Harinder Toor, owner Interjit S. Toor Construction, had hoped to be finished with his 28-unit apartment complex on Moffet Road by now. But after he won approval for the project north of the Richland Shopping Center in November 2021 interest rates soared to the point that the project no longer makes financial sense.
His is one of a number of approved projects in Ceres which have stalled because of high interest rates.
“We’re just waiting for the interest rates to come down so we can get back in the saddle and construct that 28-unit building,” said Toor. “The rates are just too high for anybody.”
Toor said he will need an estimated $5.5 million to build his project but taking out a construction loan of 11.5 percent – coupled with $900,000 for the permits and fees, increases in building materials, insurance and taxes – won’t allow the project to pencil out given what can be charged for rents. He said rates would have to be around 6 percent.
While the Federal Reserve has signaled it desires cutting rates this year, so far they have only gone up, said Toor.
“Then (Federal Reserve) chairman Powell basically said that ‘we’re essentially not in a hurry to bring down the rates’ and that basically ended any hopes of anything in March or May so hopefully in June the CPI (Consumer Price Index) and PPI (Producers Price Index) report comes down and then that’ll trigger for the feds to start cutting rates.”
Toor said he wouldn’t have asked the city to approve of his project in 2021 had he known that interest rates would be dramatically on the upswing.
The stifling effect of high interest rates is one of the hindrances to build much needed housing in California. Some experts say that an estimated 3 million housing units are needed to accommodate the state’s current population of 39 million.
“It’s not getting any better – not at all,” said Toor.
As he is forced to wait and see if the money supply loosens up, Toor plans to keep his project valid by seeking extensions.
As a small builder, Toor is staying afloat by building single-family homes when he can find land. He noted that one client spoke to him about building a hotel but backed out after the rates shot up and told Toor: “there’s no way I’m going to pay double the price on construction and then hope for a Hail Mary that I get clients to come in.’ Right now people are restricting their spending so he yanked that.”
He said another developer suspended plans to building 350 units of apartments near Carpenter and Hatch roads west of Ceres.
Interest rates appear to be stalling other construction projects approved for Ceres.
Dhillon Villas, a mixed-use project of 145-unit, high-density apartment complex behind a proposed commercial strip mall on Mitchell Road was approved in a 3-2 vote of the Ceres City Council in March, 2023. The site remains vacant opposite the Ceres Post Office.
While the AM/PM Mini-Mart at the northwest corner of Service and Morgan roads has been built, there is no sign of development of 64 units of apartments approved as part of the package in September 2019. Jaskarn Chahal of Chahal Investments, LLC of Ceres was the applicant.
A vast number of other projects which were approved by the Ceres Planning Commission and Ceres City Council over the past decade also have not started construction. They include:
• A commercial shopping center of five buildings on 3.3 acres at the northeast corner of Mitchell Road and Roeding Road. Surgit Singh won approval of the project in June 2022.
• Family Pizza. In October 2022 the Ceres Planning Commission approved Sukhi Mann, owner of the Family Pizza at 2921 Whitmore Avenue, to build a 11,900-square-foot pizza restaurant and bar on a vacant 1.16-acre site at 3113 E. Whitmore Avenue, just east of the Del Taco and medical office properties.
• The Holy Apostolic Catholic Assyrian Church of the East won approval in July 2019 to build a 7,539-square-foot church at 1748 Evans Road but no development has occurred. The church also won a Conditional Use Permit (CUP) for the church to continue operating the existing Evanshire wedding event venue at the site.
• A customer of Raising Cane’s on Hatch Road recently complained to the Courier about the awkward parking lot situation, which was expected only to be temporary until the adjoining project to turn the old Kmart building into a Public Storage is completed. But there has been no sign of development activity at the boarded-up building.
• In May 2021, Sam Khacho won approval to subdivide 12 acres of his commercial property on Mitchell Road near Highway 99, laying the groundwork for SamBella Plaza, a shopping center which hasn’t seen any advancement.
• Whitmore Towers, a proposed 7,280-square-foot retail building focused on eating establishments on the uniquely shaped 1.13-acre island at the corner of Whitmore and Central avenues opposite Ceres High School, has also stalled. The project was kept alive in July 2023 with a two-year extension of the approved conditional use permit.
