HomeMy WebLinkAbout2025-09-23; City Council; 11; Agreement for Property Management Services for the Chestnut Apartments and a Community Development Block Grant loan not to exceed $500,000 to address immediate repairs toCA Review CDS
Meeting Date: Sept. 23, 2025
To: Mayor and City Council
From: Geoff Patnoe, City Manager
Staff Contact: Mandy Mills, Housing & Homeless Services Director
mandy.mills@carlsbadca.gov, 442-339-2907
Nicole Piano-Jones, Senior Program Manager
nicole.pianojones@carlsbadca.gov, 442-339-2191
Subject: Agreement for Property Management Services for the Chestnut
Apartments and a Community Development Block Grant loan not to
exceed $500,000 to address immediate repairs to the property
District: 1
Recommended Actions
1) Adopt a resolution authorizing the City Manager to execute an agreement for property
management services and all other documents necessary to have Kingdom BP LLC manage
and operate the Chestnut Apartments at 945 Chestnut Avenue; and
2) Adopt a resolution approving a forgivable loan in an amount not to exceed $500,000 in
Community Development Block Grant funds to make immediate repairs at the Chestnut
Apartments affordable housing project.
Executive Summary
In 2014, the city provided a $3.1 million loan to Solutions Chestnut, LLC, a subsidiary of
Solutions for Change, Inc. to acquire the Chestnut Apartments, a 16-unit apartment complex at
945 Chestnut Ave., to provide affordable housing for homeless families.
The loan was granted with conditions that require the project to include major rehabilitation,
including the relocation of the existing tenants, through permanent financing obtained by
Solutions for Change. However, Solutions for Change was unable to secure funding to complete
the project. Solutions for Change sought to end its ownership of the property and proposed to
transfer ownership of the property to the City of Carlsbad for its continued use as affordable
housing in exchange for cancellation of the loan.
The City Council authorized the acquisition of Chestnut Apartments from Solutions for Change
on May 21, 2024. Details of the property, the project’s background and the transfer were
included in the May 2024 staff report provided as Exhibit 3.
Sept. 23, 2025 Item #11 Page 1 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
In June 2024, city staff issued a request for proposals to identify a new owner for permanent
ownership and operation of the affordable housing project. Although the city did not receive
any proposals in response to its request, the city received two unsolicited proposals later in
2025, one from Mirka Investments and another from Kingdom Development, Inc., the manager
of Kingdom BP LLC, collectively referred to as Kingdom.
City staff evaluated the two proposals and are pursuing negotiations with Kingdom to acquire
the property. In its proposal, Kingdom said it would need a one-year period to arrange the
financing and other subsidies necessary to make the acquisition of the property feasible.
City staff are recommending that Kingdom temporarily manage and operate the property as
affordable housing as it currently does for Solutions for Change during the interim between
when the city completes its acquisition of the property from Solutions for Change and when
Kingdom completes its acquisition of the property. City staff are recommending that the City
Council authorize the City Manager to execute an agreement for property management
services with Kingdom to manage and operate the Chestnut Apartments for this interim period,
during which the City of Carlsbad will own the property.
City staff are also recommending that the City Council approve a forgivable loan in an amount
not to exceed $500,000 in Community Development Block Grant funds to address immediate
repairs needed at the Chestnut Apartments affordable housing project.
Explanation & Analysis
Background
The $3.1 million loan to Solutions for
Change that the City Council approved in
2014 was funded with $2,646,000 from
the city’s Housing Trust Fund and
$454,000 from Community
Development Block Grant (CDBG) funds.
Solutions for Change was to use the loan
funds to acquire the 16 units on
Chestnut Avenue and provide
permanent affordable housing for
homeless families.
The agreement with the city required
Solutions for Change to obtain financing
and initiate work to plan, design and
obtain permits for the substantial
rehabilitation of the apartment project by Dec. 31, 2019. Solutions for Change was unable to
secure the funding needed to complete the project because of a significant change in the
operational requirements associated with governmental funding. Solutions for Change wants to
end its ownership of the property and has proposed transferring the property to the City of
Carlsbad for its continued use as affordable housing in exchange for cancellation of the loan. On
May 21, 2024, the City Council authorized the City Manager to execute all documents necessary
to complete the acquisition of 945 Chestnut Ave. from Solutions for Change.
The property at 945 Chestnut Ave.
Sept. 23, 2025 Item #11 Page 2 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Developer
Kingdom has already taken ownership of other affordable properties which Solutions for
Change previously owned and Kingdom currently manages and operates Chestnut Apartments
under an operating agreement with Solutions for Change.
Kingdom is a California nonprofit public benefit corporation that has acquired and/or
developed 42 affordable housing communities since its inception in 2015. It has demonstrated
experience with tax credit financing and management of projects that range in size, location
and type. It has eight projects in San Diego County. All neighboring jurisdictions provided a
positive reference when asked about their experience with Kingdom as a partner in affordable
housing.
Interim period of city ownership
In its proposal, Kingdom said it would need a one-year period to arrange the financing and
other subsidies necessary to obtain its financing and complete its acquisition of the property.
The city will be the temporary owner of the property during this period. Kingdom is currently
managing and operating the property under a contract with Solutions for Change.
City staff are recommending that the City Council authorize the City Manager to execute an
agreement for property management services with Kingdom to manage and operate the
Chestnut Apartments during the interim period when the City of Carlsbad owns the property.
During this interim, the property will continue to be used as a 100% affordable housing project.
Because the existing loan will be terminated, the City of Carlsbad will terminate the loan and
remove the current regulatory agreement and the deed of trust, which secure the existing loan
against the property. The required affordability requirements will be identified in the new
agreement for property management services and CDBG loan agreement.
The future acquisition and rehabilitation of Chestnut Apartments will continue to provide
affordable housing for the current low- and moderate-income tenants. When the city sells the
property to Kingdom, the city will be recording a new 55-year regulatory agreement against the
property that will include the minimum affordability requirements consistent with the
provisions of the Surplus Land Act1 and restrict the property to the affordability requirements
for 55 years.
Before the property ownership can be transferred to Kingdom, the City Council will need to
review and approve the terms of the sales agreement, along with a new 55-year regulatory
agreement and an anticipated new loan agreement. These will be presented to the City Council
once the other subsidies and permanent financing are in place.
If the proposed agreement is approved, city staff will enter into a CDBG agreement with
Kingdom to carry out the needed repairs to the property in accordance with all applicable
regulatory requirements. The forgivable loan will require Kingdom to provide affordable
housing for the low- and moderate-income tenants for five years.
1 California’s Surplus Land Act (Government Code Sections 54220-54234) requires local government agencies to
make local public land available for affordable housing when it is no longer needed for government purposes.
Sept. 23, 2025 Item #11 Page 3 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Community Development Block Grant loan
The entire property will be renovated in one to two years when complete financing is in place
and Kingdom takes ownership of the property. However, there are a number of immediate
repairs needed at the property that should not be delayed. These repairs include roofing repairs
to prevent further water intrusion, balcony repairs and water heater replacements. The project
does not generate enough cash flow to fund these projects, so city staff are recommending that
the City Council approve a forgivable loan in an amount not to exceed $500,000 in Community
Development Block Grant funds to complete the repairs needed immediately.
A total of $1,202,291 was received in CDBG program income during FY 2024-25, much of which
was received near the end of the fiscal year. This funding comes from program income
received on CDBG-funded activities, such as the purchase and resale of properties under the
city’s Affordable Resale Program. CDBG program income must be allocated in the same manner
as entitlement funds and comply with all CDBG regulations.
On April 29, 2025, the City Council approved the FY 2025-26 CDBG Annual Action Plan, which
includes the priorities and funding awards for projects to receive CDBG funding this year. The
plan identified the goal to increase and preserve affordable housing as a high priority and the
allocation of program income for affordable housing activities, including acquisition and
rehabilitation of affordable rental housing was approved. To maintain compliance with CDBG
expenditure requirements, city staff identified these projects as eligible uses on which CDBG
funds could be spent prior to the expenditure deadline in spring 2026.
Fiscal Analysis
There is no fiscal impact to the General Fund related to the action of authorizing an agreement
for property management services with Kingdom to manage and operate the Chestnut
Apartments. Management Fees for Kingdom and routine maintenance and repairs will come
from rental proceeds from the project. Rental proceeds are not sufficient, however, to fund the
immediate large repairs identified for the project. The requested forgivable loan in an amount
not to exceed $500,000 in Community Development Block Grant funds will be offset by
$500,000 in Community Development Block Grant revenue, which is received on a
reimbursement basis from the federal government. City staff are also recommending that the
City Council authorize appropriations for the expenditures in the Community Development
Block Grant Special Revenue Fund and authority for the City Manager to execute the CDBG
agreement with Kingdom.
Authorization for the future sale of the Chestnut Apartments property to Kingdom will be
brought forward to the City Council once a complete financing package is established. But there
is no anticipated impact to the General Fund because any future financial proposal will use
funds from the city’s Housing Trust Fund. Fiscal impacts to the Housing Trust Fund will be
clearly outlined at that time.
Sept. 23, 2025 Item #11 Page 4 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Next Steps
On May 21, 2024, the City Council authorized the City Manager to act on behalf of the City of
Carlsbad for all future actions necessary related to the loan reconveyance and property transfer
process from Solutions for Change to the City of Carlsbad. City staff will execute an agreement
for property management services with Kingdom for management and operations of the
Chestnut Apartments for the interim period when the City of Carlsbad owns the property. The
City Manager, or designee, will appropriate $500,000 in Community Development Grant funds
to the FY 2025-26 budget. Staff will also enter into a separate CDBG agreement with Kingdom
to carry out the immediately needed repairs in accordance with all CDBG regulatory
requirements.
Environmental Evaluation
The proposed action to enter into an Agreement for Property Management Services for existing
housing is categorically exempt from environmental review under CEQA Guidelines Section
15301 because it involves the leasing, operation, maintenance and minor alteration of existing
facilities with negligible or no expansion of the existing or former use. No exceptions to the
categorical exemption as set forth in CEQA Guidelines Section 15300.2 or Carlsbad Municipal
Code Section 19.04.070(C) apply.
The proposed action of providing a loan for minor repairs to an existing apartment complex
(roofing, balcony repair and water heater replacement) is categorically exempt from
environmental review under CEQA Guidelines Section 15301 because it involves the
maintenance, repair or minor alteration of existing facilities with negligible or no expansion of
the existing or former use. No exceptions to the categorical exemption as set forth in CEQA
Guidelines Section 15300.2 or Carlsbad Municipal Code Section 19.04.070(C) apply.
Exhibits
1. City Council resolution – Agreement for Property Management Services
2. City Council resolution – Community Development Block Grant Loan
3. May 21, 2024, staff report (on file in the Office of the City Clerk)
Sept. 23, 2025 Item #11 Page 5 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Exhibit 1 RESOLUTION NO. 2025-219
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT FOR PROPERTY MANAGEMENT SERVICES AND ALL OTHER
DOCUMENTS NECESSARY TO HAVE KINGDOM BP LLC MANAGE AND
OPERATE THE CHESTNUT APARTMENTS AT 945 CHESTNUT AVENUE
WHEREAS, on Dec. 24, 2014, the City of Carlsbad executed a loan of $2,646,000 from the city’s
Housing Trust Fund to Solutions for Change to acquire Chestnut Apartments, a 16-unit apartment
complex at 945 Chestnut Ave., to provide affordable housing for homeless families; and
WHEREAS, Solutions for Change decided to turn the property over to the City of Carlsbad in lieu
of loan repayment since it cannot fulfill the obligations identified in the 2014 loan documents recorded
against the property; and
WHEREAS, on May 21, 2024, the City Council approved Resolution No. 2024-111, which
authorized the acquisition of Chestnut Apartments from Solutions for Change; and
WHEREAS, on May 21, 2024, the City Council approved Resolution No. 2024-112, which
authorized staff to issue a request for proposals with the intent of identifying a new owner; and
WHEREAS, in June 2024, city staff released a request for proposals, to identify a new owner for
permanent ownership and operation of the affordable housing project; and
WHEREAS, no proposals were received during the prescribed RFP timeline; and
WHEREAS, two unsolicited proposals were received after the RFP deadline; and
WHEREAS, city staff evaluated the two proposals and are pursuing negotiations with Kingdom
Development, Inc., the manager of Kingdom BP LLC, or another related business entity, to acquire the
property. Kingdom Development, Inc. will need approximately one year to arrange the financing and
other subsidies necessary to complete the acquisition of the property from the City of Carlsbad; and
WHEREAS, during the period of time the City of Carlsbad will own the property, the city desires
to contract with Kingdom BP LLC, which is managed by Kingdom Development, Inc., to manage and
operate the property as affordable housing; and
WHEREAS, management fees for Kingdom BP LLC and routine maintenance and repair costs will
come from rental proceeds from the project.
Sept. 23, 2025 Item #11 Page 6 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.The proposed action to enter into an Agreement for Property Management Services for
existing housing is categorically exempt from environmental review under CEQA
Guidelines Section 15301 because it involves the leasing, operation, maintenance and
minor alteration of existing facilities with negligible or no expansion of the existing or
former use. No exceptions to the categorical exemption as set forth in CEQA Guidelines
Section 15300.2 or Carlsbad Municipal Code Section 19.04.070(C) apply.
3. That the City Manager, or designee, is authorized to execute an Agreement for Property
Management Services (Attachment A) and all documents necessary for Kingdom BP LLC
to manage and operate the Chestnut Apartments at 945 Chestnut Avenue as a 100%
affordable housing project.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the 23rd day of September, 2025, by the following vote, to wit:
AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.
NAYS: None.
ABSTAIN: None.
ABSENT: None.
______________________________________
KEITH BLACKBURN, Mayor
______________________________________
SHERRY FREISINGER, City Clerk
(SEAL)
Sept. 23, 2025 Item #11 Page 7 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 1 City Attorney Approved Version 5/30/2025
AGREEMENT FOR PROPERTY MANAGEMENT SERVICES
FOR CHESTNUT APARTMENTS
(KINGDOM BP, LLC)
THIS AGREEMENT (“Agreement”) is made and entered into as of the ______________ day of
_________________________, 20___, by and between the City of Carlsbad, California, a municipal
corporation ("City") and Kingdom BP, LLC, a California Limited Liability Company, ("Contractor").
RECITALS
A.WHEREAS, the City of Carlsbad, a municipal corporation (“City”), is the owner of certain
property located at 945 Chestnut Avenue in the city of Carlsbad, California, developed as affordable
housing (“Property”); and
B.WHEREAS, City requires the professional services of a property management company
that is experienced in management and operations of affordable apartments; and
C.WHEREAS, Contractor previously performed this work under alternate ownership and has
submitted a proposal to the City affirming its willingness and ability to perform such work at the Property;
and
D.WHEREAS, Contractor has the necessary experience in providing professional services and
advice related to on-site property management for affordable apartment rentals.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained in this
Agreement, City and Contractor agree as follows:
1.SCOPE OF WORK
City retains Contractor to perform, and Contractor agrees to render, those property management services
that are defined in attached Exhibit "A" ("Services"), which is incorporated by this reference in accordance
with this Agreement’s terms and conditions.
2.STANDARD OF PERFORMANCE
While performing the Services, Contractor will exercise the reasonable professional care and skill
customarily exercised by reputable members of Contractor's profession practicing in the Metropolitan
Southern California area and will use reasonable diligence and best judgment while exercising its
professional skill and expertise.
3.TERM
The initial term of this Agreement will be effective until Dec. 31, 2026. The City Manager may amend the
Agreement to extend it for four (4) additional one (1) year(s) or parts of a year. Extensions will be based
upon a satisfactory review of Contractor's performance, City needs, and appropriation of funds by the City
Council. The parties will prepare a written amendment indicating the effective date and length of the
extended Agreement.
4.TIME IS OF THE ESSENCE
Time is of the essence for each and every provision of this Agreement.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Attachment A
Sept. 23, 2025 Item #11 Page 8 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
September
24th
25
Page 2 City Attorney Approved Version 5/30/2025
5.COMPENSATION
The total Management Fee payable during the initial Agreement term shall be sixty-two dollars and fifty
cents ($62.50) Per-Unit-Per-Month (PUPM) for sixteen (16) rental units, payable on the first business day
of each month, not to exceed twelve thousand dollars ($12,000.00) annually. Contractor can also receive
reimbursement for payroll and benefits costs related to Contractor staff directly performing
administrative and professional services to the Property, including but not limited to accounting, property
management, and maintenance, as approved in advance by the City in the Annual Operating Budget. No
other compensation for the Services will be allowed except for items covered in accordance with the
standards set forth in this Agreement and approved in the Annual Operating Budget at a level of
expenditure comparable to those of the preceding Operating Year. If City elects to extend the Agreement,
the amount shall not exceed a 3% annual increase per Agreement year.
6.STATUS OF CONTRACTOR
Contractor will perform the Services in Contractor's own way as an independent contractor and in pursuit
of Contractor's independent calling, and not as an employee of City. Contractor will be under the control
of City only as to the result to be accomplished, but will consult with City as necessary. The persons used
by Contractor to provide services under this Agreement will not be considered employees of City for any
purposes.
The payment made to Contractor pursuant to this Agreement will be the full and complete compensation
to which Contractor is entitled. City will not make any federal or state tax withholdings on behalf of
Contractor or its agents, employees or subcontractors. City will not be required to pay any workers'
compensation insurance or unemployment contributions on behalf of Contractor or its employees or
subcontractors. Contractor agrees to indemnify City within thirty (30) days for any tax, retirement
contribution, social security, overtime payment, unemployment payment or workers' compensation
payment which City may be required to make on behalf of Contractor or any agent, employee, or
subcontractor of Contractor for work done under this Agreement. At City’s election, City may deduct the
indemnification amount from any balance owing to Contractor.
7.SUBCONTRACTING
Contractor will not subcontract any portion of the Services for property management without prior
written approval of City.
Contractor can negotiate and execute contracts for the furnishing of utilities and maintenance and other
services for necessary repairs and maintenance without prior written approval of City. Contractor will be
responsible for payment of subcontractors. Contractor will bind every subcontractor and every
subcontractor of a subcontractor by the terms of this Agreement applicable to Contractor's work unless
specifically noted to the contrary in the subcontract and approved in writing by City. Contractor
acknowledges that this work is subject to the procurement requirements in Carlsbad Municipal Code
section 3.28.080 and that any construction, alteration, demolition, installation or repair work
implemented by Contractor may constitute “public work” under Labor Code section 1720 et seq.
Contractor shall be responsible for complying with the applicable procurement requirements and
prevailing wage law. Contractor shall include the following provisions in any contract for this work:
The general prevailing rate of wages for each craft or type of worker needed to execute the Contract
shall be those as determined by the Director of Industrial Relations pursuant to Sections 1770, 1773 and
1773.1 of the Labor Code. Pursuant to Section 1773.2 of the Labor Code, a current copy of the applicable
wage rates is on file in the Office of the City Engineer and will be made available upon request.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 9 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 3 City Attorney Approved Version 5/30/2025
Contractor shall not pay less than the said specified prevailing rates of wages to all workers employed
by him or her in execution of the Contract.
Contractor shall be responsible for insuring compliance with provisions of section 1777.5 of the Labor
Code and section 4100 et seq. of the Public Contracts Code, "Subletting and Subcontracting Fair Practices
Act." The City Engineer is the City's "duly authorized officer" for the purposes of section 4107 and 4107.5.
The provisions of Part 7, Chapter 1, of the Labor Code commencing with section 1720 shall apply to the
Contract for work.
A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the
requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract
for public work, unless currently registered and qualified to perform public work pursuant to Section
1725.5. This project is subject to compliance monitoring and enforcement by the Department of
Industrial Relations.
Contractor and any subcontractors shall comply with Section 1776 of the California Labor Code, which
generally requires keeping accurate payroll records, verifying and certifying payroll records, and making
them available for inspection. Contractor shall require any subcontractors to comply with Section 1776.
8.OTHER CONTRACTORS
City reserves the right to employ other Contractors in connection with the Services.
9.INDEMNIFICATION
Contractor agrees to defend (with counsel approved by City), indemnify, and hold harmless the City and
its officers, elected and appointed officials, employees and volunteers from and against all claims,
damages, losses and expenses including attorneys fees arising out of the performance of the work
described in this Agreement caused by any negligence, recklessness, or willful misconduct of Contractor,
any subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any
of them may be liable.
If Contractor’s obligation to defend, indemnify, and/or hold harmless arises out of Contractor’s
performance as a “design professional” (as that term is defined under California Civil Code Section
2782.8), then, and only to the extent required by California Civil Code Section 2782.8, which is fully
incorporated in this Agreement, Contractor’s indemnification obligation shall be limited to claims that
arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of Contractor, and,
upon Contractor obtaining a final adjudication by a court of competent jurisdiction. Contractor’s liability
for such claim, including the cost to defend, shall not exceed Contractor’s proportionate percentage of
fault.
The parties expressly agree that any payment, attorneys fee, costs or expense City incurs or makes to or
on behalf of an injured employee under City’s self-administered workers’ compensation program is
included as a loss, expense or cost for the purposes of this section, and that this section will survive the
expiration or early termination of this Agreement.
10.INSURANCE
Contractor will obtain and maintain for the duration of the Agreement and any and all amendments,
insurance against claims for injuries to persons or damage to property which may arise out of or in
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 10 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 4 City Attorney Approved Version 5/30/2025
connection with performance of the services by Contractor or Contractor’s agents, representatives,
employees or subcontractors. The insurance will be obtained from an insurance carrier admitted and
authorized to do business in the State of California. The insurance carrier is required to have a current
Best's Key Rating of not less than "A-:VII"; OR with a surplus line insurer on the State of California’s List of
Approved Surplus Line Insurers (LASLI) with a rating in the latest Best’s Key Rating Guide of at least “A:X”;
OR an alien non-admitted insurer listed by the National Association of Insurance Commissioners (NAIC)
latest quarterly listings report.
10.1 Coverages and Limits. Contractor will maintain the types of coverages and minimum limits
indicated below, unless Risk Manager or City Manager approves a lower amount. These minimum
amounts of coverage will not constitute any limitations or cap on Contractor's indemnification obligations
under this Agreement. City, its officers, agents and employees make no representation that the limits of
the insurance specified to be carried by Contractor pursuant to this Agreement are adequate to protect
Contractor. If Contractor believes that any required insurance coverage is inadequate, Contractor will
obtain such additional insurance coverage, as Contractor deems adequate, at Contractor's sole expense.
The full limits available to the named insured shall also be available and applicable to City as an additional
insured.
10.1.1 Commercial General Liability (CGL) Insurance. Insurance written on an “occurrence” basis,
including personal and advertising injury, with limits no less than $2,000,000 per occurrence. If a general
aggregate limit applies, either the general aggregate limit shall apply separately to this project/location
or the general aggregate limit shall be twice the required occurrence limit.
10.1.2 Automobile Liability. (if the use of an automobile is involved for Contractor's work for
City). $2,000,000 combined single-limit per accident for bodily injury and property damage.
10.1.3 Workers' Compensation and Employer's Liability. Workers' Compensation limits as
required by the California Labor Code. Workers' Compensation will not be required if Contractor has no
employees and provides, to City's satisfaction, a declaration stating this.
10.1.4 Professional Liability. Errors and omissions liability appropriate to Contractor’s profession
with limits of not less than $1,000,000 per claim. Coverage must be maintained for a period of five years
following the date of completion of the work.
10.2 Additional Provisions. Contractor will ensure that the policies of insurance required under this
Agreement contain, or are endorsed to contain, the following provisions:
10.2.1 City will be named as an additional insured on Commercial General Liability which shall
provide primary coverage to City.
10.2.2 Contractor will obtain occurrence coverage, excluding Professional Liability, which will be
written as claims-made coverage.
10.2.3 If Contractor maintains higher limits than the minimums shown above, City requires and
will be entitled to coverage for the higher limits maintained by Contractor. Any available insurance
proceeds in excess of the specified minimum limits of insurance and coverage will be available to City.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 11 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 5 City Attorney Approved Version 5/30/2025
10.2.4 This insurance will be in force during the life of the Agreement and any extensions of it
and will not be canceled without thirty (30) days prior written notice to City sent by certified mail pursuant
to the Notice provisions of this Agreement.
10.3 Providing Certificates of Insurance and Endorsements. Prior to City's execution of this Agreement,
Contractor will furnish certificates of insurance and endorsements to City.
10.4 Failure to Maintain Coverage. If Contractor fails to maintain any of these insurance coverages,
then City will have the option to declare Contractor in breach, or may purchase replacement insurance or
pay the premiums that are due on existing policies in order to maintain the required coverages. Contractor
is responsible for any payments made by City to obtain or maintain insurance and City may collect these
payments from Contractor or deduct the amount paid from any sums due Contractor under this
Agreement.
10.5 Submission of Insurance Policies. City reserves the right to require, at any time, complete and
certified copies of any or all required insurance policies and endorsements.
11.BUSINESS LICENSE
Contractor will obtain and maintain a City of Carlsbad Business License for the term of the Agreement, as
may be amended from time-to-time.
12.ACCOUNTING RECORDS
Contractor will maintain complete and accurate records with respect to costs incurred under this
Agreement. All records will be clearly identifiable. Contractor will allow a representative of City during
normal business hours to examine, audit, and make transcripts or copies of records and any other
documents created pursuant to this Agreement. Contractor will allow inspection of all work, data,
documents, proceedings, and activities related to the Agreement for a period of four (4) years from the
date of final payment under this Agreement.
13.OWNERSHIP OF DOCUMENTS
All work product produced by Contractor or its agents, employees, and subcontractors pursuant to this
Agreement is the property of City. In the event this Agreement is terminated, all work product produced
by Contractor or its agents, employees and subcontractors pursuant to this Agreement will be delivered
at once to City. Contractor will have the right to make one (1) copy of the work product for Contractor’s
records.
14.COPYRIGHTS
Contractor agrees that all copyrights that arise from the services will be vested in City and Contractor
relinquishes all claims to the copyrights in favor of City.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 12 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 6 City Attorney Approved Version 5/30/2025
15.NOTICES
The name of the persons who are authorized to give written notice or to receive written notice on behalf
of City and on behalf of Contractor under this Agreement are:
For City: For Contractor:
Name Nicole Piano-Jones Name William Leach
Title Senior Program Manager Title Authorized Officer
Dept CITY OF CARLSBAD
Housing & Homeless Services
Company KINGDOM BP, LLC
Address 1200 Carlsbad Village Dr
Carlsbad, CA 92008
Address 6451 Box Springs Road
Riverside, CA 92507
Phone 442-339-2191 Phone 951-538-6244
Email nicole.pianojones@carlsbadca.gov Email william@kingdomdevelopment.net
Each party will notify the other immediately of any changes of address that would require any notice or
delivery to be directed to another address.
16.CONFLICT OF INTEREST
Contractor shall file a Conflict-of-Interest Statement with the City Clerk in accordance with the
requirements of the City of Carlsbad Conflict of Interest Code. Contractor shall report investments or
interests as required in the City of Carlsbad Conflict of Interest Code.
Yes ☐ No ☒
If yes, list the contact information below for all individuals required to file:
Name Email Phone Number
17.GENERAL COMPLIANCE WITH LAWS
Contractor will keep fully informed of federal, state and local laws and ordinances and regulations which
in any manner affect those employed by Contractor, or in any way affect the performance of the Services
by Contractor. Contractor will at all times observe and comply with these laws, ordinances, and
regulations and will be responsible for the compliance of Contractor's services with all applicable laws,
ordinances and regulations.
Contractor will be aware of the requirements of the Immigration Reform and Control Act of 1986 and will
comply with those requirements, including, but not limited to, verifying the eligibility for employment of
all agents, employees, subcontractors and consultants whose services are required by this Agreement.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 13 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 7
18.CALIFORNIA AIR RESOURCES BOARD (CARB) ADVANCED CLEAN FLEETS REGULATIONS
Contractor’s vehicles with a gross vehicle weight rating greater than 8,500 lbs. and light-duty package
delivery vehicles operated in California may be subject to the California Air Resources Board (CARB)
Advanced Clean Fleets regulations. Such vehicles may therefore be subject to requirements to reduce
emissions of air pollutants. For more information, please visit the CARB Advanced Clean Fleets webpage
at https://ww2.arb.ca.gov/our-work/programs/advanced-clean-fleets.
19.DISCRIMINATION, HARASSMENT, AND RETALIATIONPROHIBITED
Contractor will comply with all applicable local, state and federal laws and regulations prohibiting
discrimination, harassment, and retaliation.
20.DISPUTE RESOLUTION
If a dispute should arise regarding the performance of the Services the following procedure will be used
to resolve any questions of fact or interpretation not otherwise settled by agreement between the parties.
Representatives of Contractor or City will reduce such questions, and their respective views, to writing. A
copy of such documented dispute will be forwarded to both parties involved along with recommended
methods of resolution, which would be of benefit to both parties. The representative receiving the letter
will reply to the letter along with a recommended method of resolution within ten (10) business days. If
the resolution thus obtained is unsatisfactory to the aggrieved party, a letter outlining the disputes will
be forwarded to the City Manager. The City Manager will consider the facts and solutions recommended
by each party and may then opt to direct a solution to the problem. In such cases, the action of the City
Manager will be binding upon the parties involved, although nothing in this procedure will prohibit the
parties from seeking remedies available to them at law.
21.TERMINATION
In the event of Contractor's failure to prosecute, deliver, or perform the Services, City may terminate this
Agreement for nonperformance by notifying Contractor by certified mail of the termination. If City decides
to abandon or indefinitely postpone the work or services contemplated by this Agreement, City may
terminate this Agreement upon written notice to Contractor. Upon notification of termination, Contractor
has five (5) business days to deliver any documents owned by City and all work in progress to City address
contained in this Agreement. City will make a determination of fact based upon the work product
delivered to City and of the percentage of work that Contractor has performed which is usable and of
worth to City in having the Agreement completed. Based upon that finding City will determine the final
payment of the Agreement.
City may terminate this Agreement by tendering thirty (30) days written notice to Contractor. Contractor
may terminate this Agreement by tendering ninety (90) days written notice to City. In the event of
termination of this Agreement by either party and upon request of City, Contractor will assemble the work
product and put it in order for proper filing and closing and deliver it to City. Contractor will be paid for
work performed to the termination date; however, the total will not exceed the lump sum fee payable
under this Agreement. City will make the final determination as to the portions of tasks completed and
the compensation to be made.
22.COVENANTS AGAINST CONTINGENT FEES
Contractor warrants that Contractor has not employed or retained any company or person, other than a
bona fide employee working for Contractor, to solicit or secure this Agreement, and that Contractor has
not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission,
percentage, brokerage fee, gift, or any other consideration contingent upon, or resulting from, the award
or making of this Agreement. For breach or violation of this warranty, City will have the right to annul this
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 14 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 8
Agreement without liability, or, in its discretion, to deduct from the Agreement price or consideration, or
otherwise recover, the full amount of the fee, commission, percentage, brokerage fees, gift, or contingent
fee.
23.CLAIMS AND LAWSUITS
By signing this Agreement, Contractor agrees that any Agreement claim submitted to City must be
asserted as part of the Agreement process as set forth in this Agreement and not in anticipation of
litigation or in conjunction with litigation. Contractor acknowledges that if a false claim is submitted to
City, it may be considered fraud and Contractor may be subject to criminal prosecution. Contractor
acknowledges that California Government Code Sections 12650 et seq., the False Claims Act applies to
this Agreement and, provides for civil penalties where a person knowingly submits a false claim to a public
entity. These provisions include false claims made with deliberate ignorance of the false information or in
reckless disregard of the truth or falsity of information. If City seeks to recover penalties pursuant to the
False Claims Act, it is entitled to recover its litigation costs, including attorneys fees. Contractor
acknowledges that the filing of a false claim may subject Contractor to an administrative debarment
proceeding as the result of which Contractor may be prevented to act as a Contractor on any public work
or improvement for a period of up to five (5) years. Contractor acknowledges debarment by another
jurisdiction is grounds for City to terminate this Agreement.
24.JURISDICTION AND VENUE
This Agreement shall be interpreted in accordance with the laws of the State of California without regard
to, or application of, choice of law rules or principles. Any action at law or in equity brought by either of
the parties for the purpose of enforcing a right or rights provided for by this Agreement will be tried in a
court of competent jurisdiction in the County of San Diego, State of California, and the parties waive all
provisions of law providing for a change of venue in these proceedings to any other county.
25.SUCCESSORS AND ASSIGNS
It is mutually understood and agreed that this Agreement will be binding upon City and Contractor and
their respective successors. Neither this Agreement nor any part of it nor any monies due or to become
due under it may be assigned by Contractor without the prior consent of City, which shall not be
unreasonably withheld.
26.THIRD PARTY RIGHTS
Nothing in this Agreement should be construed to give any rights or benefits to any party other than City
and Contractor.
27.ENTIRE AGREEMENT
This Agreement, together with any other written document referred to or contemplated by it, along
with the purchase order for this Agreement and its provisions, embody the entire Agreement and
understanding between the parties relating to the subject matter of it. In case of conflict, the terms of
the Agreement supersede the purchase order. Neither this Agreement nor any of its provisions may be
amended, modified, waived or discharged except in a writing signed by both parties. This Agreement
may be executed in counterparts.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 15 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 9
28.SEVERABILITY
If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court
of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and
effect.
29.AUTHORITY
The individuals executing this Agreement and the instruments referenced in it on behalf of Contractor
each represent and warrant that they have the legal power, right and actual authority to bind Contractor
to the terms and conditions of this Agreement.
Executed by Contractor this___________ day of _______________________, 20____.
CONTRACTOR
KINGDOM BP LLC, a California Limited
Liability Company
CITY OF CARLSBAD,
a municipal corporation of the State of
California
By: Kingdom Development, Inc., a California
Nonprofit Corporation, its manager
By: By:
(sign here)
(sign here)
Geoff Patnoe, City Manager
(print name/title) (print name/title)
ATTEST:
By: SHERRY FREISINGER, City Clerk
(sign here) By:
Deputy / Assistant City Clerk
If required by City, proper notarial acknowledgment of execution by contractor must be attached. If a
corporation, Agreement must be signed by one corporate officer from each of the following two groups.
Group A Group B
Chairman, Secretary,
President, or Assistant Secretary,
Vice-President CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under
corporate seal empowering the officer(s) signing to bind the corporation.
APPROVED AS TO FORM:
C.DALTON SORICH
BY: _____________________________
Assistant City Attorney
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
September 2517
William Leach, President
Sept. 23, 2025 Item #11 Page 16 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 10
EXHIBIT A
SCOPE OF PROPERTY MANAGEMENT SERVICES
The following management plan is proposed for property management of Chestnut Apartments.
1. THE ROLE AND RESPONSIBILITY OF THE CITY AND THE RELATIONSHIP AND DELEGATIONS
OF AUTHORITY TO THE CONTRACTOR
a. A resident manager will be available to field resident concerns. The resident manager is
directly responsible to the Contractor and will be directed by the Contractor who will set
forth the requirements of day-to-day operations. On-site office hours are Mon to Fri, 9
a.m.to 5 p.m.; and include on-call emergency service 24-7.
b. The Contractor will make all decisions empowered within the executed contract
regarding operations without consulting the City, including events of extreme
emergency. The Contractor will notify the City as soon as possible after any emergency
response decisions or actions have been required.
c. The Contractor will consult the City regarding all policy matters which the Contractor is
not authorized to handle within the terms of the management agreement, and on all
matters, which are of significance to the project. The Contractor will meet with the City
at regular intervals established by the City to review all property business and to update
the management plan as directed by the City.
2. PERSONNEL POLICY AND JOB DUTIES
a. All employees will be employees of the Contractor, not the City. All hiring will be in strict
conformance with equal employment opportunity requirements provided by the
Department of Fair Employment and Housing in regard to race, color, religion, sex,
handicap, familial status or national origin.
b. Through a combination of Contractor staff and subcontractors, the will direct the
operations of the project in accordance with the policy, guidance, and procedures
prescribed by and under direction of the Contractor.
The major duties include:
Establish positive resident relations, and promote harmonious relations among
residents, personnel and representatives, and the neighboring community.
Resolve resident complaints on a timely urgent basis and within the guidelines
of the Resident Grievance and Appeals procedure.
Maintain working relations with the police and fire departments, government
officials, and other community resources that are programmed and designed to
assist residents.
Oversight to keep building in good repair, and grounds areas and public areas
clean which present a good appearance/curb appeal.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 17 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 11
Be responsible for the preventive maintenance and current maintenance of
buildings, electrical, plumbing, heating, air conditioning, irrigation, and
mechanical systems per requirements of the Contractor.
Instruct and educate residents on procedures and practices to follow concerning
utility conservation and the operations of appliances, safety equipment, fire
prevention, and preventive maintenance.
Keep informed on changes in local rental, tax and utility rates, and other
activities that would affect the tenancy of the project.
Collect and deposit all monies collected from tenants within 24 hours or next
business day, as directed by the Contractor.
Oversight of all residential leases, amendments, renewals for residents; and the
leasing and qualification process for applicants from acceptance of application
through move-in or cancellation.
Maintain the regulatory compliance and organization of the resident files with
the requirements specific to this property, and as prescribed by Sec x below.
Maintain building and ground safety and fire prevention programs. Develop an
emergency preparedness plan for residents and in conjunction with the fire
department educate the procedure for residents to follow in case of fire,
earthquake or other emergencies.
Obtain labor and material costs, permits, and work completion estimates for
major repairs, renovation or replacement of equipment.
Assist applicants regarding questions in preparing applications for residency
following the compliance regulations, as appropriate and adhering to all Fair
Housing guidelines.
Participate and successfully complete all training sessions, including but not
limited to State of California legal updates pertaining to Landlord Tenant Law,
pertinent regulatory compliance training, Fair Housing, sexual harassment
training, and Active Shooter training.
Process invoices and maintain accurate financial records.
3. AFFIRMATIVE FAIR HOUSING MARKETING PLAN
a. Contractor is responsible for marketing the property and will abide by all applicable fair
housing laws and an approved Affirmative Fair Housing Marketing Plan.
b. Advertising, as needed, in English, Spanish and other languages will be done as
appropriate within Fair Housing laws to sustain occupancy goals and within budget
guidelines. This may include online website presence advertisement, flyers distributed
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 18 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 12
to local and county area organizations associated with the market, internet listings
affiliated with rental and affordable housing, participation in property management
website, and signage/banners if necessary and allowed by code.
c. Community outreach will be ongoing and will include those groups least likely to know
about Chestnut Apartments, so that prospective residents within those groups feel
welcome to apply. Outreach also includes agencies and organizations serving the special
needs populations.
d. All advertising, electronic or printed, will identify Chestnut Apartments with the
international symbol of handicapped accessibility and the Fair HousingEqual
Opportunity logos in addition to our DRE Broker's License for the property.
e. All resident requests for Reasonable Accommodations or Modifications will be managed
in accordance with the law. The Contractor will follow established policies and
procedures to document all requests.
f. Contractor will utilize any existing waitlist and will record updates and follow
established procedures in an excel spreadsheet format.
4. PROCEDURES FOR DETERMINING RESIDENT ELIGIBILITY AND FOR CERTIFYING AND
RECERTIFYING INCOME
All residents are selected in accordance with this management plan and resident selection
criteria.
a. All interested age-qualified persons may obtain and submit an application for housing.
All personnel handling the selection of residents and the processing of applications are
required to be knowledgeable and reference the Online Policies and Procedures
manual, which encompasses the occupancy and continuing compliance requirements.
b. According to the Wait List, completed applications are processed in chronological order
of the date the fully completed application was received based on eligibility within the
parameters for income and rent and unit size. Additionally, applications will be logged
by date and time when received. An application fee of $25 per applicant will be charged,
and $15 application fee for a documented Live-In Care Attendant. The application fee is
a direct expense incurred for the processing of the credit and background screening.
c. Contractor’s staff are thoroughly trained by the Contractor pertaining to the program
requirements and California Landlord Tenant Law including, but not limited to: Fair
Housing, Harassment, Interviews, Resident Selection, Certification and Recertification
requirements, and the Lease, including all Addenda.
d. Contractor will adhere to maximum income and rent requirements identified below*.
These exceed the requirements found in California Government Code 37364. One unit is
reserved for the onsite resident manager :
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 19 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 13
Very Low
Income
(40%)
Very Low
Income
(50%)
Low
Income
(60%)
Low
Income
(70%)
Low
Income
(80%)
Total Units
by Bedroom
1 BR 1 1 0 1 1 4
2 BR 1 0 9 0 1 11**
Total
Units
by
Income
2 1 9 1 2 15
*Maximum rents include a utility allowance. The utility allowance schedule is provided
on the City’s website and updated annually
**One additional two-bedroom unit is used for the onsite resident manager
e. Maximum income is calculated as the above percent of the area median income
adjusted for actual family size.
f. Maximum rents are calculated by the product of 30 percent times the percent of
median income identified in subsection (4)(d) adjusted for family size appropriate for
the unit divided by 12. Adjusted for family size appropriate to the unit shall mean for a
household of two persons in the case of a one-bedroom unit and three persons in the
case of a two-bedroom unit.
g. The project will be audited by the Contractor annually for compliance to make certain
that all requirements are adhered to. Additionally, every future resident file is audited
by the Contractor prior to move in to ensure accuracy of income and asset qualification.
5. LEASING AND OCCUPANCY POLICIES
a. Minimum and occupancy criteria are:
Unit Size Minimum Occupancy Maximum Occupancy
1 BR 1 Person 3 People
2 BR 2 People 5 People
b. All interested applicants are provided an application, and Notice of Rights under
Violence Against Women Act.
c. All prospective adult residents will complete an application. This is designed to give the
Contractor basic required data about the resident with which the manager can
determine whether there are factors of age, income, family size, or others that would
effectively eliminate the applicant from further consideration. It also gives the resident
manager a chance to meet and talk with the prospect prior to beginning the Agency
paperwork. The Rental Application authorizes credit/criminal background report be
obtained for each applicant after it is determined that the applicant(s) qualifies with
regard to the Agency guidelines for income, in addition to prior landlord reports.
Income verification authorization forms will be signed by the prospective resident. It
will be explained at that time that their credit and background will be thoroughly
investigated. The resident manager will request that the prospective resident give any
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 20 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 14
information in advance of any unusual situation that the manager is likely to
encounter in performing the screening of prospective resident. In this way,
prospective residents have an opportunity to explain in advance, any unresolved
credit problems, unfavorable reports from former landlords, criminal background and
other factors, which might otherwise disqualify them. In the event an applicant
screening result is declined or deemed a conditional approval, an adverse action letter
is provided to the applicant which offers the opportunity for them to work with the
credit screening entity to resolve any issues.
As verification forms are completed, the resident's file is assembled. The resident
manager will evaluate each resident in light of the information in his or her file as well
as the objectives established for the project by the City. The resident manager and
Contractor’s Compliance Department will determine which residents are qualified to be
accepted for residency in the community.
d. After it is determined that the prospective resident meets all required criteria for
qualification, the resident manager will meet with the resident to select an apartment,
complete a 'Holding Deposit Agreement" and collect the established refundable
"Holding Deposit".
e. On the scheduled move-in day the future resident will schedule an appointment to
come to the office for orientation, to complete all move-in paperwork. All move-in
paperwork must be completed on the day the lease is signed or based on circumstances
maybe a day or two in advance. Keys are not given out until the lease start date and all
move-in monies have been paid and paperwork is completed.
f. New residents will receive an orientation to the building including a review of all
documents prior to signing, building rules, locations and availability of staff and services,
information on utility rate assistance programs, review of the physical layout of the
grounds and will have any questions answered. A copy of the Grievance Procedure is
also provided and posted in the community room so they know who to call if they have
an issue/complain concern during their residency. The resident will be given copies of
any signed documents and keys will be issued.
g. At the time of orientation, residents will be introduced to policies regarding respecting
the safety of all residents and to display respect for other residents in a community
living environment.
h. At this time, forms written in languages other than English are not planned. Those who
are not bilingual have friends or family who translate and many of the residents are able
to act as translators when necessary. A translation service maybe coordinated if needed.
i. Resident files are maintained by the Contractor and available to City for their inspection
at all times. These files include Application, Regulatory Qualification, and Income
Verification forms, all Move-in documentation.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 21 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 15
6. RENT AND COLLECTION POLICIES AND PROCEDURES
a. All rents are due on the first day of the month. However, all residents are given until
close of business on the fifth of each month (or the next business day if the 5thfalls on a
non-business day to pay their rent in full prior to a late charge being assessed.) Three-
day notices are delivered on the 6th to residents who have not paid by the 5th. All rent
payments are to be delivered to the on-site office during normal office hours, which are
posted in the office or mailed to the office. Any resident who has not paid their rent
before the end of the fifth day of the month will receive a late assessment of charge.
Said late charge will be levied against the residents, however, eviction proceedings will
not be instituted against the resident for nonpayment of late charges. A 3-Day Notice to
Pay will be served upon all tenants who have not paid by the 6th day of the month. If a
resident regularly receives a check later in the month, documentation will be requested
for consideration of the modified rent due date to be adjusted accordingly so as not to
impose a hardship on that resident.
b. The resident manager is responsible for the collection of all rents and the issuance of all
rent receipts upon request. Cash payment will not be accepted. All payments are made
by check, cashier's check or money order. The payee field must be completed, never left
blank when presented to the office.
c. Rent payments, as they are received, are entered into the accounting system. Upon
request the rent receipt that the resident receives will include the name of the project;
the amount of money receipted for and is signed by the authorized person receiving the
funds. We encourage all residents to keep their receipts for their own protection. All
funds received are deposited within 24 hours of receipt in the operating account. The
Contractor maintains an operating account as well as a separate security deposit
account.
d. The required security deposit will be based on the results of the applicant screening
report. A conditionally approved credit report will result in a higher security deposit. All
applicants will also have the option of using a surety bond for their security deposit
through Sure Deposit which allows for a reduced security deposit if resident chooses the
Sure Deposit option. Additional deposits will be required for pets and remote-control
devices, if applicable. In compliance with Landlord Tenant Law, no additional deposit is
accepted for Service Animals. Upon termination of the lease, deposit will be refunded to
the former resident within 21 days, except as maybe legally used by the City toward
reimbursement of the cost of repairing any damage to the property (normal wear and
tear excepted) caused by the resident or his family or guests, and any rent or other
charges owed as permitted by the law. The City shall provide the resident within 21 days
an itemized statement of any security deposit retention and any charges in excess of
$125 will include copies of invoices. Charges against the deposit in excess of the total
deposit will be turned over to a collection agency or Sure Deposit if the resident
participated in that program.
7. PROCEDURE FOR RESIDENT COMPLAINT RESOLUTION
a. When a resident complaint arises the first point of contact should be the resident
manager. The resident manager will respond to a complaint within 24 hours of receipt
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 22 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 16
of the complaint during business hours and will investigate the complaint. The resident
manager will communicate to the complainant the proposed resolution of the
complaint. If the complainant is not satisfied with the resolution from the resident
manager, the complaint will be reviewed by the Contractor for resolution and if
necessary an in-person meeting will be arranged to discuss with all parties involved in
the complaint to get consensus on a resolution. If resolution is still not successful, the
complaint will be reviewed by the President of Contractor. If the issue is still unresolved,
mediation will be attempted with an impartial entity.
8. BUDGET PROCEDURES
a. Annually on or before Oct. 1 of each year, Contractor shall submit to the City the Annual
Operating Budget for the Property for the next operating year (Jan-Dec). The Annual
Operating Budget shall include (1) an operating budget containing bona fide good faith
estimates of all property expenses for the next operating year, including expenditures
for (a) property administration, operation and maintenance, (b) repairs, replacements,
and alterations under $25,000, (2) anticipated revenue for all rents and charges and (3)
any request for necessary capital improvements that exceed $25,000. The parties agree
that they shall use commercially reasonable efforts to limit the increase in total property
expenses during the term of this Agreement due to limited increases in revenue.
The Annual Operating Budget shall be subject to the written approval of the Housing &
Homeless Services Department. It is contemplated by the parties that the Annual
Operating Budget will be agreed upon by Contractor and the Housing & Homeless
Services Department not later than ninety (30) days following delivery of the Annual
Plan by Contractor to the City. If the Housing & Homeless Services Department fails to
either approve the Annual Plan within said 30-day period or to advise Contractor in
writing of his/her objections to the Annual Operating Budget within such period, then
the Housing & Homeless Services Department shall be deemed to have disapproved the
Annual Operating Budget as submitted. The first Annual Operating Budget is included as
Exhibit B.
b. Net operating income will be held for operating and/or capital reserves. At the end of
each year, after the audit has been reviewed and approved by the City, reserves will be
moved to an interest bearing account.
c. Requests for capital improvements that exceed the amount of net operating income will
be considered by City on a case-by-case basis. If such improvements are needed within
the Operating Year, City can elect to reimburse Contractor for expenses that exceed net
operating income. Net operating income will be verified by an annual audit described in
Section 12 below.
d. In the event of a dispute with regard to the Annual Operating Budget, pending the
resolution of such dispute, Contractor shall continue to manage and operate the
Property in accordance with the standards set forth in this Agreement at a level of
expenditures comparable to those of the preceding Operating Year.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 23 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 17
9. REQUESTING AND IMPLEMENTING A RENT INCREASE
a. Rent increases shall be anticipated and implemented upon direction by the City and
recommendation from Contractor. All rent increases will be implemented in
conformance with the requirements of the Health and Safety Code Section 50053. It is
anticipated that rent increases would not be more than once per twelve (12) months.
Once it has been determined by a City that a rental increase is necessary, the Contractor
will adhere to any and all program requirements and with California State Law.
b. Rent increases for units occupied by holders of Housing Choice Vouchers shall be
coordinated with the local Housing Authority. Voucher rent increase requests on-site
will be processed 60-90 days prior to the end of the resident's move-in anniversary.
c. Upon City approval, the Contractor will be responsible for all processing of rental
increases and timely subsequent lease addendum to update changes.
10. PLANS FOR AN EFFECTIVE MAINTENANCE AND REPAIR PROGRAM
a. Preventative maintenance is an important part of maintenance. All appliances, water
heaters, AC/heaters, weather-stripping, windows, fans, and smoke detectors are
inspected on a regular basis. Each apartment unit is inspected semi-annually to
ascertain the condition of all items and ensure timely repairs as necessary. This is a part
of the normal preventative maintenance program; in addition, all appliances and
mechanical equipment will be inspected prior to initial occupancy and prior to each
resident occupying the unit thereafter.
b. In the case of any future authorized work, it will be the responsibility of the contractor
or subcontractor to provide the City and Contractor with “as-built" updated plans and
specifications upon the completion of their work. Required permits will be obtained.
c. General Maintenance Procedures:
(1) Should a warranty item or plumbing/electrical problem be involved, a local
professional or the building contractor will be contacted. Any regularly scheduled
major improvements will be coordinated with the Contractor prior to
commencement of work and required permits obtained.
(2) City, State, and Federal regulations will be complied with as to the installation and
maintenance of fire alarm systems, sprinkler systems, smoke detectors, and fire
extinguishers. A certified vendor will conduct annual fire alarm system inspections
and quarterly fire sprinkler inspections. Smoke detectors are checked at least twice
a year during maintenance inspections. Fire extinguishers are checked during semi-
annual safety inspections to ensure service dates are current and have not lapsed.
Outside lighting will be provided as required for proper security on the project.
Outside lighting is checked on a regular basis to ensure proper light coverage and
bulbs are operational.
(3) When a resident gives notice to vacate the unit, the resident manager is required to
comply with all California and Federal laws related to vacating the unit, including
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 24 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 18
but not limited to provide a Pre-Move Out Inspection offer to inspect the apartment
to give the resident on Notice the opportunity to resolve any damage and/or
housekeeping deficiencies in advance of move out. Immediately following a move-
out inspection will be performed for the apartment turnover including the
appliances of that unit to ascertain whether or not there has been any damage or
any maintenance is required. Any necessary work is entered into a work order,
which then is performed by the maintenance staff. All work must be completed
prior to re-renting the unit and meet the standards of the property manager.
(4) Each unit is inspected semi-annually to ensure safe and sanitary living conditions
and to determine the need for any unreported necessary maintenance work.
The interior and exterior of the project is expected to be completely rehabilitated in
the next three years once permanent financing plan is secured and in place. All
repairs and maintenance until then will be performed to keep the property in
proper compliance with a health and safety code requirements and Housing Quality
Standards as defined by the U.S. Dept. of Housing and Urban Development.
(5) All major repairs that are beyond the capabilities of Contractor maintenance staff
will be handled on a contract basis, notwithstanding emergencies. Contractor will
solicit bids from three qualified subcontractors on all major repairs and
replacements, if possible, to be assured the best possible quality and price. In case
of emergency, the Contractor will use good judgment on how to best handle the
situation. In any emergency situation, the resident manager will contact the
Contractor and the City of Carlsbad as soon as possible with a full report of the
situation and resulting action.
Professional landscapers will carry out the upkeep and maintenance of the grounds.
Outside contract labor or subcontractors may be used for exterior painting, parking
lot sweeping, major landscape renovation, balcony repair, exterminating, major air
conditioning and plumbing, and roof repair.
(6) Garbage and trash removal is handled by a subcontractor.
(7) The Contractor will also be responsible for the cleanliness of the common areas of
the community. On a daily basis, staff will walk the grounds and common areas to
check for cleanliness and tidiness and to identify anything that may be a safety
hazard.
(8) Maintenance calls will be handled by work order only. Residents are not to do their
own repairs. Any resident with a maintenance issue will contact the Contractor
detailing the problem or assistance requested. After office hours calls will be
handled by the answering service who will dispatch the Contractor if it is
determined to be a maintenance emergency, e.g. fire, flood, toilet plumbing, or
lockout. The resident will be required to authorize management to enter the
apartment to make the necessary repairs. Damages specifically caused by and
attributable to the resident will be billed to the resident. When parts must be
ordered before a repair can be made, the resident will be advised and given an
approximate date when the repair will be made. Emergency problems will receive
immediate attention. Non-emergency problems will receive 24-hour service. Work
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 25 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 19
orders are tracked using the property management computer software program.
Two copies of each work order are printed with one left in the resident's apartment
and one kept on file by apartment number once the work is completed.
(9) A monthly Safety Inspection Checklist is performed regarding all aspects of the
physical condition of the property for items that may present a hazard or safety
concern.
(10) Apartment inspections of every unit are performed on a semi-annual basis. This
helps with preventive maintenance and allows an opportunity to discover deferred
maintenance with plumbing, electrical, smoke detectors, etc., in addition to
potential health, sanitary and safety concerns related to housekeeping or the overall
condition of the apartment.
d. All equipment and supplies are purchased only after shopping for the best price. Three
bids will be required, if possible, for any unbudgeted major equipment purchase.
Neither the City nor the Contractor has any identity of interest with any supplier of
products or services on the project.
11. PLANS AND PROCEDURES FOR PROVIDING SUPPLEMENTAL SERVICES
a. Laundry machines are provided by vendors. The laundry vendor owns all vending
services and equipment. Cash collected is paid in the form of a check to the appropriate
property and is deposited into the general operating account.
b. All equipment will be owned by the laundry vendor.
c. Laundry vendor forwards a monthly check to be deposited into the operating account of
the project. No cash is accepted.
d. Laundry vendor will be responsible for all maintenance, servicing, and stocking any
machines.
e. Laundry contracts are normally renewed every five (5) years at which time the terms
and conditions are renegotiated. A new contract is written and signed by both parties.
This is the Contractor standard contract. Vending machine contracts are negotiated in
the same fashion as laundry contracts, but as of this date do not apply to Chestnut.
12. MAINTAIN ADEQUATE ACCOUNTING RECORDS
a. All project records will be developed by the Contractor and maintained in accordance
with City regulations and policies governing fiscal operations, accounting and financial
reports for multifamily housing projects, and will comply with generally accepted
accounting procedures. Financial reports will be prepared and submitted from the
Contractor to the City using a modified cash reporting system.
The Contractor will be responsible for the preparation of and submission of a semi-
annual cash flow report. In addition, the Contractor will be responsible for the
preparation and submission of the Annual Operating Statement. The Contractor will
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 26 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 20
contract for an annual audit conducted by an independent CPA not associated with the
project. The Contractor will cooperate with and make all records available to the CPA for
the preparation of the audit.
b. Project funds will never be co-mingled. The accounting records will be set up and
maintained by the Contractor in the Contractor’s office. The records will be kept on a
modified accrual basis and will comply with generally accepted accounting practices.
The accounting department will be responsible for the preparation and submission of
the quarterly and annual reports to the lender, if necessary.
c. Individual folders will be kept on the project site for all residents and will contain
completed applications, verification of income and certification, lease agreement,
security deposit, rent receipts, and correspondence. All files for residents who have
vacated an apartment will be kept a minimum of seven (7) years and in accordance with
the regulatory agreement. The original first-year files will be kept stored as directed.
Scanned copies of all tenant certifications are also maintained at the Contractor’s office.
d. Resident records will be retained at the Contractor’s office and will be available during
normal business hours for review. Accounting records will be maintained at the
Contractor’s office and will be available during normal working hours for review. All
records are maintained for a minimum of seven years.
13. ENERGY CONSERVATION MEASURES
a. Each resident will be in direct control over his or her consumption of gas and electricity.
The manager will carry out orientation programs to educate the residents in regard to
the conservation procedures. Each resident will be advised on how to best maintain
their equipment to the best of their ability and to call the office for assistance for those
who are unable to maintain the equipment. Items such as filter changes, thermostat
settings, and water temperature control will be an integral part of the program.
b. The management will provide filters as necessary to keep the HVAC clean and efficient
as well as make service calls on all HVAC that are not operating properly. At the time of
the maintenance visit, maintenance staff is instructed to educate the residents with
regard to the conservation of utilities. Additionally, with each visit to a unit, the
maintenance staff is instructed to inspect the plumbing connections under the sinks for
malfunctions. The manager will make available free pamphlets distributed through the
utility companies with household hints on conservation when available.
14. RESIDENT COUNCIL
a. Residents may form a council, if desired, to plan community events, get togethers,
parties and potluck dinners. Contractor will attend council meetings, if asked, and will
respond to all resident issues arising at such meetings.
b. The resident manager will be well trained and knowledgeable in the area of resident
grievance procedures.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 27 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 21
15. PLANS FOR MANAGEMENT TRAINING PROGRAMS
a. Contractor maintains our own training program. Supervisors will thoroughly train new
hires in the areas of company policies and procedures, regulatory or other program
compliance, and supervisors handbook. All new managers are required to attend and
successfully complete Contractor-sponsored training courses.
16. TERMINATION OF LEASE AND EVICTIONS
a. The lease agreement outlines all provisions and procedures for the Contractor to evict a
resident. All legal efforts will be made to resolve issues that are in direct violation of the
Rental Agreement so that it does not result in eviction. If a resident violates their Rental
Agreement the 1st step is a private meeting in the office to discuss the issue. This is
followed up with confirmation of the meeting for the benefit of the resident. If the
violation issue continues, a 2nd and final meeting will take place, and a written Notice of
Violation will be given to the resident. If the violating resident continues the action of
violating the rental agreement legal notice to Cure or Quit the violation. If the violating
resident is part of a Reasonable Accommodation, any related case manager will be
sought to participate in the resolution prior to legal action through attorneys.
Contractor may not terminate the tenancy or refuse to renew the Lease or Rental
Agreement of a Low-Income Tenant except for good cause, including a serious or
repeated violation of the material terms and conditions of the Lease, or a violation of
applicable Federal, State, or local law. To terminate the tenancy or refuse to renew the
Lease, Contractor must provide written notice to the tenant of the grounds with
sufficient specificity to enable the tenant to prepare a defense. The notice must be
served at least three days before the termination of tenancy and must comply with all
requirements of California law and other applicable programs. Tenant has the right to
enforce this requirement in state court, including presenting a defense to any eviction
action brought by Contractor.
b. Within the Contractor’s organization, the supervisors are responsible for determining
and overseeing evictions.
17. SECURITY
a. Strict key control should be utilized. Residents will not be allowed to make duplicates of
front door keys for visitors. Keys will be issued only by the Contractor staff.
b. Contractor keeps alert to the presence of unknown people on or around the apartment
community and will call the local police if the situation warrants. Chestnut is registered
as a NO TRESPASSING property. Security will also be provided by ensuring that the on-
site staff has a readily available list of agencies such as police, fire department, and
paramedics, along with their telephone numbers.
18. ON-SITE MANAGEMENT
a. Office hours are Monday through Friday from 9 a.m. to 5 p.m., in addition to a 24/7
emergency on-call response. Current hours are posted on door of onsite manager.
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 28 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Page 22
EXHIBIT B
ANNUAL OPERATING BUDGET
Approved Annual Operating Budget for 2026
Income
Rental Income $220,000
Laundry $7,500
Other Fees $500
Total Anticipated Income $228,000
Expenses
Management Fee $12,000
Administrative Expenses (Bank Fees, Office Expenses, IT,
Accounting, Audit, etc.)
$27,000
Property Management Services $44,000
Facility Maintenance (Utilities, Pest Control, Landscaping) $48,000
Repairs & Maintenance $41,000
Insurance $20,000
Total Operating Expenses $192,000
Net Operating Income (Income-Operating Expenses,
available for operating/capital reserves)
$36,000
Approved Capital Expenses $500,000
Additional Income from City: CDBG Loan for Capital
Improvements
$500,000
Docusign Envelope ID: 9239066A-55A4-42DB-B2F9-077CD66F2844
Sept. 23, 2025 Item #11 Page 29 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Exhibit 2 RESOLUTION NO. 2025-220
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING A FORGIVABLE LOAN IN AN AMOUNT NOT TO
EXCEED $500,000 IN COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS TO
MAKE IMMEDIATE REPAIRS AT THE CHESTNUT APARTMENTS AFFORDABLE
HOUSING PROJECT
WHEREAS, the primary objective of the federal Community Development Block Grant (CDBG)
Program is to develop viable urban communities through the provision of improved living
environments, expansion of economic opportunity and decent housing. Grant funds received through
the program are intended to principally serve people of low and moderate income; and
WHEREAS, the CDBG program is a fully funded federal program and is separate from the city’s
General Fund; and
WHEREAS, to be eligible for CDBG funds, the applicant jurisdiction must adopt a five-year
Consolidated Plan and an Annual Action Plan, which must be reviewed and approved by the
Department of Housing and Urban Development; and
WHEREAS, on April 29, 2025, the City Council adopted Resolution No. 2025-098, approving the
FY 2025-30 Consolidated Plan and FY 2025-26 Annual Action Plan; and
WHEREAS, the FY 2025-30 Consolidated Plan identifies the goal to increase and preserve
affordable housing as a high priority; and
WHEREAS, the FY 2025-26 Annual Action Plan identified the allocation of program income for
affordable housing activities, including acquisition and rehabilitation of affordable rental housing; and
WHEREAS, the City of Carlsbad at a Carlsbad City Council Meeting on Sept. 23, 2025, has
approved a property management agreement with Kingdom BP LLC, which is managed by Kingdom
Development, Inc. for the property located at 945 Chestnut Avenue; and
WHEREAS, the City of Carlsbad is committed to continuing to provide a suitable living
environment and to expand economic opportunities for the city's low-income residents as is outlined
in the Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
Sept. 23, 2025 Item #11 Page 30 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
2.The proposed action of providing a loan for repairs to an existing apartment complex
(roofing, balcony repair, and water heater replacement) is categorically exempt from
environmental review under CEQA Guidelines Section 15301 because it involves the
maintenance, repair or minor alteration of existing facilities with negligible or no
expansion of the existing or former use. No exceptions to the categorical exemption as
set forth in CEQA Guidelines Section 15300.2 or Carlsbad Municipal Code Section
19.04.070(C) apply.
3.That the City Manager, or designee, is authorized to appropriate $500,000 in community
development block grant funds.
4. That the City Manager, or designee, is authorized to execute all documents necessary to
carry out a forgivable loan with Kingdom Development, Inc., Kingdom BP LLC or another
business entity that manages or is managed by either business, in an amount not to
exceed $500,000 in Community Development Block Grant funds to address immediate
repairs at the Chestnut Apartments affordable housing project in accordance with the
above terms, subject to review and approval by the City Attorney’s Office.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the 23rd day of September, 2025, by the following vote, to wit:
AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.
NAYS: None.
ABSTAIN: None.
ABSENT: None.
______________________________________
KEITH BLACKBURN, Mayor
______________________________________
SHERRY FREISINGER, City Clerk
(SEAL)
Sept. 23, 2025 Item #11 Page 31 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524
Exhibit 3
May 21, 2024, staff report
(on file in the Office of the City Clerk)
Sept. 23, 2025 Item #11 Page 32 of 32
Docusign Envelope ID: ACA5C7F2-A7A1-4F9E-AAB4-A4D4EAB76524