Half Moon Bay City Council Special Meeting – April 28, 2026

The Half Moon Bay City Council held a special meeting on Tuesday, April 28, 2026, to consider the introduction of an ordinance approving a suite of agreements for the 555 Kelly Affordable Housing Project, a 40-unit, 100% affordable senior farmworker housing development on city-owned land. The meeting included a staff presentation, extensive public testimony, and council deliberation on proposed amendments. The council voted 4-1 to introduce the ordinance on first reading and continued consideration of a related grant agreement to the May 5, 2026 meeting.

Public Comments & Testimony

• Supporters (majority of speakers): Over 30 speakers representing community groups (e.g., Coastside Faith in Action, Del Campo al Cambio, Housing Leadership Council of San Mateo County, residents, and farmworkers) urged approval, citing the moral obligation to house senior farmworkers who have contributed to the local economy, the need for dignified housing, and the opportunity to remedy past injustice following the January 2023 mass shooting. Several noted that Mercy Housing is a qualified developer with a strong track record, and that the project is fiscally responsible with committed state funding.
• Opponents/Concerns (about 6 speakers): Raised issues including: the lack of a major transit stop (so the project’s density bonus and reduced parking are inappropriate), the 99-year ground lease at $1/year being insufficiently protective of city interests, the high cost per unit (~$1.4 million vs. ~$800,000 for comparable local projects), the risk of unfunded liabilities (e.g., earthquake damage without insurance), and potential impacts on neighborhood character. Some called for a citywide referendum on the project.
• Key speaker positions:
  • Mike Ferrara: Expressed concerns about enforceability of responses to council questions and that the transit stop finding is false.
  • Barbara Fain Mathewson: Argued the building is too large for Half Moon Bay, cited density bonus ineligibility, and urged a citywide vote.
  • Rick Hernandez (Planning Commissioner): Noted that 555 Kelly costs significantly more per unit than other local affordable projects and that funding is not yet secured; urged clear milestones and termination dates.
  • Joaquin Jimenez (former councilmember): Stated that Councilmember Nagengast should recuse due to his previous appeal, and characterized opposition as racism/classism.
  • Rogelio Nabor Martinez and Salomon Nabor (farmworkers from Del Campo al Cambio): Stressed the urgent need for dignified retirement housing for aging farmworkers.
  • Rami Dare (Mercy Housing) and staff answered questions during the meeting.

Discussion Items

• Staff Presentation: City Manager and Interim City Attorney Denise Pizzano presented the proposed Affordable Housing Property Disposition Agreement (AHPDA), ground lease (99-year term), regulatory agreement, and memorandum of ground lease. Key changes from prior drafts included: clarified community-serving space (16 hours/week for public use), removal of “reasonable” from certain provisions, addition of ICE enforcement access protections, and revised CEQA determination.
• Councilmember Questions & Proposed Amendments: Councilmember Nagengast raised detailed questions about the 15-year operating pro forma, a five-year operating budget, insurance coverage (including earthquake insurance), a date certain for financing, the absence of a major transit stop, the definition of disability, audit rights, and referendum indemnification. He requested periodic reviews every seven years (instead of ten), prevailing wage requirements, and stronger language on restoration after casualty. Mayor Raddock expressed strong concerns about section 13.1 of the ground lease, which limits the tenant’s restoration obligation if insurance proceeds are insufficient, stating it exposed the city to unacceptable risk.
• Responses from Mercy Housing: Mercy Housing confirmed they would pay prevailing wages, provided a one-year operating budget and 15-year pro forma, and indicated that earthquake insurance is not standard due to cost (estimated $200,000/year). They opposed a date certain but after negotiation accepted a termination of the AHPDA by December 31, 2028, with a meet-and-confer provision. They were unable to agree to the mayor’s proposed revision to section 13.1 and the referendum indemnity requested by Nagengast, stating those terms would make the project unfinanceable or were legally unsupportable.
• Consensus Revisions: The council and Mercy Housing agreed on several amendments: (1) revised termination date for AHPDA (earlier of recordation of ground lease memorandum or December 31, 2028, with 90-day meet-and-confer); (2) city manager may consult with council before approvals; (3) seven-year record retention and right to audit; (4) surrender provisions including keys and codes; (5) disability definition aligned with state law; (6) removal of references to three-bedroom units in regulatory agreement; (7) streamlined CEQA language.

Key Outcomes

• First Reading Vote: Council voted 4-1 to introduce the ordinance (first reading) approving the AHPDA, ground lease, and related documents, with the agreed-upon amendments. Councilmember Nagengast voted no, stating he could not support the agreements as they stood despite supporting the project’s goals.
  • Roll call: Councilmember Brownstone – Yes; Councilmember Johnson – Yes; Councilmember Nagengast – No; Vice Mayor Penrose – Yes; Mayor Raddock – Yes.
• Continuation: The council voted unanimously (5-0) to continue consideration of the separate $2 million grant agreement (item 2B) to the May 5, 2026 meeting.
• Next Steps: The ordinance will have a second reading (adoption) on May 5, 2026. The grant agreement will also be considered on that date. The two outstanding issues (restoration after casualty and referendum indemnification) remain unresolved but did not preclude first reading approval.