Huntington Beach Council to hold special meeting Tuesday on loan for senior apartments
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The Huntington Beach City Council will hold a special meeting Tuesday, after failing to agree during its regular meeting this week on a procedural loan request from developer Jamboree Housing Corp.
Jamboree borrowed about $3 million from Huntington Beach to help finance the Pelican Harbor Apartments on Beach Boulevard near the Five Points area, completed in December 2024. Multiple federal and state sources also contributed funding for the development, which offers 43 one-bedroom apartments to formerly homeless seniors, according to a city staff report.
At this week’s council meeting, the city held a Tax and Equity Fiscal Responsibility Act (TEFRA) public hearing, as Jamboree is seeking to convert a portion of $20 million in tax-exempt construction bonds into permanent financing. But in lieu of taking action, the council voted 4-3 to continue the public hearing to Oct. 28.
A favorable vote would mean Jamboree could meet an Oct. 31 deadline for its construction loan and avoid the financial consequences it would suffer if the conversion didn’t occur.
“They could lose their tax-exempt status, interest rates would be higher and, therefore, their debt service rates on the bonds would increase,” Charles Kovac, the city’s housing manager, told the City Council at Tuesday’s regular meeting.
Kovac added that because the project’s cash flow is likely tight, that could result in a possible loan default down the line.
Michael Massie, Jamboree’s executive vice president and chief development officer, said the nonprofit could be forced to put in additional equity.
“We’ve operated properties at a loss previously,” Massie said, adding that Jamboree has never defaulted on a loan. “We don’t like to do it, but we’re mission driven, and that’s part of our mission.”
Mayor Pat Burns and Councilmembers Don Kennedy, Andrew Gruel and Chad Williams voted to continue the hearing, while Mayor Pro Tem Casey McKeon, Councilman Butch Twining and Councilmember Gracey Van Der Mark dissented.
“I’m in favor of extending the tax-exempt status,” Gruel said. “But if we need another week to discuss this, then I’m a yes on that.”
In exchange for hosting the TEFRA hearing, the city negotiated with Jamboree to extend the affordability of the project from 60 to 99 years. Over that span, Jamboree would make a $5,000 payment annually to the city.
Additionally, beginning in year 20, the interest rates on both city loans — a federal HOME loan and a smaller inclusionary housing loan — would increase from 3% to 5%. That would add nearly $5 million to the future repayment amount, over the full term.
Some members of the council questioned why the item came to them so close to the deadline, given the previous TEFRA approval expired last December.
“This is new to us, too,” Massie said, adding that Jamboree worked with staff for several months. “Because this project happened during COVID and had to deal with a lot of the issues around COVID, around supply chain and manpower, this was delayed.”
Massie said talks with the city on a new TEFRA approval began in February. Payback on the city loans could start in year 16, based on projections.
“We’ve gone above and beyond,” he said. “We knew that the council obviously has the authority, but we thought we had already come to agreements. We’ve met and exceeded everything that we’ve said we would do.”
Some of the council members said that with the deadline days away, they were being put in a regrettable situation.
“Nobody’s heartless up here,” Kennedy said. “It’s just, can we get a little bit more out of the deal because of what we’re giving?”
Williams noted the city was forgoing millions in property taxes throughout the 99-year period.
“That’s something that’s helpful for Jamboree, but that’s a burden for the taxpayer,” he said.
He asked if Jamboree would consider raising its $5,000 monthly payments.
“I see this [continuance to Tuesday’s special meeting] as maybe an opportunity to do a little bit more restructuring before we sign off on it,” Williams said. “I don’t think this current council probably would have approved this type of project, which puts such a burden on our taxpayers.”
But McKeon, a real estate developer by profession, noted that Jamboree was developing a project that the private sector could not accomplish on an awkwardly shaped piece of land.
“It’s a finished project, and there’s seniors living inside of the units,” McKeon said. “It’s delivering the service they want, and we’ve gotten three concessions from [Jamboree].”
Twining said he would be supporting the conversion of the bonds.
“The last thing I want to do is put any seniors, especially handicapped seniors, in jeopardy of being displaced,” he said.
Tuesday’s special meeting starts at 4 p.m. at Huntington Beach City Hall.
