Carlsbad may buy apartment building from Solutions for Change and forgive $3.1 million loan

Carlsbad's City Council could decide to buy a 16-unit apartment complex from Solutions for Change after the nonprofit that provides services to homeless families failed to obtain the funding it needed to include the property in its residential program.

The city loaned $3.1 million to Solutions for Change to purchase the Chestnut Avenue buildings in 2015. The project was to include the relocation of the existing tenants and minor renovation of the apartments, to be accomplished in the first year, according to a city staff report.

Solutions was to obtain permanent financing within the first three years for a major rehabilitation of the entire development for use as affordable housing, the report states. However, it has been unable to secure funding because of federal and state requirements for low barriers to entering housing programs, a policy called "housing first."

"Because Solutions for Change requires sobriety and participation in the workforce training as a condition of housing, the project is not eligible to receive the federal or state level Housing First public funds that are traditionally used for transitional or supportive housing," the city report states.

"Solutions for Change has decided to voluntarily turn the property over to the city of Carlsbad in exchange for having its loan forgiven because it cannot fulfill the obligations identified in the 2014 loan documents recorded against the property," it states.

CEO Chris Megison has said the housing first policy does not provide the personal accountability needed for the Solutions program. Megison and his wife, Tammy, founded Solutions for Change in 1999.

Megiston reportedly is in negotiations to buy a portion of the 138-acre Green Oak Ranch, south of state Route 78 in Vista. Green Oak Ministries has operated a Christian drug and alcohol recovery program for men on a piece of the property since the late 1990s.

The Carlsbad City Council is expected to approve the Chestnut Avenue deal Tuesday.

Built in 1975 on a narrow, 0.77-acre lot along the western edge of Interstate 5, the complex in the 900 block of Chestnut consists of three, two-story apartment buildings with an attached laundry and a small storage room. One apartment is for a live-in manager.

Solutions for Change would maintain the property through the end of the year under the proposed agreement. Meanwhile, the city will look for a new owner to take it over as a 100 percent affordable housing project.

The nonprofit dropped its residential program in 2020 because of the dispute about federal funding requirements.

Then, in 2022, it announced the kick-off of a campaign to raise $4.8 million from private donors to refurbish and pay off six properties purchased for the program. Most were duplexes and single-family homes around the Solutions For Change main campus in Vista.

The three-year program was expected to provide job training, leadership training, family management skills, financial literacy, personal development and accountability for 550 individuals.

This story originally appeared in San Diego Union-Tribune .