The Carlsbad Housing Commission on Oct. 9 voted 4-0 to recommend that the City Council approve a $500,000 additional loan from the Housing Trust Fund to Chelsea Investment Corporation for the West Oaks affordable housing project.

Nicole Piena Jones, senior program manager with Housing and Homeless Services, told commissioners the West Oaks development is part of a larger 192-unit project adjacent to Palomar Airport Road, east of Aviara Parkway, in which the developer agreed to set aside 20% of units as affordable. "Staff recommends that the Housing Commission approve a resolution recommending that the city council approve an additional $500,000 loan to Chelsea Investment Corporation," Jones said.

The recommendation follows an earlier City Council loan of $1.5 million approved in 2021 and a 2023 extension related to sewer-connection delays. Chelsea Investment Corporation, named by project partners as the affordable housing development partner, would own and operate 42 of the project's apartments, a mix of one- to three-bedroom units restricted to households meeting the project's income limits. City staff said the total project cost rose by roughly $4 million, from about $17 million to about $21 million, creating the shortfall that prompted the new request.

Staff said the developer plans to finance most of the project with a bond allocation and federal tax credits; if developers win tax credits and bond allocations, the city would execute loan documents and the loan closing is anticipated in late 2026 with construction beginning in early 2027. "Then the city will begin to execute all the appropriate loan documents," Jones said.

Commissioners asked about sewer service for the site after a commissioner referred to earlier sewage problems in a nearby retail area. Mandy Wells, director of Housing and Homeless Services, said the master developer spent several years negotiating which water and sanitation district would treat the development’s wastewater and that the project now has a will-serve letter. "So they have, they now have a will serve letter and so they do have sewer the ability to discharge and to sewer and have that treated," Wells said.

Staff also clarified the Housing Trust Fund balance: the staff report already reflected $1,550,000 previously set aside for the project, and the $500,000 before the commission would be the only new portion taken from the fund balance. After questions, the commission moved and voted to adopt the resolution recommending the City Council approve the additional $500,000; the motion carried 4-0 with Commissioner Collins absent.

If the City Council approves the recommendation later in 2025 and the developer secures tax credit and bond financing in early 2026, staff anticipate loan closing in late 2026 and construction beginning in early 2027. The City Council must approve the staff-recommended loan before any funds would be disbursed.