City begins Surplus Land Act process for Stein Mart/Los Osos site after HCD exemption withdrawal

The Mission Viejo City Council moved to declare the Stein Mart/Los Osos property at 25282 Marguerite Parkway surplus and initiate the Surplus Land Act notice‑of‑availability process. Community Development Director Larry Longnecker told the council the surplus declaration is a required step to solicit interest from affordable‑housing developers, school districts and other public entities if the city decides to lease or sell the property. "The purpose of the Surplus Land Act is to notice the property, to issue a notice of availability so that developers of affordable housing can have a first right to make an offer on the property," Longnecker said.

During public comment several residents asked the council to postpone action until they could review outstanding documents and past RFQ/RFP responses. Kathy Schlick (spelled in the record) said the California Department of Housing and Community Development (HCD) had withdrawn a requested Surplus Land Act exemption and raised legal questions tied to prior CC&Rs on the property. Staff confirmed that HCD initially granted an exemption and later withdrew it, which is why the city is moving forward under the Surplus Land Act now. Longnecker said the notice is a 60‑day process and that the city retains discretion to reject offers that do not meet fair‑market, feasibility or zoning standards.

Council discussion included requests for additional clarity on prior RFQ responses and potential legislative changes that could affect affordable‑housing rules. After discussion, the council voted to approve the surplus declaration and begin the required notice process; the record shows the motion passed with all present members approving (4–0, Councilmember Goodell absent). The action starts the 60‑day notice period that will be sent to HCD and other interested parties per state law.