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September 23, 2025
ITEM TITLE
Affordable Housing: Financial Repositioning of the County of San Diego Public Housing Portfolio in Chula Vista
Report Number: 25-0205
Location: 772-792 Dorothy Street (Dorothy Street Manor), 584-588 L Street (L Street Manor), 1670-1682 Melrose Avenue (Melrose Manor), and 434 F Street (Town Center Manor) Department: Housing and Homeless Services
G.C. § 84308 Regulations Apply: Yes
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act (“CEQA”) State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution : 1) supporting the financial repositioning of the San Diego Public Housing Portfolio in Chula Vista (four properties) and authorizing the City Manager to draft and execute a letter of support to that effect; and agreeing not to exercise City rights to purchase the properties; 2) authorizing the City Manager to negotiate the termination of the 434 F Street grant deed reverter ; and 3) authorizing the City Manager to negotiate the termination of the Development Agreement and Abstract of Development Agreement for 584 - 588 L Street.
SUMMARY
The County of San Diego (“County”) has requested support from the City of Chula Vista (“City”) in converting the four (4) properties they own in Chula Vista from Public Housing (Section 9) to Project-Based Vouchers (Section 8). Transitioning to Section 8 will increase funding for operations and capital improvement needs.
As a part of the transitioning to Section 8, a termination of a reverter with the grant deed for 434 F Street and the Development Agreement and Abstract of Development Agreement for 584 - 588 L Street is necessary, as is the City not exercising its right to purchase the properties.
ENVIRONMENTAL REVIEW
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The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change to the environment.
Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
Thus, no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
The Housing Authority of the County of San Diego is proposing to reposition its Chula Vista public housing portfolio through a R ental Assistance Demonstration (RAD)/Section 18 Small P ublic Housing Authority Blend conversion. Repositioning is the removal of a property from the Public Housing Program and replacing it with project-based voucher (PBV) assistance. This voluntary conversion will help to preserve and improve affordable housing stock for low -income families throughout the County by increasing funding to better support ongoing operations and enhance residents’ quality of life. The current Public Housing funding model does not generate sufficient revenue to address capital improvement needs.
The proposed repositioning is done on the national level with approval from the Department of Housing and Urban Development and would provide the County with greater flexibility to secure capital for rehabilitation and long-term sustainability of aging public housing properties. By leveraging public and private resources through the R ental Assistance Demonstration/Section 18 blend, the County would be better equipped to meet the housing needs of vulnerable populations while ensuring compliance with the Department of Housing and Urban Development standards and maintaining long-term affordability commitments.
The four properties that would be a part of the repositioning are:
Dorothy Street Manor - located at 772-792 Dorothy Street. The site consists of 22 units, all of which are three bedrooms and two of which are Americans with Disabilities Act (ADA) accessible. The units were built in 1992 and host a target population of working families. L Street Manor - located at 584 -588 L Street. The site consists of 16 units, all of which are thre e bedrooms and one of which is ADA accessible. The units were built in 1992 and host a target population of working families.
Melrose Manor - located at 1670-1682 Melrose Avenue. The site consists of 24 units, eight of which are three bedrooms and 16 of which are two bedrooms. Additionally, two units are ADA accessible.
The units were built in 1984 and host a target population of working families. Town Center Manor - located at 434 F Stree t. The site consists of 59 units , 58 of which are one bedroom and one that is two bedrooms. Six of the units are ADA accessible. The units were built in 1985 and host a target population of elderly/disabled individuals.
In addition to its request for City support, the County is requesting that the City not exercise its right of first refusal on the properties, as the units must be conveyed to another entity per the Department of Housing and Urban Development.
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434 F Street, known as Town Center Manor, has a reverter as a part of its grant deed that would cause the property to revert back to the City. The County is requesting that the City terminate the reverter as it would potentially discourage lenders and investors from the project. 584-588 L Street, known as L Street Manor, has a recorded Abstract of Development Agreement that grants the City a first right of refusal to acquire the property if the County chooses to sell or otherwise transfer title to the property. If the City does not exerc ise its first right of refusal, the County is required to diligently attempt to sell the property at fair market value. Upon closing the City and County would evenly split the proceeds.
The County intends to transfer the property to a wholly owned LLC and subsequently ground lease the property to an affordable developer to rehab the property. Both the reverter for 434 F Street and the Abstract of Development Agreement for 584 - 588 L Street would trigger the right of first refusal and the requirement to sell the property at its fair market value and split the proceeds. The concern is that the lender and investor would be anxious of the possibility of a foreclosure requiring splitting proceeds with the City, and therefore staff believe it is in the best interest to retain the property as affordable and to release its right of first refusal.
Conclusion
Converting the properties from the Public Housing program into affordable housing with PBV assistance will provide a number of benefits. As PBVs, HUD provides funding based on local market rent as opposed to the outdated formulas under Public Housing. This will provide a path for increased financial reserves to address the long -term needs and thereby, extend the life of the devel opments. The properties will remain as affordable rental units under a long-term contract for current and future residents.
During and after the conversion, the residents will have the right to stay in their homes, continuing to pay no more than 30% of their income towards rent, while keeping the same rights and protections they had under the Public Housing program. Unlike Public Housing, PBVs offer residents the additional benefit of choice mobility. One year after conversion, and contingent on funding, re sidents are able to request a Section 8 Housing Choice Voucher (HCV), allowing them the option to move to a rental unit in the private market anywhere in the United States. When a resident moves out, their former unit would then become available for another family selected from the waiting list.
Overall the repositioning will allow the County to preserve the properties as long -term affordable rental housing while creating a stable financial foundation to address the capital improvement needs of the properties.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found that Councilmember Fernandez has real property holdings within 1,000 feet, but beyond 500 feet, of the boundaries of a property that is a part of the subject of this action. Staff has determined that, pursuant to California Code of Regulations Title 2, sections 18700 and 18702.2(a)(8), this item does not present a disqualifying real property -related financial conflict of interest under the Political Ref orm Act (Cal. Gov't Code § 87100, et seq.) for the above - identified member.
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Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter
CURRENT-YEAR FISCAL IMPACT
There is no current-year fiscal impact as a result of this action.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact as a result of this action.
ATTACHMENTS
1. Properties Location Map
Staff Contact: Chris Stanley, Senior Planner