Making $160,000? A City Takes Pity

The scruffy lot with the golden weeds and the lonesome palms wouldn’t rate a second glance if it were in, say, Los Angeles or Bakersfield. No one would think twice about these two flat, empty acres if their ZIP Code placed them in San Jose or Stockton.

But this is Santa Barbara, a built-out city hemmed in by the Santa Ynez Mountains to the north, the Pacific Ocean to the south and politics in every possible direction. And this is believed to be Santa Barbara’s last vacant lot big enough to hold a housing development.

Not, however, just any housing development. The City Council is considering whether to use the property to build affordable housing, a condominium complex called Los Portales for families earning up to $160,000 a year.

Now, “it’s hard to get sympathy for people making $160,000 a year if you’re down in Texas or something,” said Bill Watkins, head of the UC Santa Barbara Economic Forecast Project. Any household with that kind of money is in the nosebleed section of American earners, and “most of the country would think, ‘You’re going to subsidize that person’s house? You’re kidding me.’ ”

But in this city -- where the median home price is around $1.2 million -- that person needs help. And the Housing Authority of the City of Santa Barbara is about to become the rare public housing agency to assist the well-heeled along with the poor, to build shelter for those whose business cards come in designer leather cases and include words like “doctor,” “lawyer,” “director.”

“It’s getting into a market that we shouldn’t be spending much time on but, stunningly, needs it,” said Robert G. Pearson, the agency’s executive director. “It’s rare for housing authorities to get involved in a project like this. We have our plate full dealing with the poor.”

So, what does it mean when a city is down to its last vacant lot and must help build housing for some of the most financially comfortable people in America?

Santa Maria Mayor Larry Lavagnino can’t decide which part surprises him more, the last lot or the helping hand. His working-class city is home to a chunk of its ritzy neighbor’s displaced workforce, men and women who have been priced out of the rarefied market 75 miles south.

“I can hear the water swirling” down the drain, he said of Santa Barbara’s situation. “How do you retain or recruit policemen or firemen when the median home price is $1.2 million?”

Actually, Santa Barbara officials view Los Portales as one answer to the conundrum of keeping middle-class families in a rich man’s city.

Prospective buyers would probably be “a cop married to a teacher, a nurse married to a guy who owns a plumbing store,” Councilwoman Iya Falcone said during last week’s City Council meeting. “Some of the people who are going to buy the higher-priced units are doctors and lawyers. But lawyers are people too.... I love this project.”

Santa Barbara fancies itself America’s Riviera, with its wide, white beaches and perfect weather, its rugged mountain backdrop and clear-day views of the Channel Islands, its building codes tended as meticulously as its lawns.

The city is zoned for 40,005 housing units. About 38,000 have been built, and the only housing construction these days is in-fill: a few units here, a few there. Unlike other land-poor cities, Santa Barbara has been loath to tear down large swaths of outdated structures and rebuild, said Paul Shigley, editor of the California Planning & Development Report.

“They think they’ve got paradise,” Shigley said. “They don’t want it to change.”

The tallest building here is the eight-story Granada Theatre, built in 1924. It could never be replicated today, in part because the City Charter strictly limits buildings to 60 feet, about four stories. And even four stories is a hard sell.

In fact, residents and the council balked at early plans for the Los Portales complex: 90 condos, four stories, with the first floor containing 8,000 square feet of commercial space and a parking garage smaller than municipal requirements.

The project has been in the works for nearly three years, since the Housing Authority bought the vacant lot at Montecito Street and Calle Cesar Chavez. The land originally was a bracero camp; then it morphed into a lemon processing plant. After a while, a research and development operation moved in and then out. It is zoned for industrial use.

“If you’re looking at completely vacant, developable urban land, this is our last big lot,” said Paul Casey, the city’s community development director. But the council “would not have rezoned this land for market-rate housing. They were willing to rezone this property for the benefit of affordable housing only.”

The lot’s few buildings were torn down about eight years ago, and it’s been empty ever since, Pearson said. Its former owner had hoped to build offices on it but finally gave up, putting it on the market. The lot was appraised at $4.3 million, but the owner agreed to sell for $3.5 million and take a charitable deduction for the rest.

The Santa Barbara Foundation lent the Housing Authority money for the land. In return, up to half of the units are to be marketed first to workers in the area’s nonprofit organizations, people who can’t buy market-rate homes on non-market-rate salaries.

“It becomes really difficult for us to identify people who can work in the [nonprofit] sector and live in the community,” said Chuck Slosser, the foundation’s president and chief executive. “Every nonprofit in this community struggles with this issue. The larger ones have people living outside the area and must commute in, from Lompoc, Santa Maria, Ventura.”

At a Planning Commission hearing in June, Pearson said, there was so much concern over the 90-unit project’s “size, bulk and scale” that the agency went back to its architecture and development partners and retrenched. They came up with plans for a 48-unit complex with a $26-million price tag and presented the new plans to the City Council last week.

It would take some fancy math to keep the two- and three-bedroom Mediterranean-style condos affordable. And, truth be told, they’d be considered affordable only in a housing market like Santa Barbara’s. On the open market here, they’d bring more than $1 million each; the proposal is to sell them for $495,000 to $595,000.

Which explains why the City Council -- with some consternation -- decided last week to create a new class of affordable-housing recipients.

State and federal laws generally state that, depending on the program, people eligible for affordable housing can’t make more than 80% of the area’s median income, as defined by the U.S. Department of Housing and Urban Development. In Santa Barbara County, which includes tony Santa Barbara as well as working-class Santa Maria, the median income is $65,800 for a family of four.

The City Council here had already created a class of affordable housing several years ago for people making up to 200% of the median income. Last week, they agreed to tailor the Los Portales project for people making up to 240%, or nearly $160,000. (To keep these affordable condos affordable, buyers would be subject to price controls on resale that would restrict any price increase to about 2% a year.)

The only way the council could lower the price of the units and target the project at families making even less would be to sell some units at full market price.

Although the council did not preclude that, many members expressed great reservations about changing sacrosanct zoning for additional ultra-expensive homes.

“I don’t want to slam the door on market rate, but I’m telling you, I’m really hesitant,” said Mayor Pro Tem Helene Schneider. “It makes the hair on the back of my neck go up.”

The Housing Authority must flesh out the plans for the smaller complex, including determining how buyers would be selected, and start the approval process over. And it must do it fast enough so that increasing construction costs don’t doom the project.

For now, though, a cautious optimism rules.

“We’re creating a new class of affordable housing, affordable housing accessible for truly middle-class individuals,” Councilman Das Williams said last week. “That’s something that’s good.”