Housing Authority Unveils Plan to Rescue Casa de la Raza

Proposes Loan to Pay Debts, Continue Community Hub, and Build Housing

La Casa de la Raza may have found a champion in the city's Housing Authority, which proposes to pay its debts and build low-income housing at the site, as well as preserve it as a community center.
Paul Wellman (file)

The City of Santa Barbara Housing Authority has materialized as the latest knight in shining armor hoping to save La Casa de la Raza from itself and its long-festering woes. On paper, the deal is simple enough: the Housing Authority would loan La Casa — located on East Montecito Street — up to $1.5 million to pay off its current debtors and lien holders. Later, La Casa — formed in 1971 to provide a cultural, political, and recreational hub to the city’s Latino population — would transfer ownership to the Housing Authority. Ultimately, the Housing Authority envisions building 30-50 units of low-income affordable rental housing. In such a scenario, the building would have to pop up by two to three stories. In this scenario, a certain amount of space would be set aside for La Casa to continue some operations in some form.

The history of La Casa de la Raza’s financial problems is anything but simple, and any solution will encounter serious complexities along the way. The building — an old commercial warehouse — lies in the city’s floodplain. Any major reconstruction effort will have to address that reality; most likely the existing structure would have to be scraped and rebuilt; serious effort would have to be taken to preserve the building’s defining tower and the historic murals inside. La Casa is not currently zoned for housing, but for manufacturing. A zoning change is a major undertaking.

More complex still are the lienholders themselves. Tomas Castelo, the first president of La Casa, is owed $800,000, having bailed out La Casa on multiple occasions for failing to pay its mortage. Castelo and La Casa’s current board could not enjoy more poisonous relations. Castelo has successfully blocked the board’s effort to declare bankruptcy, arguing in court that the board was not legally constituted because it was not elected by a vote of the shareholders. It’s been decades since La Casa’s “shareholders” have been engaged in any way at all.

La Casa’s current board believes Castelo hopes to sell the building outright, thus reaping a substantially larger payoff — $5 million — than he would if his outstanding debts are satisfied. No one from the Housing Authority had spoken to Castelo or his attorney when announcement of the proposal was made.

However, Castelo, encountered in the aisles of a market, said it looked like the solution could be a win-win for all sides.

The first community meeting to discuss this plan takes place January 17. La Casa’s financial difficulties date back more than 10 years and have involved multiple foreclosure actions.

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