Developer Rick Caruso said he’s “really bullish on workforce housing” and talked about his plans for the Rosewood Miramar Beach during last week’s Santa Barbara County Economic Summit. 

He wants to build more retail space at the Montecito luxury hotel to subsidize the housing, he said. His company already subsidizes rent for some workers, Caruso said. 

“The economics of mixed-use are great.” 

Retail sales are up, and there’s a 50-50 mix of local and out-of-area shoppers, he said. 

The Miramar was a property with a lot of development challenges, which was a good thing in his mind, Caruso said:

“It’s hard to compete with because it’s hard to build one down the road.” 

Caruso proposes building 26 below-market-rate units for hotel employees on the property and 10 luxury apartments for high-end guests who want to stay for more than 30 days. 

“In order to be a good developer, you have to listen,” Caruso said at Thursday’s gathering.

At a recent Montecito Association meeting, neighbors said they were concerned about the luxury apartments and boutique shops, but supported the affordable housing. 

Caruso made a surprise visit to that packed meeting and said the development would not negatively impact the community. 

Future of State Street 

The economy is strong right now, but high development costs could hinder attempts to build affordable and market-rate housing, panelists said during the Economic Summit.  

Gene Deering of Radius Commercial Real Estate presented construction and labor costs, from a local developer, showing sharp increases in the money and plan review time since 2021.

With higher affordability targets, projects can be less feasible, he said.

The economy is doing “incredibly well” and so is the labor market, with more jobs than unemployed people, said Peter Rupert of the UC Santa Barbara Economic Forecast Project.

Santa Barbara County’s retail and leisure/hospitality sectors are almost back to where they were when the pandemic hit in 2020, but they’re not growing as fast as the U.S. economy, Rupert noted. 

Deering and Rupert also gave their takes on the endlessly debated future for State Street. 

From the stage of the Granada Theatre, they talked about the importance of getting more people downtown. 

That means more housing downtown, and adaptive reuse to revitalize older buildings, Deering said. 

The City Council has paid a lot of money to a lot of consultants over the years to see what to do long-term about downtown State Street, Rupert said. It all comes down to understanding supply and demand, and incentives, he added. 

The design plans out of a 2022 study, which cost $780,000, were not popular with the public. Local architects have jumped in with their own ideas, volunteering their time.

In 2020, the city of Santa Barbara closed blocks to vehicle traffic and allowed restaurant dining in outdoor “parklets” between Victoria and Haley streets.

The configuration has changed to make room for ambulance traffic and bike lanes, and some restaurants removed their parklets rather than pay fees to keep them. 

Deering said the 900 block of State Street has the most commercial property vacancies with eight. 

That area between Carrillo and Canon Perdido streets has no parklets, and it’s “pretty sleepy,” he said. 

The 500 block – between Cota and Haley streets – “has probably done the best being closed,” Deering said.

There are lots of restaurant parklets in the street and it has a bustling atmosphere. 

Some people want State Street reopened to vehicles so parades can use that route again – but it could also be done another way, Deering said. 

“If we can successfully transplant someone’s heart, we can move 20 parklets for six hours” for parades, he said to laughs from the crowd. 

Caruso also weighed in, saying, “The better State Street does, the better everybody does.” 

Part of his company’s retail strategy is enriching people’s lives, he said. It sounds corny, but they do things that competitors don’t, he said, such as building a trolley that goes nowhere at The Grove. 

His developments have 100% retail occupancy right now, Caruso said – “It has to be the right type of retail.” 

Panelists made several references to the city’s expensive consultant contracts to develop a long-term plan for State Street, and Caruso offered to help. 

“Where do I sign up?” he asked.