Historic Santa Barbara Market Survives as 45-Unit Housing Project Gets Final Green Light

A project to build a housing development while preserving the longtime Tri-County Produce grocery store in Santa Barbara received final architectural approval.

The Architectural Board of Review on May 26 granted the project design approval for the redevelopment project at 335 S. Milpas Street during its fifth and final hearing, clearing the way for a residential building and an expanded grocery store.

Unlike the previous versions of the plan, which called for the store’s removal or demolition, the approved project retains the existing Tri-County Produce. The neighborhood market has served Santa Barbara for over five decades.

Praising the project’s evolution, the board noted that the plan had become a “sensitive project” that successfully preserved the market while also adding much-needed housing.

The plan includes a 4,000-square-foot addition to the existing market, a new 1,000-square-foot outdoor patio, and a reconfigured parking lot with 45 spaces dedicated to the commercial lot.

The developers proposed a two-lot subdivision of the 2.47-acre site, which will create two separate lots. While Lot 1 will house the grocery store, the other lot will have the new residential building.

The residential building will consist of a new 45-unit, four-story building that will be built on a newly created lot adjacent to the market.

The developers reduced the unit count from 53 to 45 to include 14 three-bedroom units. This was done to address the lack of family housing in the area, the applicant told the board.

Despite lowering the overall unit count, the number of affordable units remained the same. The development will have three very low-income units and one moderate-income unit, increasing the overall percentage of affordable housing.

While approving the entire project, the board placed a condition on the developers and prohibited any of the units from being used as vacation rentals.

Public and Board Concerns

Several residents raised concerns about the project’s height, massing, and potential impacts on neighboring properties.

One speaker argued that the four-story building and 16-foot ground floor would create a “canyon effect” and block sunlight along the streets.

Since the project site sits adjacent to Union Pacific Railroad tracks, the board discussed the need for vines or screening on the chain-link fence for safety and aesthetics.

To mitigate the visual impact, the developer said that the building massing was set back on the corner closest to Tri-County Produce.

Local Market With High-Profile Backers

Popular for its fresh and abundant local produce, Tri-County Produce has built relationships with local and regional growers, suppliers, and customers.

The market attracted attention in 2024, when former Google CEO Eric Schmidt and his philanthropist wife Wendy Schmidt helped secure its future after learning that the business was at risk of closing.

In a social media post in April 2025, Wendy Schmidt said that the couple had become regular customers of the market since relocating to Santa Barbara during the pandemic and admired the market’s network of suppliers.

She said that the effort to preserve the market was undertaken in partnership with the store’s owner, developers, and longtime employees Jaime Desales Sr. and Jaime “Mito” Desales Jr. The two were expected to operate the business and eventually become owners.

Originally opened in 1966 as a wholesale distributor, Tri-County Produce serves three coastal counties.