Staff recommends exclusive negotiations for six "Own National City" sites; council presses on costs, parking and liability

City staff on Tuesday presented recommendations from the "Own National City" request-for-proposals process and urged the City Council to direct staff to begin exclusive negotiations with the selected teams for six city-owned parcels.

The presentation, led by Community Development Manager Angelie De Palma and consultant Lenny Gavino of Kaiser Marston Associates, summarized a SANDAG/HAP-funded homeownership feasibility study and the RFP evaluation. The study, funded in part by a $450,000 grant, tested options for six surplus parcels and concluded that townhomes and rowhomes were the most feasible ownership forms and that deeper affordability would require subsidy and city land support.

Staff recommended Community Housing Works (CHW) and San Diego Habitat for Humanity for Sites 1 ("Purple Cow"), 2 (Division Street), 3 (Roosevelt Lot), 4 (A Avenue) and 6 (Plaza Bonita). For Site 5 (Lamb’s Players Theater), staff recommended Casa Familiar’s proposal, which uses a community land trust and a rent‑to‑own conversion intended to yield homeownership after a 15‑year low‑income housing tax‑credit compliance period.

"This RFP is a foundational step in creating long‑term equitable access to homeownership for National City residents," Angelie De Palma said, calling the effort a transition "from planning to implementation." Lenny Gavino told the council that most proposals rely on some form of city land contribution or long‑term ground lease and may also request local cash support to be competitive for state funding.

Council members pressed staff and the developers on immediate and long‑term fiscal impacts. The CHW/Habitat proposal for Site 1 includes a residual‑receipts loan representing ground‑lease value of about $2.9 million and a separate $1.5 million cash contribution that staff said could come from the city’s low‑ and moderate‑income housing fund, which staff estimated held about $5 million.

"That residual receipts loan would not be repaid until after construction and project stabilization," staff said, noting it is repaid from net cash flow after debt service rather than as an immediate budget outlay.

Council members also raised recurring concerns about on‑site parking and construction labor costs. For example, the CHW/Habitat plan for Site 3 shows four parking spaces for 20 units, prompting requests that the ENA negotiations evaluate additional parking or mitigation. Lenny Gavino said prevailing‑wage requirements depend on funding sources — projects that rely on tax credits or certain state and federal funds typically trigger prevailing wages, which he estimated could add roughly 20% to development costs.

Developers told the council they could consider changes in the ENA phase. "There is room to include [a project labor agreement] during the ENA or DDA negotiation process," De Palma said.

Developers and proposers appeared at the dais to answer council questions. Kwafi Reed, president and CEO of San Diego Habitat, described a stewardship approach for for‑sale products: "We maintain a first right to repurchase those homes, and we see ourselves as an ongoing asset manager," he said, adding that defects and long liability windows are an enduring industry challenge that often stem from state law.

Casa Familiar representatives described their Comunidad proposal for Site 5 as a long‑term community investment that would begin as rental housing under LIHTC financing and convert to homeownership after 15 years, supported by a community land trust and resident coaching programs. "Comunidad delivers permanently affordable homeownership through a community land trust," Carla Samayoa of Casa Familiar said during public comment.

Because the meeting was a workshop, staff did not bring items for a vote. Multiple council members asked staff to return with additional financial documentation and clarifications — particularly for proposals that included assemblages or relied on third‑party parcels — and staff said the earliest practical return date would be in August to allow time for deeper analysis.

Next steps: if the council directs staff to proceed, staff will interview the selected teams, negotiate exclusive negotiating agreements (ENAs) for due diligence, and then seek disposition and development agreements (DDAs) that specify design, affordability requirements and land purchase or lease terms. The council recessed into closed session after concluding the workshop.