How Hard Should City Hall Squeeze Goose That Lays Golden Eggs?

One Downtown Santa Barbara Housing Developer Withdraws Application; Another Signs 99-Year Lease

Developer Peter Lewis has doubled down on his plans to build 78 rental units behind the old Staples building on the 400 block of State Street. | Credit: Nick Welsh

It was a compelling tale of two developers. Almost immediately after last week’s Santa Barbara City Council debate over how hard to squeeze rental housing developers for more affordable units, one of State Street’s biggest landlords, Jim Knell of Sima Management, withdrew his application to build 34 rental units on the 700 block of State Street. Meanwhile, developer Peter Lewis doubled down on his plans to build 78 rental units behind the old Staples building on State’s 400 block, signing a 99-year lease for what once had been a Cadillac dealership.

Real estate mogul Jim Knell | Credit: Paul Wellman (file)

In style and temperament, Knell and Lewis — both active downtown business personalities for more than 30 years — could not be more different. Knell, a onetime swimming coach who long ago emerged as State Street’s “Mister Big,” is famous for peppering councilmembers with blistering critiques on everything from downtown homelessness to City Hall’s red tape. By contrast, Lewis has maintained a much more low-key approach. While Knell personifies the “big stick,” Lewis — an Indiana transplant who started the leather clothing company Firenze in the 1980s with just one sewing machine and $210 — embodies the “soft voice.”

Both, however, have expressed serious concern at the likelihood that the City Council will increase “inclusionary housing” requirements — from 10 to 15 percent — for rental housing projects built as part of City Hall’s Average Unit-size Density (AUD) program, created seven years ago to incentivize developers to build rental housing. This increase, they argued, would have a chilling effect on the development of new housing.


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