Rendering of proposed apartment project at 400 W. Carrillo St. in Santa Barbara.
The Housing Authority of the City of Santa Barbara plans to build 63 apartments at 400 W. Carrillo St. (Courtesy rendering)

A 63-unit apartment project for “missing middle” workers is headed to Santa Barbara.

The Housing Authority of the City of Santa Barbara, in partnership with the City of Santa Barbara, plans to build the units at 400 W. Carrillo St.

The site is currently a commuter parking lot for downtown workers. The project is unique because it mostly targets middle-income workers — those who earn between 120% and 200% of the area median income, which is about $107,000.

The Housing Authority typically builds housing for low-income workers, those who earn below 80% of the area median income, and funds those projects through federal tax credits. For market-rate units, a developer typically secures a loan.

There is no traditional funding mechanism for middle-income workers.

“Targeting people in between, there’s no model for it,” said Dale Fathe-Aazam, director of real estate and technology for the Housing Authority. “What we are doing is testing a new approach.”

The Housing Authority said it is working with an unidentified investor who is willing to put up the money as long as the project meets a 5% minimum yield.

Fathe-Aazam said the Housing Authority won’t know the final affordability levels of units until after construction.

 The project would include 39 one-bedroom units, 19 studios and five two-bedroom units.

“There’s a great need for housing in the missing middle,” Fathe-Aazam said.

The project calls for the removal of eight king palms, one jacaranda and 15 tipu trees at the site.

City leaders have backed the project because it is run by the Housing Authority, which has a record of successfully managing affordable housing projects for decades. It has acquired or developed more than 1,500 units in Santa Barbara and distributed more than 3,000 Section 8 vouchers.

The City Council approved a development agreement for the project last Tuesday.

Councilman Eric Friedman noted that the council has approved a couple of housing projects in recent weeks reaching nearly 100 units.

“It is almost 100 units that are going to be here, over 90-year covenants, that we are going to have for low-income, middle-income,” he said. “That’s what we are doing. We are being strategic.”

It’s not the first version of the project. In July 2020, the Housing Authority proposed 103 units, but it was rejected by community members because of the size and lack of parking.

Councilwoman Meagan Harmon praised the ability of the community to work together to come up with a project that would house middle-income workers.

“This is a project that we will be so proud to have,” said Harmon, who lives in the area. “It is going to be a huge improvement for that area. So many of us who love downtown are the very people that need this housing.”