CARLSBAD — The Carlsbad City Council has allocated federal block grant funds for urgent repairs to the Chestnut Apartments, a 16-unit affordable housing complex, as the city works toward a permanent ownership solution.
The apartments, at the southwest corner of Chestnut Avenue and Interstate 5, were previously owned and operated by Solutions for Change, a local homeless services provider.
On Sept. 23, the City Council unanimously approved two actions to advance the acquisition of the property at 945 Chestnut Avenue. The first was to execute a property management services agreement with Kingdom Development, Inc., which currently manages and operates the apartments under a deal with Solutions for Change.
The second was to approve a forgivable loan of $500,000 in federal Community Development Block Grant funds for immediate repairs, including roofing, water damage remediation, and work on balconies and stair rails. The U.S. Department of Housing and Urban Development provides block grants to states, cities, and counties for projects that benefit lower-income residents.
The council’s actions mark the next step in transferring ownership while ensuring the property remains stable and fully affordable during the transition.
Under the city’s proposal, Kingdom, a California nonprofit that has already taken ownership of other affordable properties previously owned by Solutions for Change, will have one year to arrange financing and complete its purchase of the Chestnut Apartments.
During this interim period, Carlsbad will temporarily own the property and continue using it as 100% affordable housing. City staff recommended that Kingdom manage the property during the interim period.
Once Kingdom secures funding, the city will sell the property with a new 55-year regulatory agreement to ensure affordability is preserved, according to city documents.
The units are projected to generate $220,000 in rental income in 2026, against $192,000 in management, repair, and other costs, according to city documents.
In 2014, the city provided a $3.1 million loan to Solutions Chestnut, a subsidiary of Solutions for Change, to turn the property into permanent, affordable housing for homeless families who had graduated from the Solutions Academy.
The loan required major rehabilitation work and temporary relocation of tenants, to be financed through permanent funding secured by Solutions for Change.
That plan fell through after new state laws required homeless programs to adopt a Housing First approach, which mandates accepting people experiencing homelessness into permanent housing without conditions such as sobriety or service participation.
Solutions for Change, which has long opposed the Housing First model, requires its program participants to remain drug- and alcohol-free and participate in workforce training. By declining to adopt the model, the nonprofit was (and remains) ineligible for state and federal government funding.
In May 2024, due to a lack of financial resources, the Solutions for Change board agreed to forfeit ownership of the property at 945 Chestnut Avenue in exchange for the city forgiving its loan. The nonprofit agreed to continue to run the property until December.
“This Housing First law is decimating the city and a lot of cities around San Diego County,” Chris Megison, CEO and founder of Solutions for Change, previously told the council. “I’m sorry we couldn’t get this done.”
The City Council approved the city’s acquisition of the Chestnut Apartments from Solutions for Change on May 21, 2024. However, the city does not yet own the property, a city spokesperson said.
