Yuba City, county push HCD talks after Habitat seeks $7.05 million gap loan for Merriment Village

YUBA CITY, Calif. — Yuba City council members, county officials and Habitat for Humanity representatives met at a special Yuba City City Council session to address a funding shortfall for Merriment Village, a proposed 217‑unit affordable housing development awarded $24,632,331 in Homekey 3 funds. Habitat for Humanity Yuba Sutter requested an unsecured line of credit up to $7,047,672 to cover the remaining gap; council members said they would not approve an unsecured loan and directed staff to pursue discussions with the California Department of Housing and Community Development (HCD) and other funding partners.

The project’s Phase 1 is a four‑story, 79‑unit building fronting Walton Avenue. HCD’s original milestones required acquisition, construction or rehabilitation to be completed by Feb. 13, 2025, and capital funds expended with full occupancy by May 13, 2025. HCD later granted an extension that moves final construction completion to Oct. 13, 2026, and occupancy for the target population to Jan. 13, 2027.

Why it matters: The Homekey award is roughly $24.6 million; no Homekey funds have yet been disbursed because Habitat has not met preconditions in the recorded covenant and loan agreement. If the project cannot meet HCD deadlines and requirements, the state could seek reallocation of the award. Council members said they wanted HCD — the award manager — at the table quickly to explore scope adjustments or other remedies rather than returning funds.

Background and timeline

City staff recounted that the Merriment…