Council approves $2 million increase in city loan to convert Civic Center motel into 49 permanent supportive housing units

The Richmond City Council unanimously approved a resolution to increase the city's loan for the Civic Center Apartments Homekey conversion from $8.3 million to up to $10.3 million, a staff presentation said, to cover additional rehabilitation costs revealed during construction.

"The recommended action is to adopt a resolution which would increase the city's loan for this project from $8,300,000 to $10,300,000," Lina Velasco, Richmond's director of community development, told the council. She said the city acquired a motel that will be converted into a 49‑unit permanent supportive housing development for people who are chronically homeless and that the project includes 48 studios plus a manager's unit and on‑site services.

Staff said the state Homekey grant contributed approximately $14.5 million to the project, with roughly $12 million toward capital costs and the remainder reserved for operating and services. During construction, consultants identified health and life‑safety issues including mold, asbestos and deteriorated walls; Hillman Development Advisors estimated roughly $2.5 million in additional hard and soft costs, with developer credits and other adjustments reducing the city's requested additional contribution to about $2.0 million.

Velasco described the financing structure as a long‑term ground lease to 4 25 Civic Center LP (a partnership that includes Trinity Center and Novin Development) for $1 per year for 55 years after occupancy, and said loan repayment would be structured through residual receipts generated by the project. "It is highly unlikely that the full amount will ever be paid," Velasco said, explaining that subsidized affordable housing projects typically do not generate large residual streams.

Councilors pressed staff on repayment timelines and on how tenants would be selected. Velasco said the project is intended to follow a "housing‑first" approach with on‑site supportive services (including CalAIM referrals), that occupancy is targeted by the Homekey grant milestone of 06/30/2026 and that the city will coordinate with the county continuum of care for tenant selection.

A public speaker who joined online said the presentation contained valuable budget detail and should not have been placed on the consent calendar. Council members subsequently moved and approved the resolution unanimously.

Key numbers and deadlines disclosed at the meeting: the Homekey grant (~$14.5M), acquisition price reported as $6,220,000, an extension of the construction milestone to 06/30/2026, and a staff estimate of capital cost per unit of approximately $384,426. Staff also said the city would split residual receipts with the operator per agreement terms.

Next steps: Staff will finalize predevelopment agreements and environmental review pathway selection (Part 50 vs. Part 58) and continue resident engagement; the council approved the loan increase so rehabilitation work can proceed toward the June 30, 2026 milestone.