The Redwood Downtown, a mixed-use development proposed by Community System Solutions, would include residential and retail units. The developer said he plans to demolish the old Daly's building to make way for the project. | Images courtesy of Community System Solutions City Manager Eric Wier said plans to demolish the old Daly’s building and replace it with a development that includes affordable housing could be the key to revitalizing Crescent City’s downtown. Councilors were enthusiastic about the proposal, especially when the developer, Community System Solutions CEO Mike Bahr assured them that the city would be protected should it not materialize and the state asks for its grant dollars back. Bahr said construction would start on The Redwood Downtown development at 3rd and J streets in March or April 2027. His goal is to have a ribbon cutting about a year later. Bahr also assured councilors that the complex would align with its downtown masterplan. “We worked with Don Arambula and actually changed the design of these buildings based on Don’s sketches and designs, so they’re now closer to what he is envisioning,” Bahr said, referring to the city’s consultant with Crandall Arambula, who is spearheading the city’s Downtown Masterplan. “We are 100% open to making sure that as this moves forward, it is a catalyst for all of your designs.” Crescent City councilors on Monday unanimously approved a loan agreement with Community System Solutions to build The Redwood Downtown using about $1.05 million in California Department of Housing and Community Development dollars. HCD awarded $650,000 in Prohousing Incentive Program funds to Crescent City in June 2024. The city also received $344,198 in Permanent Local Housing Allocation dollars in July 2024 and expects to receive a further $56,111 “once the 2023 allocation is released,” according to the city’s staff report. The city is required to use those dollars to build at least four units of affordable housing, Wier said. The Redwood Downtown would house a total of 27 units with about 80% of those being for low-income households and the other 20% being for moderate-income families. The Redwood Downtown would also house shops along 3rd Street, Wier said. The complex is expected to be a business incubator as well as give people a reason to stay in the downtown area in the evening, he said. “The project they are proposing, it’s approximately $11 million,” he said. “Our $1 million does not get you this. It’s going to take several different phases and components. However, a key piece for this is the money does need to be spent quickly and this project has assured us this will happen.” If CSS doesn’t build the four affordable housing units Crescent City is required to develop as a stipulation of its grant dollars, the company has signed a promissory note to reimburse the city, according to City Attorney Martha Rice. The city will also have a deed of trust for the property in question to ensure its loan to CSS is paid back, Rice said. “If we don’t make four units by June 2030 we have to give the money back (to the state),” she said. “Through these mechanisms, we’ve provided the city with security that if that happened we would be able to get the money back from the development. We’re doing that through a combination of security on the land itself as well as promissory notes from, not just the company itself, but from the investors.” According to Bahr, in addition to using the city’s PHLA and PIP funds, The Redwood Downtown will be eligible for further state grant dollars — he said he’s looking to fund about half of the project cost with those grants. Investors are expected to contribute about $1.5 million in project equity, he said. Bahr said he expects The Redwood Downtown to be eligible for about $3 million in tax credits. Investors would then get a tax write off they could use for 20 years, he said. The additional state grants will come from the California Certified Affordable Multifamily Developer Program, Bahr said. Union pension funds are also an option, he said. “The unions reinvest those funds into communities, basically, for workforce housing to put union folks to work,” he said. According to Bahr, about 3,500 to 5,000 square feet would be used for retail space. Although he said that the project requires Johnston’s Gift Garden Home to relocate to another building, his intent was not to “be rushing them out.” There will be multiple buildings with two primary residential entries and a third entry that will open into a green space. Wier said the design would reflect the city’s gateway project on Front Street with the “redwood coastal community” being a key element. There is also parking associated with the development. According to Bahr’s proposal to the city, there will be covered parking with a solar car port that charges an onsite battery storage system for emergencies. There will also be electric vehicle and electric bike charging stations. The plans call for 14 on-site parking spaces as well as 13 additional spaces along nearby streets, according to Bahr’s proposal. Though he wanted to be sure that Crescent City wouldn’t be left owing a lot of money to the state, Councilor Jason Greenough said he was excited — The Redwood Downtown is an improvement on the vacant building that’s currently there. “Our downtown isn’t on the 101 corridor,” he said. “So our businesses struggle because people don’t always come off that corridor.” His colleague, Mayor Pro Tem Candace Tinkler, who is working with the city on its Downtown Masterplan, said that Redwood Downtown complements those plans. “Not everything that is historic is actually historic,” she said, adding that she remembers getting a dress from the Daly’s Department Store as a 5-year-old. “Sometimes it’s just old.”