Outraged Santa Barbara residents jumped into action when a developer unveiled plans last year for a towering apartment complex within sight of the historic Old Mission.

They complained to city officials, wrote letters and formed a nonprofit to try and block the project. Still, the developer’s plans went forward.

Then something unusual happened.

Four hundred miles away in Sacramento, state lawmakers quietly tucked language into an obscure budget bill requiring an environmental impact study of the proposed development — which housing advocates allege was an attempt to block the project.

The legislation, Senate Bill 158, signed into law by Gov. Gavin Newsom, didn’t mention the Santa Barbara project by name. But the provision was so detailed and specific it couldn’t apply to any other development in the state.

The fallout was swift: The developer sued the state and a Santa Barbara lawmaker, the powerful new president of the state Senate, is under scrutiny over her role in the bill.

The saga highlights the governor’s and state Legislature’s growing influence in local housing decisions, and the battle between cities and Sacramento to address California’s critical housing shortage.

In the face of California’s high cost of housing and rent, state leaders are increasingly passing new housing mandates that require cities and counties to accelerate the construction of new housing and ease the barriers impeding developers.

In this case, the law targeting the Santa Barbara development does the opposite by making it harder to build.

‘A horrendous nightmare’

The fight started last year after developers Craig and Stephanie Smith laid out ambitious plans for an eight-story housing project with at least 250 apartments at 505 East Los Olivos St.

The five-acre site is near the Old Mission Santa Barbara, which draws hundreds of thousands of tourists each year.

In Santa Barbara, a slow-growth haven where many apartment buildings are two stories, the Los Olivos project was perceived as a skyscraper. The mayor, Randy Rowse, called the proposal “a horrendous nightmare,” according to local media site Noozhawk.

But the developer had an advantage. California law requires cities and counties to develop plans for growth every eight years to address California’s increasing population. Jurisdictions are required to pinpoint areas where housing or density could be added.

If cities and counties fail to develop plans by each eight-year deadline, a provision kicks in called “builder’s remedy.”

It allows developers to bypass local zoning restrictions and build bigger, denser projects as long as low or moderate-income units are included.

Santa Barbara was still working with the state on its housing plan when the deadline passed in February 2023. The plan was complete by December of that year, but didn’t become official until the state certified it in February 2024.

Opponents of the proposed Santa Barbara development, clockwise from bottom left: Cheri Rae, Brian Miller, Evan Minogue, Tom Meaney, Fred Sweeney and Steve Forsell.

(Kayla Bartkowski / Los Angeles Times)

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A month prior, in January, the developers submitted their plans. And since they included 54 low-income units, the city couldn’t outright deny the project.

“The developers were playing chess while the city was playing checkers,” said Evan Minogue, a Santa Barbara resident opposed to the development.

He said older generations in California resisted change, leaving the state to come in with “heavy-handed, one-size-fits-all policies to force cities to do something about housing.”

Santa Barbara, a wealthy city that attracts celebrities, bohemian artist-types and environmental activists, has a long history of fighting to keep its small-town feel.

In 1975, the City Council adopted a plan to limit development, along with water consumption and traffic, and keep a cap on the city’s population at 85,000. In the late ‘90s, actor Michael Douglas — an alum of UC Santa Barbara — donated money to preserve the city’s largest stretch of coastal land.

Hemmed in by the Santa Ynez Mountains, the city is dominated by low-slung buildings and single-family homes. The median home value is $1.8 million, according to Zillow. A city report last year detailed the need for 8,000 more units, primarily for low-income households, over the coming years.

Stephanie and Craig Smith, the developers of the project at 505 East Los Olivos Street.

(Ashley Gutierrez)

Assemblymember Gregg Hart, whose district includes Santa Barbara, supports the language in the budget bill requiring the environmental review. He doesn’t want to see the proposed development tower over the Old Mission and blames the builder’s remedy law for its introduction.

“It’s a brilliant illustration of how broken the ‘builder’s remedy’ system is,” said Hart. “Proposing projects like this undermines support for building density in Santa Barbara.”

Similar pushback has been seen in Santa Monica, Huntington Beach and other small cities as developers scramble to use the builder’s remedy law. A notable example recently played out in La Cañada Flintridge, where developers pushed through a mixed-use project with 80 units on a 1.29-acre lot despite fierce opposition from the city.

Still, the controversial law doesn’t exempt developments from review under the California Environmental Quality Act, known as CEQA, the state’s landmark policy requiring a study of the project’s effects on traffic, air quality and more.

The developers behind the Los Olivos Street project sought to avoid the environmental review, however, because of a new state law that allows many urban infill projects to avoid such requirements. Assembly Bill 130, based on legislation introduced by Assemblymember Buffy Wicks (D-Oakland), was signed into law by Newsom in June.

When the Los Olivos developers asked city officials about using AB 130 for their project, a Santa Barbara community developer director told them in July 2025 that the CEQA review was necessary. AB 130 doesn’t apply if the project is planned near a creek and wetland habitat, or other environmentally sensitive area, the director wrote.

Months later, the state Legislature passed its budget bill requiring the review.

Santa Barbara residents who oppose the project said they didn’t ask for the bill.

But if the review finds that traffic from the development would overwhelm fire evacuation routes, for instance, they may have an easier time fighting the project.

“We don’t want to come off as NIMBYs,” resident Fred Sweeney, who opposes the project, said, referring to the phrase “not in my backyard.” Sweeney, an architect, and others started the nonprofit Smart Action for Growth and Equity to highlight the Los Olivos project and a second one planned by the same developer.

Standing near the project site on a recent day, Sweeney pointed as cars lined up along the main road. It wasn’t yet rush hour, but traffic was already building.

A ‘really strange’ bill

Buried deep in Senate Bill 158, the bill passed by state lawmakers targeting the Los Olivos project, is a mention of the state law around infill urban housing developments. Senate Bill 158 clarified that certain developments should not be exempt from this law.

Developments in “a city with more than 85,000 but fewer than 95,000 people, and within a county of between 440,00 and 455,000 people,” and which are also near a historical landmark, regulatory floodway and watershed, are not exempt, the bill stated.

According to the 2020 census, Santa Barbara has a population of 88,768. Santa Barbara County has a population of 448,229. And the project sits near both a creek and the Santa Barbara Mission.

The controversial development fit the bill.

Monique Limón is president pro tem of the California state Senate.

(Myung J. Chun / Los Angeles Times)

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A representative for Senate President Pro Tem Monique Limón told CalMatters that the senator was involved in crafting that exemption language.

During a tour of an avocado farm in Ventura last month, Limón declined to comment on her role. She cited the lawsuit and directed questions to Atty. Gen. Rob Bonta’s office.

Limón, who was born and raised in Santa Barbara, confirmed that she did talk to Sweeney — who started the nonprofit to fight the development — about opposition to the development.

The Los Olivos project had “a lot of community involvement and participation,” she said. “In terms of feedback, what I understand, reading the articles, there are over 400 people that have weighed in on it … it’s a very public project.”

Limón also defended her housing record.

“Every piece of legislation I author or review, I do so based on the needs of our state but also with the lens of the community I represent — whether that is housing, education, environmental protections or any other issues that come across my desk,” Limón said.

The developers filed a lawsuit against the city and state in October, claiming that SB 158 targets one specific project: theirs. As such, it would be illegal under federal law, which bans “special legislation” that targets a single person or property.

The home currently located at the proposed development site.

(Kayla Bartkowski / Los Angeles Times)

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The suit claims that Limón promoted and ushered the bill through the state Senate, argues that it should be overturned and questions the required environmental review, which would likely add years to its timeline and millions to its budget.

Stephanie Smith, one of the developers, told The Times that the bill was born of the “protests of wealthy homeowners, many of whom cosplay as housing advocates until the proposed housing is in their neighborhood.”

“As a former homeless student who worked full time and lived in my car, I know what it means to struggle to afford housing. Living without security or dignity gave me a foundational belief that housing is a nonnegotiable basic human right,” Smith said.

Public policy advocates and experts expressed concern about state lawmakers using their power to meddle with local housing projects, especially when carving out exemptions from laws they’ve imposed on everyone else in the state.

“It’s hard to ignore when legislation is drafted in a narrowly tailored way — especially when such language appears late in the process with little public input,” said Sean McMorris of good government group California Common Cause. “Bills developed in this manner risk fostering public cynicism about the legislative process and the motivations behind narrowly focused policymaking.”

UC Davis School of Law professor Chris Elmendorf, who specializes in housing policy, called the bill’s specific language “really strange” and questioned whether it would survive a legal challenge.

He expects to see more pleadings for exemptions from state housing laws.

“Local groups that don’t want the project are going to the legislature to get the relief that, in a previous era, they would have gotten from their city council,” Elmendorf said.

UC Santa Barbara student Enri Lala is the founder and president of a student housing group. He said the bill goes against a recent pro-housing movement in the area.

“It’s certainly out of the ordinary,” said Lala. “This is not the kind of move that we want to see repeated in the future.”