The shortage of housing on the South Coast has the city of Santa Barbara considering policy changes that would allow developers to build housing on top of commercial buildings throughout the city.
The Santa Barbara City Council is set to vote on the Adaptive Use Ordinance at Tuesday’s meeting. With retail struggling, Santa Barbara officials are looking to make it less expensive and quicker for developers to get approval if they build housing on top of retail and office spaces.
Currently, converting nonresidential space into housing requires zoning modifications because the buildings often cannot accommodate the open yard, parking or setbacks that are required for residential development.
The proposed adaptive reuse ordinance removes the requirement for these
zoning modifications and associated discretionary hearing. The changes would reduce developer risk, speed up the approval process, and make it easier to convert
buildings to housing.
Politically there is support for the ordinance, but developers are asking for another change. They want the city’s 10% inclusionary requirement for below-market rate housing to also be removed from the central downtown business district.
Remodeling and renovating commercial buildings is expensive, they say, and requiring a below-market rate unit would effectively kill the ordinance.
“Unfortunately, downtown is the most expensive real estate in the city, and it is one of the most complex places to do housing conversions,” said Ben Romo, who represents developers Jason and Kevin Yardi. “Requiring owners to build and maintain affordable units in residential conversions downtown will result in few if any projects. State Street and our central business district will continue to suffer because of it.”
Romo said his clients have worked on three adaptive reuse projects downtown. He said, however, that they are “unicorns,” doing the work for philanthropic reasons, and are willing to willing to only receive a 5% return on their housing projects. Such a small return is unacceptable for most developers, he said.
The changes would allow adaptive reuse projects anywhere in the city that allows multi-unit residential use, except the coastal zone, as long as the building is at least five years old.
Romo said building more housing at underutilized sites is essential to reviving downtown.
“Converting underutilized commercial and retail space to residential produces badly needed housing with no negative community impacts,” Romo said. “It is also one of the few concrete strategies we have to revitalize State Street. We need more people living, shopping, and bringing vibrancy to what should be our central business district.”
Santa Barbara City Councilwoman Kristen Sneddon said the city has been working on this ordinance for several years, and it will be an important tool to address both housing and retail issues.
“There are so many storefronts that are standing empty because they are just too big, and this will allow them to adaptively reconfigure their spaces for more modern usage. Retail spaces are too big, and we need housing. This benefits both.”
Sneddon said somehow the ordinance needs to include support for affordable housing.
“For the inclusionary, it is really important that we address affordable housing needs as well,” Sneddon said. “They may not be able to fit in an adaptively reused space, but we could look at in-lieu fees to be sure we are looking at all the needs.”