New San Luis Ranch plan calls for 580 homes — with first dibs to city residents, workers

This rendering offers a bird’s eye view of the proposed San Luis Ranch project bordering Madonna Road and Oceannaire Drive in San Luis Obispo.
This rendering offers a bird’s eye view of the proposed San Luis Ranch project bordering Madonna Road and Oceannaire Drive in San Luis Obispo.

To provide more affordable housing and reduce commutes, the developers of San Luis Ranch are proposing to build up to 580 homes off Madonna Road in San Luis Obispo — but with a twist: Anyone who wants to buy one must already live or work in the city to have first dibs.

The housing units would range in size from a 250-square-foot efficiency apartment to a 2,200-square-foot home, with the homes on small lots (the largest would be 3,200 square feet, half the size of the city’s current standard lot).

Costs in today’s dollars would range from about $350,000 to $600,000.

Buyers who sell their homes in the first few years — during the construction period — of the planned project must offer them back to the developer at market rate or forfeit half of their profits to the developer as part of an effort to keep the housing from becoming investment property.

The 131-acre project being proposed by developer Gary Grossman is a far cry from the big-box store plan approved for the site by countywide voters in 2006 — when it was referred to as the Dalidio property. That project called for 60 residential units, 530,000 square feet of commercial space, 198,000 square feet of office space, a 150-room hotel and 13 acres for agricultural uses.

The current proposal headed before the San Luis Obispo City Council on July 5 would devote 40 acres to housing and set aside nearly half the total space — 60 acres — for organic farming and open space. The ag land would be along Highway 101 and abut the current city farmland on the south side, and the housing would border neighboring existing housing to the west and north.

About 200,000 square feet would be used for commercial space, 150,000 square feet for office space. A 200-room hotel is also planned.


“(San Luis Ranch) addresses the critical need for new affordable and workforce housing, and allows for a walkable, bike-friendly, recreation-oriented community that seamlessly integrates into the existing environment,” Grossman said.

The project calls for 282 single-family units with two-car garages and 298 multi-family units. Of those, 34 deed-restricted affordable units would be integrated into the neighborhoods, designated for various levels of qualifying low-income residents.

In addition, smaller, 200- to 450-square-foot homes (called accessory dwelling units, or ADUs) could be built on all single-family home lots for extended family members or others, just as such units are permitted on single-family home lots throughout San Luis Obispo.

These secondary units are not considered part of the maximum buildout proposal of 580 homes and could be rented out, but it’s unlikely a large number would be built on the proposed site because “most lots don’t have the extra yard space available for a separate ADU,” said Michael Codron, the city’s community development director.

To ensure that those who work or live in San Luis Obispo get first dibs on buying a home, the developers propose to use a lottery. The lottery system would be used one time only; home purchases would be opened to anyone if the list of local applicants runs out.

Additionally, public and private equity share programs are designed to help homebuyers reduce their down payments, and public safety, hospital workers, teachers and veterans would be eligible for $5,000 to $10,000 discounts.

The property sits on county land, but it’s expected that the city would annex it upon approval by the Local Agency Formation Committee (LAFCO), which governs annexations, the formation of districts, and the incorporation of cities.

In two hearings in late May, the city Planning Commission reviewed the plan and solicited reaction. About 50 people commented then, with most in support; the commission also received more than 100 letters with mixed reactions.

Supporters say the project would provide much-needed housing in a city that draws 30,000 commuters into town each day. Opponents claim it would increase traffic and develop valuable agricultural land.

“We are losing our beautiful city,” said Kathleen Borland of San Luis Obispo. “It’s going to be a traffic jam. That’s the concern I’d like to see you address.”

But Audrey Bigelow, a marketing professional who has rented in San Luis Obispo for more than a decade, said it would help working people like her to afford a home.

“Our city has made it clear we need to prioritize workforce housing,” Bigelow said. “There are too many people commuting into SLO these days. This project is the best use of this land.”

The City Council will review several planning documents such as the Specific Plan and the environmental impact report to determine whether the project can be built as proposed. The council holds the final decision-making power on the project’s go-ahead.

Under the city’s Land Use Element, the property is zoned for 500 market-rate homes (the current plan includes a density bonus that allows up to 580 total homes); if the project isn’t approved, Grossman’s consultant, Rachel Kovesdi, said that it could be the last opportunity to get workforce housing built at the property.

The developer currently has the legal rights to build a predominantly commercial big-box project under former owner Ernie Dalidio’s plan, which was approved by the Measure J vote.

“Developers from Orange County and farther afield have repeatedly tried to buy the property in order to build Measure J, which they see as very profitable,” Kovesdi said. “Given Gary Grossman’s expenditures to date, if the city doesn’t approve the San Luis Ranch project, he will be forced to sell the property to a developer who will build Measure J in the county.”

Alternative project ideas of a smaller scale, 400-home project and a land swap with Cal Poly to preserve the agricultural land at the property have been suggested by members of the public. But Kovesdi said they aren’t realistic options given infrastructure costs, plus no good site at Cal Poly accomplishes the project’s goals, which includes creating a central location for a transit hub for buses and bikes.

If approved and annexed, the project is slated to be completed in six phases. Infrastructure improvements are tentatively scheduled to start in 2018, with the first occupants moving in later that year. It’s not yet known what the commercial space might look like; that would be determined later. Buildout could come as soon as 2021, according to the city, but the dates are considered approximate and could change.

Grossman plans to contribute $30 million to $50 million toward onsite and off-site infrastructure, including new streets and utilities in the development, in addition to his fair share of offsite improvements such as the Prado Road overpass (which is in the planning stages under Caltrans review). The overpass would provide easy northbound Highway 101 access from the site. The southbound ramps may or may not be built because of concerns about the oncoming traffic from that location.

Grossman would pay 15 to 20 percent of the cost for Highway 101 access ramps at Prado Road, though that could change because the funding for the overpass project must be in place before the second phase of the project’s home construction begins.

The city is planning the overpass project and will seek other public funding sources to complete it, possibly increasing the developer’s share.

Grossman plans to pay for other upgrades including a road extension and new bridge connecting Froom Ranch Way near Target to the new housing; a widening of Dalidio Road; and extending and adding turn lanes at Madonna Road.

The planned road upgrades are part of a series of identified improvements to offset the traffic impacts caused by the new development.

Under the draft environmental impact report, the city has identified two areas of traffic improvements that were deemed “potentially significant and unavoidable” to mitigate traffic congestion. Those were needed right-of-way acquisitions at the intersections of Madonna and Dalidio and Los Osos Valley Road and Froom Ranch Way. The developer would need to acquire those properties or the city could undertake an eminent domain process, but completion of acquisition wouldn’t keep the project from moving forward necessarily.

Relocation of two historic barns and a historical home on the property also are proposed, which would be open to the public.

Steps for approval

  • The city’s Cultural Heritage Committee, Airport Land Use Commission, Bicycle Advisory Committee, Parks and Recreation Commission, and Architectural Review Commission each have reviewed and recommended the project to the City Council (with suggestions)
  • The city’s Planning Commission will hear the project Wednesday at 6 p.m. to consider recommending it to the City Council.
  • The City Council will decide on planning approval on July 5 and July 18
  • If approved, LAFCO will consider the site’s annexation from county land into the city, possibly in September
  • The City Council would then need to review annexation for final approval.

Other SLO projects planned or in the works

  • The proposed, 720-home Avila Ranch development near the airport will be heard by the Planning Commission later this month.
  • Ongoing development in the Orcutt Area includes approvals of 13 different properties. Of those, 387 units are projected for buildout by developer Ambient Communities by 2026; 172 units by developer West Creek by 2019; and 142 units by Andy Mangano by 2022.
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