Half Moon Bay City Council Meeting on 555 Kelly Ave Housing Lease and ENA Extension - March 18, 2026
Half Moon Bay City Council Meeting on 555 Kelly Ave Housing Lease and ENA Extension - March 18, 2026
The City Council held a study session on March 18, 2026, to discuss the draft Affordable Housing Property Disposition Agreement (AHPDA) and Ground Lease for the 555 Kelly Avenue affordable housing project, which proposes 40 units for senior and retired farm workers. After extensive public testimony and council deliberation, the Council voted to extend the Exclusive Negotiations Agreement (ENA) with Mercy Housing through December 31, 2026.
Public Comments & Testimony
- Supporters: Numerous speakers—including farm workers, ALAS staff, faith leaders, and community members—urged approval. Farm workers shared personal stories of housing insecurity, long work hours, the 2023 mass shooting, and the need for dignified housing. Supporters emphasized the project as a moral obligation, a way to honor farm workers' contributions, and a symbol of community care. Several noted the project was designed with extensive input from the farm worker community itself.
- Opponents: Concerns raised included: excessive cost ($1.1 million per studio), the 99-year $1/year ground lease, insufficient parking, building height exceeding the three-story limit, lack of clarity on tenant preferences, potential subletting, and the absence of direct voter approval. Some argued better alternatives exist, like the county-built housing near the post office.
- Procedural notes: A Spanish-speaking speaker was given two minutes for their statement plus consecutive interpretation; the policy was explained to the audience. Several speakers noted their support while also requesting specific lease modifications (e.g., annual walkthroughs, no subleasing, parking permits).
Discussion Items
- City Attorney Denise Bazano and real estate attorney Lisa Maxwell presented the draft AHPDA and Ground Lease, highlighting key terms: 99-year term, $1/year rent, 100% affordable, city retains title, and developer obligations. Over two dozen revisions were made to strengthen city protections (e.g., indemnity, insurance, hazardous materials remediation).
- Councilmembers raised numerous questions and concerns:
- Legal authority: Vice Mayor Penrose questioned Government Code §37380 (lease limits) vs. §37364 (affordable housing exception). Staff agreed to provide written legal analysis.
- Definitions: Needed clarity on terms like “agricultural worker,” “retired,” “living in” vs. “residing,” and “sublease.”
- Financing: Lack of detailed operating pro forma showing both revenues and expenses; need for updated budget and debt service assumptions.
- Community serving space: Discrepancy between AHPDA (“at least 16 hours/week”) and Ground Lease (“up to 16 hours”); the ad hoc committee intended the city to control that time.
- Delegated authority: Objection to the Community Development Director having final say on numerous matters; preference for City Manager or council oversight.
- Insurance and mortgages: Concerns about lack of earthquake insurance, provisions for multiple secured loans, and language that city “will not withhold consent” unreasonably.
- Staff confirmed $2 million state earmark from Senator Becker for the project, not previously needed due to county ARPA funds. Council directed staff to bring back a reimbursement grant agreement rather than a direct transfer.
- Councilmember Nagengast expressed frustration with delays but emphasized the need for careful review given the 99-year commitment.
Key Outcomes
- ENA Extension: The Council voted 4-0 to adopt a resolution authorizing the City Manager to extend the second ENA with Mercy Housing from April 1, 2026 to December 31, 2026. Councilmember Johnson was absent.
- Further revisions: Staff and attorneys will incorporate council feedback (e.g., definitions, delegated authority, community space terms) and bring back redlined AHPDA and Ground Lease for a future meeting.
- Next steps: The city will prepare a grant agreement for the $2 million state earmark; an updated operating pro forma and all related subleases (e.g., ALAS community space) will be included in the next package.
Meeting Transcript
Here. Mayor Reddick. Here. We have a quorum. So we have a couple items on our agenda this evening. The first one is a study session related to legal property documents that the city has to consider in order to effectuate this project. So because there are so many people and probably more online I can't see. So this is a study session. We're going to be talking about two different documents. So we're going to start. Sorry. Is it a long presentation? Yeah, the other side. I think we start with the public. Yeah. And uh actually uh Councilmember Nagengast is gonna make a statement first. Go ahead, Paul. Thank you. For the record, before we begin on both of the items relating to 555 Kelly, I'd like to disclose that prior to my time on the City Council, I filed an appeal regarding this project as a private resident. I have considered this matter and confirmed that I have no personal or financial interest in this matter. And I want I want to state that I will consider the lease agreement and the affordable housing property disposition agreement as well as the potential extension of the ENA based on the documents before the council, the staff report, and public comments. I've heard some really negative things about me, some of them have been borderline threats. But having work in city government in sp and I've worked in this town of Half Moon Bay. I know passions run strong. Those that know me know that I don't judge who you are. So that's I just wanted to make those statements because I've heard a lot of things out there, and I just felt it's important to start what I did. Thank you. Thank you. Thank you, Councilmember Nagengast. I'll just make a just in case it comes up. Uh Councilmember Johnson is under the weather this evening and will not be attending. Um he sends his regrets. So I'm going to begin with Patty Ramirez. Patty, are you here? She will be followed by Lucy Miller. Okay. Okay. It is a glad I will. She's going to read it and then I'm going to do a site translation. You can lower it for her too. Okay. Thank you. Good afternoon, members of the council. I want to appreciate the opportunity to express myself. La vivienda no es únicamente una structura física. Las familias viven en la constante preocupación de no saber si podrán permanecer in un lugar donde trabajan. Esta presión constante de theory mental debilita la cohesión social y limita la capacidad de las personas para prosperar. Pero hoy quiero enfocarme, hoy quiero enfocar su atención in un grupo que sostiene silenciosamente nuestra economía, la comunidad campesina y los trabajadores esenciales. Son las manos que cultivan nuestros alimentos, quienes mantienen funcionando nuestros servicios básicos, quienes cuidaron de nuestras ciudades durante los momentos más difíciles. Sin embargo, muchos de ellos no pueden permitirse vivir in las mismas comunidades que ayudan a sustenerse.
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