Embracing Miramar’s Plan for Employee Housing

Having moved to Montecito in 1973, I well remember the many memorable activities at the Miramar. To me, the Miramar was the “Gateway” to Montecito/Santa Barbara coming in from the 101 Highway. It was then, as it is today, a magical location for both locals as well as the guests to spend rewarding time with friends and family.

Closing the Miramar took the Heart out of Montecito. The entire property became a complete dilapidation. Previous owners had neither the tenacity nor vision to revitalize the once revered property. Thank God the Caruso Team came to the rescue!

Having sat through multiple meetings involving the planning of the development, I soon realized the willingness of the Caruso Team to listen to the “demands” of our Community as well as the County.

We all know the exorbitant pressure placed upon developers. The “soft costs” required for any building project in Santa Barbara County may have scared away two previous owners in a row.

Caruso had the vision and tenacity to turn the “Shanty” into the 5 Star Resort that is “ours” today!

That vision continues with another welcome addition of real affordable housing for its employees.

Those of us that have been entrepreneurs, fully understand and appreciate the importance of happy and loyal employees. Happy employees are the “secret sauce” that make any business a success.

There are so many deterrents to finding and retaining great employees in our hamlet. Some are cost of housing, gas prices, inflation, and massive congestion created by decades long widening of Hwy 101.

Once again, the Caruso Team is working diligently to solve those challenges with their affordable housing proposal. When successful, the Plan will take dozens of vehicles off our roads, save on gasoline usage, and create less turnover of employees that can and will help support business in our local Community.

Dana Newquist 

The Many Fallacies of the Rosewood Project

There are several misunderstandings and actual fallacies that exist right now regarding “workforce housing” or “affordable housing” on which the Caruso developers base their argument for further commercialization of the Rosewood/Miramar property.

First of all, here are a couple of facts to help us understand the issues. Bear with me here! Housing “affordability” of course is based on the income of the renter, and the rent the landlord charges. Renters’ incomes are set against a county standard, called Area Median Income (AMI), calculated annually by the Dept. of Housing and Urban Development, and based on a “household” of one to four associated individuals. 

For 2024, the AMI for Santa Barbara unincorporated areas stands at $119,100. Households making up to 30% of that, or less than $35,730, (or $17.18 per hour individually on a 52 week/40 hrs per week basis) are considered “Extremely Low Income.” Households which make 30%-50% of AMI ($35,731 to $59,550 or up to $28.63/hr. as an individual) are in the “Very Low-Income” bracket. If a household makes between 50%-80% of AMI ($59,551-$95,280) they fall in the “Low-Income” bracket. And, finally, if the household unit makes 80%-120% of AMI ($95,281- $142,920), that category is considered “Moderate Income.” Whew! Now keep all that in mind! 

When the individual or household unit falls into one of the categories above, and it can be proven with tax records, they are eligible for “affordable housing,” where the rent will not be greater than 30% of their monthly income. (There is NO category called “workforce housing”!)

The management at the Rosewood/Miramar Hotel has claimed on several occasions that they want to support their lowest income workers. This is their stated raison d’etre of the entire grand retail and housing project. They say they want to help the housekeepers, the line cooks, the gardeners, maintenance men, bellmen, etc., which is a noble aim. Out of perhaps 250 employees, at least 100-125 or more fall into the “Extremely Low” and “Very Low” income brackets, earning up to $28.63 per hour, or less than $59,550 per year. 

Of the 26 employee units they are planning to construct in their 40-foot-high three-story employee housing building, roughly 65% (17) will be studio apartments, housing perhaps only one or two workers. Then about three of the apartments will be one-bedroom in size, a little bigger than studios, and there will be six two-bedroom units – according to the Caruso developers. 

However, only one third, or nine, of all the units will be allocated to the “very low-income” workers. So only nine to 12 of those 120+ hardworking gardeners, cooks, housekeepers, et al, will be eligible for the Very Low-Income units, a very small percentage (< 8%) of that entire group. The other two-thirds of the apartments will be reserved for workers making $60,000-$142,920 per year, which would be managers, junior executives, administration, and other white-collar employees. 

One may see what Caruso pays their employees by checking the employment opportunities at the Indeed-Rosewood/Miramar website, or Career Opportunities on the Rosewood site. (For example, they are looking for a Restaurant Manager at a salary of $82,000. A restaurant server-assistant is advertised at $16/hr. A Retail Shop Supervisor, or a Pastry Chef will each earn only up to $25/hr, still in the Very Low-Income bracket! )

Now, that mix of residents is fine as far as I am concerned. But, please Caruso staff, don’t tell us that the housing is mainly for “the lower-income workers,” when only 9-12 folks out of more than 120 will have housing access, and then hide your 17,000 square foot luxury shopping mall behind them, “as a reason to pay for the housing.” 

So, therein lies the First Fallacy – that Caruso Aff. is building units to house their low-earning workers. Many higher-earning folks will be eligible (but are they willing?) to live there by the freeway. 

And following closely is the Second Fallacy, that they need the mall to pay for the housing. The workers will all pay rent, to begin with amounting to nearly $50,000 per month. I think with at least 100 of their hotel rooms occupied daily, (say, 62% occupancy,) going for $1,500-4,000 per night, it would not take many weeks to gross millions of dollars to help pay off the dorm. 

You see, the truth is, they need the mall to pay for the HOTEL ITSELF, which cost too much to purchase and to build. By renting 12 more “boutiques” out to famous brands, they hope to generate more than $2 million per year extra revenue, even as 20%-40% of hotel rooms sit empty. With 22 stores in all it comes to much more than $3M, in fact. But, they have to make our residential area into a commercial zone to do that! Can all these shops be “incidental and directly oriented to the NEEDS of visitors?” That sort of retail belongs in areas where retail is currently zoned and approved. Then it won’t ruin Montecito’s character! And, to be honest, Caruso Aff. has many sources of income, from malls, from apartments, from banking, investments, cash on hand, and so on. They are not going hand to mouth. 

The Third Fallacy that they have promoted to their clan is that “…they are not using taxpayer money to build the housing.” Well, of course that is true, except they forget to explain that those housing grants and government subsidies are for Nonprofit Organizations ONLY! If they were a Habitat for Humanity, or Jamboree, or People’s Self-Help Housing Org., then they would be nonprofit and qualify for financing grants up front. But they are not! Any “for-profit” developer has to get their own financing to build, since only a percentage of the mixed-use structures is for affordable housing. And getting financing is no problem for Caruso, who, for example, just got a $450 million-dollar refinancing loan on the Glendale mall he owns, and who spent about $100 million of his own money running for mayor of Los Angeles! Furthermore, when completed, the Caruso developers can apply for a Low-Income Housing Tax Credit, as well as use depreciation and business expense write-offs to lower the final costs of the project. In addition, when he rents his luxury apartments out for 31 days or more, he does not have to pay Transient Occupancy Tax (TOT) on those rooms. So in these ways, YES, they do use Taxpayer Subsidies by cleverly reducing the amount of taxes they pay. 

The last two Fallacies I will illuminate in my next letter.  

Sincerely, 

Cliff Ghersen