An Amtrak train runs alongside Village at Los Carneros, which reached an agreement on Tuesday with the City of Goleta on the pace of construction. Affordable housing in early stages can be seen in the foreground and market-rate townhouses in the background.
City Adjusts Flow of Building Permits for Los Carneros Village
Goleta Development Agreement Modified to Add Some Slack
Originally published 8:19 a.m., June 11, 2017
Updated 10:20 a.m., June 12, 2017
It’s complicated. There’s no other word for a Goleta development the size of a small town that includes 70 low-income units — and all the tax-breaking financial instruments those involve — and 395 market-rate homes being built by two different builders. And getting everything completed revolves around the City of Goleta’s ability to hold back on market-rate building permits to force developer Comstock Homes to finish the affordable units.
Only four building permits remained in the kitty before Comstock ran into the wall of its Development Agreement when it came before the City Council, for the second time, to ask for a break. In April 2014, the developer had agreed to have the affordable units finished before receiving its 220th building permit to continue construction on the 465-unit complex known as Village at Los Carneros. Indeed, the 43 acres of soon-to-be-built detached homes, townhouses, and apartments is the equivalent of the community of Los Olivos — which occupies about 1,600 acres —all bounded by Highway 101, Los Carneros Road, a creek, and Hollister Avenue.
John Fowler of People’s Self-Help Housing, for whom Comstock is building the affordables and to whom it donated the two acres on which they sit, told the council on Tuesday that getting the low-income-housing loans — complicated but standard instruments that include tax-free bonds and tax credits — took longer than expected. This pushed the affordable-unit ground-breaking into the rainy season, while the market-rate construction had started earlier and on time.
The nonprofit’s loans included performance requirements, which People’s signed over to Comstock. CEO Dave Lauletta explained his company was required by the bank to complete the affordables by April 29, 2018. Otherwise, Lauletta said, Comstock faced daily penalties of $4,000 or $5,000. If the lender stepped in to finish them, it would further charge Comstock for the work. All the beneficial tax credit and tax-free bond status would go away, and Comstock would have to pay its two completion guarantees. People’s CEO John Fowler said of Comstock: “We’re pretty confident they’re on the hook pretty deep.”
The five Goletans who spoke to the council weren’t buying it. “If they get the permits, but the affordables for some reason do not get built, they will be back and you will hear a wailing and gnashing of teeth on, ‘How can you hold back my certificates of occupancy after all this money I have spent on building these units,’” Rick Foster exhorted the council. “The only guarantee you have of seeing these units actually built isn’t by giving dates they think they’re gonna be pouring concrete. It’s by finishing the units.”
The market-rate homes going up at Village at Los Carneros are visible through the greenery growing along Tecolotito Creek, as seen from Cortona Drive, which becomes a private road on the other side of the creek. A bridge to be built here will be open to bicyclists and pedestrians, but accessible only to residents’ cars.
Foster was referring to a three-stage checklist that staff and Comstock had devised as a compromise. For stages like foundations, second-story framing, and drywall taping for the four separate buildings that house the 70 affordable units, the city would issue 25 permits once its inspectors had signed off on the work stage. According to the city staff report, that would leave 23 permits— which Lauletta said were worth about $17 million in homes sold — to be awarded once the affordables were complete. (After re-examining the math, planning Interim Director Lisa Prasse told The Santa Barbara Independent on Monday that actually 27 permits would remain.)
The bridge proved to be the tipping point. Crossing over Tecolotito Creek and joining the development to Cortona Drive, a new bridge is the only alternative to driving out via highly congested Los Carneros Road. In the Development Agreement, the 232nd market-rate building permit is contingent on it having begun construction. Councilmember Stuart Kasdin suggested making bridge construction one of the checkpoints, requiring its construction to commence by July 31. Comstock’s Dave Lauletta agreed, adding that Comstock’s environmental permit required them to be out of the creek by October 31.
Mayor Paula Perotte shook her head, saying, “I know Comstock went into this with their eyes wide open. I am having a hard time seeing any compelling reason we can’t hold them to the original agreement … People desperately need homes now.” Her fellow councilmembers disagreed, however, passing the memorandum to the Developers Agreement, plus the bridge start date, 4 to 1. According to the staff report, it also states, “Comstock Homes agrees to not sell off any additional lots to other builders.”
As for the second developer, Red Tail Acquisitions, or RTA, it needs 88 building permits to build out Lot 9, all of which fall under the original building-permit-limit agreement. City officials had let Red Tail out of the obligations in its previous purchase of Lot 5, unbeknownst to the City Council, which has claimed 74 permits. Its lender continues to ask that RTA not be bound by any stop-work rights by the city if the affordables are not built — because those are Comstock’s responsibility, not RTA’s — but the company is funding construction by other sources. RTA’s request will likely be the subject of a future City Council meeting.