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Board approves supplemental loan for Avon River Homekey project despite supervisor objections on costs
Summary
County staff and a developer requested up to $4.1 million in additional loan funds for the Avon River Homekey conversion project to cover unexpected roof and water-infrastructure costs; after a pointed debate about developer due diligence and per-unit costs the board approved the supplemental loan with three votes in favor and one abstention.
The board considered a supplemental financing request for the Avon River Apartments Homekey project (1400 Bristol, Costa Mesa), asking the county to commit up to $4.1 million in additional loan funds to cover unforeseen construction costs discovered during demolition, chiefly a complete roof replacement and water-service upgrades.
Supervisor concerns centered on whether developers had sufficiently investigated the property prior to purchase and whether taxpayers should absorb large overruns. One supervisor objected that "if you come back to us with a $4,100,000 funding gap that we have to bear, I think it's not right," saying project cost escalations should not default to public subsidy. Staff and the developer (American Family Housing representative Joanna Milo Pineman) explained the Homekey timeline is strict, limiting the ability to stack financing, that the developer deferred fees, pursued other resources, and that demolition uncovered conditions (two roofs, structural/plumbing repairs and water meter work) that significantly increased costs.
Julia Bidwell, director of OC Housing & Community Development, explained the county's approach: part of the requested amount could be amortized into a 15-year loan repayment (about $1.3 million in amortized debt service the project can afford), and staff said the loan is structured to be repaid and is intended to preserve the Homekey timeline and avoid losing state award points. The developer noted the building had remained in active use until escrow closed, limiting destructive testing before demolition.
After discussion, the board approved the loan request with three supervisors voting in favor and one abstention recorded; staff noted the loan is an "up to" amount and that if the developer secures other funds, the county's contribution would be reduced accordingly. The project is intended to convert the site into 78 affordable rental units, including permanent supportive housing and veteran units.
