City Council unanimously authorized the use of tax-exempt bonds to fund a controversial mixed-use affordable housing complex on March 28. The project is proposed for a city-owned parking lot in the 500 block of South Sierra Avenue.
Before the vote, council members asked for and received assurances that their approval did not put Solana Beach at financial risk or obligate the city to pay back the $9 million if something went wrong, such as the developer skipping town, as Mayor Ginger Marshall put it.
The action was somewhat of a formality, as a public hearing is required under the federal Tax and Equity Fiscal Responsibility Act to give community members an opportunity to oppose or support the use of tax-exempt bonds to finance The Pearl, a 10-unit multifamily residential rental complex.
No one spoke during the public comment period. The bonds will be repaid by Hitzke Development Corp.
The project, which has been in the works since 2009, includes nearly 13,000 square feet of building area on the 14,700-square-foot lot. Commercial office space will take up about 795 square feet on the first floor of the three-story complex.
A total of 53 parking spaces will be provided, including 31 to replace those in the existing lot, 18 for the residential units and four for the commercial office use.
The city is granting the use of the property to Hitzke under a long-term lease and will continue to own the land.
After the project was approved in 2014, two nearby homeowners associations filed lawsuits claiming, among other things, that the city didn’t notice the final public hearing correctly and was giving away land that was given to the city for use as a parking lot.
They also questioned the process for the view assessment and environmental reviews.
In August 2015 a Superior Court judge sided with the city and Hitzke on all claims. The homeowners appealed the decision, which was upheld in December 2016.
The Pearl will satisfy Solana Beach’s decades-old legal requirement to replace 13 affordable units that were eliminated when the city closed a mobile home park in the 1990s.
Solana Beach’s allocation for affordable housing during the current 11-year cycle of the Regional Housing Needs Assessment, which began Jan. 1, 2010, is 65 low income and 85 very low income.
Permitted to date are five units for the former and zero for the latter.
“We really need to work on the extra, super-low part of it,” Marshall said.
In an effort to do that — and as it was required to do under its state-certified housing element — the city recently released a request for proposals to build up to 19 affordable units in a new complex on the City Hall parking lot.
However, it’s questionable whether that would come to fruition given the cost to build such units.
“Construction prices are really high right now,” Councilman Dave Zito said. “I do think it’s going to be challenging. But it’s our responsibility to put this out there.”
“Most projects are looking for free land and a pretty huge subsidy,” City Manager Greg Wade said. “So, we’ll see what happens.”