How to: Buy a Home in Santa Barbara

I confess: I am not a homeowner. During my quarter
century in Santa Barbara as a student, desk clerk, gardener,
cashier, tutor, and journalist, I have rented. Breathtaking lack of
foresight, some of you might be thinking. Perfect example of social
Darwinism and the wisdom of the marketplace. Time to move on down
the road to Ventura along with the rest of the South County’s
workforce.

You can
forget that idea. If my next domicile is a shopping cart, I’m
staying right here. Many of my dearest friends — a number of whom
have rented rooms to me — had the wherewithal to purchase homes
here years ago. I hope that most of them will be hanging around
until death do them part from Santa Barbara; and I’m hanging with
them. Home is where the tribe is. I’m not going anywhere. I hope
you find that reassuring.

Fortunately,
rents are not nearly as inflated as selling prices presently. I
found a small one-bedroom apartment in an old Victorian for just
under $1,000 a month, and my wonderful landlords recently took the
initiative to reduce that by $50 a month. Nonetheless, for obvious
reasons — because you get more than a cleaning deposit back at the
end, and because every time they make repairs to my rental I
suspect they are preparing to turn it into a
bed-and-breakfast — I’d rather be paying a mortgage.

Happily, government-assisted affordable housing is not just for
the poor anymore. Certainly not in Santa Barbara, where — with the
median home price hovering at $1.2 million — the City Council last
week saw fit to create an “affordable” housing project for couples
earning $160,000 a year. Certain restrictions, however, apply to
homes purchased through such programs. Generally, the owner cannot
resell the house at market rate until they have owned and occupied
the house for a specified number of years. Also, the home must be
owner-occupied, not rented out. I’m okay with that.

Yet I have hesitated to enter the lotteries for affordable
homeownership. I like to think of myself, against all reason, as
middle-class. But now, even doctors, lawyers, and engineers are in
the lottery, so who am I to hold back? Also, while it is not
exactly insider information, I came across most of this 4·1·1 in my
capacity as a reporter and I thought it somehow more ethical to
share the information instead of hoarding it to increase my chances
in the lottery. But trust me, the flag drops the moment this paper
hits the streets: At noon, when the last copy goes on the last
newsstand, I’ll launch into a frenzy of downloading applications
and submitting them to the proper authorities, and I suggest you do
the same.

Scouring the South County

So how do you get in on the lottery for an affordable house? It
depends on where you want to live.

Unincorporated County

The
unincorporated county has some 408 units in its Affordable Housing
Program. Most of the existing units are in the South County,
becoming available if and when their current owner-occupants decide
to leave. They range from large, all-affordable housing projects
like Oak Grove — the earliest and biggest with 173 units (it was
built on county land before the inclusionary and bonus-density
programs came into play) — to scatterings of just two or three
units within market-rate condo projects.

If owners want to sell before the house is released to the open
market, they have to sell it at the affordable rate. Using
realtors, classified ads, signage, or word of mouth, they find
their own eligible buyer, one who fits into the income category for
which the house was intended. As you can imagine, it is not very
difficult to find buyers. The potential buyer has to verify her or
his eligibility — it’s part of the restrictions on the
deed — secure a bank loan, and go through escrow just like anybody
else.

Newly built affordable housing stock is different. Buyers are
chosen via a lottery. Thanks to recently instituted reforms in the
county’s affordable housing program, it is pretty easy to enter the
lottery. First, to receive notification when new stock is coming
onto the market, contact Susan Everett at the county’s Housing and
Community Development Department (severett@co.santa-barbara.ca.us).
She will personally add your name to the list of about 500 people
who want to be notified of upcoming lotteries. Most of the
lotteries are for North County homes, of course, because that’s
where most of the new housing is being built. The next South County
lottery will probably be for two each of low, low-moderate, and
upper-moderate units in the Villas at Calle Real, which is now in
the planning stages.

The new, streamlined application form for entering the lottery is
only one double-sided page. In order to enter, you also have to
submit a letter of pre-qualification for a bank loan. Here’s how
you get that: Everett gives you the price of the available homes,
and based on your income you determine if you are eligible for any
of them. If you are, you go to a bank and ask them to help you
qualify for a loan. It’s that easy. Yes, you have to re-enter for
each lottery.

If you’re one of the lucky winners, or if you are chosen as an
alternate in case one of the winners is found to be unqualified,
only then do you have to go through the longer process of verifying
your eligibility for the housing. In the county, if there are 10
units available, the first 20 people whose names are drawn are put
through the more lengthy post-selection verification process. After
that, you’re home free, and you can stay as long as you keep up the
payments. The number of years before you can resell at market rate
varies according to the county’s covenant with the developer, but
usually it’s 30 years in the unincorporated county.

You may at this point be feeling a combination of hope and
despair because you suspect that there are not very many affordable
homes coming onto the market. Here’s a peek at the affordable
housing landscape: The county’s inclusionary program applies to
residential projects of five or more units — projects with five
units must make 30 percent of them affordable. Or, the developer
can pay in-lieu fees, which the county can use to build affordable
homes offsite. Thanks to the state’s bonus density law, intended to
increase California’s housing stock, all developers who include
affordable units (or pay the fee) are automatically eligible to
increase their market-rate housing by the same number of units.

On the web: countyofsb.org/housing

City of Santa Barbara

Affordable
homeownership in the city has heretofore targeted people of
“moderate” income (see chart). Its stock as of February 2005
comprised 254, all for people falling within the moderate range
except for five low-income ownership units. The city included the
option to purchase in its covenants, so instead of sellers and
buyers making their own arrangements, as is done in the county,
homes are more frequently sold through public lottery.

The units are located at a couple of dozen different sites in
the city. The 46 condos comprising the Franciscan Villas on
Greggory Way were all sold to people with moderate incomes, as were
the 50 in La Colina Village, and the 17 at El Zoco artists’ colony.
There are 22 middle-income homes at La Cumbre Hills. These all came
on line when the rolling base was 30 years, and some of them were
built a while ago so their long-time owners may soon be able to
resell at market rate — meaning they would exit the affordable
program. Some of the remainder are part of larger market-rate
housing developments — even two units reserved for low-income
families at Villa Anapamu, and three at Casa Montecito — built
since the city changed its rolling base to 45 years.

With its new inclusionary home­ownership program the city is
branching into housing for workers in the middle and upper-middle
income brackets. Each municipality has its own trigger point for
mandating that a developer include below-market units in his
project: The City of Santa Barbara demands that all developments of
10 units or more include 15 percent affordable units or the
equivalent in-lieu fee. But remember, whenever a 20-unit
development includes three affordable units, the bonus-density law
decrees that the developer also gets to build three extra
market-rate units. This is a big fat fly in the ointment for
slow-growth fans, undercutting political support for inclusionary
programs.

Developments now on the drawing board include 23 new units for
middle and upper-middle buyers; seven for upper-middle buyers, and
two for moderate income buyers. To sign up on the city’s interest
list for these units, go to santabarbaraca.gov and click on
Affordable Housing, then click on Request Form to sign up for the
interest list. Or, contact Deirdre Randolph at 564-5461 or drandolph@santabarbaraca.gov.

On the web: santabarbaraca.gov

Housing Authority Portals

Besides the inclusionary programs, the city’s Housing Authority,
which until now has specialized exclusively in affordable rentals,
is also branching into affordable homeownership. Its first such
project, still in the planning stages, consists of two- and
three-bedroom condos, targeted for employees of the community’s
nonprofits and other “below market” income workers making up to 240
percent of the median — that’s $160,000 for two people . Slated for
the empty lot at the corner of Montecito Street and Calle César
Chávez, and dubbed Los Portales, the condos will sell for $600,000
and cannot be resold at market. It is a joint project with Bermant
Development Company. The city put zero money into subsidizing this
project — unless you count the grant from the Santa Barbara
Foundation to buy the property, plus the cost of administering and
negotiating the project. The situation is subject to change, but
still it can’t hurt to sign up now on the “interest list” by
contacting Rob Fredericks at robf@hacsb.org.

On the web: santabarbaraca.gov/Resident/Home/Housing

City of Goleta

Because Goleta is such a new city, it is still operating on an
interim General Plan. That plan calls for 20 percent inclusionary
housing in any new development of 5 units or more. So far, there
have been two developments to which this applies, and in both cases
developers paid in-lieu fees rather than include below-market units
within their projects. The city has not yet decided what to do with
that money. Meanwhile, Goleta’s draft General Plan requires that 55
percent of any condominium project along Hollister Avenue be
affordable to moderate low- and very low-income buyers. It sounds
good, but most affordable housing activists consider Goleta’s 55
percent inclusionary rule a ruse to prevent any new housing
development at all. We will examine this question in an upcoming
issue.

All other affordable homes in the City of Goleta are still under
county jurisdiction, left over from when Goleta was
unincorporated.

On the web: goleta.govoffice.com

City of Carpinteria

At present, Carpinteria has exactly 14 units, built several
years ago. However, Carpinteria’s General Plan requires
developments of five or more units to include 12 percent that are
affordable to people whose incomes are 120-180 percent of the
median. In the 40-unit Lavender Courtyard project under
construction, five more will be available to people making between
120 and 200 percent of the area median income. To get on the list
for the lottery, call Stephanie Diaz at 684-5405 x415. That housing
will have an initial 30-year occupancy requirement that starts
again with each new owner until 90 years has elapsed since the
initial purchase. Several more inclusionary developments are in the
pipeline and expected to begin construction over the next couple of
years.

In addition, a development called “Lagunitas,” owned by
Investek, is in the approval process now. It is 74 residential
units on 25 acres, to be offered to Investek employees for the
right of first refusal. The homes would be priced for employees
making from 90 percent to 200 percent of median. If they are not
filled by employees, they will be offered via lottery to
income-eligible city residents, then valley residents.

On the web: carpinteria.ca.us/communitydev/planninginfo.shtm

LEXICON

Over the years, bureaucrats have dreamt up clever ways of
ensuring that housing is available for the working class, even here
in paradise, where almost everyone from gardeners to gynecologists
can qualify for some type of affordable housing. But first, you
have to learn the language.

Inclusionary Housing: Usually condominiums, for
sale at prices significantly below market. They are included in
market-rate projects as a condition to getting a building
permit.

State Bonus Density Program: California law
requiring that a developer be allowed to build extra market-rate
units, regardless of the zoning, as a reward for including
below-market units in a project.

Affordable Housing: According to state and
federal guidelines, housing that costs no more than 30 percent of
your monthly gross income.

In-Lieu Fees: Fees developers pay in lieu of
including below-market units at their market-rate project site. The
city or county government uses the fees to build or subsidize
lower-income units at a separate location.

Subsidized Homeownership: Programs whereby
local governments pay all or part of the down payment and provide
low-interest or deferred payment mortgages, primarily using federal
funds. Available in this county only in Lompoc, Santa Maria,
Orcutt, and Tanglewood.

Owner-Occupancy Requirement: The rule that says
if you win the right to buy an affordable home, you have to live in
it. You can’t rent it out and live in Baja.

Rolling Base: The length of time before the
owner can resell at market rate. If you sell the home before then,
it must be at the affordable rate, and the timer resets at zero for
the new owner. Rolling bases range from 10 to 45 years. However,
homes exit the affordable program after a maximum of 90 years.

Affordable by Design: A land-use planner’s
dream; refers to units that are offered at market rate, but because
of their small size or other cost-cutting measures are naturally
affordable — a rare-to-mythical occurrence in Santa Barbara.

Critical Workforce: Target population for some
proposed affordable housing programs, such as the project to house
Cottage Hospital workers on the site of the former St. Francis
Hospital. When municipalities or counties speak of housing the
critical workforce, they are not talking about me. In
bureaucratese, the term refers very specifically to firefighters,
police officers, teachers, and nurses.

Lottery: The opportunity to buy below-market
inclusionary or density-bonus housing is determined by lot, namely
a computer-randomized ranking of numbers assigned to eligible
contenders.