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Title:
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Purchase and Sale Agreement - Aldea Apartments
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FROM:
Development Services
SUBJECT:
Title
Purchase and Sale Agreement - Aldea Apartments
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RECOMMENDATION:
Recommendation
1. Approve a Purchase & Sale Agreement for the purchase of buildings and associated land located at 15186 Foothill Boulevard, Fontana, CA 92335 specifically described as APN 0191-162-40 in the amount of $26,635,000 plus escrow costs and related acquisition fees.
2. Authorize the purchase of that certain Real Property with APN 1110-161-44-0000 (former APN 1110-161-09-0000) comprised of approximately 2.27 acres ("Property") from Aldea Fontana Foothill, LLC, a California limited liability company.
3. Authorize the City Manager to enter into the Purchase and Sale Agreement and/or any other documents necessary or appropriate to facilitate said purchase on behalf of the City of Fontana.
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COUNCIL GOALS:
* Promote economic development by construction of high-quality multi-family housing which also serves to address the affordability needs of this community.
* Promote affordable housing by acquisition, substantial rehabilitation, and professional management of selected multi-family properties as a vehicle to reduce crime and code enforcement activity and to address the affordability needs of this community.
DISCUSSION:
The City of Fontana has been actively addressing the growing demand for affordable and workforce housing. In recent years, we have observed a significant increase in housing needs driven by population growth, economic development, and changes in housing affordability. This demand underscores the necessity of expanding our housing portfolio to support diverse and inclusive community development.
The 78-unit multi-family development located at 15186 Foothill Boulevard represents a strategic opportunity to advance our housing goals. The development's design and unit mix align with our objective to provide a range of housing options that cater to different income levels and family sizes.
In September 2024, the City Council approved a lease for the subject property, which included an option to acquire. The lease was subsequently executed, and the property is currently being utilized as an affordable housing community. The lease was intended as a placeholder, allowing the city the necessary time to locate acquisition funding. Funding has now been identified and staff is recommending moving immediately forward with the acquisition.
Details of the Purchase Agreement:
1. Purchase Price: The proposed purchase price is $26,635,000 (plus escrow costs), approximately $341,500 per unit.
2. Release of deposits: Concurrent with the execution of the lease, the city released a good faith option deposit in the amount of $500,000. That payment will be applied to the purchase price. In addition, upon execution of the purchase agreement and approval of the pro forma title policy, an additional $3,000,000 will be deposited into escrow and immediately released to the seller, all applicable to the purchase price.
3. Close of Escrow: The balance of the purchase price will be deposited into escrow prior to the anticipated closing, which is currently projected to occur on or before November 6, 2025.
FISCAL IMPACT:
The fiscal impact associated with the approval of this item is $26,635,000 plus estimated escrow costs and related acquisition fees of $65,000, for a total cost of acquisition of $26,700,000, and is not currently included in the 2025-26 budget. Additionally, in 2024-25 a non-refundable option payment of $500,000 was previously provided by the Housing Authority and the acquisition cost is being offset by the payment resulting in a net fiscal impact of $26,200,000.
Funding for the acquisition will be provided as follows and included in the 2025-26 First Quarter Budget Status Report:
Of the necessary $26.2 million, $2.5 million is already included in the Housing Authority 2025-26 budget. The additional amounts will come from the Parking Structure project ($15.5 million) budgeted in Fund 601 and pavement rehabilitation projects ($7.7 million) budgeted in Fund 604, which will be programmed to be funded by the 2025A Lease Revenue Bond proceeds, and additional funding from the Housing Authority ($463,382).
MOTION:
Approve staff recommendation and authorize City Manager to enter into the Purchase and Sale Agreement and to take any other actions necessary to consummate the purchase of the Property.