Fountain Valley staff brief council on buying 14 deed‑restricted Los Caballeros units; residents urge other uses for $9.4M fund

City staff presented a study-session proposal March 17 to acquire 14 deed‑restricted units in the Los Caballeros community using the Fountain Valley Housing Authority’s Low and Moderate Income Housing Asset Fund (LMIHAF), which staff said contains roughly $9 million earmarked for affordable‑housing activities.

Robert Daly, the city housing technician, told the council the two buildings contain seven affordable units each and carry affordability covenants running through 2062. He said the covenants remain binding regardless of ownership, that the units are rent‑restricted and income‑qualified, and that any rental income must be returned to the housing asset fund. “These units will not become transitional housing, halfway housing, bridge housing, or housing for people experiencing homelessness,” Daly said.

The presentation prompted dozens of public comments. Ray Price, a resident and HOA board member at Los Caballeros, said his community has experienced vandalism and trespassing tied to nearby riverbed encampments and asked the council not to site homeless services at Los Caballeros. Several other residents and the complex’s property manager, Laura Muniz, said the current screening and tenant mix — which includes very low, low and moderate income households — works and that current tenants would not be displaced.

Some speakers and council members questioned whether buying existing deed‑restricted units achieves the city’s larger housing goals. Councilmember Grandes described the plan as “no gain” because the transaction would preserve 14 affordable units but not increase the city’s total affordable housing stock. Multiple commenters urged using the LMIHAF to finance new units, provide down‑payment assistance or otherwise expand supply.

Angela Brown referenced language in the city’s annual progress report and said a packet page “specifically says that it will house 38 persons experiencing homelessness.” Staff and the city manager clarified that the figure Brown quoted came from a separate annual report section about the navigation center and is not part of the proposed purchase agreement; Omar (staff) told the council the staff report for this item does not propose converting the Los Caballeros units into a shelter.

In response to council questions about statutory rules on the housing asset fund, finance staff explained that state law and successor‑agency rules govern allowable activities. They also said an “excess surplus” calculation applies; because the city has encumbered funds for ongoing obligations, there is not an immediate requirement to return the $9.4 million.

After extended public comment and council discussion, vice mayor Harper summarized the sentiment: staff should keep exploring options, but Los Caballeros is not the right location for a direct acquisition at this time. The council directed staff to return with alternative options for using the restricted housing fund that comply with state law and preserve or expand affordable housing, rather than move forward at this location immediately.