If you invest on the California coast, Santa Barbara’s AUD program belongs on your radar. The Average Unit‑Size Density framework reshapes what is possible on select parcels by pairing higher densities with smaller average unit sizes, especially in and near downtown. The City made AUD permanent in 2024, so this is not a fleeting pilot. For multifamily investors and boutique developers, that means clear opportunity, clear rules, and a need for disciplined underwriting per the City’s program overview.
AUD zoning at a glance
The AUD program is Santa Barbara’s incentive toolkit for more housing in the right places. In exchange for keeping the average size of units under defined caps, qualifying sites can achieve higher unit counts than standard zoning typically allows. Some downtown areas also benefit from modernized parking rules and a Priority Housing Overlay that favors rental and other priority housing types. The result is a planning environment where thoughtfully designed, smaller‑format homes can pencil, especially on infill lots near services and transit as summarized by the City.
This guide focuses on how investors and small developers can translate the policy into viable plays while managing risk and timelines.
How AUD incentives work
Eligibility and program framework
AUD does not apply everywhere. Eligibility depends on the parcel’s base zoning, the City’s General Plan land‑use designation, and whether the lot sits inside specific overlays such as the Priority Housing Overlay. The City maintains an AUD Program Map and parcel tools so you can verify where incentives apply before you underwrite a site see the City’s map resources. Project standards and allowances are codified in the municipal code, which is your source of truth for how the program is applied at the parcel level see Code references.
Average unit size and density logic
The heartbeat of AUD is the average unit size concept. Instead of simply setting a maximum number of units, the program ties your achievable density to a required average unit size across the building. In practice, the smaller your average unit size, the more homes you can fit within the allowed density tier for that land‑use designation. This structure rewards efficient plans, stackable layouts, and right‑sized bedrooms. It also nudges teams to avoid a few oversized units that would pull the average above the threshold.
Height, setbacks, and massing considerations
Even with AUD incentives, your envelope still needs to fit Santa Barbara’s urban design expectations. Height limits, stepbacks, and setbacks remain key drivers of massing. Thoughtful articulation, courtyard strategies, and daylight management not only help projects move through design review, they also unlock better unit frontage and cross‑ventilation. Review the applicable development standards for AUD projects in the municipal code to understand how form and scale are calibrated in each zone code framework.
Parking and mobility tradeoffs
Parking is often the pivotal line item. In much of the Downtown/Central Business District, the City allows a maximum of one space per unit and permits unbundled parking, which can reduce capital costs and free up ground floors for active uses. Outside the CBD, ratios and layouts vary by zone and overlay. Early parking test fits, shared‑parking studies, and mobility plans influence both feasibility and marketability see the City’s downtown amendments summary.
Approvals and design review pathway
Processing depends on where you build and how your proposal aligns with objective standards. Some projects that meet state eligibility can pursue streamlined, ministerial approval using objective design standards. Others follow the traditional discretionary path with design review and hearings. Before you assume a timeline, confirm with Planning whether your scenario fits a streamlined pathway, and review the City’s SB 35 and objective standards guidance city guidance and objective standards update.
If your site lies in the Coastal Zone or overlaps historic resources, additional procedures may apply under the Local Coastal Program, with potential Coastal Development Permit requirements and appeal pathways LCP overview.
Site selection and underwriting
Parcel characteristics that move the needle
- Frontage and access: Wider frontages and clear alley access simplify parking and loading. Narrow lots can still work with careful circulation.
- Topography and soils: Steep grades or poor soils add cost. Flat infill sites near transit are often ideal AUD candidates.
- Utilities and capacity: Confirm available water, sewer, and power early. Off‑site improvements can swing your pro forma.
- Adjacent uses and context: Compatibility with neighboring massing and privacy lines influences design review and unit layouts.
- Overlays and constraints: Check Coastal, historic, and wildfire overlays. These can change review paths, add studies, or shift your timeline LCP guidance.
Program‑aware massing and unit mix
Because average unit size drives yield, early massing studies should balance a mix of efficient studios and one‑bedrooms with targeted two‑bedroom inventory where your renter profile demands it. Avoid long double‑loaded corridors that balloon common area. Stack wet walls, standardize bay widths, and design kitchens and baths that repeat. In courtyard buildings, use corner turns to create more one‑bedroom corner units with extra glazing without increasing square footage.
Pro forma essentials and sensitivity checks
- Land and carry: Model realistic hold times for entitlement and permits, with interest‑rate buffers.
- Hard and soft costs: Include sitework, utility upgrades, fees, inclusionary obligations if applicable, and third‑party reports.
- Parking: Price structured parking conservatively. In the CBD, evaluate the revenue benefit of unbundled parking against demand.
- Rents and lease‑up: Underwrite conservative rents for smaller formats and consider premiums for design‑forward finishes and amenities.
- Exit cap and interest rates: Run downside cases on exit pricing, cap rates, and cost of debt.
- Objective vs. discretionary: Model parallel timelines. A few months saved in approvals can recapture design investments city process pointers.
Risk, timeline, and capital planning
Stage your capital with clear gates: pre‑app greenlight, schematic cost plan, entitlement milestone, permit set, and GMP. Maintain a contingency for scope discovery, especially if you are working in older commercial districts. If your parcel falls inside the Coastal Zone, add time for coastal permits and potential appeals LCP info. Confirm the City’s current rules of measurement, since rounding and net lot area calculations directly affect unit counts under AUD. The City has adopted updates to clarify how to measure and calculate density, which flow into allowable yield rules of measurement reference.
Hold vs. sell decision points
- Merchant build: Design for speed to market and buyer preferences. Prioritize efficient shells, simple mechanical systems, and clean, marketable finishes.
- Long‑term hold: Emphasize durability, operating efficiency, and simple unit turns. Right‑size amenities to control OpEx and target stable cash flow.
- Hybrid: Phase sales of a portion of units or sell stabilized at a target cap rate based on proven lease‑up.
Multifamily playbook options
Small‑lot infill with efficient plans
Use stackable unit types, compact cores, and light‑well strategies to maximize average unit efficiency. These projects often thrive near neighborhood retail and transit, where smaller homes trade convenience for space.
Adaptive reuse or partial redevelopments
Retain viable structures or facades where it supports design review and neighborhood fit. Insert new units behind or above existing improvements when the envelope and code allow. Carefully test structural and code compliance costs before committing.
Assemblage for scale and frontage
Combining adjacent parcels can create a more efficient footprint, unlock internal courtyards, and simplify parking. Assemblage also helps you step massing to respect neighbors while still meeting your density target.
Build‑to‑rent with long‑term hold
Lean into the Priority Housing Overlay where available to deliver durable rental communities. Unbundled parking in the CBD can align with a mobility‑first renter and reduce upfront costs downtown amendments. Focus on resilient finishes, energy performance, and streamlined maintenance to protect yield.
Design‑forward boutique residences
Santa Barbara rewards timeless design. Thoughtful materials, human‑scale massing, and curated outdoor rooms can lift absorption and pricing. Keep the unit mix efficient to maintain your average while still delivering a premium experience.
Execution roadmap from concept to keys
Early diligence and team assembly
Assemble your architect, planning consultant, land‑use attorney, GC, and MEP early. Use the City’s AUD map and parcel tools to screen opportunities and confirm eligibility and overlays at the outset AUD map.
Concept design and pre‑submittal feedback
Run quick massing studies with parking test fits and average unit size targets. Schedule a pre‑application meeting to confirm the review pathway, objective standards, and any Coastal or historic triggers SB 35 and objective standards guidance.
Entitlement, plans, and permitting
Document the average unit size calculations and compliance with development standards in your submittal. If eligible, pursue streamlined, ministerial review. Otherwise, plan for iterative design review. Keep an eye on any inclusionary requirements and ensure they align with your average unit strategy code framework.
Bids, build, and quality control
Bid to qualified GCs with experience in tight infill logistics. Value engineer without compromising unit livability. Maintain a clear RFI and submittal cadence to protect schedule.
Lease‑up or sales launch strategy
Time your launch to local demand cycles. For rentals, design leasing suites and digital tours early. For sales, lead with brand, architecture, and lifestyle. Santa Barbara’s buyer base responds to craft and authenticity.
Partnering for off‑market edge
Targeted site sourcing and quiet approaches
The most compelling sites rarely hit wide circulation. Relationship‑driven outreach and curated networks uncover parcels that align with AUD overlays and neighborhood character.
Feasibility sprints and decision clarity
Move fast from curiosity to clarity. In a one‑ to two‑week sprint, validate eligibility, objective standards, parking, overlays, and rules of measurement. Then greenlight or pass with confidence using disciplined go/no‑go criteria rules reference.
Market‑ready presentation and launch
Great design deserves great presentation. Brand the project early, align materials with audience expectations, and plan a launch that tells the neighborhood story.
Private consultation CTA
If you want a second set of eyes on a parcel or thesis, schedule a private consultation with Shelton Wilder. We can help source sites, pressure‑test feasibility, and shape a go‑to‑market plan that reflects Santa Barbara’s design culture.
Next steps for AUD investors
- Shortlist parcels using the City’s AUD map and confirm overlays and eligibility map.
- Run a first‑pass massing and parking test fit tied to an average unit size strategy.
- Confirm your approval pathway, objective standards, and any Coastal or historic triggers SB 35 guidance and LCP.
- Build two pro formas: streamlined vs. discretionary. Include contingencies for measurement rules and inclusionary obligations code and rules of measurement.
- Decide hold vs. sell, then tailor specs and marketing accordingly.
- When you are ready, book a one‑on‑one to sharpen your plan with our team.
FAQs
What makes an AUD site eligible?
- Eligibility depends on the parcel’s zoning, General Plan land‑use designation, and whether it lies within the City’s AUD tiers or Priority Housing Overlay. Verify with the City’s AUD map and municipal code before underwriting AUD map and code.
How does the average unit size requirement affect design?
- Your density target is linked to a maximum average unit size across all homes in the project. Efficient layouts, stackable plans, and right‑sized rooms help you meet the average while maximizing unit count code framework.
Can downtown projects reduce parking?
- In much of the CBD, the City caps parking at a maximum of one space per unit and allows unbundled parking, which can lower costs and free space for homes or amenities downtown amendments.
Is approval guaranteed under AUD?
- No. Some projects qualify for streamlined, objective review. Others require discretionary design review, especially with Coastal or historic overlays. Confirm your pathway with Planning early SB 35 guidance and LCP.
Do recent rule updates change my unit count?
- The City’s rules of measurement guide how to calculate net lot area and rounding for density. Small differences can change allowable units, so confirm the current rules before finalizing a pro forma rules reference.
Where can I see program results to date?
- The City reports program statistics and examples of permitted projects. Reviewing these outputs can help benchmark yields and parking strategies used locally program stats.
