LipoDiesel & Weed Wars: Who’s Behind Santa Barbara’s First ‘Builder’s Remedy’ Project?

LipoDiesel & Weed Wars:
Who’s Behind Santa Barbara’s
First ‘Builder’s Remedy’ Project?

Investment Group With Controversial Past
Applies to Build 30-Units of Housing
on Lower Riviera

By Ryan P. Cruz | May 31, 2023

California’s housing crisis has created a sense of desperation, with state officials professing to do everything in their power to encourage and incentivize the building of much-needed affordable housing. Local governments are now required to meet state-mandated housing quotas and have been threatened with penalties should they fail to meet those numbers by the deadlines. 

This perfect storm, where state policy meets pressure to build, plays out in the “Builder’s Remedy,” a provision of California’s Housing Accountability Act that essentially allows developers to sidestep the local review process if those jurisdictions have not met their quotas.

Here on the Central Coast, all of Santa Barbara County, including the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, and Santa Maria, are out of compliance according to the California Department of Housing and Community Development (HCD). In fact, 230 out of 539 jurisdictions in the state — or 43 percent — ​ are also out of compliance as of May 30, 2023. 

In Santa Barbara, this means developers can take advantage of the Builder’s Remedy, and for the first time in recent memory, their projects can move quickly through the city’s notorious, molasses-like planning process. What could possibly go wrong? Hopefully nothing.

First in Line

Last week, the first development proposal utilizing the Builder’s Remedy was submitted to the city of Santa Barbara. It came from a Los Angeles–based investment company, Industrial Partners Group, that applied to build a 30-unit apartment complex with six low-income affordable units across two vacant parcels located on Grand Avenue in the Lower Riviera. 

The company, founded by partners Craig Martin Smith and Stephanie Smith, described their plans as a “Spanish-revival-styled project” with “4,000 feet of outdoor communal deck space with panoramic city and ocean views for residents.” 

Craig Martin Smith said the project was “one step toward alleviating our community’s crisis-level housing needs,” and that the Builder’s Remedy made it “economically viable” to construct low-income housing without government grants, because “otherwise the cost of land and construction makes affordable housing impossible.”

“Without Builder’s Remedy,” Smith said, “this development would be limited to four units. Now we can provide six affordable units along with additional housing for 24 other families. Santa Barbara needs housing, and the neighborhood needs vibrancy, energy, and families.”

The project is one of “several” other Builder’s Remedy projects the company has submitted throughout the state, Smith told the Independent, explaining, “We are following the state’s lead and using the Builder’s Remedy law to overcome bureaucratic obstruction and NIMBYism to build affordable housing for the people of Santa Barbara.”

‘Dr. Lipo 90210’ and LipoDiesel

As it turns out, Craig Martin Smith and Stephanie Smith, the pair behind Industrial Partners Group, have had a very public and often controversial presence in California dating back 15 years.

In 2007, Craig, then going by the name Dr. Craig Alan Bittner, ran one of the most successful liposuction clinics in Beverly Hills. According to Stephanie Smith’s website — which lists her as a “real estate developer, cannabis activist, psilocybin advocate, professional bohemian, aspiring painter, wannabe surf goddess,” and founding member of Industrial Partners Group  — she worked at the clinic, where, she said, they “treated over 100 patients a week and removed gallons of unwanted fat every day.”

Sometime that year, the pair had the original idea to use the excess fat removed from their patients to fuel their car. The story is recounted on the LipoDiesel website, where Smith (who at the time went by the name Stephanie Darcy) said the idea started off as “part joke, part inspiration.”

“Making fuel out of love handles, jiggly bellies, and saddlebags is funny,” she wrote. “This is America, land of too much fat. If you don’t see any humor in using liposuction fat for fuel, we feel a bit sorry for you.”

She explained that they had always considered themselves environmentalists who opposed wars over oil, and said the seed was planted when they lived in Brazil and owned a car that ran on ethanol from sugarcane. “We knew that finding fossil-fuel alternatives wasn’t a matter of technology; it was a matter of political will,” she wrote.

They didn’t have lots of sugarcane on hand, she says, but what they did have was gallons of human fat.

Soon they bought basic biofuel equipment online and made the first batch of LipoDiesel using thigh fat from a woman named Samantha. The fat was heated, agitated, and treated with chemicals to fuel their Mercedes GL320 diesel. “We got about 11 miles per gallon,” she said.

Fat-Fueled Fallout

In 2008, several media outlets picked up the story. Some questioned the legality of LipoDiesel, although Craig and Stephanie asserted that all of the patients whose fat was used signed “special consent forms” and were offered a choice between having their fat used for fuel or incinerated as medical waste. 

However, several patients had filed complaints against Craig, a k a Dr. Bittner, accusing the clinic of allowing unlicensed staff to perform cosmetic surgery. Some of the patients alleged that the liposuction had left them disfigured when too much fat was removed.

Stephanie wrote on her website that she was surprised by the outrage surrounding LipoDiesel.

“Why were people so offended by LipoDiesel?” she asked. “There is no easy answer to crazy. We were (of course) compared to Hitler. Lots of people thought that using liposuction fat was exactly the same as the ovens in concentration camps. Many people seemed to think the project was misogynistic and anti-Semitic. Nevermind that we are feminist and Jewish. Others claimed that burning the fat was unholy per scripture. Never mind that medical waste was incinerated anyway.”

The couple said they were doxxed, an employee was stalked, and protesters visited their home. Eventually, Stephanie wrote, they had to move back to South America and change their names. Their last gallon of LipoDiesel was made in September 2008.

According to legal documents from the Medical Board of California signed in July 2011, Bittner surrendered his medical license as part of a stipulated agreement, admitting that he “aided and abetted the unlicensed practice of medicine.” His partner, Stephanie, admitted to practicing medicine without a license and paid a small fine of $240. Around the same time, Bittner filed for bankruptcy, claiming in court documents that he was millions of dollars in debt and had no personal assets to surrender.

Craig, who trained at Johns Hopkins, UCLA, and Stanford in cardiovascular and interventional radiology, said that he has often found himself at the forefront of preventative health care, and that his practices have gone from “highly controversial to standard medical care.”

He explained that his partner was found to be practicing medicine without a license when authorities decreed that her clinic consultations were given as medical advice. “The media sensationalized the issue, yet her fine was lower than a speeding ticket,” he recently told the Independent. They decided to adopt the name of Smith, a name common in both of their families, he said, before they had children together.

‘Cannabis Queenpin’

In the years following the LipoDiesel fallout, the Smiths had moved back to Los Angeles and Stephanie began making a name for herself in the regional real estate market renting some of the largest warehouses to cannabis producers.

According to a Los Angeles Times article, she had purchased a former pawn shop; converted it into a laundromat; installed water, gas, and electricity; and soon began renting it at double or triple the going rate to local cannabis grower looking for space to cultivate and process marijuana.

By 2017, Smith had earned a reputation as one of the biggest cannabis landlords in Los Angeles. She was the face of Industrial Partners Group, which had grown to own nearly two million square feet of industrial property, including everything from a Walmart to warehouses rented out to big-name tenants like B-Real, front man for rap group Cypress Hill.

At the time, marijuana was in the process of being legalized, and Smith found that renting to cannabis producers came with its fair share of controversy. As she navigated the murky world of semi-legal cannabis policy, she began advocating against local governments asserting control over marijuana, earning the title “cannabis queenpin” in several news outlets.

On her website, she wrote: “A queenpin is a woman essential to an organization’s success. So yeah, that label fits me at home and in the office. I run a successful medium-size real estate firm and I’ve fought for cannabis legalization and other personal rights for over a decade. Although I’d be proud to wear the crown, I’m not the queen of cannabis. The truth is I am a real estate developer with a side hustle fighting corruption of all types.”

In December 2017, just weeks before marijuana was to be legalized in the state, several warehouses she rented out in San Bernardino were raided by police. Thousands of pounds of marijuana were confiscated, but no charges were filed against Smith.

A few weeks later in February 2018, police also conducted a raid on her Pacific Palisades home, where they found hundreds of prescription pills and $200,000 in cash, some of which was found concealed in a green-metal lockbox in the garage.

Although she was placed under arrest for the pills and cash, she was released after showing receipts for the prescription pills —  which were left over from the couple’s liposuction clinic ​—  and after explaining that the money was rent from her cannabis tenants, who typically paid in cash.

Neither Stephanie nor Craig was ever convicted of any charges related to any of the raids, and both maintain that they were victims of retaliation after taking on “corruption in the city of San Bernardino.”

“We fought many corrupt cities and pushed forward several local initiatives to decriminalize marijuana, as we firmly believe the war on drugs is destructive and medically irrational,” Craig told the Independent recently. “Twice the City of San Bernardino, who we continue to litigate over their corruption to this day, sent their police to raid us. Their police fabricated charges as part of their attempt to intimidate Steph, only to have the charges thrown out days later when Steph showed up with the actual receipts from a medical supply company for the exact bottles of medicine, lawfully purchased in 2007 for my medical practice, seized from a locked storage trunk in our garage.”

In the middle of these events, the couple and their five children “escaped the gorgeous bubble of Pacific Palisades to build a new life on Bali.” Stephanie Smith described the move through her blog Balifornia Dreamin’, which was last updated in 2020.

City’s Hands Are Tied

Though Craig Martin Smith wrote in his original announcement that the project application had been approved, Stephanie Swanson, the City of Santa Barbara planner who processed the application, said they had submitted a preliminary application, which was accepted by the city, but that does not mean that the project is fully approved.

“It is, instead, as the name suggests, very preliminary and does not contain much of the substantive information that is required of a formal complete planning application for a development project,” Swanson said.

She explained that the preliminary Builder’s Remedy application “locks in” development standards as they were at the time it was submitted to the city. “It is a way for applicants to guarantee that, even if the rules change while a formal application is being prepared and processed, the rules in place at the time their SB-330 Preliminary Application was submitted remain in effect for the project.”

But, if the developers’ formal planning application is completed within six months of the preliminary application, the city’s hands are tied, and it cannot deny the project as long as it meets all objective standards.

Much of the process for Builder’s Remedy projects is still evolving, however, as developers around the state begin to test just how much power the provision grants them. In the case of the Grand Avenue project, as long as Industrial Partners Group offers 20 percent of its units as low-income, they have a right to build their apartment complex.

The city also has little power to stop developers due to their financial or professional history. Currently, the city does not run any type of background check for individuals submitting planning applications, nor does staff look into the financials of applicants. The Smiths assert that all of their real estate projects are “self-funded,” and that the company “does not seek or accept investors” in their developments.

Additionally, there are no policies in place which would deny applicants with any type of history — whether it be a loss of a medical license, previous arrests, or bankruptcies. As far as the law is concerned, anybody can apply to build in the city, as long as they have all of their documents in order.

Swanson said that the background of the Industrial Partners Group ​— no matter how controversial or extraordinary — could have no effect on their application going forward. If all plans are submitted and meet the city’s requirements, it is expected that the project will be approved within the next few months.