Brisbane Housing Authority authorizes HEART to acquire Visitation Gardens and approve 55‑year ground lease; board moves forward without flood insurance

BRISBANE, Calif. — The Brisbane Housing Authority on May 21 authorized the executive director to sign agreements with the Housing Endowment and Regional Trust of San Mateo County (HEART) that will enable HEART to acquire the 14‑unit Visitation Gardens Senior Apartments, assume portions of outstanding debt and enter a 55‑year ground lease intended to preserve long‑term affordable housing for seniors.

Staff presented HEART’s proposal and a recommendation to accept it, describing the property at 2–8 Visitation Ave as a 14‑unit senior affordable housing complex built in 2000 and currently sited on land owned by the authority. Staff said Bridge Housing originally developed the property and later assigned the ground lease and project loans to Brisbane Senior Housing Inc. Outstanding principal and accrued interest on the authority’s two redevelopment‑agency loans total more than $4 million, staff said; Bridge originally borrowed about $2.5 million in principal.

The proposal calls for HEART to take a long‑term ownership role and assume most of the existing debt while the authority would provide a new loan of just under $400,000 that — together with HEART’s matching loan and assumed amounts — would be rolled into a single 55‑year loan at 3% simple interest, paid from residual receipts after operating expenses. HEART’s financing plan also dedicates most residual receipts in the first 14 years to repay HEART’s loan and a deferred $60,000 developer fee, with more proceeds directed to the authority loan thereafter, staff said. Staff also described a capital needs assessment that identified near‑term and longer‑term repairs the project will need.

The staff presentation noted the property’s appraised value was $3.29 million, which is less than the outstanding debt on the site. Staff also said Brisbane Senior Housing requested forgiveness of roughly $1 million in accrued interest that HEART would not assume; staff framed forgiveness as serving the public purpose of preserving the affordable development and recommended the board authorize documents to implement HEART’s proposal, including termination documents with Brisbane Senior Housing and Bridge Housing.

Legal counsel Michael Roush addressed a board question about tenant subleasing, saying, "The answer is no. . . . the provision between HEART and the tenant in that lease would prevent that tenant from subleasing to anyone else." He and staff said they would review specific tenant‑furnishing questions and the potential for higher insurance limits with HEART.

Board members praised HEART’s capital plan and pro forma during discussion. "The return on investment here, I don't think can be measured exactly in cash, uh but more of a half of a century of guaranteed stable housing for 14 senior households," said Board member Kern, who expressed support for approving the proposal that night. Board members raised two insurance‑related concerns: the draft ground lease sets minimum liability limits of $1 million per occurrence and $2 million aggregate and a capital reserve minimum of $20,000 (and a $50,000 three‑year average), which some members said may be low for major repairs. Staff and counsel said HEART’s pro forma projects larger multi‑year reserve balances in most years and that umbrella or excess insurance could be arranged.

Kern also questioned whether the city should adopt tenant‑preference guidelines for Brisbane residents. Staff replied the city does not currently have such an ordinance but has completed a disparate‑impact analysis to support one and that HEART would abide by any preferences once adopted.

On flood insurance, staff said the site is in FEMA Zone X, an area determined to be of minimal flood hazard, and had obtained flood insurance quotes at the board’s request. One board member urged caution and recommended purchasing flood coverage; two others said they would accept the transaction without adding flood insurance. Board member O'Connell stated, "I would be happy to accept it without flood insurance." With two members willing to proceed without buying flood insurance and one urging purchase, the board did not require HEART to add flood coverage as a condition of approval.

The board then voted to adopt a resolution authorizing the executive director (or city manager acting in that capacity) to execute the ground lease, a memorandum of ground lease, a regulatory agreement, loan agreements, termination of the prior ground lease and declarations of restrictions and all other documents necessary to implement HEART’s acquisition and long‑term management of Visitation Gardens. Chair Mackin asked for a vote and recorded the adoption; all members present voted in favor. The motion and vote authorized staff to finalize documents in forms approved by the authority’s general counsel.

The resolution does not specify exact final insurance limits, capital reserve targets in HEART’s final documents, or detailed tenant selection rules; staff said they will finalize those terms with HEART and return related matters to city processes as needed. The meeting adjourned at 9:02 p.m.