On the outer edges of a swath of homes—some finished, some nearly there, others meandering toward completion, purchase, and the American dream—Craig Smith pointed at a hand-drawn home on transparent vellum paper.
“Nobody draws them anymore, but I do,” he said, pointing to his right middle finger. “You know when someone draws by this indent in their finger.”
His is a lost art in an old town now in mid-pivot as houses begin to rise out of once-empty lots. The drawing is an early step, an initial imagining of what the residences in Guadalupe’s Pasadera Homes development would look like. They’re a mash-up, in image and function, of other housing complexes Smith has designed.
The long-stalled development has finally reached its stride with 200 houses built and 602 more on the way. Big steps forward in a project that looked like it might never start. The housing plan has been in the making since 2004, Smith said, a few years before the economic downturn. Just as Pasadera Homes was ready to break ground in about 2007, the bottom fell out of the housing market, and the mortgage crisis terrified financial analysts and froze fresh construction.
Cities statewide collapsed into bankruptcy under the pressures of the Great Recession as the outlook was dim and development slowed.
And Pasadera Homes just waited.
Years walked by.
Smith bought a red Prius for the long drives up to a Monterey County project, moved through his 40s, 50s, halfway into his 60s, and went through two prescriptions on his glasses.
The agricultural town lost business and jobs and, nearly, the very thing that made it a city: Guadalupe’s services and much of its autonomy were nearly absorbed back into the county.
“It was in the paper; it was on TV,” Smith said. “Everybody knew they were in dire straits.”
Finally, in 2014, the company was ready to start converting Smith’s drawings into plywood and two-by-fours.
Money from building permits began trickling into the city, along with funds from three tax measures the city passed to stop its spiral into disaster. But housing and development—and the dollars such projects bring to a city—have always been the key to Guadalupe’s sustained survival. For years, there have been rumblings of commercial business moving into an undeveloped, 18-acre patch of Pasadera-owned property. To get there, city officials say the city will need to be bigger than the roughly 7,000 people who currently call Guadalupe home.
That means more drawings, more houses, and more people.
Smith said the city is on its way. Pasadera’s houses have sold almost as soon as they’ve been built, due to a combination of factors, Smith said. The nearby Trilogy’s million-dollar homes in Nipomo serve a different type of buyer. Owners of larger, more expensive homes in towns like San Luis Obispo want a “move down” home. One like the $365,000 base model in Guadalupe, Smith said, gives some couples an extra shot of cash and less to look after.
It’s all going according to plan, Smith said, with the Pasadera project likely to be done somewhere in the next four to five years. But an unforeseen dip in the housing market could still undo the city’s newly stabilized finances, just as the first housing crisis did.
Guadalupe is one of the state’s oldest cities—it incorporated in 1840—often forgotten in its sequestered, coastal location, off the beaten path of U.S. 101. A small city, it hasn’t drawn in business from big-box stores or national franchises. Instead, it contains small-town businesses, where waiters, cooks, and barbers are also the owners of their restaurants and barbershops, and patrons know them by first name.
Fortunes for Guadalupe are now changing, as deficits to its budget slowly disappear, and once dreamed-of developments begin bearing the fruit of the city’s long-discussed potential.
Looking down the road
In the final days of his brief tenure as interim city manager, Bob Perrault was preparing to leave his office at City Hall, the pink former elementary school. At 68, Perrault is a veteran of the small-city experience, serving in city administration for 30 years. Upon retiring from his decade of managing Grover Beach, he began a circuit of interim jobs at the cities of Willits, Greenfield, and, most recently, Guadalupe.
The town’s problems weren’t unknown to him.
He’s seen cities racked by shifts in the economy. He’s even managed some of them, like Cloverdale. Once reliant on lumber and home to just 5,000 residents, the Northern California town was hurting. As fewer trees were felled and processed, the job market waned.
“But they recognized what their assets were and set a vision from there,” Perrault said. “If you look at it now, it’s far different from what it was in the ’90s, but it took 15 years to get there.”
The housing market characterized Guadalupe’s most recent fall, preventing new construction and development that otherwise may have started in 2007 and 2008. But its turnaround began in 2013, before development restarted. With Guadalupe facing disincorporation, the City Council deployed countermeasures to halt its utter failure as a city. The deficit to the general fund was more than $700,000 then, when Frances Romero helmed the city as its mayor. The choice was to accept its fate—and lose the first-responder services of the city—or ask city residents for more money.
The council chose the latter and began to revive itself with a three-pronged tax strategy: a quarter cent sales tax, a utility users tax, and a business license tax. These measures allowed the city to keep services in town and maintain the response time of the fire department at an average of less than 10 minutes.
At first, the city earned no sales tax, according to a Sept. 24, 2019, staff report. The other two tax measures brought in a little less than $260,000 when they were put in place. But in fiscal year 2018-19, the city pulled in $824,000 with all three as local businesses began to find a footing.
The other problem is property taxes. Perrault said those taxes don’t pull in the kind of money one might think. When property taxes were restructured in the local California tax system in 1978, it was 1 percent of the assessed value of a house.
“When you look at a house with a value of $400,000, the value it’s contributing to the city is maybe $400 or $500, and out of that, the city has to provide all the essential services—which includes police, fire, public works, planning, administration—and that begins to get hard to do. That leads to the need for more diverse revenue sources,” Perrault said. “Business-generated revenue sources.”
For a town like Guadalupe, that means, in part, sales taxes—and they’ve been slow to accumulate. The quarter cent sales tax now earned the city only $137,000 in the last fiscal year.
“The city needs to ensure that it has ongoing revenue capable of delivering the services that a full-service city requires,” Perrault said. “That is why I’m suggesting they take a strong look at increasing their sales tax again.”
Perrault wore a forest green paisley tie to match his shirt the day before he left his interim job. He’d taken the posting while the city was already on the mend.
“It has a great future,” Perrault said. “If it’s stewarded right.”
What “stewarded right” means still needs to be planned out. Perrault has suggested a 2020 vote to raise the city’s sales tax to a full cent. But no plans have yet been made to put that initiative on a future ballot.
But for a vibrant business community to fully take hold, more would need to arrive to the city’s downtown, and Guadalupe isn’t the easiest place to get to. The city is about 20 minutes from Santa Maria, which Perrault said is a bit too far to reliably draw customers.
“You’re here, kind of on an island by yourself, so it’s really incumbent upon you to provide all those basic services,” he said. “You can’t rely on them to come from Santa Maria. So it’s really important that the city continue to develop reliable sources of income so it can continue to provide the services the city’s citizens needs.”
That means developing the city’s downtown, a long talked about vision that has slowly come into focus. The building that once housed the Far Western Tavern is scheduled to eventually undergo a makeover by its proprietor, the Dunes Center. And the main drag now has its own coffee shop, the newly minted Guadalupe Café.
More housing is starting to take root near the city’s old strip with affordable units entering the market. Peoples’ Self-Help Housing is constructing 38 units of low-income housing, and the Escalante Housing Authority is building another 80 apartments.
But some local residents worry that new business might take away from what’s already there, diminishing or destroying the locally famous businesses sweated over and loved by multiple generations of family ownership.
Guadalupe’s culinary history stretches back to the ’40s and southward to Mexico where some owners of what would become a bustling local restaurant scene were from. Of those restaurants in the louder days of downtown, La Simpatia remains.
“Everyone hopes the houses will bring more business,” owner Rosa Quiroga said. “But it hasn’t.”
Romero, in her time as mayor, gauged the pulse of the people in town, and she said she doesn’t see new business plowing under the long-timers.
“The locals pick what they’re going to support,” Romero said. “I gotta tell you, if there was a Starbucks on the corner, they’d have to offer something special.”
Commercial development is still years away, but developer Smith said Pasadera has drawn the interest of national brands. The city has to hit the 10,000 resident mark before it can draw serious interest.
“Everyone knows that commercial is where you make your money,” Romero said. “Property taxes are fine, but property values change, and with more people you need more services.”
And property taxes may not be enough. Perrault cautions against what another housing bust could do to the city. He estimates the one-time money from housing permits makes up 12 percent of the city budget. That’s too much. For a healthy city, he said the number ought to be about 5 or 6 percent of the city’s total budget.
If housing sales slow, or stall, the city needs to be ready. That’s why Perrault suggested the sales tax increase.
“I hope in the 2020 election they get it on the ballot for the community to vote on,” Perrault said. “I think a penny instead of a quarter cent is totally reasonable.”
What’s next
As he strolled through the display models at Pasadera Homes, Smith pointed that indented drawing finger of his at a granite countertop.
“Those come standard,” he said.
Fifteen years ago, granite was at a premium. Now, buyers expect it.
It’s one small buyer’s incentive in a state that’s so often a seller’s market. With his smiling squint peering from underneath a Carhartt ball cap, he pointed to master bathrooms or outside at fields and mountains.
He knows the kind of buyer who will like his homes and the quiet town in which they’re built. Those buyers are steadily trickling in.
What’s next could be the commercial development of an 18-acre stretch of land on the property his company owns. Some will be sold and developed, and some of that building might be done by Pasadera itself. Smith said it’s hard to say when that will get going. Maybe after 400 houses are built, but he said it’s more likely to happen after 600.
Right now, he’s focused on the buyers.
Echoing through the home, visitors’ exclamations reached Smith’s ears.
“I love that sound,” he said, smiling, repeating what he’d heard. “‘Wow, that’s awesome.’”
Staff Writer William D’Urso can be reached at [email protected].
