Oxnard staff seeks $800,000 city loan to help settle $2 million dispute tied to stalled Las Cortes housing project

Brenda Lopez, interim housing director for the City of Oxnard, told the City Council and the Oxnard Housing Authority board that staff recommends a loan of $800,000 from the city general fund to partially fund a $2,000,000 settlement between the Oxnard Housing Authority and UHC 00558 LP related to the stalled Las Cortes (Colonial Village) affordable housing project in the La Colonia neighborhood.

Lopez said the settlement would close a funding gap that remains after the housing authority spent $2,332,619 to demolish 260 aging public-housing units on the Colonial Village Public Housing Site and that the total amount due to the housing authority as of March 31, 2025, was $2,655,505. "The total amount due to the housing authority as of 03/31/2025 was $2,655,505," Lopez told the council. She added, "The loan will be automatically forgiven on the date of construction of affordable housing begins."

The recommendation follows a history of authorization, development and delay: HUD authorized demolition in February 2008; the Oxnard Housing Authority and UHC entered a development agreement dated Sept. 18, 2012 that was amended June 1, 2015; UHC completed a first phase, Las Cortes, with 144 units including two manager units; a planned second phase of 29 units was not constructed. Lopez said UHC's delays led to trespassing, loitering and criminal activity at the vacant site and that the tentative tract map for the project expired Nov. 13, 2023. The housing authority issued a notice of default to UHC on Feb. 26, 2024, and a termination notice on April 10, 2024; UHC contested the termination and invoked a termination-for-convenience clause, prompting extended settlement negotiations.

Staff described arbitration and further litigation as uncertain, potentially costly and likely to delay completion of the final portion of the affordable housing site. Lopez said many of the housing authority's project-based voucher and public housing wait lists have not been opened since 2019 because of limited unit availability; she said pursuing arbitration or litigation would "likely add even more years to the completion of this project."

To cover the proposed settlement, staff proposed three approvals: 1) the City Council adopt a resolution authorizing the city manager to execute a loan agreement with the Oxnard Housing Authority and to appropriate $800,000 from the general fund (Fund 101); 2) the Oxnard Housing Authority board adopt a resolution authorizing the housing director to accept the loan and to appropriate $1,200,000 from the Housing Authority Central Fund; and 3) authorize the write-off of bad debt associated with a promissory note entered June 1, 2020 and amended Jan. 1, 2021 for demolition costs. Lopez said the housing authority currently has $1,200,000 in unrestricted funds, producing an $800,000 gap to reach the $2,000,000 settlement.

Lopez explained key loan terms: the loan would be $800,000 from the City of Oxnard general fund, require that the property be developed with affordable housing reserved for households at or below 80% of area median income for Ventura County, include a 10% default interest rate or the highest rate allowed by law if the housing authority fails to perform, and be automatically forgiven once construction of the affordable housing begins. The presentation notes that forgiveness is conditioned on documented performance measures and that default protections would be included to protect the city.

The staff presentation did not record a formal vote in the provided transcript excerpt. The proposals were presented as staff recommendations for Council and Housing Authority board action; the transcript does not record whether the Council or the Housing Authority board approved the resolutions, nor does it record any public comment in the excerpt provided.

Background details cited by staff include HUD's original demolition authorization (Feb. 2008), the development agreement (Sept. 18, 2012, amended June 1, 2015), demolition expenditures totaling $2,332,619, the housing authority's outstanding balance of $2,655,505 as of March 31, 2025, and the expiration of the tentative tract map on Nov. 13, 2023. Lopez framed the recommended settlement as a way to avoid arbitration or litigation that staff said would be uncertain and expensive and would further delay restoring affordable units in La Colonia.

Staff signaled that the loan structure was intended to function like a forgivable grant tied to performance to expedite redevelopment and restore housing inventory needed for vouchers and public-housing wait lists that remain closed or limited. The presentation concluded with the three specific recommendations for Council and Housing Authority board action.