Santa Fe Group Residential (SFG), a private real estate developer, is seeking to refinance a residential development loan for a high-profile project located in Ocean View Hills in Otay Mesa in the City of San Diego. The project site consists of approximately 14 acres of vacant land, currently designated as open space, adjacent to the Vista Del Mar Middle School just north of state route 905. The project, Del Sol Village, is a proposed in-fill multi-family development comprised of 350 rental apartment flats, 191 for-sale condominium flats and 34 for-sale tri-level townhomes. The project also includes a low to middle income affordability component. The San Diego Planning Commission has issued a recommendation to proceed with the development application and there is strong support from the city due to the critical shortage of accessible housing in San Diego.
The purpose of the development loan is to complete the entitlement process in the next 12-18 months, which includes a community plan change, a zone change to medium-high density, and a MHPA boundary line adjustment. Therefore an 18-month loan commitment is requested with a 6-month loan extension option. The total development loan budget is currently estimated at $2.8 million (not including interest reserve and closing costs). It includes the take-out of the existing loan of $1.895 million that was mainly used to cover preliminary development costs, development fees, carrying costs and interest reserve. The land value at completion of the entitlements will be in the tens of millions of dollars depending upon the final units approved. Therefore, the project offers a good loan risk with an extraordinarily low loan-to-value ratio at entitlements.
Upon completing the entitlement process, a construction loan will be sought to finance the site work construction, including grading the entire site, constructing the final 800-foot roadway segment of Del Sol Boulevard that will traverse the site, and constructing the streets, sidewalks, utilities, and other infrastructure. The total site construction loan budget is estimated to be $10-$12 million, which would include the take-out of the $2.8 million development loan.
The site work construction will be performed by Pena Grading & Demolition, Inc., which is an affiliate of SFG and has been in business for over 30 years. The company maintains California engineering and construction licenses and has a bonding capacity of $20 million. The completion of site work will result in finished pads for the apartment and condominium structures and finished lots for the townhomes that will add significant value to the project.There is great interest by local developers in acquiring high-density residential projects, at either the entitlement phase or at finished lots, which will provide for ample loan repayment sources.
The development site consists of two parcels; APN 645-040-24-00 and 645-040-27-00 located a half-mile northeast of the intersection of I-805 and SR-905 and less than two miles from the U.S.-Mexico border. The site is bordered by SR-905 to the south; single-family homes to the west; Vista Del Mar Middle School to the east; and the future extension of Del Sol Boulevard to the north, which will bisect the project site.
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The 2014 Otay Mesa Community Plan Update designates the land use as Open Space. The Site is zoned as AR-1-1, which allows for residential uses of 1 unit per 10 acres in accordance with the City’s Land Development Code. The Site is within the California Terraces Specific Plan Area.
The project site is also located within the Multiple-Species Conservation Program (“MSCP”) area and the City of San Diego MSCP Subarea Plan, and most of the Site is within the Subarea Plans’ Multi-Habitat Planning Area (“MHPA”) preserve system. The Site is within the Airport Land Use Compatibility Overlay Zone of Brown Field.
The Project requires a Land Use Amendment, Rezone, Site Development Permit, Planned Development Permit, Tentative Map, and a possible MHAP Boundary Line Adjustment.
PROPSED SITE PLAN
Amenities will include a pool and spa, patios, a separate fitness facility, a tot lot and ample green spaces. As previously mentioned, the rooftop will also provide areas for patios, sun decks, and entertainment facilities. Meeting areas and private workspaces and retail shops will be provided adjacent to the lobby of the building.