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San Fernando
Friday, Mar 29, 2024

Mixed-Use With City of San Fernando Twist

A mixed-use apartment project is coming to blue-collar San Fernando. But it’s not what you think. Forget the endless parade of upscale mixed-use developments common to Sherman Oaks or the Westside, all looking for the same “young professionals” to rent high-priced units. Instead, the San Fernando project is more in keeping with the city’s identity. Severyn Aszkenazy, a local developer, received approval last month from the city’s Council to construct a four-story complex with 101 units of affordable housing and retail. It would be in the heart of downtown at the entrance of the San Fernando Mall, a retail strip similar to Santa Monica’s Third Street Promenade. The 1150 San Fernando Road project would replace a historic J.C. Penney that operated for 60 years before closing two years ago. That means the 95,000-square-foot project will require significant demolition, though the façade of the J.C. Penney store will remain intact, as the city has deemed it historic. Aszkenazy declined comment on the project, but the commercial real estate community thinks the development would be well received. “The demand will be great for this project. The city is dying for this type of product,” said Jesus Henao, vice president at the Encino office of NAI Capital Inc. “But believe me, no one is moving out of Sherman Oaks to live in San Fernando.” In the last decade, just 156 low-income housing units have been built in San Fernando, many by the developer and his Aszkenazy Development Inc., according to the city. In the same span, 120 market-rate units were built. Another 33 low-income household units are under construction, as well as 12 market-rate units. Still, completion of the project is not entirely certain. City officials believe Aszkenazy still needs financing for the project, which has an estimated cost of $20 million. And while many in San Fernando seem excited by the mixed-use development, not everyone is pleased. Mayor Sylvia Ballin said she is “frustrated” by the project and is its most high-profile critic because the city could support a market-rate project. The largely working-class Latino city of 25,000 has a median household income of about $55,000, with 18.5 percent of the population living below the federal poverty line, according to the 2010 U.S Census. But that median is only slightly lower than the county’s $56,200, and the Public Policy Institute of California estimated that far more county residents – 27 percent – were living in poverty in 2011. “I do not support low-income housing right here. Our little 2.4-square-mile city doesn’t need more low-income housing,” Ballin said. “I don’t want us to become the low-income housing capital of California.” Long history Both the developer and the land have long histories in the city. Aszkenazy projects in San Fernando date back more than 20 years and include a medical office building, a library and a building that housed a Sears Roebuck & Co. catalogue store decades ago and is now home to Famsa, a popular Mexican furniture store. He also is owner of the local newspaper, the San Fernando Valley Sun, which he bought in 2001. Aszkenazy purchased the 60,000-square-foot J.C. Penney store at 1140 San Fernando in June 2004 for nearly $4.5 million, and a neighboring 14,000-square-foot retail store the following month for nearly $1.7 million, according to real estate data firm CoStar Group Inc. J.C. Penney came to San Fernando in 1920 and over the years operated out of multiple locations, before settling at 1140 San Fernando Road when the building was constructed in 1953. The 2012 closure amid a national sales downturn for the retailer left a massive vacancy in a strip of shops along San Fernando Boulevard. The strip, owned by multiple landlords, includes a home furnishings retailer, a T-Mobile shop, Payless Shoe Source and several vacancies. The guts of the J.C. Penney store will be razed, leaving only the front façade. The ground floor will consist of about 17,500 square feet of retail with three stories of one-bedroom apartments above, totaling about 77,500 square feet. The project also calls for 106 parking spaces on the ground level and a subterranean level. According to city documents, the project is in line with the San Fernando Corridor Specific Plan, which seeks to “breathe new life” into the area. Fred Ramirez, the city’s community development director, said preserving the old J.C. Penney façade was important to the local community. “This was a good outcome because we’re not only allowing for new development, but also preserving some city history,” he said. “A lot of developers would have wanted to demo the building and the city wouldn’t have liked that.” And while Ballin is vehemently opposed to the project, all the other councilmember’s were in favor. “I support the project, especially for what it could do to reinvigorate the mall,” said Councilman Joel Fajardo. “I’m under the assumption that they’re trying to begin this year, but construction products can be delayed for one reason or anything. But he’s got a great track record in San Fernando.” Project hurdles No one at the city is sure when the project will break ground, potentially due to the difficulty in financing affordable housing projects. Ramirez said he’s heard that getting the dollars to build is what’s holding up construction. “It’s entitled, but now we have to see if they’re going to gather all the funding needed for such a project,” he said. Financing is an all-too-familiar issue for developers seeking to build affordable housing. A lack of government support, most notably from the loss of state redevelopment dollars, has made it difficult to turn a profit on such projects. Few know the struggle better than Robin Hughes, chief executive of Los Angeles non-profit development firm Abode Communities. Her group has 33 affordable housing projects in Southern California, including several in the Valley. “The subsidy gap has really been a challenge,” she said. “After a mortgage and whatever tax credits are available, we used to look at public subsidy to cover 30 to 40 percent of a project. This means fewer projects will be built and communities have to rely on local government help.” For Ballin, one of the largest issues with the project is its location. She said the entire point of mixed-use product near retail is so that residents will patronize local shops and eateries. But with the project set aside for affordable-housing, she said there is a disconnect. “Where is the discretionary income going to come from? It’s a very frustrating project,” she said. Typically, affordable housing is set aside for aside for households making 80 percent or less of the L.A. County median income. That would amount to a little less than $45,000 a year for a family of four, and much of the community would likely qualify. Ramirez, however, thinks that even if the residents do not have a lot of discretionary income, a new housing project in the middle of downtown can only bring more dollars in. “I think this project will help,” he said. “Maybe it will even be a catalyst project that could bring more into the downtown area.”

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