Funk Zone Hotel Project Hits Wall at Santa Barbara Planning Commission

A proposed 250-room hotel in Santa Barbara’s Funk Zone stalled during last week’s city Planning Commission meeting, and the developers behind the project were told to foot the bill for a more in-depth study into how the hotel would impact the city’s housing crisis while city staff take a deeper look into whether the project qualifies for an exemption from environmental review.

The project has been years in the making, with longtime property owner Bill Wright contending that the city agreed for a 250-room hotel at the location in its Specific Plan in 1983. Forty years later, the development is struggling to win over city leadership, especially in the face of concerns over the city’s housing crisis and environmental impacts.

Back in April, the Planning Commission attempted to address these concerns, with Commissioner Devon Wardlow suggesting that, due to the current housing climate, the development team consider a housing analysis or at least include employee housing with the project.

This time around, the project included six affordable housing units, which the developers hoped would mitigate the impacts on the city’s housing stock. Instead, the project was blasted by commissioners and during public comment, with the commission ultimately deciding to continue the hearing to a later date when city staff had more information.

The project’s developer, Shaun Gilbert, expressed frustration with city staff and said his team had done “years of work” to get to this stage and to work toward a California Environmental Quality Act (CEQA) exemption, which would allow the project to bypass environmental review. 

 “That’s the frustrating part for us,” Gilbert said. “We keep going down this rabbit hole.”

He said that he felt that the city was asking too much, and that they were forcing the developers to spend hundreds of thousands of dollars toward a project that may not happen. The development team did their own housing study, he said, which is why they decided to include the six affordable units to minimize the impact on the housing market. Anything more, they contended, could kill the project for investors.

“This is not an affordable housing development. We are trying to do a hotel and solve some of the things you guys asked us to do,” Gilbert said. “We are not going to solve all of the city’s problems with one project, right? We’re not going to make everyone happy.”

City Project Planner Kathleen Kennedy made it clear from the beginning of the hearing that the city was hoping to continue the item to a later date because of the housing and environmental concerns. City staff, she said, had “many of the same questions” as the commissioners regarding the developer’s housing study and environmental review.

“We would like to evaluate the information further and get back to you on that,” she said.

Wardlow, who has been outspoken about the need for more housing in the city, questioned how the developers arrived at the final number of six affordable units: Was it for 10 percent of the hotel’s projected staff of 60? Was it based on the original Specific Plan, which called for seven residential units?

When the developers had little explanation as to how they arrived at that number, Wardlow expressed her own frustration with the applicant’s lack of preparation.

“I hope you all can understand our goal of making sure that this is the best project for our community,” Wardlow said. “Just like you are frustrated, it’s a little frustrating,” Wardlow said.

Commissioners also questioned the level of community outreach that had been done. The city received more than 25 letters of public comment; all but two of which voiced concerns over the hotel.

One group opposing several large-scale developments in the Funk Zone is the nonprofit Keep the Funk. Brittany Zajic, a representative of Keep the Funk, spoke at the meeting, saying the group was formed a year ago to “start holding accountability to the influx of developments coming into the Funk Zone looking to maximize profits by capitalizing on the community they return no benefit to.”

While developers of the hotel have met with the group privately, she said, they have not yet proved that they are willing to work with the community. 

“The proposed project is massive, and thus will have massive implications for the Funk Zone,” Keep the Funk wrote in a statement to the Independent following the meeting. “Community benefit must be prioritized. As of yet, the developers have not fulfilled the requirement of bringing community value to this project.”

In a 6-1 decision, the commission voted to continue the project to a later date, and recommended that the applicant either pay for a housing study organized by the city or arrange an independent study of their own. 

Before the project returns, city staff and the city attorney’s office will look into whether the site’s current status qualifies for a CEQA exemption or whether it requires further environmental review.