TO:Andrew P. Powers, City Manager
FROM:Kelvin Parker, Community Development Director
DATE:April 14, 2026
SUBJECT: Hillcrest Homes For-Sale Affordable Housing Project Update – 384 Erbes Road
RECOMMENDATION:
1. Authorize the City Manager to negotiate proposed amendments to the Disposition & Development Agreement (DDA) and underlying entitlements, which will be considered by City Council at a future City Council meeting.
2. Direct staff to research the feasibility of a citywide impact fee waiver program for 100 percent affordable for-sale projects within the City and provide a recommendation and/or proposed ordinance for City Council consideration at a future City Council meeting.
3. Find that these actions are not a project as defined under the California Environmental Quality Act.
LEVINE ACT ITEM: No
FINANCIAL IMPACT:
No Additional Funding Requested. Minimal staff time required to prepare the report is included in the Adopted FY 2025-26 General Fund Budget.
BACKGROUND:
The property located at 384 Erbes Road operated as a hospital until 1976, then as a private school until it was vacated in 2019. In 2021, the City purchased the property for $10 million with a combination of General Fund and Housing Successor Fund dollars, with the intent to pursue affordable housing development.
On June 24, 2022, the City issued a Request for Proposals/Qualifications (RFP/Q) to more than 500 developers and received four submissions, three of which qualified for interviews and evaluation. Following review, on November 1, 2022, City Council selected People’s Self-Help Housing Corporation (PSHH) to develop an affordable for-sale housing project.
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On February 28, 2023, the City and PSHH entered into an Exclusive Negotiating Agreement to begin work on a Disposition and Development Agreement (DDA).
PSHH and its development team, DeCecco Architecture, Housing Trust Fund/Land Trust Ventura County, Ventura County Community Development Corporation, and McCarthy Companies, collaborated with staff to refine the project.
The project, a 78-unit, 100 percent affordable housing development, was approved by the Planning Commission on February 26, 2024, and by City Council on March 19, 2024. At this meeting, City Council found the project to be Categorically Exempt under the California Environmental Quality Act (CEQA), approved the development entitlements, declared the site exempt surplus land, approved the DDA, and authorized the City Manager to implement the DDA and associated documents.
The effective DDA dated March 19, 2024, establishes a two-year period for PSHH to secure the required project financing. Upon verification that full financing has been obtained, the DDA obligates the City to transfer the property by grant deed to Housing Trust Fund/Land Trust Ventura County.
The DDA further requires that all 78 units be sold at an affordable purchase price to qualified buyers during the 99-year affordability period administered by the Land Trust Ventura County. The unit mix is provided in Table 1 below.
Table 1 – Hillcrest Homes Affordable Housing Units
Affordability Level Number of Units
Moderate Income 19
Lower Income 49
Lower Income (HSC)* 10
Total Units 78
*Per Section 34176 of the Health and Safety Code (HSC), City Council elected to retain the housing responsibility functions previously performed by the former Redevelopment Agency. The site was partially purchased using funds from the former Redevelopment Agency and 10 units represent an allocation for the funds used.
On February 12, 2026, PSHH submitted a request to extend the Closing Date of the DDA allowing PSHH an extra year to obtain the full financing required for the project. The City Manager approved the extension, amending the property closing deadline to March 19, 2027. PSHH has also been in discussions with staff about potential changes to the project to help reduce the current funding gap.
DISCUSSION/ANALYSIS:
This staff report provides an update on the current status of the Hillcrest Homes project and summarizes proposals from PSHH to refine the project and reduce the existing funding gap. For reference, the following documents are included: the Hillcrest Homes For-Sale Affordable Housing Project Update – 384 Erbes Rd.
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DDA (Attachment #1); the approved entitlements for Hillcrest Homes, Resolution No. 04-2024 PC (Attachment #2); PSHH’s April 7, 2026, request for project modifications (Attachment #3); and PSHH’s March 5, 2026, request for an additional concession under the density bonus provisions (Attachment #4).
Project Financing Update
The DDA provides an initial period of two years for PSHH to obtain the required funding to develop the project, with options to extend that period. At the time the project was approved, the estimated cost to develop the project was $49.6 million.
As of March 2026, the estimated project cost has increased to $51.2 million due to the rise in construction costs over the past two years. The project cost estimate excludes the City’s $10 million land contribution.
As of March 2026, PSHH successfully secured $12,477,343 in competitive funding as shown in Table 2:
Table 2 – Financing Resources
HCD CalHome Award $ 10,000,000
Federal Home Loan Bank San Francisco
Affordable Housing Program Award
1,475,000
County of Ventura HOME Award 760,640
County of Ventura PLHA 2025 Award 241,703
Total Project Awards $ 12,477,343
Anticipated Home Sales $ 34,000,000
Total Financing Resources $ 46,477,343
Based on current cost projections of $51.2 million, project awards of $12.5 million, and anticipated total home sales of $34.0 million, PSHH estimates a remaining funding gap of approximately $4.7 million. The organization continues to actively pursue additional financing opportunities through the County of Ventura, the State of California, and the Federal Government to close this gap.
Over the past several months, City staff and PSHH have held multiple discussions regarding project needs and potential revisions to the DDA. Key items raised by PSHH include:
•Revisiting the role of the Housing Trust Fund Ventura County and the Land Trust Ventura County in the development and ongoing management of the project.
•A current project financing gap of approximately $4.7 million. •Impact fee relief for the 100 percent affordable for-sale housing project. •Revisions to DDA Exhibit 12 and updates to the affordable sales price calculation methodology.
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•A density bonus concession to remove private balconies from the project. •A request to remove the requirement to underground two utility poles from the Hillcrest Homes development conditions as the City is funding the undergrounding.
Authorization for City Manager to negotiate modifications to DDA Each funding source carries its own federal, state, or local requirements. As a result, projects must navigate affordability conditions, construction timing obligations, and other regulatory requirements that do not always align. The obligations associated with current funding sources require additional DDA modifications to address these regulatory differences.
Accordingly, the following sections of the DDA and related exhibits may require modification: Exhibit 3, Method of Financing; Exhibit 4, Schedule of Performance; Exhibit 5, Scope of Development; Exhibit 6, Project Budget; and Exhibit 12, Sales Price Calculation Methodology. Staff is requesting authority for the City Manager to negotiate amendments to the existing DDA.
Citywide Fee Waiver
PSHH has requested that the City consider implementing a citywide fee waiver ordinance that would waive City development impact fees for 100 percent affordable housing projects developed in the City. Staff is supportive of considering a waiver program for 100 percent affordable, for-sale projects in the City. Such a program would provide for fee waivers for the Hillcrest Homes project and similar projects proposed in the future and potentially make it more feasible for developers to build for-sale affordable housing in the City.
If the City Council is interested in exploring such a program, staff is requesting direction to research the feasibility of a citywide impact fee waiver program for 100 percent affordable for-sale projects within the City and provide a recommendation and/or proposed ordinance for City Council consideration at a future City Council meeting. PSHH estimates that applicable project impact fees are approximately $1.6 million, not including school impact fees. If the program is approved and implemented, the fee waiver would help reduce the project’s $4.7 million funding gap. The impact fee waiver would only apply to City impact fees, not impact fees charged by other governmental agencies.
Community Development Plan Review Update
On March 5, 2026, the Community Development Director received a letter from PSHH requesting additional modifications to the previously approved density bonus concessions and waivers. Specifically, PSHH is seeking removal of the Hillcrest Homes For-Sale Affordable Housing Project Update – 384 Erbes Rd.
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private balcony requirement for all seven unit types within the project, as established by Municipal Code §9-4.2205(c)(2) and Condition of Approval No. 15 for Residential Planned Development Permit No. 2023-70014-RPD.
In addition, in April 2026, PSHH submitted a subsequent letter requesting removal of Conditions of Approval Nos. 23 and 78, which require undergrounding two utility poles for which the City would reimburse PSHH. Upon further review of these conditions, there is concern that the reimbursement for the undergrounding could potentially trigger a requirement that the entire project pay prevailing wages which would further increase the cost of the project and make the funding gap much larger, potentially delaying the project further.
City staff is in the process of reviewing these requests to determine the appropriate procedure for amending the land use entitlements. In addition, it is likely that the collective changes to the project will require modifications to the DDA. Once staff has had the opportunity to finalize any project changes, the City Manager and staff will negotiate revisions to the DDA. Those revisions will then be submitted to City Council for consideration.
Conclusion
One of City Council’s top priorities is to continue to work with PSHH on the 100 percent affordable for-sale housing project and to promote funding solutions needed to advance the project. Staff have reviewed the current status of the Hillcrest Homes project along with PSHH’s requested modifications. Since City Council approval of the DDA in March 2024, PSHH has been awarded $12.5 million in funding for the project. PSHH has applied for additional funding and is awaiting award notifications with the potential for the existing gap to be eliminated.
PSHH is proposing amendments to the DDA and modification of project entitlement conditions in order to reduce the estimated construction cost of the project as well as ongoing monitoring costs and homeowner costs. Following City Council direction, staff will coordinate next steps with PSHH.
COUNCIL GOAL COMPLIANCE:
Meets the following City Council goals:
A. Create a more equitable, accessible, safe, welcoming, and inclusive government and community regardless of race, color, ethnicity, religion, sex, physical or mental ability, sexual orientation, gender identity and expression, age, language, education, and/or socio-economic status.
C. Operate City government in a fiscally and managerially responsible and prudent manner to ensure that the City of Thousand Oaks remains one of California's most Hillcrest Homes For-Sale Affordable Housing Project Update – 384 Erbes Rd.
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desirable places to live, work, visit, recreate, and raise a family.
J. Implement high quality revitalization projects within Thousand Oaks Boulevard and Newbury Road Areas; Develop a pedestrian-oriented, viable, and self- sustaining "Downtown;” and, continue to support production of long-term affordable housing.
PREPARED BY: Lynn Oshita, Senior Analyst
Attachments:
Attachment #1 – Disposition and Development Agreement (#13646-2024) Attachment #2 – Resolution No. 04-2024 PC
Attachment #3 – PSHH Letter dated April 7, 2026
Attachment #4 – PSHH Letter dated March 5, 2026
CDD: 430-31//H:\COMMON\Housing & Redevelopment\Developers & Developments\Hillcrest Christian Site\Council\2026- 04-14 – Update\Staff Report