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Preparing a Place for Seniors in Santa Cruz, California

A two-story apartment building with a front-gabled roof. A parking lot is visible in the foreground.St. Stephen’s Senior Housing provides 39 affordable apartments for seniors on the grounds of a church in Santa Cruz, California. Credit: Photo by Emily Hagopian, courtesy of MidPen Housing

Nestled along California’s Pacific Coast just south of San Francisco Bay, Santa Cruz County is a community of about a quarter of a million people with close ties to the job centers of Silicon Valley. The county lacks sufficient land and zoning types to meet its housing needs. In 2011, St. Stephen’s Lutheran Church, a congregation of about 350 in Santa Cruz, identified a way to serve its neighbors who needed housing. As a founding member of Communities Organized for Relational Power in Action (COPA), a longstanding local organization that advocates for various social justice issues, the church was able to follow through on its vision to create new affordable housing for seniors in the community.

A Community Called To Act

Reverend James Lapp, pastor of St. Stephen’s Lutheran Church, recalled that the catalyst for the congregation’s affordable housing efforts was when the church decided to allow a member family with two working parents who had grown up in the congregation to live in a trailer in the church’s parking lot because they could not afford rent. Having congregants unable to afford rent in their own community drove the church to take housing affordability challenges seriously. From this call to action came the project that became St. Stephen’s Senior Housing.

Because of the shape of the lot, the church would need to share parking facilities with any potential housing project. Jan Lindenthal, chief real estate development officer at MidPen Housing (MidPen), recalled that the parking situation was behind the decision to focus on seniors. Senior housing projects require fewer parking spots per unit (and, therefore, less overall space dedicated to parking) than do developments for other potential populations. In addition, MidPen’s experience in managing senior housing in other locations gave it confidence that it would be able to provide high-quality residential services to fill an unmet need in Santa Cruz County.

St. Stephens Senior Housing began leasing to tenants in 2017. Lapp reported that the project had considerable demand and that by opening day, the building was fully leased and had a waiting list of more than 700 people. The project consists of 40 units, a mix of 4 studio, 4 one-bedroom, and 32 two-bedroom apartments. With the exception of the manager’s apartment, all 39 other units are affordable for seniors earning 30, 40, or 50 percent of the area median income.

Funding

St. Stephen’s Senior Housing cost slightly less than $18 million to develop. The primary funding source for the project was the sale of $10.7 million in low-income housing tax credits (LIHTCs) to Wells Fargo. Acquiring the LIHTCs presented a major impediment to the project; St. Stephen’s and MidPen applied for four cycles of LIHTC funding before they were finally approved. Lindenthal stated that although securing funding for the project was challenging, the church congregation maintained its support for MidPen’s mission and the project during the lengthy grant application process — one that other partners might not have been willing to endure.

Three individuals sit in a common area with modern armchairs and tables. An individual walking along a path outside is visible through one of the windows.MidPen Housing organizes social activities that take advantage of the communal spaces in the building and help create a sense of community among residents. Credit: Photo by Emily Hagopian, courtesy of MidPen Housing

The senior housing is built on land owned by t St. Stephen’s Church that MidPen occupies through a 99-year ground lease. To support the construction, the church agreed to lease the land to MidPen for a lump-sum payment of only $1.2 million — about half of its market value. In addition to the cash payment that would be held in an endowment for the congregation, MidPen also agreed to provide in-kind payments in the form of a newly paved parking lot with curbing, landscaping, and lighting; a new church sign; a sidewalk; and a left-turn lane into the church property.

The remaining funds came in several forms from Santa Cruz County. The county provided $5.3 million during the predevelopment, acquisition, and construction phases that it had been allocated through a state program and had to use before the funds expired. In addition, the Housing Authority of Santa Cruz County provided project-based Section 8 vouchers worth approximately $9 million over 15 years, making St. Stephen’s Senior Housing only the second voucher-funded project in the county. Mid Pen then leveraged those vouchers to finance the construction of the building and break ground. As a condition of receiving the vouchers, the county negotiated with MidPen and the church to set aside five units each for medically frail seniors and veterans.

Onsite Amenities and Community

MidPen Housing’s role in the project did not end when the doors opened to the public. The company provides onsite senior services in the form of social activities such as bingo and potlucks as well as outdoor recreation at the onsite bocce court. In its role as a service coordinator, MidPen also brings in other groups to provide programs such as income tax preparation and health screenings for residents. In addition, students of the church’s onsite preschool engage in intergenerational programs with senior housing residents. These programs are particularly special to one resident who grew up in Santa Cruz and raised his family in the neighborhood but was facing displacement because of housing costs. Lapp recounted that St. Stephen’s Senior Housing allowed him not only to stay in the community but also see his granddaughter, who attends preschool on the property.

Community Response

Because only one side of the property abuts a residential area, the project faced little community opposition, particularly after assuring the adjacent residential community that the development would not have an exit onto their street. Julie Conway, housing program manager for Santa Cruz County, reported that the primary complaint she receives about the development is that it does not have even more units.

St. Stephen’s Senior Housing: Lighting the Way for Future Actions

The congregation of St. Stephen’s is pleased with the result of their affordable housing initiative, according to Lapp. He reported that other Lutheran congregations around the country have contacted him to discuss building affordable housing on their campuses, and he added that the church has been proud to serve as an example for their broader faith community. St. Stephen’s has continued to advocate for housing affordability, both through COPA and in the community. MidPen has showcased St. Stephen’s Senior Housing as an example of a high-quality, modern, affordable housing development in their future work. Lindenthal stated that MidPen has brought community members who had been concerned about other planned MidPen developments to St. Stephen’s Senior Housing to show them an example of successfully executed housing and allay their fears.

Source:

Interview with the Rev. James Lapp, pastor of St Stephen’s Lutheran Church (Santa Cruz, CA), 20 March 2019; Interview with Julie Conway, housing manager at the County of Santa Cruz, 18 March 2019. US Census Bureau. 2018. “Quick Facts: Santa Cruz County, California,” Accessed 20 May 2019.

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Interview with the Rev. James Lapp, pastor of St Stephen’s Lutheran Church (Santa Cruz, CA), 20 March 2019.

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Interview with Jan Lindenthal, chief real estate development officer at MidPen Housing, 22 March 2019.

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Interview with the Rev. James Lapp, pastor of St Stephen’s Lutheran Church (Santa Cruz, CA), 20 March 2019; California Tax Credit Allocation Committee. 2015. “Project Staff Report.” Accessed 15 May 2019. MidPen Housing n.d. “Much Needed Affordable Housing for Seniors Breaks Ground in Santa Cruz.” Accessed 20 May 2019. Housing Authority of the County of Santa Cruz. 2016. “St. Stephens Senior Housing.” Accessed 20 May 2019.

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Interview with Jan Lindenthal, chief real estate development officer at MidPen Housing, 22 March 2019; Correspondence from Jan Lindenthal, chief real estate development officer at MidPen Housing, 22 March 2019.

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Interview with the Rev. James Lapp, pastor of St Stephen’s Lutheran Church (Santa Cruz, CA), 20 March 2019.

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Correspondence from Jenny Panetta, executive director of the Housing Authority of the County of Santa Cruz, 19 March 2019.

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Correspondence from Jenny Panetta, executive director of the Housing Authority of the County of Santa Cruz, 19 March 2019; Correspondence from Jan Lindenthal, chief real estate development officer at MidPen Housing, 22 March 2019; Interview with Julie Conway, housing manager at the County of Santa Cruz, 18 March 2019.

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Interview with Jan Lindenthal, chief real estate development officer at MidPen Housing, 22 March 2019; Interview with the Rev. James Lapp, pastor of St Stephen’s Lutheran Church (Santa Cruz, CA), 20 March 2019.

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Interview with Julie Conway, housing manager at the County of Santa Cruz, 18 March 2019.

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Interview with the Rev. James Lapp, pastor of St Stephen’s Lutheran Church (Santa Cruz, CA), 20 March 2019; Interview with Jan Lindenthal, chief real estate development officer at MidPen Housing, 22 March 2019.

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