CARLSBAD — Two years after Solutions for Change forfeited ownership of the Chestnut Apartments on 945 Chestnut Avenue, the Carlsbad City Council has approved a carryback loan and additional gap financing to facilitate a transfer of ownership to Kingdom Development, a faith-driven affordable housing management nonprofit.
The 16-unit apartment complex has been under city ownership since May 2024, when Solutions for Change, another affordable housing and homeless services nonprofit, forfeited the property. Since then, the city has been in negotiations with Kingdom Development regarding a formal acquisition of the property.
On June 9, the City Council unanimously approved two resolutions to support this transfer.
The first authorized the sale of the Chestnut Apartments via a carryback loan at the property’s appraised value, allowing the city to finance the acquisition upfront. Kingdom, which has managed the property since Sept. 23, 2025, will repay the purchase price over time with revenue generated by the property.
The second resolution approved an additional loan of up to $850,000 to cover additional development and maintenance costs. It will come out of the city’s Housing Trust Fund, a federal fund dedicated to affordable, low-income housing projects. The exact amount of the loan will be determined once final development costs are compared with Kingdom’s estimates. As with the carryback loan, Kingdom will repay this gap-financing loan with net proceeds from the property. Both loans require a 55-year regulatory agreement to ensure the property remains affordable housing.
Solutions for Change purchased the property in 2014 using a $3.1 million land loan from the city with the goal of rehabilitating the complex as drug-free housing for homeless individuals. In the following years, California instituted the Housing First policy, which mandates that all state-funded homeless and housing programs must provide permanent housing to homeless individuals without preconditions such as sobriety or workforce training.
Because its “training-first” program model did not comply with these requirements, Solutions for Change was ineligible for state and federal funding to conduct the necessary repairs and repay its debts to the city. In exchange for having its city loan forgiven, Solutions for Change forfeited ownership of the Chestnut Apartments in May 2024.
Originally built in 1975, the apartments have needed significant repairs to the roof to address water damage and to repair deterioration of the balcony and stair rail, for which the city allocated $500,000 in federal Community Development Block Grant funds last September.
As part of development and construction costs, Kingdom plans to temporarily relocate current residents of Chestnut Apartments in order to perform significant repairs inside and outside the property, according to city documents. Kingdom also aims to reduce rent levels while completing extensive rehabilitation work, according to city staff.
With this additional loan, the city of Carlsbad will have invested approximately $4.4 million in the Chestnut Apartments property since Solutions for Change’s original purchase in 2014. As of June 30, 2025, the city’s Housing Trust Fund has an available balance of $11.5 million and has contributed to approximately 2,300 affordable homes in Carlsbad.
Founded in 2015, Kingdom currently operates five affordable housing properties in San Diego County, including North Coast Terrace Apartments in Oceanside and Escondido Apartments in Escondido. In a report to the Carlsbad Housing Commission, city staff noted that these projects received positive feedback on the development process and the experience under Kingdom.
After the loan documents are prepared by the City Manager and approved, Kingdom plans to apply for tax-credit financing and bond allocations in July. Construction is expected to begin on the Chestnut Apartments in early 2027, according to city staff.
