On June 23, 2025, the City Council provided direction that would authorize a negotiated settlement with the developer Shelby Family Partnership, L.P. (“Shelby”) in the pending Shelby Family Partnership, L.P. v. City of Goleta litigation (“Lawsuit”). Under the parameters of the settlement, the City will review and process a permit application for the proposed project, which includes increased affordable housing and comprehensive environmental review. The settlement does not approve the proposed project or pre-commit the City to doing so.
“We believe the settlement agreement represents the best resolution possible, given the circumstances,” said City Manager Robert Nisbet. “It allows us a path forward that includes meaningful affordable housing and robust environmental review.”
Shelby is the owner of the property located at 7400 Cathedral Oaks Road (“Property”). Since 2005, Shelby has had a pending application to develop a residential project (originally proposed with 60 for-sale single-family units, later revised to 56 units) on the Property (“Project”). The Project includes a vesting tentative tract map, which was deemed complete by the City in 2011. For years, the Project was delayed due to a water moratorium imposed by the Goleta Water District. After the moratorium was lifted, Shelby submitted an SB 330 preliminary application to revise the Project (“Revised Project”) at a time that the City did not yet have a certified Housing Element — which, Shelby maintained, made the Revised Project subject to the Builder’s Remedy and the protections of the Housing Accountability Act.
Shelby’s use of an SB 330 preliminary application to revise a 2011 development application raised novel legal issues. As profiled in the City’s February 2025 press release (see here), the City disagreed with Shelby’s position and returned the preliminary application. Shelby subsequently initiated the Lawsuit and, in December 2024, the California Attorney General filed an amicus brief in support of Shelby’s position. On February 26, 2025, the Santa Barbara Superior Court ruled in favor of Shelby. Among other things, the court ordered the City to accept the SB 330 preliminary application and process the Revised Project in accordance with state law (which, under the Builder’s Remedy provisions, prohibits the City from denying the project for not complying with the City’s Zoning Code or General Plan).
Given the Revised Project’s status as a Builder’s Remedy project, and following the Attorney General’s involvement and the adverse court ruling, the City felt that the best way forward was to settle the Lawsuit and agree to the submittal of a Revised Project under defined parameters. Without a settlement, the Revised Project could have been proposed without any regard to the City’s local development standards (e.g., the Revised Project could have been denser and included significantly more units). Subject to limited exceptions, the negotiated Revised Project generally conforms to the City’s development standards and is nearly identical to the Project originally proposed on the Property (and subject to the 2011 vesting tentative tract map). If ultimately approved, the Revised Project would result in greater affordable units and lower density than what could have been proposed under the Builder’s Remedy. The Revised Project will also undergo robust and transparent environmental review and analysis.
With respect to affordable housing, the Revised Project would create more affordable housing than required by state law. Currently, the Revised Project could qualify for the Builder’s Remedy by dedicating only 4 units (i.e., 7%) to extremely low-income households (as defined by state law). Under the settlement agreement, the Revised Project will provide these units and additional affordable units in accordance with the City’s inclusionary housing ordinance — resulting in 19.6% of units (11 units) being dedicated as affordable housing. The affordable units will be for-sale and comprised of the following (with income limits defined by state law and the City’s inclusionary housing ordinance):
- 4 units for extremely low-income households,
- 1 unit for lower income households,
- 3 units for moderate income households, and
- 3 units for above-moderate income households earning between 120 – 200% of area median income.
The settlement agreement requires that the affordable units be constructed of substantially similar materials, in a similar style, and no different in appearance than the market-rate units.
In addition, as part of the City’s continued commitment to transparency and comprehensive environmental review, the settlement agreement ensures that the City will update and recirculate the full environmental impact report (EIR) for the Revised Project in accordance with the California Environmental Quality Act. By doing so, the City will ensure that all aspects of the Revised Project are thoroughly reviewed under the most current environmental standards. This process will provide the public and stakeholders with an opportunity to engage with an up-to-date and complete analysis of the Revised Project’s potential environmental impacts.
As previously noted, the settlement agreement does not approve the Revised Project or pre-commit the City to doing so. After the environmental review is completed, the Revised Project will be scheduled for hearings before the Planning Commission and/or City Council depending on the Revised Project’s environmental impacts. The settlement agreement will be made available for review upon request after it is executed by the parties.
Questions can directed to the City Clerk’s Office at 805-961-7505.