Oasis in Paradise Housing Agency Creating Affordable Apartments Within Affluent Santa Barbara
By Caitlin Jones
4 min read
Santa Barbara, Calif., sitting on a hill beside the Pacific 90 minutes north of Los Angeles, may be the home of many rich and famous. But the city still faces an acute shortage of affordable housing for working class and special needs residents.
As part of its continuing effort to meet that need, the Housing Authority of the City of Santa Barbara (HACSB) is developing a new affordable apartment project called Artisan Court. The $13.7 million, 56-unit low-income housing tax credit development, which broke ground in January, is expected to be completed in early December.
A courtyard-style complex, it will seek to rent to very low-income workers and special needs individuals, such as persons once homeless or at risk of homelessness as well as youths graduating from foster care.
“The city of Santa Barbara is one of the least affordable places to live,” says Robert Pearson, Executive Director and CEO of HACSB. “We have a relatively high cost of housing, and a low median income.” While the city is home to beautiful estates owned by celebrities like John Cleese and Oprah Winfrey, roughly 40% of local residents are renters.
Only 5,200 of Santa Barbara’s 40,000 apartments have affordable rents, says Pearson. Building additional affordable apartments is part of HACSB’s 10-year plan to end chronic homelessness.
55 Tax Credit Studio Units
Artisan Court will consist of 55 studio apartments, all LIHTC units, plus a manager’s apartment.
Initial monthly rents will range from $408 to $817. Seventeen units will rent for $408 to individuals making $16,350 or less per year (30% of area median income); 26 units, for $545 ($21,800, 40% of AMI); six units, for $681 ($27,250, 50% of AMI); and six units, for $817 ($32,700, 60% of AMI).
The development will have 40 parking spaces, a community room, decks, high speed Internet, landscaped courtyards, a laundry room, and other amenities. The local YMCA and local nonprofit PathPoint will provide supportive services for residents, including job skills training, job placement, and financial counseling.
History of Project
Located at 420 East Cota Street, the property was the home of Haagen Printing for 50 years. HACSB bought the property for $4.7 million in 2006, funding the acquisition with a $2 million loan from the City of Santa Barbara Redevelopment Agency and a $2.75 million bank loan. The housing authority collected rent from Haagen Printing during 2006-2009 while seeking financing and development approvals for Artisan Court.
The existing buildings on the site were demolished in late February, clearing the way for the new apartment project, which is being developed by the housing authority. The authority will lease the site to the tax credit partnership for one dollar per year, with an option to buy the project after 15 years.
Santa Barbara-based architect Christine Pierron, of CP+MW: jv, said the Artisan Court project allowed her firm to design housing that went beyond simply providing shelter and storage. She describes the architectural style as “ecospandeco” – a mix of 1920s Art Deco, Spanish influence, and ecologically friendly designs.
Pierron predicted that the completed project’s most eye-catching feature will be its overall sense of light, air, and space. Unit interiors will be simple, but special tiles and window trims will hearken back to a 1920s sensibility.
Special Needs Population
The special needs population targeted by Artisan Court made the development more attractive to tax credit investors, said Don Snyder, senior vice president-acquisitions at Red Stone Equity Partners, LLC, which syndicated the housing credits.
Artisan Court will house a number of young adults who aged out of the local foster care program after turning 18. Many of these individuals would otherwise be homeless within three years, HACSB estimates. “The city is an expensive place to live,” says Snyder. “Being able to provide this much-needed housing is something that we found very attractive from an investment standpoint.”
According to Snyder, Red Stone wasn’t concerned about potential cash flow problems with the development, because of the special needs tenant base. With the housing authority’s financial strength, the federal tenant-based Section 8 vouchers for residents, and the local demand for housing, Red Stone was comfortable committing to pay 73 cents on the dollar for the tax credits, he said.
Stimulus Funds Used
Like many other tax credit projects these days, Artisan Court is relying on federal stimulus funding from the federal American Recovery and Reinvestment Act to make up a shortfall in tax credit equity.
The project received a no-interest, $1.6 million stimulus loan from the California Tax Credit Allocation Committee, to supplement the $10.1 million in tax credit equity received for the project. The loan will eventually be forgiven as long as the property meets tax credit program guidelines.
Other funding sources included a city loan of federal HOME program dollars, a loan from the redevelopment authority, and equity from the housing authority. The authority plans to use its developer’s fee from Artisan Court for future projects or land purchases.
– Stephen K. Cooper
