Half Moon Bay November 3, 2026

555 Kelly & Measure Q

How the project developed and what voters are deciding.

What does my vote decide?
Background

How 555 Kelly Reached the Ballot

How the City-owned site became a housing proposal, and why the lease is now before voters.

The City bought 555 Kelly Avenue in 2017. In November 2021, the City Council asked staff to pursue affordable housing there.

In February 2022, the City issued a formal Request for Qualifications (RFQ) seeking a developer for affordable housing at 555 Kelly Avenue. The RFQ encouraged a maximum height of three stories. Mercy Housing and Ayudando Latinos A Soñar (ALAS) submitted the only response.

By 2023–2024, the proposal was a five-story building with 40 apartments and 18 on-site parking spaces.

One reason the project could qualify for additional height under State Density Bonus Law was the City's 2024 determination that the site was within one-half mile of a “Major Transit Stop.”

A Major Transit Stop is a term defined by California law. It includes a rail or bus rapid transit station, a ferry terminal served by transit, or a location where qualifying major bus routes meet and provide frequent peak-hour service.

For 555 Kelly, the City combined nearby fixed-route SamTrans service with Ride Plus on-demand service and concluded that the combined service was equivalent to a Major Transit Stop.

The Planning Commission approved the Coastal Development Permit in May 2024. The City Council upheld that permit after an appeal hearing in June.

In December 2024, the City Council resolved that it would not use on-demand transit to qualify a location as a Major Transit Stop unless State law directed otherwise. However, the 555 Kelly Coastal Development Permit stayed in place, although the Council determined that Half Moon Bay does not have a qualified Major Transit Stop.

In spring 2026, the Council approved Ordinance No. 2026-01. It authorized a long-term Ground Lease and related housing-development agreements. A referendum petition received enough valid signatures to qualify. The Council then placed the ordinance before voters as Measure Q.

555 Kelly Timeline

The dates below show the major City actions that led from the purchase of the property to the November 2026 ballot.

  1. 2017

    City buys the property

    The City acquires the 555 Kelly Avenue property.

    Read the original record — document page 3
  2. Nov. 9, 2021

    Council chooses 555 Kelly for affordable housing

    The City Council directs staff to pursue affordable housing at 555 Kelly.

    Read the City's key dates — page 1
  3. Feb. 15, 2022

    City request encourages three stories

    The City releases a Request for Qualifications that encourages a maximum height of three stories for the 555 Kelly site.

    Read the developer request — document page 6
  4. May 23, 2022

    One proposal is submitted

    Mercy Housing and ALAS submit the only response to the City's request.

    Read the City's key dates — page 1
  5. 2023-2024

    The proposal becomes five stories

    The project presented to the City becomes a five-story, 40-unit apartment complex with 18 on-site parking spaces.

    Read the City project history
  6. May 14, 2024

    Planning Commission approves the Coastal Development Permit

    The Planning Commission conditionally approves the five-story, 40-unit project and related entitlements.

    Read the City project history
  7. June 26, 2024

    Council upholds the Coastal Development Permit

    The City Council denies three appeals and leaves the Planning Commission approval in place.

    Read the City project history
  8. Dec. 16, 2024

    Council determines that Half Moon Bay does not have a Major Transit Stop

    After the 2024 approval, the Council resolves that the City will no longer use on-demand transit to qualify a location as a Major Transit Stop unless directed otherwise by State law. The 555 Kelly approval remains in place.

    Read the Council decision — minutes, page 4
  9. Apr. 28 / May 5, 2026

    Council approves the long-term lease and development agreements

    The Council introduces and then approves Ordinance No. 2026-01, authorizing the Ground Lease, Affordable Housing and Property Disposition Agreement, Regulatory Agreement, and related actions.

    Read the City project history
  10. June 16 / June 30, 2026

    Referendum qualifies

    The referendum petition is filed, and the San Mateo County Elections Office verifies enough signatures to qualify it.

    Read the City project history
  11. July 21, 2026

    Council sends the ordinance to voters

    The City Council votes to submit Ordinance No. 2026-01 to Half Moon Bay voters.

    Read the City project history
  12. Nov. 3, 2026

    Measure Q is on the ballot

    Voters decide whether Ordinance No. 2026-01 should be adopted.

    Read the election information

Why is this on the ballot?

The referendum challenged Ordinance No. 2026-01, which authorizes the long-term Ground Lease and related housing-development agreements. It did not repeal the separate Coastal Development Permit approved in 2024.

What Measure Q decides

YES

Ordinance No. 2026-01 is adopted, allowing the Ground Lease and related agreements authorized by the ordinance to take effect according to their terms.

No

Ordinance No. 2026-01 does not take effect. The separate 2024 Coastal Development Permit remains in place and it gives the City an opportunity to reconsider project terms.

Primary public-record sources

City project records, the City's key-dates document, Council staff materials on the 2024 Major Transit Stop interpretation, and City election information for Measure Q.

The timeline summarizes the public record. The linked records provide the full details.

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555 Kelly at a Glance

The main facts about the apartments and the City-owned land.

How many apartments?
40 units

39 apartments for households that meet income limits, plus one manager unit.

How tall?
5 stories — up to 56 feet
How much parking?
18 spaces

The parking study estimated total demand of about 27–34 spaces for the 40-unit project.

Who can live there?
Age 55+

The income-restricted apartments are intended for qualifying senior agricultural workers age 55 and older. Caregivers may also live with residents when allowed under the project’s occupancy rules. One unit is for a manager.

What is the land rent?
$1/year — up to 99 years

This is the base rent. The City keeps ownership of the land.

What is the estimated cost?
$41.6 million

The plan includes taxpayer-supported public grants and loans, tax-credit financing, private money and City land.

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Key Issues About 555 Kelly

The sections below explain the project details and link to the records behind them.

Building Size

How Did the Project Become Five Stories?

The City’s 2022 request for developer qualifications encouraged a maximum height of three stories. Mercy Housing later proposed five stories. The City approved the five-story Coastal Development Permit in 2024.

What changed?

Mercy Housing later proposed a five-story, 40-unit apartment complex. The City used State Density Bonus Law to allow changes from some local development standards, including height and parking.

Major Transit Stop interpretation

In 2024, City staff combined nearby fixed-route SamTrans bus service with Ride Plus on-demand microtransit and concluded that the combined service was equivalent to a Major Transit Stop. That conclusion supported Density Bonus treatment used for the approved project.

What happened later?

In December 2024, the Council resolved that the City would no longer use on-demand transit this way for future Major Transit Stop determinations unless directed otherwise by State law. The already-approved 555 Kelly Coastal Development Permit remained in place.

Check the records

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Parking

How Much Parking Does the Project Provide?

18 on-site spaces. The parking study estimated total demand of about 27–34 spaces for the 40-unit project.

Parking beyond the site

The study did not expect all parking demand to fit inside the apartment complex. It counted parking on adjacent City property as part of the available supply. If those spaces are full, additional parking demand may extend onto nearby neighborhood streets.

Questions for readers to consider

  • Where will residents park when the 18 on-site spaces are full?
  • Where will caregivers, workers and visitors park?
  • How could more parked cars affect traffic, narrow streets, and people walking or biking nearby?

Check the records

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Project Review

Was a Full Environmental Impact Report Prepared?

NO FULL ENVIRONMENTAL IMPACT REPORT WAS PREPAREDThe City used a Class 32 infill exemption under the California Environmental Quality Act (CEQA), which allows qualifying projects to be fast-tracked without a full Environmental Impact Report (EIR).

Transportation analysis

No transportation analysis was prepared as part of a full Environmental Impact Report. Instead, the City relied on the April 2024 Transportation Impact Analysis. That focused analysis examined three intersections: Highway 1 and Kelly Avenue; Kelly Avenue and the project driveway; and Kelly Avenue and Church Street. It covered selected weekday and weekend peak times, looked at whether stop signs were warranted at the project driveway, and included a focused parking analysis. It was not a full EIR transportation review.

Other technical materials

Separate technical reports addressed noise and ground conditions, in addition to the transportation and parking analysis. These reports did not make up a full Environmental Impact Report. The ground-conditions report identifies a mapped liquefaction hazard area and gives building recommendations.

Check the records

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Project Cost

How Much Does the Project Cost?

The current estimated project cost is about $41.6 million.

Dividing the total project cost by 40 apartments gives about $1.04 million per unit. That includes more than the cost of building each apartment.

Does financing include taxpayer funds?

Yes. The plan includes taxpayer-supported public grants and loans. It also includes Low-Income Housing Tax Credits, private loans and investor money, and City land leased for $1 a year.

Where the money comes from

Funding sources listed in the housing-development agreement dated April 23, 2026.
SourceAmount / statusType
State Infill Infrastructure GrantCalifornia Department of Housing and Community Development$2,756,304Public grant
Additional State funds$2,000,000State funding
Joe Serna Farmworker Housing funds$13,350,000Public loan
San Mateo County American Rescue Plan Act fundsNot stated in the cited planPublic grant
State / federal Low-Income Housing Tax CreditsNot stated in the cited planTax-credit financing / investor money
Construction and long-term loansNot stated in the cited planPrivate debt
City-owned landUp to 99 years at $1/year base rentPublic asset

The plan lists both public and private funding. The final financing package is not yet fixed.

Check the records

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City Land Lease

How Much Will Mercy Housing Pay to Lease City Land?

$1 per year in base rent for up to 99 years.

Who owns the land?

The City keeps ownership of the land. A Ground Lease is an agreement to rent the land. Mercy Housing would receive the right to use the property for the lease term.

What happens when the lease ends?

The land remains City property. The building and other project improvements would generally become City property at the end of the lease, subject to the terms of the Ground Lease.

Check the records

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Community Space

How Much of the Community Space Is Open to the Public?

A multipurpose portion must be available for public meetings and activities for at least 16 hours during each Monday-through-Friday work week.

The project includes about 2,658 square feet of community-serving space.

The agreement does not guarantee unrestricted public use of the entire 2,658-square-foot area. Scheduling rules, restrictions and fees may apply.

Weekend public access is not guaranteed by the minimum-use requirement.

Check the records

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Earthquake & Insurance

Is the Site in a Liquefaction Hazard Area?

Yes. The project's geotechnical record identifies the property within a mapped liquefaction hazard area.

What is liquefaction?

Liquefaction can happen during an earthquake when water-saturated soil loses strength and begins to behave more like a liquid. It can cause the ground to settle or shift, crack pavement, damage underground pipes, and cause buildings to tilt or sink.

Earthquake insurance

The Ground Lease does not expressly require earthquake insurance.

At the April 28, 2026 City Council meeting, a Mercy Housing representative said Mercy Housing typically does not buy earthquake insurance because it is cost prohibitive.

City's financial risk

Engineering addresses how the building is designed for site conditions. Insurance is a separate financial issue: if a major earthquake caused serious damage without earthquake insurance, another source of money would be needed for repairs.

Check the records

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State Lawsuit

Is the State Lawsuit About 555 Kelly?

No. The State's July 2026 enforcement action concerns Half Moon Bay's broader Housing Element compliance. The State's public announcement does not describe the case as a lawsuit filed specifically to compel construction of 555 Kelly.

Check the records

Would the 555 Kelly agreements by themselves end the State lawsuit?

No. Ordinance 2026-01 is about the 555 Kelly land lease and other project agreements.

The State’s concerns are broader. They include the City’s Housing Element, which is its State-required housing plan, and rezoning, which means changing local land-use rules.

State record

Does California law specifically require the City to build 555 Kelly?

The public records reviewed for this page do not show a State law or court order that specifically tells Half Moon Bay to build this one apartment complex.

This describes the records reviewed for this page. It is not a court ruling.

See the records

Does the Measure Q vote by itself trigger Builder’s Remedy?

Builder’s Remedy is a State housing rule tied to whether a city’s housing plan meets State law.

The State’s March 24, 2026 notice links Builder’s Remedy to the City’s Housing Element status, not simply to the vote on one project.

State record

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Sources

Source Documents

Use these links to read the original records. Document page numbers refer to the page counter in your document viewer, not always the number printed on the page. Some viewers may open at page 1; use the page number shown here.

City page

City Measure Q Election Information ↗

City page with the ballot question, YES/NO meaning, project facts, and election links.

https://www.halfmoonbay.gov/1108/2026-Measure-Q---City-of-Half-Moon-Bay-H

City page

555 Kelly Avenue Project Page ↗

City page with project history, plans, meeting records, reports, and agreements.

https://www.halfmoonbay.gov/845/555-Kelly-Avenue---Affordable-Housing

Main record

Final Ground Lease — April 23, 2026 ↗

Land lease covering the 99-year term, $1 base rent, insurance, damage, upkeep, and end of the lease.

https://www.halfmoonbay.gov/DocumentCenter/View/7790/535-555-Kelly-Avenue-Ground-Lease-4-23-26

Main record

Affordable Housing Regulatory Agreement ↗

Rules for who can live there, rent limits, upkeep, and City checks.

https://www.halfmoonbay.gov/DocumentCenter/View/7792/535-555-Kelly-Avenue-Regulatory-Agreement-4-23-26

Main record

$2 Million State Grant Agreement ↗

Agreement for passing $2 million in State grant money to the project, subject to its rules.

https://www.halfmoonbay.gov/DocumentCenter/View/7794/535-555-Kelly-Avenue-Grant-Agreement-4-23-26

City staff record

Council Questions — April 27, 2026 ↗

City answers about money, community-space hours, insurance, State housing issues, and other questions.

https://halfmoonbay.gov/DocumentCenter/View/7800/Council-Questions-555-Kelly---042726

Map

Liquefaction Exhibit ↗

City-posted map showing the site in a mapped liquefaction area.

https://halfmoonbay.gov/DocumentCenter/View/6651/Liquefaction-exhibit

Meeting video

April 28, 2026 City Council Meeting Video ↗

Council meeting video with the Mercy Housing earthquake-insurance discussion at about 2:51:44–2:53:36.

https://halfmoonbay.granicus.com/player/clip/1405?redirect=true&view_id=1

State record

State housing-agency notice — March 24, 2026 ↗

California Department of Housing and Community Development notice about the City’s housing plan and required housing-law steps.

https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/half-moon-bay-he-noncompliant-nov-032426.pdf

State record

California Attorney General — July 16, 2026 ↗

State announcement about the housing-law case against Half Moon Bay.

https://www.oag.ca.gov/news/press-releases/attorney-general-bonta-newsom-administration-take-legal-action-against-local

City record

City key dates for 555 Kelly ↗

A one-page history of the early City actions.

https://www.halfmoonbay.gov/DocumentCenter/View/6635/05-CC-Key-Dates-re-555-Kelly#page=1

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555 Kelly Avenue — Google Street View

Enlarge to see details.

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