ELK GROVE, CA (MPG) - The Elk Grove City Council approved a $4.2 million loan to Mutual Housing California to develop an 89-unit senior affordable housing project in Old Town Elk Grove during its April 23 meeting.

The project will be located on a city-owned parcel on Elk Grove Boulevard near Webb Street, west of Waterman Road, and close to the new Elk Grove Library. The city acquired the land in 2023.

The loan consists of $1.2 million in land value and $3 million in cash, with a 4% interest rate over a 35-year term. Mutual Housing must secure full project funding by Dec. 31, 2026, to move forward with construction.

The total estimated cost of the project is $51 million, or about $571,000 per unit. The city’s contribution subsidizes approximately $47,727 per affordable unit. The agreement ensures that the units will remain affordably priced for 55 years.

 “This is a much-needed project addressing our affordable housing needs, particularly for seniors,” said Mayor Bobbie Singh-Allen. “It’s great to partner with someone who has been doing the work statewide.”

The proposed development will feature primarily studio, one-bedroom and two-bedroom apartments, with one three-bedroom unit reserved for on-site property management. Amenities will include a community room with fitness equipment and computers, outdoor courtyards, a bike rack, an elevator and laundry facilities.

Construction is expected to begin in February 2026 and conclude in September 2027. A planning entitlement application for the project has been submitted but not yet approved.

City officials expressed strong support for the project despite acknowledging some financial risks.

Housing and Public Services Manager Sarah Bontrager noted that rental revenue is expected to rise more slowly than operating expenses and that the replacement reserve may be insufficient to maintain the property over 55 years. Annual payments to the city are also expected to be minimal.

Nevertheless, Bontrager emphasized the city’s need for more senior housing.

“We have a good partner in Mutual Housing. They have completed more than 20 affordable housing projects in Northern California, though this will be their first in Elk Grove,” Bontrager said. She also noted, “We have not built senior projects since 2011, so it is time to do that.”

She added, “There are reasons, despite the weaknesses, to fund the project,” 

“We need more senior housing in the city,” Bontrager said. “We do have a strong housing market, and these units are expected to be consistently full, especially with the income amount it is targeting.”

Council Members praised the project’s design and location.

Darren Suen said it would be a “transformation of the streetscape in Old Town” and highlighted the walkability for seniors. 

Rod Brewer commended the project’s focus on safety features, while Kevin Spease called it a “fantastic addition” to the area. 

Mutual Housing of California was granted exclusive development rights in February 2024 after being selected from 12 proposals reviewed by the city’s Affordable Housing Committee.