San Marcos Ranch Housing Project Clears Funding Hurdle

A small agenda item for a large amount of money passed through the Board of Supervisors this week with barely a ripple, except for Supervisor Laura Capps’s remark that it funds the biggest affordable housing project in the history of Santa Barbara County. The San Marcos Ranch project will build 236 affordable apartments in Capps’s 2nd District, on the site of what was once San Marcos Growers’ nursery on Hollister Avenue.

The 32.7 acres will actually hold two housing projects: one the 236 affordable units at 125 South San Marcos Road and the other 720 market-rate units, along with a one-acre public park, across the street at 4960 Hollister Avenue. The market-rate development will take the usual funding route of banks and loans, said Andy Fuller, who is spearheading the project for Presidio Capital Partners. The affordable units, however, with a much smaller income potential and a cost of roughly $125 million to build them, require a serious amount of fundraising.

The supervisors held the required public hearing on Tuesday for $90 million in municipal bonds to finance the affordable project, though the county has no approval authority over the financing or responsibility for its repayment. “Because the project is in county jurisdiction, we have to hold a public hearing,” explained County Treasurer Harry Hagen.

In addition to the bonds, which are being arranged by California Municipal Finance Authority, $5.3 million in annual tax credits for 10 years was obtained through the Housing Authority for Santa Barbara County, also known as HASBARCO, which is partnering with Presidio. To qualify for both municipal bonds and tax credits, the affordable project must be a stand-alone development, separate from the market-rate side of San Marcos Ranch.

The sizable award to HASBARCO “threw the project into high gear,” said Fuller. The land use permits are in process at County Planning, and building permits are next. Fuller, who has been in the construction business for more than 30 years, estimated that they might be ready to go as early as October.

Fuller started Presidio Capital about 15 years ago with John Blair, who brought years of experience from his Blair Hayes Commercial real estate organization. Born and raised in Santa Barbara and Isla Vista, and a graduate of San Marcos High School, Fuller generally works on projects in Bakersfield and San Luis Obispo, though Presidio completed Plaza Riviera on Santa Barbara’s East Canon Perdido Street in 2020.

“This represents the single-most units in any one affordable development,” he emphasized, outlining that they are 25 percent of the total project. San Marcos Ranch was filed as a builder’s remedy project when the county was out of conformance with state housing laws. At the time, the low-income, or affordable, units were mandated to be 20 percent of the total units. Presidio later agreed to withdraw the builders remedy application when the county agreed to rezone the property as part of its state compliance.

Once the affordables are completed, four three-story buildings will stand on close to six acres holding 115 one-bedroom apartments, 61 two-bedrooms, and 60 three-bedroom units. This represents a density of about 40 units per net acre.

Fuller said roughly half the units will be priced for households at 50 percent of area median income (AMI), or earning up to $61,800 for a single person and $88,250 for a family of four in 2025. The other half will be set at 80 percent of AMI, or up to $98,850 for a single person and $141,200 for a family of four — a category often referred to as “workforce” housing.

The former nursery has homes as neighbors along South San Marcos Road and the Turnpike Shopping Center to its east. San Marcos Growers was famous for its dry-climate trees and plantings, providing exotics to Disneyland, Lotusland, and UC Santa Barbara, among other clients. The Hodges family owned the nursery and are now partners in San Marcos Ranch, LLC, having contributed the land.

At the larger lot of market-rate homes, Fuller said they hoped to keep many of the famed big trees that towered over the nursery lands, especially the champion Arbutus ‘Marina,’ a madrone listed in Cal Poly’s California Big Tree Registry for its tremendous girth in 2013. The price tag to build the 720 market-rate units is about $350 million, Fuller said, with groundbreaking likely to be toward the end of 2026 at the earliest.

Correction: The acreage of the development has been updated to 32.7 acres, not 21 acres, which brings the density to about 40 units per acre, or 71 bedrooms, depending on the item counted. Developer fees from the affordable project of about $9 million are being deferred by the county Housing Authority and the builder, The Pacific Companies, until the development reaches profitability.