This afternoon, Santa Barbara City Council is asked to introduce a 30-year, $1 million loan so the Housing Authority can turn the vacant Parma School lot at 915 East Montecito Street into 30 apartments for Santa Barbara Unified employees. The Finance Committee is asked to recommend the same thing at noon. Neither body has voted yet. An agenda is a proposal.
The money is federal. Staff's September 15 Finance Committee report names the source in plain type: available expenditure appropriations in the Fiscal Year 2027 HOME Investment Partnerships Program Fund. The $1 million is assembled from three program years — $353,543.70 from 2024, $507,453.03 from 2025, and $139,003.27 from 2026. It is not Measure C, and it is not the Local Housing Trust Fund. The Housing Authority's own June 22 request letter, signed by Executive Director Rob Fredericks and attached to the packet, says the Authority anticipates applying, at a future time, for additional City money via the Local Housing Trust Fund or other sources. That is a later ask. Today's item is HOME.
The lot is 0.66 acres on Montecito Street, a short walk east of Milpas and across from Trader Joe's. The old school buildings are still there. Fredericks's letter says the site has been vacant for over a decade, with no plans to utilize it for educational purposes. A consulting archaeologist's report, cited in that letter, found the buildings are not architecturally historically significant. The District would keep the land and lease it long-term to a tax-credit partnership, Parma Court, L.P., so the buildings can come down and housing can go up.
The building on the page is a three- and four-story apartment house: 10 one-bedrooms, 12 two-bedrooms, 8 three-bedrooms, plus community space. One two-bedroom is reserved for an on-site manager. The units are meant for households at 30 percent, 50 percent, and 60 percent of area median income. Staff write that the development is anticipated to carry project-based Section 8 Housing Choice Vouchers for every resident. Anticipated is not awarded.
If Council later adopts the ordinance, the City loan would run 30 years at 3 percent simple interest, paid only from residual receipts — meaning no payment is due unless the project has money left after operating costs and other debt. The City would record a 90-year affordability covenant restricting the project to lower-income households, 60 percent of AMI and below. Staff's sentence on the clock is exact: the covenant will expire in 2116.
The draft ordinance in the packet is not finished. Blanks remain for the Planning Commission approval date and for the unit count, even though the staff report and the Housing Authority letter both say 30. The draft does name a tenant preference for Santa Barbara School District employees under the Teacher Housing Act of 2016. Preference is not a guarantee of who will live there.
The budget attached to Fredericks's letter is the part that should travel with the $1 million. Total sources and uses are $34,670,124. Tax-credit equity is listed at $19,470,742. A permanent hard loan is $9,038,227. The City HOME funds are $1,000,000. The Housing Authority would defer $500,000 of its developer fee. That still leaves a soft debt gap of $4,661,155 — money not yet in hand. The letter is frank: these numbers assume the Authority will be able to place project-based vouchers on all of the low income units, and the gap will be even larger without them.
The calendar attached to that letter is long. A Low-Income Housing Tax Credit application is planned for February or March 2027. Closing and the start of a 20-month construction period are listed for September 2027. Full occupancy is listed for May 2029. Those are the Housing Authority's estimates, not City commitments.
Staff recommend the loan as an eligible HOME use and as a fit with Housing Element Goal 2, the policy that says the City should prioritize production of deed-restricted affordable housing. Caroline Paine, the Housing and Homeless Services Manager, prepared the report. Alelia Parenteau, acting deputy city administrator, submitted it. City Administrator Kelly McAdoo approved it. Copies of the loan agreement, covenant, and deed of trust are not in the packet; the report says they may be requested from the Office of Housing and Community Vitality.
What happens today is narrower than the building. At noon, Finance Committee members sitting in Council Chambers at 735 Anacapa Street are asked only to recommend. At 2 p.m., Council is asked to introduce the ordinance and to allocate the $1 million from the FY2027 HOME fund. Introduction is not adoption. Adoption, a recorded covenant, a tax-credit award, and a filled gap of $4.7 million are later documents. Until those exist, 915 East Montecito Street is still an empty school, and the $1 million is still an appropriation sitting on an agenda.
Sources: Finance Committee meeting listing for September 15, 2026; City of Santa Barbara City Council meetings for the September 15, 2026 regular agenda (item 5) and Finance Committee item 2; the September 15 Finance Committee Agenda Report, Authorize the City Administrator to Execute a Loan for the Development of Land by the Housing Authority of Santa Barbara Related to the Parma Court Project; and the Housing Authority letter of June 22, 2026, HOME funding request for development of Parma Court, 915 E. Montecito Street, with its sources-and-uses table.