For decades, developing the Margarita area - one of the largest remaining open areas for residential expansion in San Luis Obispo - has been little more than a vision of where the city would grow.

By next summer, however, the beginning of a bona fide neighborhood with new homes, offices, parks and streets could sprout in that southern part of the city. Eventually, the area could be home to 2,500 or more people.

The city Planning Commission has been reviewing a plan for Margarita since December. It could move to the City Council for approval this summer. If it wins council backing, that would open the door for developers to move ahead with their projects.

Development is not expected to be completed before 2018.

"It will be a little bit of everything," said Mike Draze, the city's deputy community development director. "It will provide jobs, a southern link the city has wanted and dreamed about for years (Prado Road), and real housing."

New housing opportunities

State law requires cities to plan for a certain number of homes and to devise a strategy for how it will meet their housing goals. By 2009, San Luis Obispo must accommodate more than 4,000 housing units.

The Margarita area is slated for 868 homes on about 418 acres, extending from the ridge of the South Street hills to the northern boundary of the Unocal property along Tank Farm Road.

About 169 acres will be designated as open space, primarily on the South Street hills, and about 56 acres will be set aside for parks and sports fields, which includes the nearly completed Damon-Garcia ball fields off Broad Street.

The neighborhood will feature single-family attached and detached homes, apartments and a commercial center. The mix will include housing for all income levels, which will help the city meet its affordable housing goals.

The city must allow for 4,087 housing units in the next five years. Of the total, 2,167 units will be targeted for very-low and low-income households, and 1,178 for Cal Poly students, faculty and staff.

In September, a group of developers offered to build 44 affordable units - 15 low-income and 29 moderate-income homes - on nearly 3 acres of land in the Margarita area, said George Moylan, the city's Housing Authority director.

A family of three earning $30,000 or less would be considered for low-income housing. A family of three earning $66,650 would be in the moderate-income range.

"This is a working start to solving a problem," Moylan said. "It's a chance to do it, do it right and produce some affordable workforce housing."

Richard DeBlauw, an Arroyo Grande developer, has been trying to build in the area for more than two decades and believes Margarita will be a plus for homebuyers.

"Hopefully, some people that live outside the area will buy here and won't have to commute on the highways," he said. "It's a convenient location - for employment and shopping. There will be a huge demand for these homes."

Long desired

The Margarita area has been targeted for residential development since the 1960s.

However, it wasn't until the city's 1994 general plan update that the areas designated for housing and parks were enlarged, and devised what shape this new neighborhood should take.

Initially, the Margarita plan called for about 1,200 homes to be built. But the city agreed in 2002 to reduce the number of homes after the Airport Land Use Commission raised concerns about the development's proximity to the San Luis Obispo County Regional Airport.

The homes will now be built farther from where aircraft fly, and that will provide more safety and limit noise impacts to residents.

"We do whatever we can to help the city achieve its objectives out in that area," said Roger Oxborrow, a member of the airport commission. "I am pleased with the progress we've made in reaching common ground."

In fact, few major concerns remain, said city Planning Commissioner Carlyn Christianson.

"We're working with the residents at Chumash Village (an adjacent mobile home park) and with developers as they come on line with their proposals," she said. "I don't see Margarita as being controversial. Those typical neighborhood issues are not really there. There really shouldn't be any big surprises."

Property owner Dolly Garcia said the Margarita area is a neighborhood whose time has come.

"My husband (Roy) and I have been working on this for so long that we're getting sort of anxious to see something happen," she said. "We've been working on it for 20 years now, and it's almost here."