Work soon will begin to convert another Modesto motel into low-cost studios
The Modesto City Council nailed down the final details Tuesday on turning El Capitan Motel into 48 low-cost studio apartments.
The unanimous vote involved an $18.7 million state grant awarded last year and nearly $5 million in other funding. The Needham Street site will house 24 military veterans and 24 clients of Stanislaus County Behavioral Health and Recovery Services.
The tenants will pay no more than $547 a month and can earn up to 30% of Stanislaus County’s median annual income of about $80,000. Studio apartments citywide average $1,308 as of May, according to RentCafe.com.
“We’re in a housing crisis here California,” Councilmember Eric Alvarez said just before the vote. “... We’re not perfect, but we slowly chip away at that gap.”
Construction will take about a year at the two-story motel, a city staff report said. Each unit will be fully furnished, including a new kitchenette and upgraded bathrooms, heating, cooling, fire sprinklers, flooring, cabinets and paint. The other site work involves laundry, painting, lighting, paving, fencing, landscaping and disabled access. The manager will live in a 49th unit.
The funding includes relocating four households that have been at El Capitan longer than the typical motel stay.
The grant was awarded by the Homekey program at the California Department of Housing and Community Development. The rest of the $23.1 million total came from local, federal and private sources.
El Capitan is Modesto’s fourth conversion of an aging motel into subsidized apartments. Kansas House opened in 2020 with 103 studios in the former American Budget Inn & Suites, next to Highway 99. Last year brought 54 units at the Travelers Motel on North Ninth Street and 143 at the Clarion Inn on Sisk Road.
“We’ve done a great job of getting that grant money and giving people some options,” Councilmember Chris Ricci said.
El Capitan was built in 1963 on Needham west of College Avenue, near the north edge of downtown. The conversion drew no public objection Tuesday or when the council voted to apply for the grant early last year.
Modesto apartments of all sizes cost an average of $1,717 a month in RentCafe’s latest report. The figure is $1,578 for one bedroom, $1,850 for two and $2,088 for three.
Apartments are in high demand because of the even higher cost to buy a home. The median sale price countywide was $472,125 as of March, the California Association of Realtors reported. Only 34% of prospective buyers could afford the $2,870 monthly mortgage payment.
Modesto is partnering on El Capitan with two Fresno-based developers, UPholdings and RH Community Builders. The money on top of the state grant includes:
- $3 million from Modesto’s regular share of federal housing funding, lent at 3% interest
- $922,837 from the county Community Services Agency’s effort to ease homelessness
- $500,000 from the county mental health department
- $169,025 from the developers
The funding covers five years of operating expenses, including case management for residents. El Capitan will be permanent rather than transitional housing.
Homekey is among the efforts under Proposition 1, the $6.4 billion bond issue approved by California voters in March 2024.
