City Owned Property Disposition Update
City Council - February 24, 2026
Tobi Liebermann, Housing and Economic Development Manager, Kathy Kleinbaum, Assistant City Manager Background
• City currently owns and manages 3 small residential properties originally purchased by the Redevelopment Agency:
o 730 El Camino Real – group home for developmentally disabled adult residents
o 503 Crest View Avenue - 6 Bed Intermediate Care nursing home for developmentally and physically disabled residents (ICF/DD-Nursing) o 1000 O’Neill Avenue (Emmett House) – Duplex, previously leased to moderate income tenants, currently vacant
• City previously sold other residential assets in 2022 (2 condos and 1 SFR) and used proceeds to fund new affordable housing developments 2 Current Challenges with Properties
3 • Ongoing operating expenses exceed current revenue
• Properties have significant deferred maintenance and repair costs • Limited opportunities to increase revenue due to affordable housing/social service uses
• Limited staff resources to oversee ongoing maintenance and upkeep • Properties carry liabilities with ownership, if not well-maintained Prior Council Direction
4 • October 2024 – City Council approved exploration of disposition of the 3 residential properties
• February 2025 – City Council declared the properties as Exempt Surplus Land under State Surplus Lands Act
• October 2025 – City Council provided direction to:
• Transfer 730 El Camino Real to Kainos, current non-profit operator • Transfer 503 Crest View to either current for-profit operator or nonprofit for lease back to operator • Sell Emmett House for market value to fund future new affordable construction
• All actions to include deed restrictions to either preserve current use or to protect historic character
Current Status of Properties
5 • 730 El Camino Real
• Staff has negotiated terms with Kainos
• Bringing actions forward tonight to authorize execution of property transfer
• Emmett House
• Staff has completed groundwork to move forward with sale • Has selected Real Estate broker to handle process through RFP process
• Seeking authorization from Council to authorize staff to advertise property for sale and City Manager to execute sales agreements • 503 Crestview
• Property received grant from the State to cover renovations • Staff is negotiating transfer with non-profit, Brilliant Corners, and will bring item back for Council approval later this Spring
What is a Section 33433 Report?
• Because redevelopment funds were used to purchase the 730 El Camino and 1000 O’Neill properties, State law requires a Section 33433 report (aka Reuse Appraisal) to be adopted by the City Council • The report includes a summary of the proposed sale transactions, the appraised market value of the property, estimated fair reuse value, and consistency with blight elimination requirements • Reuse Value is distinct from Market Value in that it takes into account the restrictions to be placed on the property, such as affordability requirements and limitations on transferring the properties due to the restricted use.
• Market Value is the value of the property without restrictions as if sold on open market
6 730 El Camino Real
7 • Existing Group home
• Operated since 1999 by Kainos
• Enables developmentally disabled
residents to live independently
• Total monthly rent to City is $1,500
• Deferred maintenance/repairs
estimated at $148,000
• Appraised value- $2.17 million
• 33433 Report Reuse value - $0
Transfer of 730 El Camino Real
8 • Approval of the resolution will authorize the City Manager to transfer the property to Kainos
• Section 33433 Report (Reuse Appraisal) is required to be adopted at a public hearing
• Purchase and Sale Agreement will transfer property to Kainos for $1 • The City will record Regulatory Agreement restricting the use of the property for 55 years to a residential supported living group home for lowincome individuals 730 El Camino Real Reuse Appraisal
• Reuse value with restrictions for use and affordability is less than $0 due to economics of operating property as
group home with affordable rents for developmentally
disabled residents
• Reuse Appraisal takes into account current operations of the property including income from rents, applicable
subsidies from the Golden Gate Regional (Center GGRC)
• Analysis also deducts all operating expenses for Kainos and an allowance for repairs/maintenance resulting in
negative value
9 Photo Source: Kainos Website
730 El Camino Purchase and Sale Agreement
The City will enter into a purchase and sale agreement with Kainos to transfer the property which includes the following provisions:
• Property sales price of one dollar
• Property sold in as-is condition
• Requirement for Kainos to cover all closing costs
• Term of due diligence period
• Closing requirements, including execution of regulatory agreement • No broker involvement or broker’s fees for either party 10 730 El Camino Regulatory Agreement
The Regulatory Agreement places limitations on the property including:
• Ownership and or operation by a non-profit entity
• Restricting use to congregate care or residential living facility • Limiting occupancy to lower income renters with special service needs
• Requiring affordable rents
• Restrictions in place for 55 years
• Requires repayment to City at current appraised value if sold at market rate before 55 years
• Repayment terms include an allowance for owner to recoup major investments made for maintenance or renovations
11 1000 O’Neill Avenue (Emmett House)
12 • Original home built in 1885
• Originally located on Ralston Avenue
• Moved to current location in 2008
• Converted to Duplex in 2011
• Rental property for moderate-income
residents
• Currently vacant
• Deferred maintenance estimated at
$209,000
• Appraised Value - $2.23 million
Authorization for Sale of 1000 O’Neill Ave
13 • Approval of the resolution will authorize the City Manager to hire a real estate broker to market and execute the sale of the property • Section 33433 Report (Reuse Appraisal) is required to be adopted at a public hearing
• A Replacement Housing Plan is required for the two affordable units that will be lost when property is sold as market rate property • Deed restrictions to be put in place to preserve historic character of property
1000 O’Neill Ave Real Reuse Appraisal
• Reuse appraisal notes lack of restrictions for future use and affordability
• Reuse appraisal relies on market appraisal assuming highest and best use is a residential duplex
• Historic preservation deed restrictions not anticipated to have significant impact on the value of property
• Reuse appraisal estimated value at highest and best use is $2.2 Million
14 1000 O’Neill Avenue Replacement Housing Plan
15 • Replacement Housing Plan required due to loss of the two moderate income units
• City is required to identify net new affordable units to offset loss • The plan designates 803 Belmont Avenue, the 125-unit 100% affordable project currently under construction, as the replacement units
1000 O’Neill Avenue Real Estate Broker Services
16 • City issued RFP for Brokerage Services in January 2026 • Experience with sale of Redevelopment Agency funded and Below Market Rate properties was preferred
• Experience with historical properties was desired
• City received 4 proposals from local brokers
• Selected AMID Investments based on their experience selling prior City-owned properties in 2023 and experience with historic properties • AMID Investments is charging a broker fee of 2.5% of sales price • City will need to pay all closing costs, estimated to be roughly 6% of sales price (including the broker fee)
1000 O’Neill Avenue Historic Deed Restriction
17 • The Property is designated as a Landmark in the City’s Historic Resources Inventory in the General Plan
• To protect the historic character and appearance of the property, the City will record a Deed Restriction, which the buyer must agree to as a condition of sale
• Mandates upkeep of the property in good condition
• Requires maintenance of the historic character of the façade • Requires City approval to alter, relocate, or demolish the exterior of the landmark
• Restriction runs in perpetuity
Recommended City Council Actions
730 El Camino Real
Adopt a Resolution which includes the following actions:
1. Making certain findings under Public Health and Safety Code Section 33433 for disposition of public property located at 730 El Camino Real
2. Authorize the City Manager to negotiate and execute a Purchase and Sale agreement and related documents to sell the property to Kainos for $1
3. Approve the Regulatory Agreement restricting the use of the property to a residential supportive living group home for 55 years 18 Recommended City Council Actions
1000 O’Neill Avenue
19 Adopt a Resolution including the following actions:
1. Making certain findings under Public Health and Safety Code Section 33433 for disposition of public property located 1000 O’Neill Avenue
2. Adopt a Replacement Housing Plan for the loss of the two affordable units at 1000 O’Neill Avenue
3. Authorize the City Manager to negotiate and execute a real estate broker/listing agreement with AMID Investments, Inc. for the marketing and sale of 1000 O’Neill Avenue
4. Authorize the City Manager to approve the sale of the property at market value, including the negotiation and execution of all agreements and documents necessary to complete the sale of the property