REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
September 22, 2026
FROM
ROB GILLIAM, Acting Director, Community Development and Housing
SUBJECT
Title
Resolution Conditionally Committing Permanent Local Housing Allocation Funding to Redlands Housing Corporation for the Redlands Homekey Facility in the City of Redlands
End
RECOMMENDATION(S)
Recommendation
1. Adopt Resolution conditionally committing up to $5,000,000 in Permanent Local Housing Allocation funding to the Redlands Housing Corporation for the Redlands Homekey Facility, located at 1675 Industrial Park Avenue in the City of Redlands, subject to Board of Supervisors approval of the funding and regulatory agreements.
2. Direct the Community Development and Housing Department to complete financial, operational and underwriting due diligence, negotiate the funding and regulatory agreements, and return to the Board of Supervisors for approval before any County funds are disbursed.
(Presenter: Rob Gilliam, Acting Director, 382-3983)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Promote and Fulfill the Countywide Vision.
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The Resolution will conditionally commit up to $5,000,000 of Permanent Local Housing Allocation (PLHA) funds to the Redlands Housing Corporation (RHC). Before any County funds are obligated, encumbered, or disbursed, the Community Development and Housing Department (CDH) will return to the Board of Supervisors (Board) for approval of the funding and regulatory agreements, and any required budget adjustments.
BACKGROUND INFORMATION
San Bernardino County (County), through CDH, administers housing programs that expand and preserve affordable housing opportunities and support individuals experiencing homelessness. The proposed Resolution is a conditional first step to support the preservation of the Redlands Homekey Facility (Project), an operating permanent supportive housing property, while RHC completes acquisition negotiations and the County completes underwriting and due diligence.
The Project, formerly known as Step Up in Redlands, is located at 1675 Industrial Park Avenue in the City of Redlands (Property). The Project is a permanent supportive housing development created through the State of California’s (State) Project Homekey program. The Project consists of 98 studio units, including accessible units, plus one manager’s unit, and provides on-site supportive services designed to promote long-term housing stability for formerly homeless individuals. The Project is currently operational and provides housing to individuals who previously experienced homelessness. On-site services include case management, behavioral health support, life-skills development, and referrals to community-based resources.
The Project was originally developed through a partnership among the City of Redlands (City), Step Up on Second, Inc., and Shangri-La Industries, LLC, using funding awarded through the State’s Homekey program. Following Shangri-La Industries, LLC’s default on its obligations under the State’s Homekey program, in December of 2023, the resulting foreclosure, and litigation with the State, the City established RHC, a nonprofit public benefit corporation, to acquire and preserve the Property for continued operation as permanent supportive housing.
The City and RHC are negotiating a Purchase and Sale Agreement with the current owner of the Property. The County’s proposed conditional funding commitment would demonstrate local support and strengthen the City’s position in the negotiations, helping facilitate RHC’s acquisition and continued operation of the Project.
Approval of this item would authorize a conditional County funding commitment of up to $5,000,000 in PLHA funds to RHC to facilitate the acquisition and preservation of the Project. The commitment consists of $4,300,000 for eligible acquisition and preservation costs and $700,000 for a Capitalized Operating Subsidy Reserve to support the Project’s continued operation and long-term financial stability, which will be held in a reserve account and drawn only when Project revenues and other committed operating subsidies are insufficient to cover eligible operating expenses.
The Project advances PLHA objectives by preserving an existing permanent supportive housing development that serves low-income individuals and persons who are experiencing homelessness, are at risk of homelessness, or were formerly homeless, including chronically homeless individuals. The County’s investment will help maintain the Project’s affordable housing units, prevent the displacement of current residents, preserve access to on-site supportive services, and support the Project’s long-term operational viability.
The total acquisition cost is estimated at $13,000,000, based on the draft Purchase and Sales Agreement, with the City funding the costs exceeding the County’s commitment, with the final contribution to be confirmed at closing. The City and RHC anticipate completing negotiations with the current Property owner by the end of September 2026, followed by an approximate 90-day escrow period.
Because the Property remains subject to foreclosure-related and litigation conditions affecting ownership stability, the requested Board action is limited to a conditional commitment of County funding. Adoption of the Resolution would demonstrate that County funding may be available to support the acquisition if the transaction is determined to be feasible, but it does not authorize execution of a County funding agreement or permit the disbursement or deposit into escrow of County funds.
Following adoption of the Resolution, CDH will continue its financial, operational, and underwriting due diligence, including environmental, title, and legal reviews, and will negotiate the proposed funding and security documents with RHC. The State Department of Housing and Community Development will also review the applicable documents as required. CDH will return to the Board for approval of the funding agreement and related documents before any County funds are advanced or disbursed. Final transaction terms, including the structure of the County’s investment, repayment or forgiveness provisions, security instruments, monitoring requirements, and the affordability restrictions consistent with the PLHA regulations, will be subject to approval by the Board.
If RHC does not proceed with the acquisition, the required conditions are not satisfied, or the documents are not approved, the Resolution will expire on September 30, 2027, and the funds may be made available for other eligible housing activities. This staged approach supports the City’s time-sensitive acquisition efforts while preserving the Board’s discretion, protecting the County’s investment, and helping maintain uninterrupted housing and supportive services for current residents.
PROCUREMENT
In August 2023, CDH released a Fund Request Form (FRF) through the CDH web portal for proposed projects that would increase housing capacity to address homelessness. Funding was made available through the Housing Development Grant Fund (HDGF), which consists of County General Funds. Applications were accepted on a rolling basis and evaluated based on criteria established in the Homelessness Ad Hoc Committee Housing Guidelines, which were approved by the Board on January 23, 2024 (Item No. 29).
On September 4, 2024, the City applied through the FRF process for the Project. After evaluating the application, CDH determined that the Project met the established benchmarks for impact, project readiness, and operational sustainability.
Upon further review, CDH determined that the Project aligns best with PLHA funding which permits funds to be used for the acquisition of affordable multifamily rental housing, including necessary operating subsidies to support the preservation of an existing permanent supportive housing asset and its long-term operational stability.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Suzanne Bryant, Deputy County Counsel, 387-5455) on September 16, 2026; Purchasing (Jessica Barajas, Supervising Buyer, 387-2065) on August 27, 2026; and County Finance and Administration (Paul Garcia, Administrative Analyst, 387-4205) on August 31, 2026.