The City of Santa Barbara is moving forward with a $5 million loan toward a 48-unit low-income housing development proposed by the city’s Housing Authority at a former medical and dental office site on La Cumbre Road.
The city’s portion of the funding would come from its affordable housing reserves and represent nearly 10 percent of the total $52.7 million cost of the project.
Housing and Human Services Manager Laura Dubbels detailed the proposal for the city’s finance committee Tuesday. She said that 47 of the proposed one to three-bedrooms units would be set aside for “lower-income families,” particularly those with children, individuals with disabilities, and those making less than 60 percent of the Area Median Income.
This type of housing is “really needed here in the city,” Dubbels said, making this project an “extremely rare opportunity for the city to add bigger units to the affordable housing portfolio.”
But the size of the units — which are intended for family use as opposed to other Housing Authority projects with studios — and the growing costs of construction in the state are making it tough for even nonprofit organizations to build affordable housing. After all is taken into account, the cost per unit is estimated to be over a million dollars.
Mayor Randy Rowse said the price-per-unit was an “eyebrow-raising” figure compared to the $750,000 per-unit in the Housing Authority’s last project, the 28-unit Vera Cruz Village, which was finished in September 2023.
“The cost of construction has really gone up, as well as materials, too,” Dubbels said.
Housing Authority Director Rob Fredericks explained that this is part of a statewide trend, and developers using tax-credits to build new units have been seeing costs soar in recent years.
The development, called Bella Vista, is located on a 1.6-acre parcel on the corner of North La Cumbre Road and Via Lucero, acquired by the Housing Authority for $5.5 million in 2019. The site currently has four single-story medical and dental office buildings, which will be demolished and replaced with 48 new residential units. The apartments will be operated and managed by the city Housing Authority, and one unit will be set aside for an on-site manager.
In total the $52.7 million total cost of the project is split between the Housing Authority’s initial $5.5 million purchase, at least $31.4 million in low-income tax credits, $15.6 million through a separate permanent loan, and $5 million from the city. The Housing Authority will also defer its $693,000 developer fee for the project.
The finance committee unanimously agreed to move forward with staff’s recommendation for a 30-year loan with a 3 percent interest rate and 90-year affordability covenant.
