Crossroads Village file photo

Owners of a Project HomeKey property in Fresno received a $38 million forgivable loan from the State of California, closing the funding gap to turn the former motel into long-term, affordable rentals.

The loan from the California Housing Accelerator Fund will provide the necessary money for real estate development companies RH Community Builders and Upholdings to turn the Crossroads Village at Blackstone and Dakota avenues, formerly known as the Smugglers Inn, into permanent housing.

The project is estimated to cost $65.2 million. Additional funding has come via non-forgivable loans from the state’s No Place Like Home and Housing for a Healthy California programs, according to Jessica Berzac, principal with UPholdings.

Berzac said following high demand for affordable housing projects, Low-Income Housing Tax Credits — which developers would normally use for low-income housing — were becoming harder to secure. The State of California thus opened the California Housing Accelerator Fund to provide funding to projects.

The Fund has sent $114.4 million to projects in inland California, awarded to a project each in San Bernadino, Fresno, Kern, Riverside and Imperial counties. Crossroads Village was the largest project and the biggest recipient in the region. Just under $54 million remain in available funds, according to the California Department of Housing and Community Development.

Berzac said qualifying for the loan was extremely competitive and qualifying for the other loans helped the process.

When RH Community Builders and UPholdings received money from Project HomeKey to purchase the property, part of the covenant with the State of California required units become capable of permanently housing people.

That means adding in full kitchens as well as some redesign layout.

In a recent interview, Berzac said that all units would have outdoor access, rather then being only accessible through a hallway, making them feel more like apartments than hotel rooms.

The total number of units will be 141 of one, two and three-bedroom rooms.

The property was purchased using Project HomeKey money for $14.8 million in 2020. The hotel opened for transitional housing in February 2021. Construction is expected to begin spring 2023 and will take a year-and-a-half to complete.

Operators are working with current tenants to secure housing for them in the interim, Berzac said. Based on demand, she expects it will only take a few months to lease back up.