Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director, Department of Housing
Subject: Agreements with Mental Health Association of San Mateo County related to the Development and Operation of a Permanent Supportive Housing Project in the City of San Carlos and Initial Predevelopment Loan
RECOMMENDATION:
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Measure K: Adopt a resolution:
A) Authorizing and directing the Director of the Department of Housing (“DOH”), or designee, to execute an Exclusive Negotiating Agreement with Mental Health Association of San Mateo County (“MHA”), or an affiliate entity, to afford the parties sufficient time not to exceed one year, unless an extension is necessary and advisable in the Director’s discretion, to negotiate the terms of a development agreement and an agreement to provide long-term site control of property located on the southeast corner of F street and El Camino Real in the City of San Carlos, identified as Assessor Parcel Number 045-320-100 (the “Property”) to MHA, or an affiliate entity, for the purpose of developing and operating a permanent supportive housing development on the Property for extremely low-income and very-low income households and special needs households including those experiencing homelessness (the “Target Population”); and
B) Authorizing and directing the Director of DOH, or designee, in conjunction with MHA, to submit, or cause to be submitted, to the City of San Carlos all necessary entitlement application documents required for development of the Property as affordable housing to proceed in accordance with State law; and
C) Authorizing and directing the Director of DOH, or designee, in consultation with the County Attorney, to negotiate and enter into a development agreement with MHA, or an affiliate entity, to specify the requirements and conditions for the design, development, construction, ownership, management and control of the Property as permanent supportive housing, including the provision of supportive services at the Property; and
D) Authorizing and directing the Director of DOH, or designee, in consultation with the County Attorney, to negotiate and enter into necessary agreements to provide long-term site control of the Property, through a ground lease with at least a 55 year term, or another instrument agreeable to both DOH and MHA, subject to County Attorney review and approval, with MHA or an affiliate entity to facilitate MHA, or its affiliate entity developing and operating a permanent supportive housing development on the Property for the Target Population; and
E) Authorizing and directing the Director of DOH to enter into a predevelopment loan agreement in an amount not to exceed $250,000 with MHA, or an affiliate entity, to fund predevelopment activities for a permanent supportive housing development on the Property, on terms and subject to an agreement in a form approved by the DOH Director and the County Attorney, from Measure K (AHF) funds or other available funding sources, with no increase in Net County Cost; and
F) Authorizing the Director of DOH, or designee, acting in consultation with the County Attorney, to negotiate and execute such other agreements, documents, certificates, extensions, and amendments as may be necessary to effectuate the purposes of the resolution.
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BACKGROUND:
On May 24, 2018, the Mid-Peninsula Water District (the “District”) adopted its Resolution No. 2018-14 declaring the property located on the southeast corner of F street and El Camino Real in the City of San Carlos, identified as Assessor Parcel Number 045-320-100 (the “Property”) to be “surplus property” within the meaning of California Government Code Section 54220 (“Surplus Lands Act”).
On February 25, 2020, the County of San Mateo submitted a Letter of Intent (“LOI”) to the District expressing interest in acquiring the Property. On May 4, 2021, this Board adopted Resolution No. 078157, authorizing the County’s acquisition of the Property. On June 8, 2021, the Board adopted Resolution No. 078233 authorizing the expenditure of a total amount not to exceed $770,000 in Measure K funds for the purchase of the Property, known as the F Street Project (or the “Project”), from the District.
On January 15, 2025, the County Department of Housing (“DOH”) issued a Request for Proposals (“RFP”) to solicit proposals from affordable housing developers and service providers with experience developing, owning, operating, managing, and maintaining permanent supportive housing, and also providing high-quality resident services and supportive services, to serve as the developer, owner and operator of the F Street Project. On April 8, 2025, the RFP review committee selected MHA to develop and operate the F Street Project. MHA possesses the experience and skills necessary to utilize a thoughtful approach in working with the County, local community, and neighborhood groups to provide the property management protocols and supportive services to the residents of the F Street Project.
DISCUSSION:
To facilitate the development of the Project, staff recommends that the Board authorize the Director of DOH to enter into an Exclusive Negotiating Agreement (“ENA”) to allow sufficient time for the parties to negotiate two key agreements during the ENA term (the “ENA Period”):
(a) a development agreement that will set forth the terms and conditions governing the design, development, construction, ownership, management and control of the Property as permanent supportive housing, including the provision of supportive services; and
(b) any necessary agreements to transfer long-term site control of the Property from the County to MHA, through a long-term ground lease with at least a 55 year term, or another instrument agreeable to both DOH and MHA, to enable MHA’s development, ownership, and operation of the affordable housing project. The Director of DOH will consult with the County Attorney to determine the most appropriate form and terms to facilitate the timely development of affordable housing on the Property.
Staff further recommends that the Board authorize the Director of DOH to provide a predevelopment loan to MHA in an amount not to exceed $250,000 to support pre-development activities associated with the design and entitlements for Project. Costs associated with predevelopment include conducting environmental assessments, engaging an architect to design the project and assemble the entitlement application, and securing a project manager with experience specific to designing, financing, and managing the construction of permanent supportive housing. The loan terms and agreement will be prepared in consultation with the County Attorney.
This resolution and the ENA have been reviewed and approved as to form by the County Attorney.
COMMUNITY IMPACT:
The County is dedicated to ensuring safe, affordable housing options for all San Mateo County residents, especially the most vulnerable households. The homes created by the project would be targeted to extremely low-income and very low-income households and special needs households, including those experiencing homelessness.
FISCAL IMPACT:
There is no Net County Cost. The action authorizes an initial Predevelopment Loan not to exceed $250,000 to MHA, funded with Measure K funds or other funds previously allocated by the Board to the Affordable Housing Fund. Staff expect that MHA will apply in the future for County financial assistance administered by DOH, to further support the project development process, and such other financing as may be available.