February 17, 2026
Community Development
DATE: February 17, 2026
TO: Mayor Martinez and Members of the City Council
FROM:
Lina Velasco, Director of Community Development
Jesus Morales, Housing Manager
Subject:
Additional Loan for Capital Cost related to the Civic Center Apartments (Homekey) Project
FINANCIAL IMPACT: The City is proposing to cover the additional $2 million loan using Housing Funds (Account String: 12831063 -
400201).
PREVIOUS COUNCIL
ACTION:
June 20, 2023
September 12, 2023
December 17, 2024
March 11, 2025
STATEMENT OF THE
ISSUE:
The City Council previously authorized the submittal of a joint application for Homekey funds together with 425
Civic Center LP, a California limited partnership affiliated with Novin Development Corporation and Trinity Center
Walnut Creek to support the acquisition of a Motel 6
located at 425 24th Street and ground lease the property to 425 Civic Center LP for the development of a 49-unit permanent supportive housing development serving the
chronically homelessness. As part of the project
financing, the City provided an $8.3 million loan to the Project and additional funding is being requested to
address increased capital costs due to unanticipated
building conditions.
RECOMMENDED ACTION:
ADOPT a resolution increasing the City loan amount from $8.3 million to up to $10.3 million to 425 Civic Center LP for the Civic Center Apartments project, which will
convert an existing motel into a 49-unit permanent
supportive housing development for the chronically
AGENDA
REPORT
February 17, 2026
homeless - Community Development Department (Lina
Velasco 510-620-6841/Jesus Morales 510-620-6649).
DISCUSSION:
On June 20, 2023, the City Council adopted Resolution No. 62-23 authorizing the submittal of a joint application for Homekey funds together with 425 Civic Center LP, a California limited partnership affiliated with Novin Development Corporation (“Developer”) to support the development of a permanent supportive housing project at 425 24th Street (the “Property”) consisting of 48 units for people experiencing homelessness or at-risk of homelessness and one manager’s unit (the “Project”).
On May 10, 2024, the City finally received threshold and financial feasibility questions regarding its Homekey application. On July 23, 2024, a conditional award of $14,512,660 Homekey funds was given to the City, 425 Civic Center LP, and Trinity Center Walnut Creek for the Civic Center Apartments. In December 2024, a revised resolution was adopted by the City Council responding to clarifications requested by California Department of Housing and Community Development (HCD) to specifically name Trinity Center Walnut Creek and ratifying the various amendments to the purchase and sale agreement (PSA) executed by the City Manager on the City’s behalf.
In March 2025, prior to the acquisition of the motel, the City committed an additional $1.4 million to the project, increasing the loan amount from $6.9 million to $8.3 million.
Acquisition and ground leasing of the property to 425 Civic Center LP were executed in April 2025. Construction started with demolition work in Summer 2025. During demolition activities, additional needs were identified due to extensive long-term water intrusion that required extensive structural repairs. These unforeseen elements requiring additional capital fundings include:
• Extensive degradation of the façade and underlying framing work; • Extensive plumbing issues, including but not limited to additional waste line and sewer upgrades that are required for project completion; • Mold remediation and repairs have been identified in the bathrooms due to leaks; and
• Asbestos investigation to determine if remediation and repairs are needed in the affected plumbing areas.
These additional scope items are necessary to complete the project. City staff is recommending to the City Council that an additional loan be awarded to 425 Civic Center LP in an amount not to exceed $2 million. Funds for the loan will be taken from the Housing funds. The City’s loan will be paid back via residual receipt payments per the City loan agreement with 425 Civic Center LP.
SYNERGISTIC POLICIES:
February 17, 2026
This Council action aligns with the Homelessness Strategic Plan Goal 2. Specifically, Goal 2 is to “Create Temporary Supportive Housing and Expand Permanent Supportive & Affordable Housing”. This policy directly complements the Homekey Project’s mission of converting the former Motel 6 into a 49-unit affordable permanent supportive housing development for individuals experiencing chronic homelessness. The Homekey Project operationalizes this goal by bringing permanent units online quickly through adaptive reuse.
DOCUMENTS ATTACHED:
Attachment 1 – Resolution