EXECUTIVE SUMMARY

C&C Development Co., LLC, (“C&C" or “Developer”) is requesting cancellation of Development Agreement No. 19-01 (“DA 19-01”), recorded as Instrument No. 2020000458788, which pertains to the previously approved 114-unit Mercury Lane Residential Planned Community Project (“Prior Project”), located at the southeast corner of Mercury Lane and Berry Street (Assessor’s Parcel Number 296-143-01) (“Project Site”). The Prior Project was not constructed and is no longer being pursued. The Project Site is now approved for development of the Mercury Senior Apartments Project, an 85-unit affordable senior housing community by C&C (“Current Project"). 

RECOMMENDATION

Staff recommend that the City Council take the following actions:

1. Find the cancellation of Development Agreement No. 19-01 exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3);
2. Introduce by title only and waive further reading of Ordinance No. 1278 “An Ordinance of the City Council of the City of Brea Approving Cancellation of Development Agreement No. 19-01 (Mercury Lane Residential Planned Community)” (Attachment A);
3. Open and conduct a public hearing;
4. Schedule second reading and adoption of the aforementioned ordinance at the next regular City Council meeting; and
5. Authorize the City Manager, or their designee, to execute the following documents on behalf of the City, subject to any non-substantive changes deemed necessary or appropriate by the City Manager and the City Attorney:
   1. Cancellation of Development Agreement (Attachment B);
   2. Affordable Housing Agreement Termination (Attachment C); and
   3. Workforce Housing Restrictive Covenant Termination (Attachment D).

BACKGROUND

The 1.01-acre Project Site is located within the Brea Core Specific Plan area, at the southeast corner of Mercury Lane and Berry Street and is designated as Mixed Use 50 in the City's adopted Brea 2050 General Plan and Brea Core Specific Plan. The Project Site is currently a vacant, unpaved lot as shown in Figure 1 below.

FIGURE 1 - AERIAL VIEW OF THE PROJECT SITE

Entitlement History

On April 28, 2020, the Planning Commission recommended approval of the Prior Project by a 5-0 vote. On June 2, 2020, the City Council approved the Prior Project by adopting Ordinance No. 1214. The Prior Project consisted of a five-story, 114-unit multifamily residential development, including 11 low-income units, 80 workforce units, and 23 market-rate units. The approvals included Zone Change No. 19-01, Planned Community Master Plan No. 19-01, DA 19-01, and certification of the associated Final Environmental Impact Report. Subsequent affordable covenants were executed on April 25, 2022 and recorded on title, which include an ‘Affordable Housing Agreement’ (recorded as Instrument No. 2022000193475) and ‘Restrictive Covenant for Workforce Housing’ (recorded as Instrument No. 2022000193474) (collectively referred to as the “Affordable Covenants”). Although building permit plan check documents were subsequently submitted, the Prior Project was not constructed.

On April 1, 2025, as part of the Greenbriar Residential Development Project (“Greenbriar Project”), the City Council approved a Development Agreement (“Greenbriar DA”) by adopting Ordinance No. 1258. The Greenbriar DA allows off-site construction of affordable units to satisfy the Greenbriar Project’s affordable housing requirement, consistent with the City’s Affordable Housing Ordinance (Brea City Code [BCC] Section 20.40.050.B). The Greenbriar Project applicant, Lennar Homes of California, LLC, identified the Project Site as a potential site to satisfy its affordable housing obligation and identified C&C as its partner.

On August 19, 2025, the City Council approved Density Bonus No. 2025-01 by adopting Resolution No. 2025-057, along with an Affordable Housing Agreement, Loan Agreement, and Addendum to the Final EIR for the Current Project, which is to serve as the off-site affordable housing component for the Greenbriar Project. The Current Project is an 85-unit, 100 percent affordable apartment community, serving lower-income households. Tenant selection will prioritize seniors and/or veterans, as well as those employed in or residing in the City of Brea.

DISCUSSION

Since the Prior Project was not constructed and is no longer being developed, C&C is requesting cancellation of DA 19-01 as it remains on the title report for the Project Site. Additionally, the Developer’s construction lender, permanent lender, and tax credit investor require DA 19-01 and the Affordable Covenants for the Prior Project to be cleared from title, as they pertain to a development that is no longer being pursued. The cancellation of DA 19-01 and the Affordable Covenants will satisfy these title and financing requirements and allow the Developer to proceed with closing on the financing for the Current Project. The proposed cancellation does not modify the approved entitlements for the Current Project.

The Developer pursued multiple funding and financing sources to facilitate project construction. The City's financial participation in the Current Project includes a Housing Trust Fund loan and development impact fee deferral, as previously approved by the City Council on August 19, 2025. The Current Project also received an allocation of low-income housing tax credits from the California Tax Credit Allocation Committee on May 12, 2026 and was approved by the Orange County Board of Supervisors for Supportive Housing funding on September 15, 2026. The Developer is currently proceeding through the building plan check process and working toward the closing of permanent financing, with first permit issuance targeted for October 2026. 

PLANNING COMMISSION RECOMMENDATION

On September 8, 2026, the Planning Commission approved Resolution No. PC 2026-07 (Attachment E) by a 5-0 vote, recommending City Council approval of the cancellation of DA 19-01.

PUBLIC NOTICE AND COMMENTS

Cancellation of DA 19-01 was noticed in accordance with the City’s public noticing requirements, which involved mailed notices sent to property owners within 500 feet of the Project Site and publication in the Brea Star-Progress. The public hearing notice for cancellation of DA 19-01 is provided as Attachment F. As of the drafting of this report, staff have not received public comments.

ENVIRONMENTAL ASSESSMENT

The proposed action has been evaluated in accordance with CEQA Guidelines and applicable environmental regulations of the City. The proposed action is exempt from CEQA under the common-sense exemption set forth in CEQA Guidelines Section 15061(b)(3), which applies when it can be seen with certainty that there is no possibility that the proposed action may have a significant effect on the environment. The cancellation of DA 19-01 is an administrative action that will not result in a direct or reasonably foreseeable indirect physical change in the environment. Therefore, the proposed action is exempt from the provisions of CEQA and the draft Notice of Exemption is included as Attachment G. The proposed action does not modify or otherwise affect the previously certified Final Environmental Impact Report for the Prior Project (State Clearinghouse No. 2018121032).

FISCAL IMPACT

Authorizing the cancellation of DA 19-01 and the Affordable Covenants will have no fiscal impact on the General Fund (110).

CONCLUSION

The cancellation of DA 19-01 would remove the documents associated with the unconstructed Prior Project from the Project Site's title and facilitate financing for the approved Current Project. The proposed cancellation would not modify the approved entitlements for the Current Project. Therefore, staff recommend that the City Council introduce by title only and waive further reading of Ordinance No. 1278, open and conduct a public hearing, schedule second reading and adoption of the ordinance at the next regular City Council meeting, and authorize the City Manager, or their designee, to execute the Cancellation of DA 19-01 and the associated Affordable Covenants.