POWAY -- Pressured by the state to plan more low-income housing, city officials say they're thinking about turning some of the aging apartment buildings along Oak Knoll Road into homes for low- and very low-income residents.

The idea is tucked inside a housing plan the city plans to submit to the state in the next few months.

If approved, the proposal could help Poway meet a state-set affordable-housing goal and improve the look of Oak Knoll Road between Pomerado and Carriage roads. Parallel to, but one block south of, Poway Road, that section of Oak Knoll is home to several densely populated apartment complexes built in the 1970s and 1980s.

The city could accomplish the market-rate-to-affordable-housing conversion in one of two ways.

The first would see Poway buying one or more of the older buildings, fixing them up with redevelopment money and turning them over to a nonprofit organization to run as low-income housing.

Such an arrangement would be similar to ones already in place at several low-income housing complexes the city built from the ground up in recent years.

The other option is for the city to work out a deal with property owners willing to team up with Poway to create affordable housing. Participating owners would receive a city subsidy -- thereby guaranteeing them a steady stream of income -- in exchange for keeping the rent low on a specific number of their apartments.

Restrictions would be placed on the properties' deeds to ensure the units in question remain affordable forever after.

The ideas rely on state approval and on the city's ability to persuade property owners to either sell their complexes or enter into a partnership with the city. Senior city planner Patti Brindle said last week that city officials have not zeroed in on any specific Oak Knoll apartment buildings yet.

Still, she said, the idea holds promise.

"What they're looking for is getting a net increase in low-income units," said Brindle. "We're real excited about it."

Taking its 'fair share'

State law requires cities throughout California to submit an updated housing plan to the state every five years. The plans must show that each city has zoned enough land to accommodate its "fair share" of the housing state officials have said will be needed for an ever-growing population.

The mandate covers all levels of housing, including that built for people with high, moderate, low and very low incomes.

Although cities are required to plan for the additional housing, the law does not require any actual construction. And the state provides no money to help build homes for lower-income residents -- something typically left to the cities and counties because that type of housing is less profitable for private developers to construct, compared to higher-priced homes.

Households whose annual incomes are 50 percent or less of the median income for the region fall into the very low-income category, while those with incomes of 51 percent to 80 percent of the median are considered low income. In San Diego County, the median income is $63,400 for a family of four, according to the U.S. Department of Housing and Urban Development.

The housing plan Poway is working on now will be good through 2012 once it is approved. State officials have said they want to see 501 low and very low-income housing units included.

Brindle said Poway is somewhat ahead in terms of meeting the state goal, because the city constructed several affordable-housing complexes in the past few years, is about to open another, and has one more in the works. The city will be allowed to count all those units toward its state-mandated goal in the new housing plan, Brindle said.

However, Poway must still find room for an additional 290 affordable-housing units.

Road improvements already planned

That is getting increasingly hard to do as the city gets closer to build-out, Brindle said. That's where the existing apartment complexes come in.

Recent changes in state law suggest Poway can get credit for up to 94 affordable-housing units by converting some of its existing housing stock to that category. Forty of the converted apartments could be turned into homes for very low-income residents, and 54 could be earmarked for people in the low-income range under the state's rules, said Brindle.

The proposal would dovetail nicely with a $9.7 million capital improvement project the City Council approved for Oak Knoll Road last year. A sewer main that runs beneath the street will be replaced and the city will add curbs, sidewalks, gutters and other improvements along sections of the road that lack those amenities now as part of the work, scheduled to start this summer.

Poway redevelopment services Director Dena Fuentes said city officials do not plan to discuss the idea with Oak Knoll apartment complex owners until the state either signs off on the idea, or rejects it.

"We haven't structured the program; we're still talking about it conceptually," she said. "So a lot of the details still have to be worked out."

If the proposal becomes reality, though, the city's redevelopment agency would use so-called tax increment money to buy, fix up and/or subsidize the rents of apartment buildings. The increment is the difference between original and new property tax revenues in a redevelopment area, which usually sees its property values go up as new projects are completed.

Under the law, redevelopment agencies are required to spend at least 20 percent of the tax increment on affordable housing.

Existing tenants whose income excludes them from low-income housing would get money to help them relocate, Fuentes and Brindle said.

One Oak Knoll apartment complex owner, who asked not to be identified, said his company built the buildings in the mid-1980s and is in the process of completely remodeling them inside and out. He declined to say how much money he was putting into the project but said he would probably be reluctant to sell his property or enter into a partnership with the city.

Fuentes, however, said the conversion idea makes sense.

"To me, it's a very logical process because I think, as it relates to affordable housing, cities should compliment their production of new affordable housing with maintenance and enhancement of their existing housing stock," she said. "(That way) you are balancing new product with revitalization, rehabilitation of existing housing -- with the ultimate objective that those units are affordable."

- Contact staff writer Andrea Moss at (760) 739-6654 or amoss@nctimes.com.