HomeMy WebLinkAbout2024-09-26; Cassia Heights Ground Lease and Surplus Land Act Exemption (District 2); Barberio, GaryTo the m~m•ers of the:
CITY COUNCIL
Date 9/~L~cA v cc ~
CM~.JLOCM (3)-!L
September 26, 2024
Coun cil Memorandum
{cityof
Carlsbad
Memo ID# 2024071
To:
From:
Honorable Mayor Blackburn and Members of the City Council
Gary Barberio, Deputy City Manager, Community Services
Mandy Mills, Director of Housing & Homeless Services
Geoff Patnoe, Assistant City Manager /G? Via:
Re: Cassia Heights Ground Lease and Surplhrland Act Exemption {District 2)
This memorandum provides information about a new ground lease (or amendment to the
existing lease) to a new entity for Cassia Height s, a 56-unit, 100% affordable apartment
complex at 2029 Cassia Road. The City Council is tentatively scheduled t o consider the new
lease or amendment along wit h a resolution declaring the property as exempt surplus land on
October 29, 2024.
Background
In 2005, the City of Carlsbad provided financing for the land purchase and construction of
Cassia Heights. The City of Carlsbad owns the land and leases it to El Camino Family Housing
Partners, LLC, to operate the improvements on the property as affordable housing. El Camino
Family Housing Partners, LLC, with Affirmed Housing Group as the Managing General Partner,
owns all the improvements on the property and now wishes to sell the project and their ground
lease interest to a new entity, Avanath Cassia, LP.
New Lease or amendment
The amended lease or new lease t erms will provide higher lease revenue to the Housing Trust
Fund each year allowing for more investment opportunities in future affordable housing. The
new lease term will be for 75 years, which extends the affordability period by 37 additional
years as the city is 17 years int o the current 55-year term.
New lease or amendment subject to Surplus Land Act
The City Council will need to consider and provide consent to the transfer and enter into a
ground lease, or an amendment to the existing ground lease, with the new owner. Before the
city can take action to dispose of surplus land, an agency must follow certain procedures
required by the Surplus Land Act {SLA) and the California Department of Housing & Community
Development (HCD) Guidelines. Because this is a lease longer than 15 years it may be
considered a disposition of property under the SLA. However, even if the HCD concludes that
the lease constitutes a "disposition" of property, an exemption may apply.
Community Se rvices Branch
Housing & Homeless Services Department
1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 442-339-2810 t
Council Memo -Cassia Heights Ground Lease and Surplus Land Act Exemption (District 2)
September 26, 2024
Page 2
As the apartment project is 100% affordable, with restrictions for nearly half of renters at the
extremely low and very low-income levels and the remaining units affordable for moderate
income levels, the City Council can consider a resolution declaring the property as exempt
surplus land, allowing the city to exclusively enter into the new lease with the new owner. If the
HCD concludes the lease constitutes a disposition of surplus land, the City Council must adopt a
resolution declaring the property exempt from the SLA prior to entering into the new lease. The
new lease and the Surplus Land Act resolution are tentatively scheduled for City Council
consideration on October 29, 2024.
The HCD recommends their review of the draft resolution in advance of City Council approval.
To allow the HCD enough time to provide a response prior to the October Council meeting, city
staff plans on sending the draft resolution to t he HCD in advance for their review. Sending a
draft resolution for HCD review does not bind the City Council to approve it.
Next Steps
In advance of City Council's consideration of the lease or amendment, city staff will seek t he
HCD's opinion of whether the proposed lease constitutes a "disposition of property" under the
SLA, and if it does, ask the HCD to review a draft resolution declaring the property as exempt
surplus land, in accordance with the HCD Guidelines. The City Council is tentatively scheduled
to consider the new lease, or amendment to the existing ground lease, along with a resolution
declaring the property as exempt surplus land on October 29, 2024.
cc: Scott Chadwick, City Manager
Cindie McMahon, City Attorney
Paz Gomez, Deputy City Manager, Public Works
Laura Rocha, Deputy City Manager, Administrative Services
Jeff Murphy, Community Development Director
Zach Korach, Finance Director