The city of Santa Barbara is in conversations to acquire the beloved La Casa de la Raza, in a complex land-use deal involving the state of California, the News-Press has learned.
State Senate Pro Tempore Monique Limon secured $6.1 million in the California budget to acquire the property, 601 E. Montecito St. She said Casa de la Raza is a “community hub.”
“I was proud to secure funding in the state budget this year for the city of Santa Barbara to acquire and renovate this historic and cultural pillar of our community,” Limon told the News-Press. “I look forward to working and partnering with the city on next steps for Casa.”
But there’s drama around the deal.
Casa de la Raza is currently under the ownership of the U.S. Bankruptcy Court, Central District of California, and a separate, undisclosed nonprofit organization is in escrow to buy the property.
“We have a buyer,” said Gene Deering, a commercial real estate broker for Radius, who is representing the bankruptcy trustee. “We have an agreed-upon sale. The identity of the buyer and agreed upon price right now is confidential.”
Deering did not disclose the buyer or the sale amount, but other sources told the News-Press the deal was for $2.4 million. The property is currently in a 60-day due diligence period, said Meghann Triplett, an attorney with Margulies Faith.
Since the property is in bankruptcy, and even if the private deal goes through, the city of Santa Barbara would have the opportunity to bid on the property, in what is known as an “overbid” process.
“As part of the sale process, the trustee will request approval of proposed overbid procedures designed to maximize value for the estate,” Triplett told the News-Press. “These procedures typically involve a court-supervised auction with participation of qualified bidders. Any interested party, including municipalities, may participate in the overbid process if they meet the court approved qualification requirements.”
The role of the bankruptcy court is to seek the best financial deal for the debtors on the property.
That overbid process would take place sometime between October and December, Triplett said.
Kelly McAdoo, city administrator for the City of Santa Barbara, said the city and Limon’s office engaged in conversations to secure the $6.1 million for the property. McAdoo said the city is not interested in running the center itself, but partnering with an operator.
“If the city were to acquire it, the city would want to continue providing the current services,” McAdoo said.
Since the late 1960s Casa de la Raza has served as a community destination for a variety of events and resources. It has provided immigration services, English-language classes, youth activities and dance classes, employment opportunities, and a place for kids to hang out after school and get homework help. It’s been a venue for quinceaneras, birthday parties, dances, art shows and live musical performances.
But in recent years the center has fallen on hard times.
Before the bankruptcy, La Casa de la Raza Inc. was heavily in debt and mired in allegations of apparent mismanagement. The nonprofit had not filed taxes in three years, the News-Press previously reported. It owed $332,000 to the Internal Revenue Service for payroll taxes dating back to 2013 and $43,547 to state Employment Development Department, U.S. Bankruptcy Court filings alleged.
The problems resulted in a Chapter 11 reorganization filing in U.S. Bankruptcy Court in 2017, a suit that dismissed a year later. Then came a Chapter 7 liquidation filing in 2021.
But in July 2025, the court made a decision. The building would be offered for sale and sold to pay off debtors.
There’s also been a public dispute over which organizations can speak on behalf of Casa de la Raza. The original nonprofit organization that operated inside the building is La Casa de la Raza Inc. and owns the rights to use the name and its logo.
An unaffiliated group, the Restorative Justice Education Center, operated by Jacqueline Inda, moved into the building in 2020. Inda told the News-Press on Wednesday that she uses the facility for a “migrant services project” and “church services.”
Lisa Valencia Sherratt, co-president of La Casa de la Raza Inc., said she supports the sale of the building and wants “to see the building continue to serve the community through community-focused new owners.”
Sherratt said that a potential sale to the city of Santa Barbara “is really exciting.”
The budget is currently on Gov. Gavin Newsom’s desk waiting for a signature. Limon and McAdoo expect him to sign it with the budget allocation to acquire the property.
Deering represents the bankruptcy trustee, Jeremy Faith, on the deal, not the organization in the process of trying to buy the building. Deering said he has no opinion on who ultimately acquires the property.
The Santa Barbara City Council met recently in closed session to start the conversation about bidding on the property.
“We are focused on the due diligence period that kicks off the overbid process,” Deering said. The bankruptcy trustee and the judge are the ones who make the decisions.”
