As part of Monday’s consent calendar, the City Council approved an agreement to enter exclusive negotiations with a development team for a major mixed-use affordable housing project on city-owned property at 434–470 North Lake Ave.
The City will enter into an Exclusive Negotiation Agreement (ENA) with Holos Inc. and Heritage Housing Partners to pursue the redevelopment of the 2.38-acre site at the southeast corner of North Lake Avenue and Villa Street.
Councilmember Steve Madison voted against the item, despite being a staunch supporter of affordable housing.
“The process was not transparent and appropriate and at a time when we are facing significant financial headwinds, we don’t have any proposals to compare it to,” Madison said.
Originally, the City partnered with Los Angeles County and each side agreed to pay $6 million. The County backed out of the deal according to Madison and Kaiser Permanente walked back plans to demolish the site and indemnify the City.
“I think we have been very transparent,” said Mayor Victor Gordo.
The two sides went back and forth with Madison listing several sources the County said they would use to acquire funds, including Section 8.
The property was acquired in 2023, shortly afterwards Gordo and Los Angeles County Supervisor Kathryn Barger stood side by side to announce the new partnership.
At that time it was announced the property would be transformed into a community services site and housing that offers affordable housing, mental health care services, and primary outpatient services. The project was initiated in response to a March motion by Barger to bring the services to the north Pasadena region, which the County Department of Health Services had identified as a high-priority area.
It is not known when the County backed out of the deal.
“I do think it’s fair to say that the County reneged on the promise to participate with us and we continue to remain open to having them as a partner,” said Councilmember Jason Lyon.
Lyon said the Council affirmatively again and again made decisions to move forward with the project to provide both affordable housing and community health services with or without the County, and has made sure that there are numerous possible providers to be in that space when the time comes forward.
“That might be the county. It might not be. It depends if we want to make a deal with them. And the last thing I want to say is that it’s my recollection that we had an appraisal before us for $16 million that had been done a year, year and a half before the purchase.”
The property, which includes three vacant one-story medical office buildings once used by Kaiser Permanente, was acquired by the city in 2023 with plans to provide mental health services at the location.
Under the agreement, the city will negotiate for up to six months toward a disposition and development agreement.
The site is designated Medium Density Mixed-Use in the City’s General Plan, allowing residential, retail and health-related uses. City officials have said the long-term goal is to create a development that combines affordable housing with space for health and mental health outpatient services.
The property was declared surplus land in July 2024, triggering the state Surplus Land Act process.
The city issued a notice of availability to affordable housing developers and received 12 proposals by September 2024. After a required good-faith negotiation period and further discussions, staff narrowed the field and evaluated projects based on affordability, feasibility, experience, and alignment with city and community goals.
Nearly 150 residents attended a city-hosted public meeting in March, where feedback helped shape development priorities.
Those goals included at least 200 residential units, 60% to 80% affordability with deeper affordability encouraged, on-site health and mental health services, community-serving amenities, and compliance with the North Lake Specific Plan.
The plan also includes more than 14,000 square feet of commercial space, a targeted net-zero energy design, sustainability features, and space for integrated health and mental health services.
Heritage Housing Partners has previously developed affordable housing projects in Pasadena, including Lincoln at Orange Grove, Decker Court, Gill Court and Walnut Crossing.
Other developers were designated as backup candidates if negotiations fail, while several proposals were not selected to advance.
City officials said there is no direct fiscal impact tied to approval of the ENA. The developer would provide a $10,000 deposit to reimburse the city for out-of-pocket costs such as legal and consultant fees during the negotiation period.
If negotiations result in a development agreement, the project would return to the City Council for approval and would undergo future public review processes, including subsidy hearings and design and environmental review.
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