The First Lutheran School near St. Mary Medical Center in Long Beach could be demolished and turned into a 100-unit affordable housing project if the city’s application for a $50 million state loan to finance it is approved.

Long Beach City Councilmembers will vote Tuesday on whether to allow the city to apply for the loan with AMCAL Multi-Housing Inc., the developer that agreed to purchase the land where the school sits at the corner of Linden Avenue and 10th Street.

AMCAL is proposing to knock down the First Lutheran School and build a four-story, 100-unit project in its place. All of the units would be reserved for extremely low and low-income households, with the exception of one manager’s unit located on the property, according to city documents.

The project would include a mix of one-, two- and three-bedroom units and would be accompanied by 125 underground parking spaces. The development would include amenities like a gym, a computer center, a children’s playground and a community room. The units would be reserved for families making 60% of the area median income, according to city documents. The median income for a family of four in Los Angeles County is $71,460.

Rick De La Torre, a spokesperson for the city’s Development Services Department, said that if the funding is approved, it would put AMCAL in a good position to apply for the “gap funding” it would need to complete the project. De La Torre said construction could begin as soon as December 2024.

The project would become the second affordable housing project that AMCAL has built in Long Beach. AMCAL also built the 102-unit Las Ventanas project on Pacific Coast Highway and Long Beach Boulevard, in addition to numerous other projects in Los Angeles.

The $50 million loan is being requested from the state’s Affordable Housing and Sustainable Communities program, which is intended to finance projects that would lower greenhouse gas emissions and benefit disadvantaged communities.

That can be done by building new affordable housing near mass transit options like this project, which is in an underserved community located two blocks east of the Metro A Line.

But according to city staff, only $35 million of the $50 million loan would be dedicated to financing the construction of the building. The remaining $15 million would go toward transportation improvements around the project.

One of those projects could be a long-planned cycle track project on Pacific Avenue between Ocean Boulevard and PCH, which would include a separated bike lane, sidewalk and curb improvements for better access in accordance with the Americans with Disabilities Act, along with improved bus stops along Atlantic Avenue.

The funding could also help buy three new fully electric buses.

The Long Beach Community Investment Company already granted a $5 million loan to AMCAL when it agreed to begin negotiations to buy the property in January 2022.

While the city will be part of the application, AMCAL would be liable for paying back the loans if the project is not finished. AMCAL is expected to indemnify the city, which is applying for the loan with AMCAL to increase the chances of the funding being awarded.

The city community investment company’s decision to provide $5 million in funding and waive about $554,000 in developers’ fees could also help the application succeed, the city said. The council will also vote to pursue a “pro-housing” designation for Long Beach from the state before applying for the loan, another factor that could help AMCAL’s pursuit of the loan.

In order to be designated as pro-housing, the city will have to prove that its zoning and land use is favorable to housing development, that it works to accelerate construction timeframes, reduces development costs and provides financial subsidies.

A separate city memo says that recent policies adopted by the council including the Land Use Element, an inclusionary housing policy and the city’s Housing Element, which outlines where thousands of potential units can be located by the end of the decade, will all help the city earn the pro-housing designation.

Once the project goes live, revenue generated from the rental units will help pay back the loan.

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