Cottage Hospital won a key legal victory that will allow it to move forward with plans to build 115 units of housing at the site of the abandoned St. Francis Hospital. The 2nd District Court of Appeal rejected claims by St. Francis Friends and Neighbors, a group of neighborhood advocates opposed to the housing plan, who charged the City Council exceeded its legal authority in granting Cottage approval in December 2006. To approve the housing proposal, the council had to allow Cottage to shoehorn more units into the six-acre space than existing zoning and set-back requirements would allow. The council opined that such modifications were acceptable because Cottage pledged to sell 81 of the 115 proposed units to its employees at below-market prices. St. Francis Friends noted the units in question were to be sold at “upper-middle income” rates and objected that nothing in the city’s municipal code authorized the use of bonus densities for such relatively affluent homebuyers. The panel of three appellate justices disagreed. Additionally, it observed approvingly that the hospital located the densest development at the center of the site to minimize impacts on the neighborhood and that by providing employee housing, Cottage assured that healthcare workers would be available to Santa Barbara in times of emergency. Shortly after the court ruling was issued, Cottage submitted an application for a demolition and grading permit, as well as for plans to begin construction on half the units.