County of Santa Barbara Hits Snag in Mission LLC’s Lawsuit Seeking Tax Exemption on Religious Grounds

A legal battle over property taxes at a controversial housing development site near the Santa Barbara Mission will continue into 2027 after a Superior Court judge ruled that Santa Barbara County made several procedural errors in its attempt to dismiss the case.

The lawsuit centers on whether a for-profit development firm can secure a tax exemption by leasing its property to a religious institution. The outcome could set a consequential precedent for local tax rolls and housing development strategies along the Central Coast.

On August 5, Judge Thomas Anderle ruled that a motion for judgment on the pleadings filed by Santa Barbara County was procedurally defective, dealing a setback to county attorneys who were attempting to block the exemption claim before going to trial.

The Core of the Tax Exemption Dispute

The legal conflict dates back to June 4, 2025, when the Mission LLC partnered with a religious organization called the Unitarian Universalist Mission to file a lawsuit against Santa Barbara County. The plaintiffs allege that the Mission LLC is exempt from paying property taxes on its five-acre site at 505 East Los Olivos Street because the property is rented to a religious institution.

Santa Barbara County pushed back against this claim in July 2025. In its official response, and a subsequent amended filing in September 2025, the county argued that the property was “not utilized exclusively for religious worship or related religious activities.” Furthermore, the county asserted among more than a dozen other legal arguments that the Mission LLC failed to submit a timely claim for the exemption.

Developer Ties and the Unitarian Universalist Mission

The Mission LLC is the development firm that owns the Los Olivos Street property. Real estate advisor Ben Eilenberg is listed as the company's manager. The firm is currently seeking approval for a controversial eight-story housing project on the site, utilizing the state's "builder’s remedy" provision—a law that allows developers to bypass certain local zoning restrictions in cities that have failed to meet state housing mandates.

However, the religious organization claiming to lease the space shares deep ties to the development team. Eilenberg’s signature appears on the Unitarian Universalist Mission’s state filing documents from January 2023. Craig and Stephanie Smith, who are part of the development team spearheading the builder’s remedy project at 1605 Grand Avenue alongside Eilenberg, are listed in state filings as the CEO and CFO of the Unitarian Universalist Mission.

The website for the Unitarian Universalist Sanctuary lists the Los Olivos Street address. However, the site remains incomplete, containing default template text on its blog page and no active posts. According to the Santa Barbara Independent, the property itself has a lengthy historical connection to religious groups. The Sisters of the Holy Nativity, an Episcopal religious order, occupied the property starting in 1952. They later transferred it to the Episcopalian Brothers of the Order of the Holy Cross in 2013. The Mission LLC purchased the land in 2021, shortly after the monastery closed permanently.

County's Procedural Missteps Stall Dismissal

Seeking an early resolution in its favor, the county filed a motion for judgment on the pleadings in April. The county included written statements from two employees within the Clerk-Recorder-Assessor’s Office. In July, the Mission LLC’s legal team argued that the county's inclusion of those statements was improper. The county subsequently withdrew the statements.

Judge Anderle ultimately identified several critical flaws in the county's approach. He noted that the county failed to include a required written notice at the start of its motion, which should have detailed the specific nature of the order sought and the grounds upon which the motion was based. Additionally, the county did not clarify how the Clerk-Recorder-Assessor's statements were relevant to its core legal arguments, nor did the county give the plaintiffs adequate time to respond to the withdrawal of those statements.

Finally, Anderle noted that the county failed to file required documentation proving that the two parties had met and conferenced in an attempt to reach an agreement before bringing the motion forward.

What Happens Next for the 805 Region?

The procedural stumble guarantees that the legal dispute will drag on well into next year. Because of the filing errors and subsequent legal timeline, the case is now expected to continue into January 2027.

This property tax lawsuit is not the only legal action the Mission LLC is currently navigating. The firm sued the City of Santa Barbara in October 2024 over how city officials processed and handled the developer's builder’s remedy housing application. Although that initial case was dismissed without prejudice, the Mission LLC filed a subsequent lawsuit against the city in May 2025 to continue its challenge.

For Santa Barbara residents, the tangled intersection of state housing laws, local zoning battles, and novel religious tax exemption claims remains an ongoing saga. As the county works to amend its filing missteps, local officials and housing advocates will be watching closely to see how the courts reconcile lucrative state development incentives with longstanding property tax regulations.