”

In major cities across the country, the demand for affordable housing outweighs the supply, and Oakland is no exception. Overwhelming housing need or no, the parsimonious credit market does not discriminate when it comes to refusing loan requests, so Michaels and LINC faced challenges in securing the necessary financing for the project, which did not receive any city funds. Ultimately, they were able to cull the money through a bevy of different sources. The partners secured $1 million through a grant from the state’s CALReUSE program for the environmental remediation of the site; $1.1 million in Affordable Housing Program Funds from The Federal Home Loan Bank of San Francisco; and $1.5 million in Infill Infrastructure Grant Program funds from the California Department of Housing and Community Development. “So there are soft sources along with the equity that we got from RBC Capital Markets for the tax credits and the first mortgage that we have from Citibank,” Lukens noted.

Red Star will not only create low-income housing, it will also bring a bevy of construction jobs to the community. “The City of Oakland recently mandated that any developers that receive city funds use 50 percent of the construction costs to hire local Oakland sub-contractors and consultants, and although we didn’t get any city money, we still let people know that we’re committed to that mandate. And so far so good. We have about 25 percent of the job bid out and of that, we’re right at 50 percent of local subcontractors so we’re hoping to keep that up. We think that by the end of the project we’ll still be right around 50 percent of local hiring and that is, again, without any local city dollars.”

Advent Companies, which has worked with KTGY on over 30 developments, is on board the Red Star project as general contractor and is on schedule to complete construction in August 2012.