HomeMy WebLinkAbout2025 03-18 CC AGENDA PKT - SPECIALAGENDA
Special Meeting
City Council Chamber - 1243 National City
Boulevard, National City, CA
Ron Morrison, Mayor
Marcus Bush, Vice-Mayor – District 4 Benjamin A. Martinez, City Manager
Luz Molina, Councilmember- District 1 Barry J. Schultz, City Attorney
Jose Rodriguez, Councilmember -District 2 Shelley Chapel, MMC, City Clerk
Ditas Yamane, Councilmember – District 3
_______________________________________________________________________
The City Council also sits as the City of National City Community Development Commission, Housing Authority,
Joint Powers Financing Authority, and Successor Agency to the Community Development Commission as the
National City Redevelopment Agency
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in advance of the meeting.
AGENDA
Special Meeting
City Council Chamber - 1243 National City
Boulevard, National City, CA
Ron Morrison, Mayor
Marcus Bush, Vice-Mayor – District 4 Benjamin A. Martinez, City Manager
Luz Molina, Councilmember- District 1 Barry J. Schultz, City Attorney
Jose Rodriguez, Councilmember -District 2 Shelley Chapel, MMC, City Clerk
Ditas Yamane, Councilmember – District 3
_______________________________________________________________________
The City Council also sits as the City of National City Community Development Commission, Housing Authority,
Joint Powers Financing Authority, and Successor Agency to the Community Development Commission as the
National City Redevelopment Agency
Gracias por participar en las reuniones del gobierno local y del Consejo de la Ciudad de National
City.
Reuniones: Las reuniones regulares del Consejo Municipal se llevan a cabo el primer y tercer
martes del mes a las 6:00 p.m. La reunión especial de sesión privada y los talleres pueden ser el
mismo día, la hora de inicio se basa en las necesidades. Consulte las agendas especiales para
conocer los horarios.
Ubicación: Las reuniones regulares del Concejo Municipal se llevan a cabo en la Cámara del
Consejo ubicada en el Ayuntamiento, 1243 National City Boulevard, National City, CA 91950, las
reuniones están abiertas al público.
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de la sesión.
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del Concejo Municipal.
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Todos comentarios deben estar sometidos a más tardar cuatro (4) horas antes del comienzo de
la sesión.
A PARTIR DEL 1 DE ENERO DE 2023
Todas las contribuciones a los candidatos y funcionarios electos actuales deben autoinformar una
Declaración de contribución de campaña a un concejal de más de $ 250 en el último año (a partir
del 1 de enero de 2023). Este informe puede incluirse en el Recibo del orador de comentarios
públicos que se completará antes de la reunión del Concejo Municipal
Servicios de interpretación en español: Los servicios de interpretación en español están
disponibles, comuníquese con el Secretario de la Ciudad antes del inicio de la reunión para
obtener ayuda.
Título II de la Ley de Discapacidades Americanas: En cumplimiento con la Ley de Discapacidades
Americanas de 1990, las personas con discapacidad pueden solicitar una agenda en formatos
alternativos apropiados según lo requerido por el Título II. Cualquier persona con una
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dirigir dicha solicitud a la Oficina del Secretario de la Ciudad (619) 336-4228 al menos 24 horas
antes de la reunión.
AGENDA
City Council Workshop
Tuesday, March 18, 2025, 5:00 p.m.
City Council Chamber - 1243 National City Boulevard
National City, CA
Pages
1.CALL TO ORDER
2.ROLL CALL
3.PLEDGE OF ALLEGIANCE
4.PUBLIC COMMENT (Public Comment will be Restricted to Agenda Items Only)
5.STAFF REPORT
5.1 Own National City Homeownership Study Preliminary Findings and Request for
Proposals to Develop Affordable Homeownership on Six (6) City-Owned
Properties.
2
Recommendation:
Provide Comment and Accept the Report on Own National City
Homeownership Study Preliminary Findings.
6.ADJOURNMENT
AGENDA REPORT
Department: Community Development
Prepared by: Angelita Palma, Community Development Manager
David McEachern, Community Development Specialist II
Meeting Date: Tuesday, March 18, 2025
Approved by: Benjamin A. Martinez, City Manager
SUBJECT:
Own National City Homeownership Study Preliminary Findings and Request for Proposals to
Develop Affordable Homeownership on Six (6) City-Owned Properties.
RECOMMENDATION:
Provide Comment and Accept the Report on Own National City Homeownership Study
Preliminary Findings.
BOARD/COMMISSION/COMMITTEE PRIOR ACTION:
City Council Resolution 2023-139, Management of Real Property Policy 901 Amendment
CDC-HA Resolution 2024-89, Local Preference Policy Amendment
City Council Resolution 2023-111, SANDAG HAP 2.0 grant application for “Own National City”
CDC-HA Resolution 2024-93, RFQ for On-Call Housing Consulting Services
CDC-HA Resolution 2024-94, Authorization to use HAP 2.0 grant funds for Own National City
CDC-HA Resolution 2025-95, RFP Agreement for City-Owned Properties for Homeownership
EXPLANATION:
WORKSHOP AGENDA
Background
Introduction: Own National City Study
Homeownership Program Assessment & Discussion
Site Assessments & Discussion
RFP Overview & Next Steps
BACKGROUND
The City of National City (“City”) seeks to increase homeownership opportunities for National City
residents by offering City-owned property for development.
Historically, the majority of City-owned property used for housing in National City has been
allocated to meet the need for affordable rental housing. However, the City of National City (“City”)
has an extensive history of creating homeownership opportunities through the First-Time
Homebuyer Program and infill development using the Low- and Moderate-Income Housing Fund
Page 2 of 53
and HOME Investment Partnership (HOME) funds from the U.S. Department of Housing and
Urban Development (HUD).
The last City-funded homeownership development was completed in 2022 f or six affordable
townhomes located at 401-421 W 18th Street. The City leveraged $435,027 in HOME funds and
$400,000 in donated land as construction funding, which was later converted into a buyer subsidy.
The units were sold to qualified first-time homebuyers from National City who earn at or below
80% of the Area Median Income (“AMI”). All new homeowners received pre- and post-home buyer
counseling.
In addition to the homeownership infill development mentioned above, the City Council has
recently taken the actions listed below to support homeownership and help reduce the
homeownership disparity between National City and the surrounding region. The Focused
General Plan Update (FGPU) accomplished many of the actions below.
Five-year Housing Strategic Plan Adopted in August 2021
The Housing Strategic Plan establishes guidance for the Community Development
Commission-Housing Authority (“CDC-HA”) to utilize City-owned real estate and its
financial assets for housing purposes to stimulate housing programs, including first -time
homebuyer opportunities.
Six (6) City-owned properties are identified in the Housing Strategic Plan for consideration
for housing development and homeownership projects.
6th Cycle Housing Element Adopted in August 2021
The Housing Element is a state-mandated comprehensive strategy for promoting the
production, preservation, and maintenance of affordable housing to meet current and
future community housing needs. The Housing Element establishes goals, policies, and
programs to address housing needs for an eight-year planning period (April 2021 through
April 2029).
o Policy 5-4: Support increased homeownership across all income levels for National
City residents.
City Council Policy # 901 Management of Real Property Amendment in August 2023
The Policy was amended for the development of city-owned property zoned for residential
use to require homeownership units to be built with maximized affordability, and that 75%
of the units will be sold to National City Residents. (Exhibit B, Appendix E)
Municipal Code Amendments to Revise Title 18 Ordinance Adopted in April 2024
Title 18 was updated to comply with Housing Element policies and State housing
legislation. The Municipal Code update included the incorporation of Objective Design
Standards (neighborhood compatibility) and the Floor Area Ratio Bonus Regulations. The
updates aimed to ease the local impacts of the statewide housing crisis by facilitating
easier housing development, encouraging deed-restricted affordable housing
construction, or allowing for a variety of housing types.
“House National City Density Bonus Opt-In Incentive Program” was adopted as part of the
Title 18 update to incentivize affordable and mixed-income, both rental and for-sale
Page 3 of 53
options, in strategic areas across the city. Qualifying projects receive a Floor Area Ratio
(“FAR”) bonus in exchange for affordable housing.
Land Use Element Update Objectives Adopted in April 2024
Aid in increasing housing in areas that have access to transit and resources
Assist in adding housing units to meet community needs
Housing Acceleration Program (HAP) 2.0 Grant Funding Approved in 2023-2024
SANDAG awarded grant funding for the Study.
HAP 2.0 will implement the HAP 1.0 FGPU plans and policies.
Support of Workshops, Classes, and Seminars for First-Time Homebuyers
Springboard CDFI (“Springboard”) provides HUD-approved information, resources, and
tools to purchase a home. Topics include but are not limited to improving credit scores,
how credit affects purchasing power, home loan options, down payment assistance, and
real estate purchases.
Springboard maintains a Homeownership Training Office located at the Paradise Creek
Apartments in National City. Springboard offers virtual and in-person Homebuyer
Education Workshops to empower families to achieve homeownership.
The City Council has provided staff direction to provide long-term affordability, payment stability,
and equity in homeownership for its residents. Recognizing this priority, Staff saw an opportunity
to advance the City Council's goals and address the community's need for homeownership. Over
the past year, staff has diligently worked on the Own National City project. To develop the project
concept fully, staff engaged in public outreach, speaking with residents, service providers,
developers, consultants, and local jurisdictions. Best practices were analyzed, and letters of
support were secured before applying for the Own National City project.
Staff continues to pursue both public and private grant funding to facilitate affordable
homeownership development, specifically for National City residents whose median income is
below 50% of the region's Area Median Income.
INTRODUCTION TO "OWN NATIONAL CITY"
The City’s new homeownership program, called “Own National City,” consists of two parts: a
grant-funded study of homeownership models and site assessments (“Study”), and a Request for
Proposals (RFP) for six (6) City-owned properties.
Part I. The "Study" | Keyser Marston Associates Inc. (KMA) was contracted to assess six (6)
City-owned properties for homeownership development. This study, still underway, explores
various homeownership models using a $450,000 grant from the San Diego Association of
Governments (“SANDAG”) Housing Acceleration Program 2.0 (HAP 2.0). The study aims to:
Help accelerate infill development, thereby increasing housing supply, choice, and
affordability
Facilitate homeownership opportunities that will help rectify National City's
overrepresentation of renters. Only 34.2% of the National City population are homeowners
Page 4 of 53
compared with 54.5% for the surrounding San Diego County1 Reduce vehicle miles
traveled – the parcels for the study are within close proximity to transit, which will help
reduce VMT and associated emissions
Provide new housing on vacant City parcels to contribute toward the City’s RHNA
objectives
Evaluate options available via City site ownership, providing control over the type of
housing built and the degree of affordability for future residents.
Affirmatively further fair housing by building housing for homeownership in census tracts
that are primarily in Low or Moderate Resource Areas
As part of the Study, KMA will assess the development potential and feasibility of potential
homeownership models to determine which model(s) would be the best to pursue on the City-
owned properties.
The scope of services for the Study includes:
Site reconnaissance: Collect site-specific information, data, maps, plans, legal info, and
other relevant documents. This information will provide direction and parameters on
potential usage.
Evaluate demographic and economic trends: Gather data and review trends in the local
market area, including population, households, income, and employment, to understand
the market context within which the sites will be developed.
Survey best practices: Research examples of implemented innovative homeownership
models. This will include a review of key approaches of programmatic elements and
interviews of participants and stakeholders involved.
Perform development feasibility analyses utilizing different homeownership models.
Evaluate various parameters to reveal under which conditions each site and
homeownership model may be feasibly developed.
Output viable development scenarios for studied sites to inform the proposed City RFP.
Transition to draft the RFP for interested development organizations. The site studies will
be utilized as guides for the RFP to highlight viable options.
A comprehensive report containing the findings of each task, which will include summary exhibits
and detailed technical appendices, will be completed and publicly available in June 2025.
Homeownership Assessment
As part of the Study, the KMA Team researched best practices and case studies of limited equity
homeownership programs, namely deed restrictions (“DRs”), community land trusts (“CLTs”), and
limited equity housing cooperatives (“LEHCs”), among others. Below is a summary description of
each of the programs evaluated.
1 2019-2023 American Community Survey
Page 5 of 53
LIMITED EQUITY MODELS
Deed
Restrictions
Community
Land Trusts
Limited Equity
Housing Cooperatives
How it Works
Legal covenants placed
on property that limits
how property can be
used for a period of
time
Nonprofit acquires land
and leases it to
homeowners through
low-cost, long-term
ground leases
A group of residents
collectively own a
building. Each
household owns a share
representing their unit
Land
Ownership
Homeowner owns the
land outright
Nonprofit owns land and
ground leases it to
homeowners
Residents collectively
own land
Resident
Control
Direct control except for
restrictions in the deed
restrictions
Least amount of control
through Tripartite Board
structure
Direct control through
membership in Co-op
Resale/Equity
Restrictions
Restricted equity for a
set period of time
Restricted equity into
perpetuity *
Restricted equity into
perpetuity *
* Unless the CLT/LEHC entity is dissolved.
Methodology and Approach
The KMA Team’s preliminary assessment of homeownership programs included the following key
tasks:
Preparation of case studies of various homeownership models
Identification of program design options for each type of housing program
Review of typical levels of affordability served by each type of program; and
Assessment of key considerations for administration
In addition, the KMA Team conducted 16 stakeholder interviews with market -rate and affordable
housing developers, local jurisdictions, and other groups and organizations with expertise in
affordable homeownership. The stakeholder interviews provided diverse perspectives on the
challenges of providing affordable homeownership opportunities.
A key interview and research effort included a discussion with Casa Familiar regarding their
proposed Avanzando San Ysidro development. The project proposes the development of 103
rental units. The rental project, which has secured most of its funding sources, will be financed
with Low Income Housing Tax Credits, a tax-exempt bond, State resources, developer
contributions, and local funds. Using a CLT, the project will convert into an affordable for -sale
owner-occupied condominium development after the 15-year Tax Credit compliance period.
Page 6 of 53
The KMA Team also studied the impact of California’s Construction Defect Liability (“CDL”)
environment on the development of condominiums throughout the State.
PRELIMINARY FINDINGS
Limited Equity Homeownership Models
None of the homeownership models studied solved the upfront capital requirements for
homeownership development. Instead, the models assist in meeting other goals such as targeted
levels of affordability and long-term resident control. Ultimately each model has its own
advantages relative to the other models with none standing out above the others offering a clear
advantage to homebuyers and local jurisdictions.
DRs can be flexible with the ability to mimic the affordability perpetuity of CLTs and LEHCs by
resetting the restriction period through resale requirements. Ongoing operations of CLTs typically
require an increase in the number of units included in the land trust over time or an increase in
ground lease payments to sustainably cover the CLT’s ongoing operating costs. An increase in
ground lease payments, however, may result in a payment that is unaffordable to existing owners.
The LEHC model typically involves the acquisition of an existing building by existing tenants rather
than new construction, as it is more practical to organize tenants that already reside together.
Committed stewardship by the developer and local jurisdiction is required for homebuyers’ long-
term success. This includes qualifying new homebuyers, monitoring primary residence status,
approving property improvements, oversight of sales and transfers, enforcing restrictions, and
providing other technical assistance to residents. These programs require significant effort to
establish and don’t necessarily expand homeownership opportunities more than the deed
restrictions approach.
Rental to Ownership Conversion
The viability of a conversion to ownership after a specific rental period is unknown as it has not
been tested in California in many years. The Avanzando San Ysidro project will provide a valuable
test case for this approach. However, such projects may face fewer financial hurdles than
traditional homeownership developments due to their ability to attract large funding sources like
Low Income Housing Tax Credits.
Construction Defect Litigation
While condominium projects can offer more affordable options to homebuyers without affordability
restrictions due to smaller unit sizes, condominium developments have experienced additional
costs due to construction defect litigation. Condominium projects are typically larger projects than
other residential developments providing plaintiff’s attorneys a greater opportunity to track,
canvass, and organize for class action lawsuits. As a result, some interviewed developers stated
that they have entirely withdrawn from condominium development.
Page 7 of 53
However, CDL is not the only reason condos are not being developed, other issues include:
The typical construction type for condominium developments is more expensive to build
Insurance, in general is more expensive
Condominium developments cannot be phased
Condominium developments typically require high capital costs
Part II. Request for Proposals (“RFP”) | The Community Development Commission-Housing
Authority (“CDC-HA”) will release a Request for Proposals (RFP) for six (6) City-owned properties
on March 19, 2025. The RFP will be available for download on the City of National City’s bidding
platform, PlanetBids, at https://vendors.planetbids.com/portal/24103/portal-home. All updates,
addenda, questions, answers, and changes related to the RFP will be distributed through the
PlanetBids portal.
The CDC-HA’s objective is, to the extent feasible, to create affordable homeownership
opportunities for National City residents who have been yet unable to enter the for-sale market.
The City is seeking experienced non-profit and for-profit developers to enter into one or more
Exclusive Negotiation Agreements. These agreements will allow developers to conduct due
diligence, negotiate a Disposition and Development Agreement, and ultimately develop the sites
with for-sale housing. Development teams are invited to propose either the acquisition and
development of all six (6) sites or to specify which individual site(s) they intend to pursue.
Location of City-Owned Properties:
1. Highland and Eta Street (“Purple Cow”)
2. Division Street & R Avenue (“Division Street”)
3. Roosevelt Avenue & W 11th Street (“Roosevelt Lot”)
4. “A” Avenue & E 11th Street (“A Avenue Lot”)
5. Plaza Blvd and E Avenue (“Lambs’ Theater”)
6. Plaza Bonita Center Way (“Plaza Bonita”)
Detailed property information, including allowable site and zoning, building format, development
standards, and building setbacks, are included in Exhibit “A.” Prior actions and key dates,
snapshots of the RFP webpage, bidding information, a map of the City-owned sites, and the RFP
draft summary page “at a Glance” are included in Exhibit “B.”
FINANCIAL STATEMENT:
The City was awarded a $450,000 grant from SANDAG’s Housing Acceleration Program (“HAP
2.0”) to undertake site assessments and study potential homeownership models. Resolution
2025-95 previously approved $89,000 of Fund 532 (“Low- and Moderate-Income Housing Fund”)
to draft, solicit, and evaluate a real property request for proposals (“RFP”) to create for -sale
homeownership opportunities. The CDC-HA may need to assist the homeownership project by
deferring the receipt of payment for the value of the land to make it financially feasible to build
homeownership units. The CDC-HA may consider providing loans to make the homes affordable
to lower income first-time homebuyers through the equity created through the development. If the
CDC-HA assists the homebuyer through a loan secured by the homebuyer’s housing unit, the
City’s subsidy will be recaptured and reutilized when the property is sold or transferred.
Page 8 of 53
RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:
Housing and Community Development
ENVIRONMENTAL REVIEW:
This is not a project under CEQA, and is therefore, not subject to environmental review.
CCR15378; PRC 21065.
PUBLIC NOTIFICATION:
The Agenda Report was posted at least 72 hours before the Regular Meeting date and time, and
24 hours before a Special Meeting in accordance with the Ralph M. Brown Act.
ORDINANCE:
Not Applicable
EXHIBITS:
Exhibit A - PowerPoint
Exhibit B - Appendices
Page 9 of 53
Own National City
City Council Workshop
An overview of a grant-funded study on homeownership
& the RFP for six City-owned properties.
Linnie Gavino, Senior Principal
Julie Romey, Senior Principal
Diego Velasco, Principal-in-ChargeAngelita Palma, Comm. Dev. Manager
David McEachern, Comm. Dev. Spec. IIPage 10 of 53
Agenda
2
RFP Overview
& Next Steps
Homeownership Program Assessment
& Discussion
Site Assessments
& Discussion
Introduction: Own National City Study
Provide National City residents priority, homeownership opportunities,
and a range of unit sizes
Background
Incentivize new affordable housing for all generations of National City
residents
Page 11 of 53
Background
Housing in National City
•Majority of City-owned property in National City has been allocated for affordable rental housing.
•Homeownership opportunities have primarily been created through First-Time Homebuyer Programs and infill
development.
Plans & Document Updates
•Five-year Housing Strategic Plan (August 2021)
•6th Cycle Housing Element (August 2021)
•City Council Policy # 901 Management of Real Property Amendment (August 2023)
•Municipal Code Title 18 Zoning Updates (April 2024)
•Land Use Element Update Objectives (April 2024)
•Housing Acceleration Program (HAP) 2.0 Grant (2023-2024)
Page 12 of 53
Own National City Study
Funded with $450,000 SANDAG Housing Acceleration Program (HAP) 2.0 Grant
Homeownership Program
Assessment
Research best practices for affordable
homeownership programs
Site Assessments
Analysis of six (6) City-owned sites to
support homeownership opportunities
Market Assessment
Assess current market factors
affecting homeownership
Financial Feasibility Analysis
Prepare financial pro formas modeling
various homeownership prototypes on
the six (6) City-owned propertiesPage 13 of 53
National City Permitted Housing
Units in the Last 3 YearsOwner 6.0%
Rental
94.0%
571 Total
Housing Units
5
Rental units reflected the vast majority of units approved
to be built in National City between 2022 and 2024
National City Housing Tenure
Percentage of Owner-Occupied Households 34%
Percentage of Renter-Occupied Households 66%
Page 14 of 53
National City
Median Income*
*Compared with HUD AMI levels for the
San Diego County region
Household
Size
National City
Median
Income(1)
Very Low
Income
(50% of AMI)
Low Income
(80% of AMI)
Moderate
Income
(120% AMI)
1 $47,600 $53,050 $84,900 $100,400
2 $54,400 $60,600 $97,000 $114,700
3 $61,200 $68,200 $109,150 $129,050
4 $68,000 $75,750 $121,250 $143,400
5 $73,400 $81,850 $130,950 $154,850
6 $78,800 $87,900 $140,650 $166,350
7 $84,300 $93,950 $150,350 $177,800
8 $89,700 $100,000 $160,050 $189,300
(1) KMA estimate based on median income of $62,513 for an average household size of 3.2 persons. Source: Esri, Business Analyst Online.
National City’s median income falls
below 50% of the region’s Area
Median Income
Page 15 of 53
Site 1: Highland & Eta St.
(“Purple Cow”)
Key Opportunities & Constraints:
+Potential for detached single-family
residential development
+Adjacent to a large public park
+Strong frontage along N Highland Avenue
+±15-foot grade difference presents
topographical challenges
+The private street (Soltura Lane) presents
access and circulation challenges
Site & Zoning MXC-1 Zone
Lot Area (SF)67,910
Density 48 DU/AC
# of Units 74 (allowable)
F.A.R. (Mixed-Use)2
F.A.R. (Single-Use)1
Height 50' & 3 Stories Max.
Height (Adjacent to
Residential Zone)
Same as adjacent
zone (within 50 feet)
Building Format
# of Stories 3 (allowable)
Construction Type Type 5 - Wood
Development Standards
Street Wall 75% Min.
Building Setbacks
Street Wall 0' Min., 15' - 1st and
2nd story Max.
Other None
Other, Adjacent to
Residential Zone
Same as the
equivalent setback in
the adjacent
residential zone
Building Stepbacks
3rd story stepback
(from 2nd story street
wall)
8' Min., No Max.
3rd story stepback
(from 2nd story walls
adjacent to RS zone)
15' Min., No Max.
Site 1: Purple Cow
Page 16 of 53
Key Opportunities & Constraints:
+Proximity to public transit and freeway access
+±10-foot grade difference from the street
presents topographical challenges
+Site access from this street would be
challenging
+Front and rear setbacks restrict development on
small lot
+Division St and the freeway cause high noise
levels and fast-moving traffic
+Access to utilities severely constrained due to
limited frontage and potential obstructions
+Single family and Duplex (approx. 3 units)
Site 2: Division St. & R Ave
(“Division St”)
Site & Zoning RS-2 Zone
Lot Area (SF)6,400
Density 1 DU/Lot
# of Units 1
Lot Coverage 75%
Height 35'
Building Format
# of Stories 2 (allowable)
Construction Type Type 5 - Wood
Development Standards
Minimum Setbacks
(Primary Structure)
Front 20'
Side-Interior 5'
Side-Exterior 10'
Rear 25'
Minimum Setbacks
(Accessory
Structure)
Front 20'
Side-Interior 5'
Side-Corner 5'
Rear 5'
Detatched Building
Separation
5'
# of Detatched
Buildings
3 per full 5,000 SF of lot
area
Maximum Area Total
for Accessory
10% of lot size
Minimum Usable Open
Space
N/A
Site 2: Division Street & R Ave
Page 17 of 53
Key Opportunities & Constraints:
+Easy driveway access
+Potential views to the bay
+Ground floor activation potential
+Corner lot
+Walkable neighborhood
+Small lot area (50’ parcel width)
+Heavy adjacent auto/industrial use
+Approx. 2’ of fill across the site, may require
re-compaction or export of soil
Site 3: Roosevelt Ave &
W 11 th Street
(“Roosevelt Lot”)
Site & Zoning DSPD-6 Zone
Lot Area (SF)4,791
Density 75 DU/AC Max.
# of Units 35 Max., 17 Min.
F.A.R.6:1 Max., 3:1 Min.
Height 250' (allowed)
Height (Adjacent to
R esidential Zone
Same as adjacent zone
(within 50 feet)
Building Format
# of Stories 6 Max., 3 Min.
Construction Type Type 5 - Wood
Development Standards
Street W all 75% Min.
Building Setbacks
Street 0' Min., 10' - 1st and 2nd
story Max.
Other None
Other, Adjacent to
R esidential Zone
Same as equivalent
setback in the adjacent
residential zone
Building Stepbacks
5th story stepback
from 4th story street
8' Min., No Max.
3rd, 4th, and 5th story
stepback from 2nd
story walls adjacent to
RS Zone
15' Min., No Max.
Site 3: Roosevelt Ave & W 11th St
Page 18 of 53
Key Opportunities & Constraints:
+Positive street frontage on A Ave
+Mostly graded site
+Historical character & preservation
+Walkable neighborhood
+Small lot area (50’ parcel width)
+Potential access issues due to limited
frontage
+High noise levels
+Integrating new row-homes with existing
architectural style and scale may pose
design challenges
Site 4: A Avenue & E 11th St
(“A Avenue Property”)
Site & Zoning DSPD-5A Zone
Lot Area (SF)3,911
Density 75 DU/AC Max.
# of Units 38 Max. (allowed)
F.A.R.3:1 Max.
Height 50' (allowed)
Height (Adjacent to
R esidential Zone
Same as adjacent zone
(within 50 feet)
Building Format
# of Stories 5 Max.
Construction Type Type 5 - Wood
Development Standards
Street W all 75% Min.
Building Setbacks
Street 0' Min., 10' - 1st and 2nd
story Max.
Other None
Other, Adjacent to
R esidential Zone
Same as equivalent
setback in the adjacent
residential zone
Building Stepbacks
5th story stepback
from 4th story street
wall
8' Min., No Max.
3rd, 4th, and 5th story
stepback from 2nd
story walls adjacent to
RS Zone
15' Min., No Max.
Site 4: E Plaza Blvd & A Avenue
Page 19 of 53
Key Opportunities & Constraints:
+Proximity to Central Elementary School
+Proximity to public transit
+Reduced car reliance
+Corner lot with positive frontage
+±15-foot grade difference presents topographical
challenges
+Potential access issues
+Urban-scale and mixed-use requirements may
increase project complexity and costs
+E Plaza Blvd experiences high noise levels and
fast-moving traffic
Site 5: E Plaza Blvd & E Ave
(“Lambs’ Theater”)
Site & Zoning MXD-2 Zone
Lot Area (SF)16,990
Density 75 DU/AC Max.
# of Units 29 Max. (allowed)
F.A.R. (Mixed-Use)3.5 Max.
F.A.R. (Single-Use)2.5 Max.
Height 65' (allowed)
Height (Adjacent to
R esidential Zone
Same as adjacent zone
(within 50 feet)
Building Format
# of Stories 5 Max.
Construction Type Type 5 - Wood
Development Standards
Street W all 75% Min.
Building Setbacks
Street 0' Min., 10' - 1st and 2nd
story Max.
Other None
Other, Adjacent to
R esidential Zone
Same as equivalent
setback in the adjacent
residential zone
Building Stepbacks
5th story stepback
from 4th story street
wall
8' Min., No Max.
3rd, 4th, and 5th story
stepback from 2nd
story walls adjacent to
RS Zone
15' Min., No Max.
Site 5: Lambs' Theater
Page 20 of 53
Key Opportunities & Constraints:
+Adjacent to a large private park
+Potential views
+±50-foot grade difference presents
topographical challenges
+Significant access/circulation constraints due
to high-speed and high-volume traffic coming
from SR-54 offramp on Plaza Bonita Center
Way
+Potential fire access challenges
Site 6: Plaza Bonita Center-Way (“Plaza Bonita”)
Site & Zoning RS-2 Zone
Lot Area (SF)144,490
Density 9 DU/AC
# of Units 29
Lot Coverage 75%
Height 35'
Building Format
# of Stories 2 (allowable)
Construction Type Type 5 - Wood
Development Standards
Minimum Setbacks
(Primary Structure)
Front 20'
Side-Interior 5'
Side-Exterior 10'
Rear 25'
Minimum Setbacks
(Accessory
Structure)
Front 20'
Side-Interior 5'
Side-Corner 5'
Rear 5'
Detatched Building
Separation
5'
# of Detatched
Buildings
3 per full 5,000 SF of lot
area
Maximum Area Total
for Accessory
Structures
10% of lot size
Minimum Usable Open
Space
N/A
Site 6: Plaza Bonita Center-Way
Page 21 of 53
Discussion
13Page 22 of 53
Homeownership Program Assessment
Summary of Assessment
Researched Shared Equity
Ownership Models
Casa Familiar CLT Case Study (Rental to Ownership Conversion)
Conducted 16 Stakeholder Interviews
Researched Construction Defect Litigation (CDL) issue
14
•Deed Restrictions (DR)
•Community Land Trusts (CLT)
•Limited Equity Housing Cooperatives (LEHC)
Page 23 of 53
Limited Equity Models
15
Deed Restrictions Community Land Trusts (CLT)Limited Equity Housing
Cooperatives (LEHC)
How it Works
Legal covenants placed on
property that limits how
property can be used for a
period of time
Nonprofit acquires land and leases
it to homeowners through low-cost,
long-term ground leases
A group of residents collectively
own a building. Each household
owns a share representing their
unit
Land Ownership Homeowner owns the land
outright
Nonprofit owns land and ground
leases it to homeowners
Residents collectively own land
Resident Control Direct control except for
restrictions in the deed
restrictions
Least amount of control through
Tripartite Board structure
Direct control through
membership in Co-op
Resale
Restrictions Restricted equity for a set
period of time
Restricted equity into perpetuity *Restricted equity into perpetuity*
* Unless the CLT/LEHC entity is dissolved.Page 24 of 53
Overview
Shared
Equity
Ownership
Models
Affordable homeownership options
Involve entities or properties in which residents and community members lead in
both governance and ownership
Self-sustaining models that require a one-time public investment
Resident and community benefits
Still encounter initial financial feasibility gaps associated with developing
affordable housing units
16
•Long-term affordability
•Subsidy retention
•Improved stability
•Community control
Page 25 of 53
Deed Restrictions
Local Jurisdiction Benefiting From Restrictions
Responsibilities
•Qualifies New Buyers
•Sets Sales Prices
•Refinancing Approvals/ Subordinations
•Improvement Approvals
•Monitors Primary Residence Status
CLTs
CLT Board of Directors or Outside Management
Responsibilities
•Support Homeowners
•Maintain Affordability
•Oversight of sales and transfers with a
vested interest in the property
LEHCs
Resident Elected Board of Directors/Outside Management
Responsibilities
•Board enforces restrictions
•Offers technical assistance
•Empowers residents to become effective stewards
Stewardship
An entity shares responsibility as a
steward and representative of the
broader community’s interest.Stewardship
DR
LEHCCLT
Limited Equity Models ContinuedOngoing Stewardship is Key to the Sustainability
Page 26 of 53
18
2042End of TCAC compliance period. The condominiumized units can be sold to residents at low-income sales prices.
2025
Construction on the 103-unit Project to commence.
2027
Project to be completed and 15 year TCAC
compliance period to commence
2025
Casa previously purchased the Site and will
donate it to the CLT. CLT will ground lease Site to
Project for 99 years.
2024
Project received AHSC & TCAC allocations.Rental to Ownership Conversion
Case Study: Avanzando San Ysidro Development
Casa Familiar is the developer and has established the Avanzando San
Ysidro Community Land Trust (CLT)
The project will have a condo map and individual meters but will initially be
run as an apartment project for 15 years for Tax Credit purposes.
The board for the Community Land Trust (CLT) has already been
established:
(3) Residents from San Ysidro Zip Code
(3) CLT Residents (Employees from Casa Familiar during the interim period)
(3) Casa Familiar Board Seats
Page 27 of 53
19
City Ventures is sued on
nearly every project they
undertake, which is paid out
by insurance.
This increases the
overhead for each
project and can limit
more affordable product
types.
Budgets an extra
$15,000 per door to
cover insurance and
repair costs.
General contractors and
subs also need to
qualify for insurance,
though this also ensures
higher quality work
product.
Insurance rates have
nearly doubled in the
past 20 years.
Construction defect
litigation costs are an
increasing concern, as they
are doing more townhomes/
attached product types.
Insurance for Years 1-2,
then in-house repairs
after Year 2.
Larger/denser projects
draw more attention
from plaintiff’s attorneys
hoping to file a class
action lawsuit.
The Olson Company
stopped developing
condominiums because of
construction defect issues.
Self-insurance is
becoming more common,
as insurers will not often
cover substantive repairs.
Insurance rates seem to
be rising at a faster rate
now than before.
Stakeholder Interview Feedback
Construction Defect Litigation
Page 28 of 53
Discussion
20Page 29 of 53
21
Request for Proposals: March 19-June 6
•Six (6) City-owned sites for affordable to market rate homeownership
opportunities.
•Proposals can be for all six (6) sites or select individual sites
•KMA will assist City staff in evaluating proposals
•The RFP will be available for download on PlanetBids.
•All updates, addenda, questions, answers, and changes to the RFP will be
distributed through the PlanetBids portal.
Own National City
Page 30 of 53
Where to find the Own National City RFP
22
1.National City Website: www.nationalcityca.gov/business/contract-consulting-bid-opportunities/
2.PlanetBids: https://vendors.planetbids.com/portal/24103/portal-home
Page 31 of 53
Own National City
Workshop
March 18 March 19-
June 6
Request for Proposals
Released
Presentation on Own National City and Information on the RFP Process
RFP Released on PlanetBids for Six (6) City-owned properties
Evaluation of
RFP Proposals
Kyser Marston & Associates will review the the development proposals received, financial pro formas, developers experience, etc. and will estimate the overall feasibility, reasonableness, financial transaction, etc.
RFP Findings &
Technical Analysis
Based on the evaluation of the developer proposals and detailed financial analyses, interviews with some or all of the developers will be conducted.
Publication of
Homeownership Study
Homeownership Study “Own National City” will be published for public review.
RFP
Presentation
Own National City RFP Recommendations to City Council
60-days 36-days October 7 October 7
Next Steps
Page 32 of 53
Stay up-to-date with the homeownership study
& RFP process on the
Own National City Project Webpage:
www.nationalcityca.gov/ownnatcity
Fun Fact: The background picture is a six-unit homeownership development by Habitat for Humanity in partnership with the City of National City (2022) Page 33 of 53
•The analysis contained in this document is based, in part, on data from secondary sources such as state and local government, planning agencies, real estate brokers, and other third parties. While
KMA believes that these sources are reliable, we cannot guarantee their accuracy.
•The analysis assumes that neither the local nor national economy will experience a major recession. If an unforeseen change occurs in the economy, the conclusions contained herein may no longer
be valid.
•The findings are based on economic rather than political considerations. Therefore, they should be construed neither as a representation nor opinion that government approvals for development
can be secured.
•Development opportunities are assumed to be achievable during the specified time frame. A change in development schedule requires that the conclusions contained herein be reviewed for validity.
•The analysis, opinions, recommendations and conclusions of this document are KMA's informed judgment based on market and economic conditions as of the date of this report. Due to the volatility
of market conditions and complex dynamics influencing the economic conditions of the building and development industry, conclusions and recommended actions contained herein should not be
relied upon as sole input for final business decisions regarding current and future development and planning.
•Any estimates of development costs, capitalization rates, income and/or expense projections are based on the best available project-specific data as well as the experiences of similar projects. They
are not intended to be projections of the future for the specific project. No warranty or representation is made that any of the estimates or projections will actually materialize.
•KMA is not advising or recommending any action be taken by City with respect to any prospective, new, or existing municipal financial products or issuance of municipal securities (including with
respect to the structure, timing, terms, and other similar matters concerning such financial products or issues).
•KMA is not acting as a Municipal Advisor to the City and does not assume any fiduciary duty hereunder, including, without limitation, a fiduciary duty to the City pursuant to Section 15B of the
Exchange Act with respect to the services provided hereunder and any information and material contained in KMA’s work product.
•The City shall discuss any such information and material contained in KMA’s work product with any and all internal and/or external advisors and experts, including its own Municipal Advisors, that it
deems appropriate before acting on the information and material.
KMA Team Limiting Conditions
25Page 34 of 53
Exhibit B
Own National City
Contents
Appendix A Prior Actions & Key Dates ...................................................................................... 2
Appendix B Request for Proposals (RFP) Webpage ................................................................... 3
Appendix C RFP Summary Page “At a Glance” .......................................................................... 4
Appendix D Own National City Webpage .................................................................................. 5
Appendix E City Council Policy #901 – Management of Real Property ........................................ 7
Appendix F Map of City-Owned Sites ..................................................................................... 19
Page 35 of 53
Appendix A Prior Actions & Key Dates
8/03/2023 Application Submittal SANDAG HAP 2.0 Grant
8/15/2023 Ratification of grant application submittal Council Meeting Item 8.5
9/19/2023 City Council Policy 901 Amendment, Resolution 2023-139 Council Meeting
Item 10.2
10/5/2023 SANDAG Notice of Intent to Award HAP 2.0
2/06/2024 Local Preference Policy Amendment, HA Resolution 2024-89 Council
Meeting Item 11.2
2/14/2024 State of CA Budget Reductions/Reductions to REAP-HAP 2.0
3/01/2024 Revised HAP 2.0 Grant budget and scope due to SANDAG
Spring 2024
Focused General Plan Update (FGPU) Project Completed (4-year project), a
HAP 1.0 & SGIP grant-funded project Council Meeting Item 11.2
FGPU planning documents and ordinances used for the Own National City
Study.
5/2/2024 On-Call Housing Consulting Services RFQ Released
5/20/2024 On-Call Housing Consulting Services RFQ Proposals Received: Four (4)
6/18/2024 Agreement for Housing Consulting Services, Resolution 2024-93 Council
Meeting Item 9.2
8/1/2024 SANDAG makes HAP 2.0 Funds Available for Use
11/5/2024 Authorization of HAP 2.0 funding, CDC-HA Resolution 2024-94, Council
Meeting Item 9.2
1/21/2025 Project webpage Live: www.nationalcityca.gov/ownnatcity
1/21/2025 Agreement for RFP/grant funds Resolution 2025-95, Council Meeting Item 9.5
2/11/2025 Public Notice (PDF): Notice of Vacant Real Property Available for
Disposition
3/18/2025*
Workshop 5:00-6:00 pm Council Chambers, agenda will be linked on
the City's Calendar. Information to be noticed with the regularly scheduled
City Council meeting. The Workshop will focus on the study's preliminary
findings and provide an overview of the RFP.
3/19/2025*
Release of the RFP on PlanetBids
Staff will respond to questions and publish addenda as needed on
PlanetBids.
6/6/2025* Developer proposals due at 11:59 p.m.
10/7/2025* RFP Recommendations & Presentation to Council
Page 36 of 53
Appendix B Request for Proposals (RFP) Webpage
PLANETBIDS
The official Request for Proposals ("RFP") will be released on PlanetBids on March 19, 2025*. The RFP
should be downloaded and submitted through the PlanetBids procurement platform. Learn more
about PlanetBids by visiting https://home.planetbids.com/vendor-basic.
https://vendors.planetbids.com/portal/24103/portal-home
City of National City Contract & Consulting Bid Opportunities Webpage:
www.nationalcityca.gov/business/contract-consulting-bid-opportunities
Page 37 of 53
Appendix C RFP Summary Page “At a Glance”
Page 38 of 53
Appendix D Own National City Web page
HOUSING AUTHORITY
PLANS, PROJECTS, AND PROGRAMS WEBPAGE
www.nationalcityca.gov/HA-PPP
Page 39 of 53
HOUSING AUTHORITY
OWN NATIONAL CITY WEBPAGE
www.nationalcityca.gov/ownnatcity
Page 40 of 53
Appendix E City Council Policy #901 – Management of Real Property
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Management of Real Property POLICY # 901
(Sale, Lease, Rental, Surplus)
ADOPTED: June 19, 1984 AMENDED: September 19, 2023
Background:
The City of National City is owner of substantial real property which is used for various municipal
purposes. As public service needs change, the requirements for these properties may be revised
and, on occasion, certain parcels may be in excess of the City's current need. This requires that
each individual site be reviewed in terms of its potential for future public use, as well as its
potential economic benefit to the City.
The proceeds from the sale and lease of City-owned lands and the revenues generated from leases
are normally utilized for General Fund purposes unless the property sold or leased belonged to a
restricted program.
Purpose:
It is the purpose of this policy 1) to establish a procedure by which unused and marginally used
City-owned real estate is reviewed for its potential public use, and for designating unneeded
parcels for lease or sale; 2) to provide methodology for the sale or exchange of City-owned real
estate and 3) to establish policies for the leasing of City-owned real property; and 4) to require a
study and development of homeownership units with maximized affordability on city-owned
property (parcels) zoned for residential use and include a 75% local preference for residents of
National City.
Policy:
It is the City's policy to manage its real estate assets so that municipal needs which rely on these
assets may be properly implemented. It is not the City's policy to speculate in real estate. The City
Council will review City-owned real estate not used for municipal purposes and determine the
appropriate use of the property. Those properties not needed for either City or public use within
the foreseeable future, may be made available for lease or sale.
The City shall optimize the sale price or lease rent from City-owned real estate based on relevant
factors, including 1) an appraisal reflecting current market value when either a transaction or
authorization to sell or lease is presented to the City Council, 2) prevailing economic conditions
and market trends, and 3) any special benefits to accrue from the sale or lease.
Page 41 of 53
The City shall seek market value for its properties. Discounts will not be negotiated unless an
extraordinary need or circumstance is recognized by Council Resolution setting forth the amount
of the discount from appraised value and the public purpose served in justification of the discount.
City staff under the direction of City Manager shall prepare and present to the City Council a
comprehensive Property Management Plan with periodic reviews as needed, and updates to the
City Council. The Property Management Plan shall include an overall review of the City's real
estate portfolio (or inventory), an operating plan for corporate property, a disposition plan for
surplus property, market research to support anticipated transactions and a request for authority to
act within defined parameters (as described in this policy).
The major elements of the property management plan are to include:
• Property evaluation and characterization of real estate assets
• Strategy for City occupied real estate
• Investment Portfolio Plan (leases to for-profit tenants)
• Review of not-for-profit leases
• Disposition Plan for surplus assets
• Business Case development review to support proposed transactions
• Legal document development and review
Procedure for sale of City-owned Real Estate:
A. Real Estate Review
As part of an overall property management plan for the City's real estate assets, staff will
review the City's property inventory to determine which properties are no longer needed for
public facilities or to support the elements of the General Plan and whose disposition will
provide a greater public benefit.
B. Homeownership Requirement
City-owned property zoned for residential use requires a study and development of
homeownership units with maximized affordability on city-owned property zoned for
residential use and includes a 75% local preference for residents of National City.
When a City-owned property is considered for disposition by the City or Housing Authority,
a study will be conducted using various development models, conditions, and options that
impact the project budget, development, and unit affordability. The findings and considerations
from the study by the Housing Authority must be presented to City Council for review. The
City Council may accept the study or direct staff to issue a request for proposals on the subject
property.
Page 42 of 53
The study will analyze and evaluate various development models for homeownership, which
may include:
• Condominiums
• Townhomes
• Limited-Equity Cooperatives
• Rent-to-own units
• Community Land Trusts
• Other Models or Combinations Thereof
The subject property will also be studied and evaluated for various conditions and options that
may impact the project budget, development, and unit affordability for homeownership, which
may include:
• Construction Defect Insurance Law
• Gap Financing Options
• State Legislation
• Deed Restrictions
• Ratio of market rate to affordable homeownership units
• Unit size and distribution with an emphasis on larger units
• Funding available to subsidize affordable homeownership such as pre-paid mortgage
insurance or first-time homebuyer programs
• Other Conditions and Options
C. Available Real Estate for Sale
A City-owned property may become available for sale if:
• The property is not currently used by the City or does not support a municipal function;
and
• The property is vacant and has no foreseeable use by the City; and
• The property is a non-performing or under-performing asset and greater value can be
generated by its sale; and
• Significant economic development opportunities can be generated by selling the
property.
Factors to be considered in determining whether a property should be sold include:
• Will the City be relieved of potential liabilities and/or cost of maintaining property that
does not generate income or provide public benefit?
• Property tax increment that will be created by returning the properties to the tax rolls.
• Stimulation of the economy by providing opportunities for private sector investment.
• Generation of revenue.
• The sale of the property will generate greater economic value than a ground lease if a
ground lease is a feasible option.
D. Governmental Clearance Process
Government Code Section 54222 requires that a local agency proposing to dispose of surplus
property must first notify all governmental agencies operating within the City as to the
Page 43 of 53
availability of the property. The agencies are given 60 days to respond with an intent to acquire,
if not, the property may be deemed cleared for public sale.
Regarding the list of properties for sale:
• Governmental agencies are regularly contacted as the surplus list is updated.
• City departments are individually contacted as the surplus list is updated.
• Council members are given a preliminary review and opportunity to comment on
foreseeable uses for the property.
E. Approval Process
• City-owned properties that have been identified by the City Manager as candidates for
sale will be presented to the City Council for approval to be sold.
• If a property is of a type and location that would make a ground lease feasible, an
economic analysis of the benefits of lease vs. sale will be conducted.
• If the property is zoned for residential use a study will be conducted using various
development models, conditions, and options that impact the project budget,
development, and unit affordability. The findings and considerations from the study by
the Housing Authority must be presented to City Council for review. The City Council
may accept the study or direct staff to issue a request for proposals on the subject
property.
• If City Council determines that the property may be sold, it shall authorize City
Manager to sell the property for a price equal to or greater than a minimum price
established by a current (less than six months old) appraisal. The authorization to sell
the property will be valid for twelve months from the date of City Council action.
• The City Manager or designee may enter into purchase and sale agreements, close
escrows and execute and deliver grant deeds to the purchasers of the properties at prices
equal to or greater than the minimum price approved by City Council on terms and
conditions deemed reasonable, and in the City's best interests.
• City Manager or designee will provide a report to the City Council, regarding the price,
terms, and conditions of all transactions.
• Properties that cannot be sold at a price equal to or greater than the minimum price
approved by Council will be returned to Council for further consideration prior to
disposition. Council approval will be required to sell a property at a price less than the
minimum price previously approved by the City Council.
F. Method of Sale
Properties may be sold by any method allowed by City Council Policy. This includes direct
negotiation, request for proposal, listing with a broker, sealed bid, auction or other appropriate
method as determined by the City Council. Possible method of sale for all properties will be
included in the enabling resolution authorizing their sales.
G. Marketing
Properties offered for sale shall receive the widest possible exposure to the open marketplace.
This may be accomplished through direct marketing techniques, such as requests for proposals
(RFP), advertising, exposure through the real estate media, posting the property on the multiple
Page 44 of 53
listing service, or any other appropriate method. When appropriate, properties may be listed
for sale with qualified real estate brokers. The authorization to utilize the services of a real
estate broker will be contained in the enabling resolution.
H. Real Estate Brokers
Real estate brokers may be used to represent the City in the sale of its properties. Brokers will
be selected for individual assignments through Requests for Proposals (RFP) or Requests for
Qualifications (RFQ) and a subsequent bid or other methods that result in the City receiving
the services of a qualified broker at the best value to the City. The maximum approved
commission rate will be contained in the enabling resolution for the property's sale. If the
property is listed with a broker, the City reserves the right to exclude from the listing agreement
potential buyers whose interest in purchasing a subject property has been made a part of the
record prior to the execution of such agreement.
I. Exclusively Negotiated Sales
It will be the City's policy to insure the highest price for its real estate by pursuing open market
transactions. However, on certain occasions, an exclusively negotiated sale may be justified as
applicable and may be approved under one of the following conditions:
1. When a parcel is landlocked.
2. When the sale is to a contiguous owner.
3. When a fee interest in a pipeline or other right-of-way is no longer required, it may be sold
to a contiguous owner. A restrictive pipeline easement of adequate width or other required
easements will be reserved from said sale.
4. When other governmental, public and quasi-public agencies submit acquisition proposals a
sale may be consummated. These agencies shall include but not be limited to: Federal,
State, and County agencies; school districts, special districts, and regulated utility
companies.
5. When qualified non-profit institutional organizations offer to purchase City-owned land, a
negotiated sale may be consummated at fair market value providing there is: 1) a
development commitment, and 2) a right to repurchase or a reversion upon
a condition subsequent. Institutional organizations such as places of public assembly,
hospitals, extended care facilities, private schools and community service organizations are
required to develop under the City's conditional use permit procedure.
6. When a property has been offered by public auction and no acceptable bids were received,
it may be sold on a negotiated basis to any applicant submitting an acceptable offer within
six months following the date of auction.
7. Real property exchanges may be consummated by direct negotiation. However, exchanges
will be considered only with other governmental agencies or when there is an advantage to
the City.
J. Rezoning
Prior to completion of the sales transaction, City land shall be considered for rezoning in
accordance with the General Plan, existing community plans or other City Council direction if
a higher sale price will result. Also, all unnecessary easements affecting title to the property
shall be removed if this will result in a commensurate increase in value.
Page 45 of 53
K. Easements
The City will receive current fair market value for the removal of restrictive easements or
access rights previously paid for by the City or other governmental agency or reserved in a sale
of City property.
L. Priority Handling
Since time is of essence in land transactions, all such actions by the City Council and staff shall
be given the highest priority and special handling.
M. Public Utilities Installed by Private Entities
The applicant for the use of unimproved City land for public purposes, such as streets, sewers,
and other public utilities, shall compensate the City for the fair market value of the rights to be
granted by the City. The amount of compensation shall be established by appraisal.
Procedure for leasing City-owned Real Property
The City of National City has a very diverse real estate portfolio. While the policies herein are to
act as the standard that governs most leases, the City acknowledges that parts of its leasing
portfolio have specialized needs or restrictions. In these cases, this policy will act as a framework
for a sub-policy that will govern a specific area. Should a conflict arise between the framework
policy and the sub-policy, the sub-policy will govern.
A. Criteria for Leasing
City property shall be considered for leasing when one or more of the following criteria apply:
1. The property is not required for current municipal use, but is to be held for possible future
use and can be leased as an interim measure.
2. The property can only be leased because of legal restraints. For example, property held
under Tideland trust grants or as dedicated parks.
3. The City requires substantial control over development, use and reuse of the property.
4. The property has the immediate potential of a high return to the City because of its high
demand and type of use, such as commercial and industrial land.
5. The property can be efficiently utilized by a provider of services needed by the City.
6. The property can be leased to promote a substantial economic development opportunity.
B. Property Management Plan
The City Council may approve the execution of lease transactions that meet the terms of the
City's asset strategy for a particular property previously approved by City Council in an overall
Property Management Plan. Negotiated transactions that fall outside of the parameters of an
approved Property Management Plan either will be submitted individually for City Council
approval, or deferred until the next periodic update and approval of the plan.
C. Lessee Selection for New Leases
Competitive offers for lease of City property shall be solicited from the open market place.
This may be accomplished through a number of marketing techniques, such as Request for
Proposals (RFPs), a marketing subscription system, direct advertising, use of a Multiple Listing
Service (MLS), listing with a broker, posting the property and any other appropriate means.
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In certain limited situations, the City may exclusively consider a single proposal for lease of
City property. Potential lessees wishing to exclusively negotiate with the City must submit for
City staff review a business case with sufficient justification as to how it is capable of
optimizing the use of the property and return to the City, thereby negating the need for a
competitive process. This information will be included when the lease transaction is presented
for City Council approval.
Leasehold proposals shall be evaluated in terms of:
1. The degree to which the proposed use is in compliance with the City's strategic plan for
the property.
2. In terms of the amount of consideration offered in the form of rent.
3. In terms of the financial feasibility of the proposal.
4. The capability, expertise and experience of the potential lessee with respect to the
proposed leasehold development and operation.
5. If new development is proposed, a development plan that includes a description of the
development team and its qualifications.
6. The details of each person or entity that will have an interest in the proposed lease
7. Special public benefits to be derived (if any).
D. Rate of Return
The City shall obtain fair market rents for its leases commensurate with the highest and best
use of the property. The fair market rent shall be based on an appraisal that complies with the
definition of Market Rent found in the Uniform Standards of Professional Appraisal Practice
(USPAP) published by the Appraisal Foundation. The appraisal shall be no more than six
months old at the time the lease transaction is presented for City Council approval. If the cost
of an appraisal is not justified by the anticipated rents, the City may choose an alternative
method to establish rent. City leases shall contain terms and conditions which will sustain a
fair rate of return throughout the duration of the lease.
E. Rental Terms
Rental terms may be negotiated on the basis of fixed rates (flat rent leases) or percentages of
the lessee's gross income derived from business conducted on the property, with a provision
for a minimum rent on percentage leases.
F. Percentage Leases
Minimum Rent
The minimum rent component for a new percentage lease shall be set at no less than eighty
percent (80%) of the fair market rent as defined above. In certain cases, a portion of the
minimum rent may be abated for new construction or redevelopment on the leasehold. The
minimum rent shall be adjusted upward throughout the duration of the lease at intervals of not
more than every five (5) years to reflect no less than eighty percent (80%) of the average annual
rent actually paid or accrued during the three (3) years preceding the adjustment. In no event
shall the adjusted minimum rent be less than the minimum rent in existence immediately
preceding the adjustment.
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Percentage Rates
Percentage leases shall provide for adjustments of percentages rates every five (5) years to
current fair market rates as established by appraisals of prevailing market percentage rates
primarily within the Southern California area.
G. Flat Rate Leases
Market Rate Adjustments
Flat rate leases shall provide for upward adjustment of rent every five (5) years to current fair
market rent.
Consumer Price Index Adjustments
Flat rate leases shall provide for upward adjustment of rent in the interval term between market
rate adjustments by changes in the consumer price index. The index used for consumer price
index adjustments will be the All Urban Consumers index for Los Angeles - Riverside - Orange
County, California with a base year of 1982-84. If the U.S. Department of Labor indices are
no longer published, another substitute index generally recognized as authoritative will be
used. Flat rate leases may include pre-determined periodic increases to rent instead of
consumer price index adjustments. These periodic increases would occur at least every five (5)
years.
H. Rent Arbitration
Leases can provide for binding arbitration when the City and lessee cannot agree on the new
rent for a rental period under review. The City and lessee shall each select a professional
independent real estate appraiser who in turn will select a third independent real estate
appraiser to determine the fair market rent. If the two selected appraisers fail to mutually select
a third appraiser, then the third appraiser will be appointed in accordance with the rules of the
American Arbitration Association. The City and lessee shall pay the cost of its own selected
appraiser and equally share the cost of the third appraiser.
I. Appraisal Assumptions
City leases shall include a definition of the fair market value to be used to adjust rent and an
identification of the premise for that value. In establishing the fair market value of leased
property, any appraisal shall consider the property as a fee simple absolute estate and as vacant
and available for lease or sale for the authorized purposes of the lease at the commencement
of the rental period under review. Rates established for purposes of periodic percentage rental
adjustments shall not consider any abatement as may be appropriate in a "new" development
of vacant land. It shall also be assumed that all
required regulatory approvals to permit the use authorized in the lease have been obtained.
J. Lease Term
Short-Term Lease
The City Manager, at all times, shall have power, without advertising, notice, or competitive
bidding, to lease any City property for a term of three (3) years or less (short-term lease). The
City Council will be notified of a short-term lease not later than fifteen (15) days following its
execution. A short-term lease may not be renewed without approval of the City Council. The
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City Manager, or designee may also execute rental agreements covering up to eighteen (18)
months for tenant occupancy of City-owned residential housing.
Long-Term Lease
A lease in excess of three (3) years requires a resolution passed by a majority vote of all
members of the City Council. The length of lease term shall be based on the level of capital
improvements to be made by the lessee and the economic life expectancy of the development.
These factors can be determined utilizing cost estimating and economic life expectancy
resources such as tables provided by Marshall Valuation Service. The City may consider other
relevant information in determining if a longer lease term is warranted, such as if the proposed
leasehold development is expected to generate above average returns to the City or
significantly improve the quality of the property. A lease shall not exceed 55 years unless the
conditions set forth in Government Code section 37380(b) are met,
K. Lease Amendments
Amendments to long-term leases require City Council approval. The City's agreement to an
amendment may be contingent upon updating sections of the lease to incorporate current City
standard lease provisions and an adjustment to fair market rent.
L. Subleases
A lessee may sublease all or part of the leased property to a qualified sub-lessee subject to
approval by the City. No sublease shall be approved which would be detrimental to the City's
rights under the master lease or for a use that is not consistent with uses allowed by the master
lease. The City Manager may authorize subleases which meet these conditions and which do
not require amendment of the master lease. Unless special circumstances exist. Leases shall
provide for the City to receive a minimum of fifty percent (50%) of the incremental gross rental
revenues due to the lessee from subleases.
M. Leasehold Financing
The City will not subordinate its fee interest to encumbrances placed against any leasehold by
a lessee. The City Council may approve appropriate financial encumbrances of the leasehold
interest, which provide that all loan proceeds are used for authorized improvement of the
property until the leasehold is fully developed in accordance with the lease. City staff shall
take appropriate steps to review the proposed financing and insure that loan proceeds go into
the leasehold. Maximum loan proceeds shall not be in excess of seventy-five percent (75%)
loan-to-value, where "value" refers to the leasehold improvements, as determined by a lender's
appraisal which has been reviewed and approved by City staff. The loan term shall not exceed
the term of the lease.
Loans or refinancing in the form of encumbrances against the lease for the purpose of reducing
equity or financing the sale of leasehold interest will not be allowed until the property is fully
developed for uses authorized in the lease. After the property is developed, such financing may
be permitted so long as there is also substantial benefit to be gained by the City. This may take
the form of either a percentage share of the loan proceeds or an upward adjustment to the rent.
Either of which shall be based on commercially reasonable comparables found in the market.
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N. Leasehold Improvements
Leasehold improvements installed by lessees shall be removed at the lease termination without
cost to the City, or will revert to the City, at the City's option. All leasehold improvements and
alterations require prior written approval of the City Council.
O. Maintenance and Utilities Responsibility
City leases shall require the lessee to maintain all improvements on the property at its own
expense and be responsible for the cost of all utilities. Leases for multi-tenanted space shall
include specific requirements delineating appropriate responsibilities.
P. Lease Audits
All percentage leases may be audited by the City’s Finance Department in the first year of
operation to establish proper reporting procedures and at least once every three (3) years
thereafter. More frequent audits may be made if appropriate. The City shall reserve the right
to audit all other leases and agreements subject to this Council Policy, if determined to be
warranted by the City’s Finance Department.
Q. Leasehold Assignments
Requests for assignment of leasehold interest shall be evaluated on the same basis as the criteria
used in evaluating a leasehold proposal. The City Manager may authorize assignments which
do not require amendment of the master lease. Consent may be contingent on the payment of
additional consideration to the City, either as a percentage share of the purchase price of the
leasehold interest or an upward adjustment to the rent. Either of which shall be based on
commercially reasonable comparables found in the market. If new financing is involved in the
sale, the requirements of 'Leasehold Financing' shall apply.
R. Lease Extensions & Renewals
Requests from existing lessees for lease extensions or renewals may be considered if such
proposals promote capital investment and redevelopment of City property. Whenever an
existing lessee is seeking renewal of an expiring long-term lease that is not contemplated in a
previously approved property management plan, the City Manager will bring the issue before
the applicable City Council Committee with an appropriate recommendation. In addition to the
criteria used to assess new lease proposals, City staff also will review the lessee's history with
respect to: maintenance of the property; compliance with existing lease terms; prompt rent
payments; and a rental return consistent with maximizing the property's full potential.
The lessee must propose capital investment that: will increase the value or the useful life of the
leasehold improvements by an amount more than can be reasonably amortized over the
remaining lease term; is not recurring in nature; and is at least ten percent (10%) or more of
the value of the existing improvements. It specifically should exclude expenditures to correct
deferred maintenance and expenditures for repairs to keep the existing improvements in good
condition. The length of any extended lease term shall be calculated by the same method used
for calculating the length of new leases.
S. City's Interest in Leasehold Improvements
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City lease agreements provide the City the right to assume ownership of the leasehold
improvements at the end of the lease. The value of the City's interest in the leasehold
improvements can be appraised using widely accepted appraisal methods. In the event the City
grants a lessee a lease extension, the City shall be compensated by an amount equal to the
change in present value attributable to the deferral of its interest in the leasehold improvements.
This amount either can be paid as an upfront payment at the beginning of the extended term or
amortized over time with appropriate interest applied. The City shall offset from the value of
its interest in the leasehold improvements any increased economic benefit derived from an
extended lease. The City shall not receive any compensation for its interest in the leasehold
improvements on leases extended prior to the last twenty percent (20%) of the existing term.
T. Leasing to Non- Profit Organizations
It shall be the policy of the City Council to allow direct negotiation with nonprofit
organizations for the use of City-owned lands for the purpose of providing the community with
cultural, recreational, educational enrichment, and other public services to the citizens and
visitors of National City. Relative to this policy the following will apply:
1. Available City property shall be leased at fair market value to nonprofit organizations
when it is deemed by Council that appropriate public benefit will be derived.
2. The only discount in the land rental rate which will be considered is that which will be
a direct offset to City expenditures. An example would be where the non-profit
organization is constructing and operating a facility to provide a service that would
otherwise be a recognized obligation of the City to provide.
3. Council approval of a prospective nonprofit organization’s use of City-owned land
shall be obtained prior to commencement of lease negotiations.
4. No lease will become effective until firm financial commitments have been obtained
under an appropriate lease option arrangement.
5. Lessees will be required to construct, operate, and maintain the premises at their sole
cost.
6. Lessees shall be incorporated nonprofit organizations under the laws of the State of
California.
7. Development on parklands shall be in conformance with City park development plans,
and construction shall comply with City park design criteria.
8. Lessees shall provide desired services and facilities to the general public without
discrimination as to race, color, creed, sex, age, or national origin.
9. When leases permit revenue producing activities, some measure of rental compensation
shall be paid to the City. However, this provision will not apply to occasional fund
raising events provided the funds are used exclusively for the specified purpose(s) of
the lease.
10. Properties with significant potential for commercial, industrial, or scientific research
uses shall not be available for nonprofit use.
11. Subleases will be considered on their individual merits by the City and consistency
with conditions placed upon the City. Fees generated from subleasing will belong to
the City and be deposited with the City upon receipt by the Agency.
U. Security Deposits
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The standard security deposit for a new lease agreement shall be equivalent to two (2) month's
rent. The security deposit may take the form of cash, an instrument of credit or a faithful
performance bond. For a lessee making a substantial investment in improvements, the security
deposit will be refunded upon completion of the improvements.
Related Policy References
Government Codes: 37350 and 37380
Government Codes: 54200-54232, 54235-54237
Prior Policy Amendments
August 14, 1990
January 22, 2019
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Appendix K Map of City-Owned Sites
Location of City-Owned
Properties:
1. Highland and Eta Street (“Purple Cow”)
2. Division Street & R Avenue (“Division Street”)
3. Roosevelt Avenue & W 11th Street (“Roosevelt Lot”)
4. A Avenue & E 11th Street (“A Avenue Lot”)
5. Plaza Blvd and E Avenue (“Lambs’ Theater”)
6. Plaza Bonita Center Way (“Plaza Bonita”)
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