Don’t soak taxpayers for affordable housing in downtown Modesto | Opinion

Modesto gets a lot of bad press. Whether a spectacular homicide or astronomical car theft rates, it’s all bad. Those snarky Bay Area newspapers can’t run an article without calling Modesto “a dusty San Joaquin Valley farm town.” Routes into Modesto show us in the worst light. Outsiders don’t know about our tree-lined streets, parks and trails and vibrant cultural and social scene.

That’s about to change. If our city and Visionary Builders have their way, Modesto will have an “affordable housing” complex WITH ITS OWN LOCOMOTIVE! No one else has a locomotive-equipped apartment project. We’ll make the news. We’ll go viral!

The Seventh Street Village proposal is for 79 units; two reserved for managers, leaving 77 for tenants. The ground floor will have a leasing office, community center, Head Start program and grocery store. None of that will produce revenue except Head Start (presumably taxpayer-funded) and the grocery store.

Building it will take money — a lot of money. First, the city will commit $7 million of its affordable housing money. Then the city and Visionary will seek $50 million from California’s Affordable Housing and Sustainability Program. $35 million will be lent to Visionary and the city gets $15 million. $9 million goes to infrastructure improvements like bike lanes and bus shelters. And the city will buy the ACE train a $6 million locomotive.

So far, cost to taxpayers: $57 million. But there’s more. Visionary says it will need at least $20 million in tax credits to make the project pencil out.

So the cost to taxpayers is at least $77 million, or $1 million per unit. Visionary is still calculating the final cost, so it may get worse. This, in a city with a median home price of around $415,000.

Rents will be subsidized; these subsidies will cost the taxpayers forever.

So, here are some things to consider before this goes any farther:

1. Visionary is a nonprofit developer. Isn’t it odd that its CEO, Carol Ornelas, was paid almost $242,000 in 2019 (the most recent year reported by the IRS)?

2. Who repays the $35 million loan to Visionary if it defaults? Consider the Red Lion/Modesto Centre Plaza experience. The developer went bankrupt, the city lost the underlying land, and a projected $4.2 million rental profit became a $1.4 million loss. And that doesn’t include the perchlorethylene cleanup under the old Bradbury’s Cleaners. Centre Plaza has cost the city untold sums in subsidies. It needs millions in renovations, which the city will pay for.

3. Bee articles say Visionary has contracts with the owners of the parcels needed for construction. When did they buy them? For what price? Did they know about the project before the rest of us?

4. How can the locomotive be justified? Shouldn’t ACE buy its own locomotive? What’s going to happen to it until ACE comes to Modesto? Will it transport people elsewhere? Why should the Seventh Street project pay for that? How many Seventh Street residents will actually use it?

5. Where is all this money going? Some will be spent on costly prevailing-wage construction workers. What about the rest? Don’t we deserve to know where every penny is going?

6. This project is supposed to reduce greenhouse gases. But even if every tenant used ACE, there would be only a rounding error reduction in Altamont commuter traffic. Doesn’t that look pretextual?

7. Seventh Street is called “affordable housing.” Affordable to whom? Not to taxpayers, who will be paying for it forever.

8. Our City Council undoubtedly views this as “free money.” But there is no tooth fairy. This will be funded by taxpayers.

Downtown renaissance is a wonderful idea. It should include housing by developers risking their own money, not by a project with hideously expensive, taxpayer-funded costs. Our City Council should take another look and put this out of its misery.