Title
Approve Disposition and Development Agreement and CEQA Exemptions for Development of Affordable Housing and a Health Care Facility on County Land at 3177 Ocean View Boulevard, San Diego (District: 1)
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Overview
For many years, the San Diego region has faced a chronic shortage of affordable housing units that directly impacts housing insecurity and housing cost burden for lower-income households. Given this housing crisis, we must leverage every available option to develop more affordable housing. One of these options that has had success is the redevelopment of excess County of San Diego (County)-owned property into affordable homes. Since 2017, the County has made significant progress in developing affordable housing on County-owned excess property. There are currently 12 County-owned surplus properties in various stages of the development pipeline for affordable homes, including 3177 Ocean View Boulevard in the City of San Diego.
On April 4, 2023 (30), the Board of Supervisors (Board) declared the land surplus and authorized the issuance of a Request for Proposals to identify one or more developers for the ground lease and development of affordable homes and a health care facility on County-owned property located at 3177 Ocean View Boulevard. BRIDGE Housing Corporation was selected as the developer for 100% affordable housing, in partnership with San Ysidro Health as the health care facility operator. County staff have finalized the terms of the Disposition and Development Agreement (DDA) and related documents and are now returning for approval of those agreements. Today’s request is for Board approval of the DDA, regulatory agreement, ground leases, restrictive covenant, and the relevant California Environmental Quality Act finding.
Body
Recommendation by Chief Administrative Officer:
1) Find that the proposed actions to authorize execution of a Disposition and Development Agreement (DDA) and ground leases for development of affordable housing and a health care facility at 3177 Ocean View Boulevard are exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15332.
2) Authorize the Director, Department of General Services, to execute the DDA with BRIDGE Housing Corporation, or an affiliate entity, in partnership with San Ysidro Health, to execute one ground lease with BRIDGE Housing Corporation, or an affiliate, for the development of affordable housing, one ground lease with San Ysidro Health for the development of a health care facility, a restrictive covenant with San Ysidro Health restricting the use of the health care facility property to ensure the property is developed and maintained to serve a public purpose, and any other DDA attachments and perform any actions in furtherance of or necessary to administer or implement the DDA, each ground lease and the health care facility restrictive covenant, including but not limited to, approving, and executing amendments to the DDA, each Ground Lease, the health care facility restrictive covenant, and their attachments.
3) Find that so long as the ground lease for the health care facility is by a lessee who is an organization exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code that is organized to provide health and human services, and so long as the health care facility is operated by a federally qualified health center that provides comprehensive health care services for all patients including those that are underinsured, low income or uninsured, the ground lease for the health care facility serves a public purpose.
4) Authorize the Deputy Chief Administrative Officer, Health and Human Services Agency, or a designee, to execute the Regulatory Agreement and any amendments to the Regulatory Agreement on 3177 Ocean View Boulevard and perform any actions in furtherance of or necessary to administer or implement the DDA, Ground Leases, and Regulatory Agreement.
5) Authorize the deposit of all proceeds received per the requirements of the ground leases for both the affordable housing and health care facility at 3177 Ocean View Boulevard, including the deposit of approximately $500,000 in initial rent payments and $300 per year thereafter with an annual 3.5% increase to the Innovative Housing Trust Fund. (4 Votes)
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Equity Impact Statement
Today’s recommendations will result in the development of much-needed affordable housing in the region. The 6th Cycle Regional Housing Needs Assessment indicates that 68,959 units are needed regionally for very low, and low-income individuals and households. Restricted affordable housing for low-income households may serve seniors, families, homeless, at-risk of homelessness, veterans, homeless with serious mental illness, and transitional aged youth. All units reserved for low-income individuals and households serve tenant populations earning below 80% area median income, currently $97,950 for a one-person household and $139,900 for a four-person household. Additionally, the development of the health care facility will promote equity by increasing access to essential medical services for underserved and vulnerable population, helping reduce health disparities and improving overall community well-being. Utilizing County excess property for development of affordable housing creates private sector jobs and economic opportunities in San Diego County and contributes to the County of San Diego efforts to address local housing shortages and meet the needs of low-income residents for years to come.
This item advances the County vision of a just, sustainable, and resilient future for all residents, specifically for those communities and populations in San Diego County that have been historically left behind. This item also aligns with the regional Live Well San Diego vision of healthy, safe, and thriving communities by ensuring low-income residents have access to suitable living environments and by enhancing quality of life through decent and affordable housing. Additionally, this action supports the County Housing for All initiative by ensuring the County continues to focus on prevention and housing stability by addressing root causes, such as housing affordability
Sustainability Impact Statement
Today’s proposed actions support the County of San Diego’s Sustainability Goal #2 to provide just and equitable access and Sustainability Goal #4 to protect health and wellbeing for residents. The recommended actions support the building of safe and affordable housing for lower-income households, persons experiencing homelessness, seniors, and veterans, while also supporting the development of a health care facility that will help reduce health disparities. Together, these efforts promote long-term community sustainability by improving housing stability, increasing access to essential services, and enhancing the overall quality of life for residents. These actions also align with Sustainability Goal #6 to protect the environment by requiring sustainability features for each site that are in alignment with California Tax Credit Allocation Committee requirements, and our regional efforts to decarbonize.
Fiscal Impact
Recommendations 1-4
Funds for these requests are included in the Fiscal Year 2026-27 Operational Plan for the Department of General Services, Facilities Management Internal Service Fund. If approved, this request will result in total estimated costs and revenue up to $30,000 for staff time. The funding source is an internal agreement supported by General Purpose Revenue. There will be no change in net General Fund cost and no additional staff years.
Recommendation 5
Funds for this request are not included in the Fiscal Year 2026-27 Operational Plan for the Innovative Housing Trust Fund (IHTF). Funds will be deposited as a result of the anticipated proceeds received by the County per the requirements of the DDA and ground leases for development of affordable housing and a health care facility at 3177 Ocean View Boulevard. The estimated proceeds from both developments will be approximately $500,000 in one-time payments and $300 per year thereafter with an annual 3.5% increase. These funds will be reserved for administrative costs associated with managing the ground leases and to support future affordable housing developments consistent with the IHTF Ordinance. There will be no change in net General Fund cost and no additional staff years.
Business Impact Statement
N/A
Advisory Board Statement
N/A
Background
The County of San Diego (County) has undertaken coordinated efforts to address the needs of affordable housing within the region. Since 2017, excess County-owned property has been evaluated for affordable housing redevelopment and there are 12 County-owned surplus properties that are in various stages of the development pipeline for 100% affordable housing. An affordable housing developer, in partnership with a health care facility developer, has been selected through a competitive procurement process for development of 3177 Ocean View Boulevard, and the terms of a Disposition and Development Agreement (DDA) have been finalized as outlined below.
This property is located at 3177 Ocean View Boulevard in the City of San Diego (Ocean View Property) and is comprised of three parcels totaling approximately 1.82 acres. Two of the parcels are County-owned parking lots (Parking Lot Parcels) and the third parcel currently contains an existing health care facility that is occupied by San Ysidro Health.
On April 4, 2023 (30), the Board declared the Ocean View Property surplus to the County’s needs and authorized the issuance of a Request for Proposals (RFP) for the nominal lease and development of 100% affordable housing as well as a health care facility on the site. Prior to issuing an RFP for the development of affordable housing, staff conducted robust community outreach and the feedback that was received was used to shape the requirements of the RFP. The community overwhelmingly expressed concern about the proposed closure of the existing health care facility, even though the building was nearing the end of its useful life. Based on the feedback received from the community, an RFP for 100% affordable housing was released with a requirement to include a state-of-the-art health care facility (HCF) on site that would provide comprehensive health care services by a Federally Qualified Health Center for all patients, including those that are underinsured, low income or uninsured.
BRIDGE Housing Corporation (BRIDGE) has been selected as the affordable housing developer for this project, in partnership with San Ysidro Health, which will develop the health care facility. BRIDGE plans to build 121 affordable homes for families earning an average of 51% of the area's median income, meaning these homes are priced for households earning roughly half of what is typical in the region. The homes will exceed the state's required energy efficiency standards and will carry a GreenPoint Silver rating, a state-recognized mark of green building quality. The site will include a community garden, a barbecue area, and a children's play area.
San Ysidro Health will build a standalone, 23,800-square-foot health facility with its own parking garage on the land currently used for parking. Building the facility there, rather than on the site of the existing clinic, will allow patients to continue receiving care without interruption while the current facility is closed and demolished. Construction of the affordable homes will not begin until that demolition is complete. Like the housing development, the new health facility will exceed the state's energy code and will earn a LEED Silver rating, a national green building certification comparable to GreenPoint. Both BRIDGE and San Ysidro Health have also committed to supporting local, small, and disadvantaged businesses and veteran-owned businesses, including hiring outreach through community organizations, unions, and nonprofits, and advertising job openings locally.
To bring this project forward, County staff have negotiated six related documents: an overarching development agreement among BRIDGE, San Ysidro Health, and the County; a ground lease with BRIDGE for the housing; a separate ground lease with San Ysidro Health for the health facility; a regulatory agreement that legally establishes the affordability requirements for the housing; a restrictive covenant that permanently ties the health facility site to its intended use; and the attachments accompanying each of these documents.
The Board is now being asked to authorize two actions. First, that the Director of General Services be authorized to execute the development agreement, both ground leases, the restrictive covenant, and their attachments, and to take any further action necessary to administer them, including the approval of future amendments. Second, that the Director of Health and Human Services be authorized to execute the regulatory agreement for the affordable housing and to carry out related implementation activities.
The housing ground lease is structured in accordance with California Government Code Section 25539.4, a state law that allows public agencies to lease land for affordable housing on favorable terms, provided the units meet minimum affordability standards enforceable through a recorded regulatory agreement. This project exceeds those minimum requirements. With the exception of a single manager's unit, every home built on the parcel will be affordable, and any additional units added later must also remain affordable to families at or below 51% of the area median income, a commitment that will be recorded on the property at the same time as the lease itself. The housing ground lease has a term of 99 years and calls for an initial payment of $250,000 upon closing, expected around 2029, followed by annual rent of $100, subject to an increase of 3.5% each year.
The health facility's ground lease relies on a different provision, California Government Code Section 25372, which permits this arrangement because San Ysidro Health is a federally qualified health center, a community clinic that receives federal support to serve underserved areas, and a tax-exempt nonprofit organization dedicated to providing health and human services. The land will be subject to a restrictive covenant requiring that it be used as a health facility, operated by a federally qualified health center, for the full 99-year term. The health facility ground lease includes payment of $250,000 at closing, expected around 2028, followed by annual rent of $200, also subject to a 3.5% annual increase.
Environmental Statement
The proposed actions to authorize development of affordable housing and a health care facility at 3177 Ocean View Boulevard are categorically exempt from the California Environmental Quality Act (CEQA) under Article 19, Section 15332 of the CEQA Guidelines, because the project (1) is comprised of in-fill development that is consistent with the applicable general plan designation, all applicable general plan policies and all applicable zoning designation and regulations, (2) is located within city limits on a project site of no more than five acres substantially surrounded by urban uses, (3) site has no value as habitat for endangered, rare, or threatened species, (4) will be adequately served by all required utilities and public services, and (5) would not result in any significant effects relating to traffic, noise, air quality, or water quality. None of the exceptions to the exemptions described in Section 15300.2 prohibit the use of a categorical exemption for the proposed project. See Attachment A for Notice of Exemption.
Linkage To The County Of San Diego Strategic Plan
Today’s action supports the Health and Housing Equity Initiatives in the County of San Diego’s 2026-2031 Strategic Plan by providing County-owned property for the creation of safe and affordable housing for the region. Additionally, today’s action supports the regional Live Well San Diego vision of healthy, safe, and thriving communities by ensuring low-income residents have access decent affordable housing and the County Housing for All initiative by ensuring the County continues to focus on prevention and housing stability by addressing root causes, such as housing affordability.
Respectfully submitted,
Ebony N. Shelton
Chief Administrative Officer
Attachment
Attachment A - 3177 Ocean View Boulevard Notice of Exemption