DANCO's project would consist of 27 senior apartments at 655 H Street in Crescent City. | Screenshot

Crescent City Councilors on Monday were happy to hear that a 27-unit senior housing project spearheaded by DANCO Communities in 2015 could gain new traction and, potentially, $5 million in state grant dollars.

The senior apartments are being planned for the former El Patio Motel property at 655 H Street in Crescent City and would consist of three stories, according to City Manager Eric Wier. The top two stories would house 10 units each while the bottom floor would have another six to seven apartments as well as parking.

DANCO, with help from the city, has submitted an application for $5 million in state Competitive Permanent Local Housing Allocation dollars. The total project cost is expected to be $16 million, Wier said.

“What the plan is, is for (DANCO) to be awarded these funds, which will then make DANCO a lot more competitive for tax credits,” Wier said. “They’d hope to apply for those tax credits in April of next year. If awarded those, then they’re hoping to close construction financing by January 2024 and have construction complete in February 2025, so this can take a fairly quick pathway if we’re able to secure some of these funds.”

In addition to ratifying Wier’s signature on DANCO’s PLHA grant application, Councilors unanimously approved a one-year lease agreement with the Humboldt County-based affordable housing developer. The lease is for $1 and will allow DANCO to have site control, one of the stipulations for the PLHA grant, Wier said.

Crescent City purchased the former El Patio Motel property back in 2011 before dissolving its Redevelopment Agency with the intent of developing a low-to-moderate-income housing complex.

The city entered into a disposition and development agreement with DANCO for the sale of the property back in 2015. This agreement was extended twice with the last extension expiring in 2019. DANCO has completed the required environmental review and secured entitlements for the project.

Previous attempts to acquire grants and tax credits to pay for and finish the project weren’t successful.

According to Chris Dart, DANCO Communities president, his company has worked on the senior housing project under previous City Councils for years and was able to get land-use permits with the Planning Commission. However because funding resources were scarcer, the endeavor was shelved.

Dart said the city reached out to DANCO a few weeks ago to see if they could resurrect the project. After working with city staff and City Attorney Martha Rice, Dart said DANCO prepared documents and submitted the grant application to the state Department of Housing and Community Development at 4 p.m. Monday.

“For us as a development company, we work on lots of projects all over the state, and it’s always a shame when we’re not able to get one done,” he told Councilors. “We’re happy the city has reconnected with us and given us the opportunity to apply for these funds collaboratively together. And, fingers crossed, if you approve tonight, it’ll be funded and we’ll get the project underway.”

DANCO is currently building another senior housing project with 36 units in Eureka that has a similar funding structure to the Crescent City project, Dart told Councilors. It took multiple tries to get funding for that Eureka project, he said, but ultimately they were successful.

Dart said he thinks the Crescent City project will be similarly successful.

The Permanent Local Housing Allocation program was created through Senate Bill 2, also known as the Building Homes and Jobs Act. That legislation established a $75 recording fee on real estate documents to increase the affordable housing supply.

In addition to competitive grants, the PLHA program provides non-competitive funding to entitlement and non-entitlement communities. Crescent City is expected to receive $485,092 in non-competitive dollars, according to Wier.

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