Title
Exclusive Right to Negotiate Agreement with Mutual Housing California for 2225 Colfax Street
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FileID
File ID: 2026-01690
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Location
Location: 2225 Colfax Street, District 2
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Recommendation
Recommendation: Pass a Motion authorizing the City Manager or designee to execute an Exclusive Right to Negotiate (“ERN”) Agreement with Mutual Housing California regarding the potential sale of 2225 Colfax Street.
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Contact
Contact: Ya-yin Isle, City Housing Manager, (916) 808-1869, yisle@cityofsacramento.org, Economic Development Department; Richard Sanders, Facilities & Real Property Superintendent, (916) 808-7034, rsanders@cityofsacramento.org, Department of Public Works
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Presenter
Presenter: Ya-yin Isle, City Housing Manager, (916) 808-1869, yisle@cityofsacramento.org, Economic Development Department
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Attachments
Attachments:
1-Description/Analysis
2-Exclusive Right to Negotiate Agreement
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Additional Description/Analysis
IssueDetail
Issue Detail: The City-owned property located at 2225 Colfax Street (APN: 275-0072-002-0000) (“Property”), consisting of one parcel of 2.18 acres of vacant land, was previously used as a corporation yard. On October 15, 2024, via Resolution #2024-0299, the City Council declared the Property to be “surplus land” pursuant to the requirements of the California Surplus Land Act (California Government Code Section 54220 et seq.). On October 31, 2024, a Notice of Availability/Offer to Sell Surplus Property was issued as required by Government Code Section 54222. The City did not receive any notice of interest that included a development proposal at the end of the required 60-day period.
In 2025, City staff began marketing the Property for housing development and had some initial interest from one housing developer that ultimately did not move forward. In April 2026, Mutual Housing California (“Mutual Housing”) contacted City staff about their interest in developing the Property for housing. The location, size, and shape of the Property make it a prime candidate for affordable housing development. Mutual Housing is a trusted and valued development partner with a demonstrated track record of delivering high-quality, cost-effective affordable housing developments. They have successfully completed multiple housing projects within the City and currently have two projects under construction. They continue to prioritize advancing additional housing opportunities that align with the City’s housing goals.
The City also desires that the Property be developed for housing given the City’s housing shortage. City staff recommends executing the ERN to allow time for Mutual Housing to conduct preliminary due diligence on the Property. Should the City and Developer desire to continue moving forward after the due diligence period, Mutual Housing and the City would engage in negotiations on the terms of a purchase and sale agreement for the Property.
The proposed terms of the ERN include an initial term of 360 calendar days for the ERN agreement, with the option to extend for an additional 360 calendar days. The longer due diligence period is recommended due to the environmental restrictions recorded on the property and the need to engage with the Central Valley Regional Water Quality Control Board regarding the clean-up requirements and responsibilities. If Mutual Housing and the City decide to proceed with a purchase and sale agreement, City staff will present the proposed sale agreement to the City Council for consideration.
City staff recommends approving the motion to enter into the ERN with Mutual Housing. Execution of this agreement serves a public purpose because it furthers construction of affordable housing in the Sacramento community.
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PolicyConsiderations
Policy Considerations: Housing continues to be a priority of the City, and entering into an ERN is the first step in allowing a developer to explore the feasibility of developing housing on the Property.
This action is supported by the City’s General Plan, specifically Housing Element Policy H-2.2 Maximize Use of Public Properties for Affordable Housing and Shelters, which states the City shall make City-owned properties that are no longer needed for current or foreseeable future public operations available for the development of affordable housing and emergency shelter space to the maximum extent feasible, and shall encourage other public entities to do so as well.
This Project advances the Council-adopted priority of Economic Development identified at the September 30, 2025, Priority and Goal Setting Workshop and adopted on November 18, 2025. Specifically, this Project implements the following Strategic Initiatives in the City of Sacramento One City, One Future Priorities Strategic Workplan:
• Economic Development, Neighborhood and Commercial Development - Strategic Initiative 7: Activate Vacant and Underutilized Public and Private Properties
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EconomicImpacts
Economic Impacts: None.
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EnvironmentalConsiderations
Environmental Considerations: The action of entering into an ERN is not part of a project that has been identified, designed or funded. The ERN allows for additional due diligence and determination of project feasibility. No physical change in the environment would occur. The action is an administrative action that would not result in direct or indirect physical changes in the environment and is not a project as defined in CEQA. (CEQA Guidelines sections 15378(b)(4), 15060(c)(3))
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: The ERN enables Mutual Housing to investigate the physical condition of the Property and to determine if the City’s General Plan, zoning and design requirements will accommodate the proposed housing development. The recommendation in this report furthers the City’s objective of providing a range of housing for community needs, including affordable housing.
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FinancialConsiderations
Financial Considerations: None.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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