Workforce Housing In Better Markets

IRVINE, CA-Development of affordable workforce housing in markets where home prices are high can be a reality, thanks to collaborative efforts between employers, local governments and developers. In advance of RealShare Apartments, GlobeSt.com spoke exclusively with Greg Sadick, VP with locally based SL Residential Inc. regarding how this collaboration works and how it played out for his firm in the development of Bella Riviera in Santa Barbara.

GlobeSt.com: How does collaboration among local governments, local employers and developers produce affordable workforce housing?

Greg Sadick: Cottage Health System is the third-largest employer in Santa Barbara, a popular and high-priced real estate market. Almost 11 years ago, the health system started thinking about how it might offer affordable housing to some of its workers at a time when home prices in that area were escalating. In 2003, Cottage acquired the assets of another local hospital, St. Francis Medical Center. They re-entitled and designed the 6 acres on which St. Francis sat to develop and build Bella Riviera, a landmark townhouse community where 81 of 115 units are now dedicated to the health system's workforce housing, and 34 market-rate condominiums.

That project took a decade to complete, demanding collaboration from the healthcare provider and its designer, Cearnal Andrulaitis, and builder partner SL Residential. Moreover, Santa Barbara has a strict review process, and this project was the largest infill project ever for the city. Bella Riviera also posed several unique construction challenges, including the site's 90-ft. change in elevation from top to bottom, which required site-specific terracing and subgrade stabilization to ensure a majority of the townhouses ad an unobstructed ocean view.

The relationship among all of the stakeholders and SL Residential was very collaborative and a high-functioning team. Everyone on the team worked seamlessly together to execute a highly visible and yet meaningful community that provided the housing that Bella Riviera needed to support its high-skilled employee retention and attraction efforts.

GlobeSt.com: What should the role of the employer be in this situation, and why did it work so well for Bella Riviera?

Sadick: In this situation, it was important to remain sensitive to the architectural integrity of the surrounding community. Bella Riviera underwent a two-year design review with Cottage, its designer and city officials finally agreeing, after many meetings, on two styles—Santa Barbara Mission and California Craftsman—that matched the 1930s-style bungalows in the surrounding neighborhood.

Once completed, the hospital system used a lottery to select which employees could purchase workforce homes. Most of the workforce houses were sold to employees earning $55,000 to $100,000, or 80% to 160% percent of the Santa Barbara area's median income. To underscore the immediate demand for the housing, the sales program kicked off in February 2012, and 100% of the townhouses were sold out in less than a year.

GlobeSt.com: How do existing residents react to this type of development in their area?

Sadick: The builder must adopt the values and goals of the client, to best understand how to add value to the equation. Bella Riviera was not without its challenges, especially when it came to respecting the local community's sensitivities during the sales and construction process.

However, we understood quickly that Cottage Health System held a great deal of economic value in Santa Barbara as a major employer. So we entered into the review and approval processes with that mindset, understanding the value that the employer brings and remaining open to understanding the needs of the local community. It really takes a commitment to collaboration and open communication.

For Bella Riviera, the City Council approved the project in late November 2006, but not without density, nose and traffic restrictions detailed throughout a 64-page conditions of approval document. Some of the restrictions included, for example, that the subcontractors had to park offsite and be transported to their jobsite so their trucks didn't block local residents' parking or traffic, very restrictive dust and noise standards and adherence to pre-approved haul-routes with restricted material staging areas and delivery hours.

GlobeSt.com: Are you working on other such developments in different markets?

Sadick: These opportunities aren't available on every street corner. In this development, you had a high-priced real estate market, a large employer of highly skilled workers and a unique land opportunity. But if you look at the coastal communities in Orange County and Los Angeles and in Northern California, you can see how the demand for a workforce housing solution could grow. As a matter of fact, Facebook is working with a local developer to build a $120-million, 394-unit housing community within walking distance of its Menlo Park offices. Called Anton Menlo, the 630,000-square-foot property will include everything from a sports bar to a doggy day care.

As the economy continues to improve and housing prices begin to escalate, it won't be long before more employers in those industries that demand highly skilled employees begin to consider the benefits of these public/private opportunities. Orange County is a prime area for this type of live/work relationship. And working with a team that has the commercial and residential experience to make it happen is key.