Construction began in November 2025 after all tenants were relocated. As of July, about $26.6 million, or 77% of the original development budget, has been spent.
By Carlos Reyes
Santa Monica city staff are scheduled to present an informational report Tuesday on the ongoing rehabilitation of 40 rent-controlled apartments at 2033-2101 Virginia Avenue.
Last August, the City Council approved a Housing Trust Fund loan of up to $35.65 million to Community Corporation of Santa Monica for the project. CCSM acquired the 1947-48 buildings in 2020 with an earlier city loan of about $15.2 million to prevent displacement and preserve affordability. Existing tenants are entitled to return at their current rent-controlled rents once the work is finished. Future vacancies will be restricted to extremely low-, very low- and low-income households.
Construction began in November 2025 after all tenants were relocated. As of July, about $26.6 million, or 77% of the original development budget, has been spent. CCSM now projects the project will exceed the budget by roughly $2.4 million, largely because of higher construction and relocation costs. Unexpected repairs for mold, termite damage, deteriorated sewer lines and other hidden conditions have driven up hard costs. Relocation expenses also increased after the developer opted for full relocation rather than a phased approach that would have kept some units occupied.
CCSM is reducing other budget line items and seeking additional funding sources. The city has applied for up to $4 million in federal Community Project Funding that could be applied to the work if awarded. Under the loan agreement, costs beyond contingency must be covered by reallocating other funds, including possible deferral of the remaining developer fee.
City oversight includes weekly meetings with the development team, regular site visits, third-party reviews and monthly examination of loan draws. CCSM has started quarterly tenant meetings, held site tours in July and committed to monthly email updates.
Staff recommend that the Council receive and file the report. No additional budget action is requested at this time. The meeting is set for 5:30 p.m. Tuesday in the City Hall Council Chambers.
