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Developers of Village at Los Carneros Seek Agreement Changes to Expedite Goleta Project

City officials, residents express concern that changes would remove leverage in getting the affordable housing units built sooner

The Village at Los Carneros is under construction along Los Carneros Road in Goleta, near Highway 101. Whether the new owner of two of the project’s lots must abide by one of the original affordable-housing provisions of the development agreement was a still-to-be-resolved issue at the April 4 City Council meeting. Click to view larger
The Village at Los Carneros is under construction along Los Carneros Road in Goleta, near Highway 101. Whether the new owner of two of the project’s lots must abide by one of the original affordable-housing provisions of the development agreement was a still-to-be-resolved issue at the April 4 City Council meeting. (Sam Goldman / Noozhawk photo)

Construction has been swift at the Village at Los Carneros in Goleta, but exactly how quickly all its housing units will be ready to go depends on how the City of Goleta chooses to address changes that developers have proposed to the two sides’ development agreement.

The housing project, tucked into the southwest corner of Highway 101 and Los Carneros Road, received city approval in 2014 and will consist of 465 units, 70 of which will be affordable for lower-income residents.

At the heart of a recent construction logjam is a provision of the development agreement stipulating that the city will not hand down the 220th building permit for market-rate units until all 70 affordable units are finished.

The agreement provided the city with 176 market-rate units of leverage that it could hold over developers’ heads as an incentive to complete the affordable housing. That number comes from subtracting both the 219 market-rate units that can receive permits before the provision kicks in and the 70 affordable ones from the 465 total units.

The two companies developing the market-rate units, Comstock Homes, the original developer of all 465 units, and Red Tail Acquisitions, are each seeking their own change to the development agreement to expedite the completion of all their units, which have approached the roadblock that the building-permit provision set up.

Comstock has requested that, rather than limiting market-rate construction to the 220th building permit, it should be limited to the 220th certificate of occupancy — another required city-approval document, but one that’s issued at the end of the development process.

Comstock’s 95 units already with permits are slated to be completed during the summer. Red Tail Acquisitions’ Lot 5 units, which are waiting on permits, are projected to be finished in the fall. The affordable units are expected to be complete in December or January.

Although the city still has 124 more building permits it can issue before hitting the 220 mark, there are enough market-rate units ready to reach that threshold, according to a city staff report.

Hitting that point and then pressing pause “hurts the project, and it hurts the contractors and it hurts the public,” Comstock CEO Dave Lauletta said at Tuesday’s City Council meeting.

Without the change, he said, Comstock would have to suspend sales for a time during “a prime season of sales,” which he said puts “more exposure and risk on the project.”

Of the Village at Los Carneros’ 465 units, the 70 required to be affordable are projected to be complete in December and January. Click to view larger
Of the Village at Los Carneros’ 465 units, the 70 required to be affordable are projected to be complete in December and January. (Sam Goldman / Noozhawk photo)

“Continuity of construction is important to consider,” he added. “It’s tough to get the (sub-contractors) up to Goleta.”

Last June, Comstock sold one of the project’s housing sections, Lot 5, to Red Tail Acquisitions. In December, it sold RTA another, Lot 9.

In the Lot 5 purchase, the two firms determined that Red Tail Acquisitions should be exempt from the affordable-housing provision since the company does not have any control over the construction of the affordable units.

Interim City Attorney Michael Jenkins posited that the information the city received regarding that determination may not have been complete. City Manager Michelle Greene added that the exemption of Lot 5’s 74 units, which reduced the city’s leverage to 102 units, did not go to the council for its approval first because the full ramifications of the change were not apparent to the city, which assumed it was signing off on only a minor alteration.

Red Tail Acquisitions’ request is that the city determine that the affordable-housing provision does not apply to Lot 9’s 88 units using the same rationale as the company did for Lot 5.

Tim Kihm, RTA’s president of land acquisition and development, told the council that his company has also done everything it could to adhere to the city’s needs and vision for the project.

The council members, however, made it clear that they were not happy with the idea that their leverage could be further reduced to 14 units. Like the residents who spoke up during the meeting’s public forum session, they expressed worry that relieving RTA of the provision could be a slippery slope for future developers seeking to ease city requirements for their projects.

“Someone left the barn door open, and we lost a few horses,” Councilman Kyle Richards said. “I think we need to close the barn door and not let any more horses out.”

RTA rescinded a second request that the council relieve it from another provision that required amenities like a recreation center and a vehicle and pedestrian bridge over Tecolotito Creek begin construction before the final inspection of the 232nd market-rate unit.

What irked the council the most, however, appeared to be Lot 5’s low-key exemption from the affordable-housing provision in the first place. Council members and city staff both asserted that RTA knew what it was getting into with the provision when it bought its two lots.

“I was incredibly shocked to learn all the activity that had taken place for Lot 5 with no knowledge,” Councilman Michael Bennett said. “I consider this thing to be a major change.”

Comstock, still the affordable housing units’ general contractor, sold that portion of the project in October to Peoples’ Self-Help Housing, which supports Comstock’s proposed development agreement change.

Morgen Benevedo, Peoples’ Self-Help Housing’s director of multifamily housing development, said the affordable housing portion should be done in December or January.

“We’re going full steam ahead, and we feel confident that we’re going to hit that target,” he said.

The council voted unanimously to revisit the issue in the future after the city sits down with PSSH, Comstock and RTA to hammer out an agreement beneficial to all sides.

The council agreed that the 465 units are crucial to chipping away at the city’s housing-jobs imbalance.

“This project I think was very needed for our community,” Bennett said. “It’s providing a tremendous opportunity for our very low- and low-income housing needs.”

Noozhawk staff writer Sam Goldman can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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