Housing Authority Secures $10M Investment to Support Missing Middle Housing Initiative

In a recent Finance Committee meeting, Santa Barbara officials discussed a critical housing project aimed at addressing the needs of the "missing middle"—those who earn too much to qualify for low-income housing but cannot afford market-rate options. This initiative, which began in 2019 through a collaboration between the housing authority, city staff, and the city council, has faced significant challenges due to rising costs and interest rates.

The project was initially set to be financed by a private investor. However, the investor withdrew, citing the more attractive returns available from risk-free treasury investments. This development has prompted city officials to explore alternative funding solutions to ensure the project can move forward and continue to serve the community's housing needs.

To keep the project alive, the committee proposed a new financial structure that includes a $3.5 million city residual receipts loan and a land donation. Additionally, the housing authority is prepared to make an unprecedented $10 million equity commitment, marking the largest single asset investment in its history.

This funding strategy aims to secure the necessary resources to build housing that meets the needs of residents who fall between low-income and market-rate categories. The committee emphasized the importance of this project in providing essential housing options for the community, highlighting the ongoing commitment to address local housing challenges.

As discussions continue, the city remains focused on finding viable paths to support its residents and fulfill its housing goals, ensuring that the needs of the community are met in a sustainable manner.