A bargain price for four parcels of city-owned land in downtown Santa Maria plus reduced fees led some council members to balk at moving forward with a long-planned deal with a Santa Barbara-based developer. 

The City Council voted 3-1 on Tuesday night to continue an item regarding a sales and disposition agreement with The Vernon Group for the purchase of parcels. Councilman Mike Cordero, who supported moving forward Tuesday night, voted against the delay, while Councilwoman Gloria Soto was absent. 

With an eye to reviving the city’s downtown core, council members agreed to offer up underutilized property around the intersection of Main Street (Highway 166) and Broadway (Highway 135). 

In total, The Vernon Group would pay $120,000 per lot, a severely discounted price for property that otherwise is estimated to be worth at least $2 million. 

It also would receive a 50% discount on planning and building fees, and growth mitigation fees meant to cover expenses of the new development’s impacts on various city services such as police, fire, traffic and the library. While the final number remains uncertain, it could be a $2 million savings. 

In addition, while not part of the project, the city intends to spend $3.5 million in grant funding to upgrade sewer lines, install a bus rapid transit station and add other pedestrian improvements.

In 2020, the city began soliciting proposals for developing the city-owned underutilized land as a way to boost efforts to revitalize the downtown.

“This is a transformational project that is intended to bring economic vitality to the center of the city,” Assistant City Manager Chuen Wu said.

Councilman Carlos Escobedo and Councilwoman Maribel Aguilera-Hernandez aired concerns about the incentives.

“This is about making a huge decision that is selling property that will stay gone forever,” Escobedo said. “I think this can transform downtown, but the cost is too high for me.”

Cordero said he views it differently. 

“I see it as an investment, not as a giveaway,” he said.

The Vernon Group could drop the project and the city would continue making nothing off the land, Cordero said, adding that he believes the development would benefit the city for decades into the future.

Development would bring property tax and sales tax revenue to boost city coffers. 

Both Escobedo and Aguilera-Hernandez mentioned the city’s financial woes. 

Aguilera-Hernandez agreed that the project is good but wondered how the city would cover costs before the revenue begins flowing. 

“Who is going to supplement the needs of that area for those three years? Is it going to be the city, and do we have the money to do that given the budget that we’re dealing with? That is my concern,” she added. 

“If you don’t make the investment, you’re never going to get a return on the investment,” Mayor Alice Patino said. “So, we can just let the downtown stay fallow and do nothing with it.

“We need housing desperately in the city of Santa Maria, and this is going to provide a lot of the housing that we need. I just think it’s really important. You know, this has been on the books for a long time.”

The incentives were added to the updated Downtown Specific Plan years ago when the revitalization effort remained stagnant, she added.

Vernon Group representatives offered to pay full cost for police and fire fees to appease concerns, but the council ultimately voted to delay a decision until next month. 

“What we need is some certainty. We’ve been working in good faith for many years now, spending a lot of money trying to get to tonight’s meeting and get approval … so that we can go to the next stage,” said David Alpern, a Vernon Group partner. “Further delays are causing a lot of problems.”

Specifically, the sites and plans are: 

• Lot 1, the northerly parking lot adjacent to the former Fallas/Mervyn’s building and Broadway, for a six-story, mixed-use structure with up to 375 housing units plus parking and commercial space.

• Lot 2, the northeast corner of Main Street and Broadway and now home to the Perlman Parker, a six-story apartment building with up to 160 affordable housing units.

• Lot 3, the southeast corners of Main and Broadway. The project calls for a six-story, 75,340-square-foot, mixed-use building with ground-floor commercial area and 82 apartments. A relocated and expanded firefighters memorial also is planned. The Alvin Newton Apartments is named for the city’s fallen firefighter. The already approved project is undergoing a building plan check, and groundbreaking could occur later this year or in early 2025.
  
• Lot 4, the parking lot east of the Ruffoni building adjacent to Lincoln Street. It remains an option depending on the outcome of the first three sites. 

In addition to the low price and reduced fees, the agreement would allow the developer to use the city-owned parking structures at the Santa Maria Town Center. 

The Vernon Group has another project in the downtown area. The former department store building that housed Meryn’s and Fallas will become home to 104 apartment units in Santa Maria for a project known as Heritage Walk Apartments. Groundbreaking could occur later this year, Vernon representatives said.