Modesto gets key piece of funding for six-story apartment building proposed for downtown

A state agency on Wednesday provided $33 million toward a six-story apartment project in downtown Modesto.

The building would have 79 apartments for low-income people on a mostly vacant site at Seventh and J streets.

The nonprofit developer could learn by November whether it will get about $32 million in tax credits to complete the financing. The apartments could open to residents as soon as fall 2025.

The building would be a key step toward Modesto joining a national trend toward dense downtown housing. The only major projects to date are both senior complexes on 17th Street. Ralston Tower opened in 1974 and Tower Park in 2016.

The city government has teamed on the new project, Seventh Street Village, with Visionary Home Builders of California, based in Stockton.

“This is very exciting news,” CEO Carol Ornelas said of the state funding in a phone interview Thursday. “It’s one step closer to reality.”

The $33 million includes $17.3 million for the building itself and $15 million for upgrades for transit, bicycles and pedestrians. Another $710,880 will go to promoting housing in general by Visionary and its allies.

The funding came from the Affordable Housing and Sustainable Communities program. It aims to reduce climate-changing emissions by placing housing close to transit, businesses and other destinations.

Modesto’s project would rise a block from the newly restored depot that could serve an expanded Altamont Corridor Express by late 2026.

The building is expected to cost about $56 million, Ornelas said. About $7 million of this will come from city funds allocated in March. The $17.3 million just announced leaves about $32 million to be sought from investors who take advantage of tax credits for affordable housing.

The state funding also includes $6 million to buy a zero-emission locomotive for ACE and $9 million worth of new sidewalks, bicycle lanes and street trees near the apartment site.

ACE has run between Stockton and San Jose since 1998, timed for commuters to Bay Area jobs. It has funding for a northern branch to Sacramento and a southern extension to Merced.

All of the stations could be operating by 2030, which is also when the state hopes to complete its first high-speed rail segment between Merced and Bakersfield. This controversial project is under construction between Madera and Shafter, Kern County. The planners need several billion dollars more to reach Merced and Bakersfield.

Seventh Street Village would have one-, two- and three-bedroom apartments. The ground level would have 5,000 square feet for a Head Start program, community center and leasing office. The developer hopes to land a small grocery selling meat and produce in an additional 5,000 square feet on the ground level. Parking would be on the ground level and second floor.

Who these apartments are for

The apartments would be for households that make 30% to 80% of the area median income. For a family of four, that ranges from $23,910 at 30% to $63,760 at 80%. Rents are subsidized to make them affordable.

Seventh Street Village was among 21 projects getting a total of $757 million in the latest round of funding. They were recommended by staff members at the California Department of Housing and Community Development.

The final step Wednesday was a unanimous vote by the state’s Strategic Growth Council. The 10-member panel includes several of Gov. Gavin Newsom’s cabinet members and leaders in education and other fields.

One of the council members is UC Merced Chancellor Juan Sánchez Muñoz, who noted the future rail connection at Seventh Street Village.

“Having this there in Modesto is really critically important, an area of the state that is often less successful in procuring these kinds of dollars,” Munoz said.

Newsom commented in the latest funding in a news release from the council:

“California is reimagining communities around the state to address the ways our cities are changing — adapting to climate change and confronting housing scarcity,” he said. “These investments will help cut carbon pollution and build more affordable housing as we look forward to a clean energy future.”