Navigating a rocky course rife with transparency issues, corporate threats and specific financial details remaining veiled by nondisclosure agreements, the Santa Barbara City Council confronted the latest changes to Paseo Nuevo’s housing plans in a marathon meeting Tuesday night.
Determined to avoid future surprises, councilmembers refused to approve the current deal on the table in favor of creating an ad hoc committee, which will include two councilmembers to guide city staff as they continue negotiations with mall leaseholder AllianceBernstein (AB Commercial).
The city has been working to advance plans to redevelop the Paseo Nuevo Mall into a mixed-use project in downtown. The Macy’s building is expected to be demolished and replaced with housing. Other shops, Center Stage Theater and Museum of Contemporary Art are expected to remain and be revitalized, according to the city. The city owns the land proposed for redevelopment and is evaluating potential financial contributions, such as land value and tax revenue sharing.
“I’d really like my colleagues to consider creating an ad hoc committee to work with our negotiating team on the next iteration of this deal to give our staff feedback, to allow our staff to do some temperature taking, to kick around some ideas in real time,” said Councilmember Meagan Harmon as she proposed the idea. “So we don’t find ourselves at another hearing saying we had no idea what was going on and we didn’t participate in this.”
Harmon’s comments echoed many of her colleagues’ concerns over a lack of transparency surrounding Paseo Nuevo’s redevelopment plans.
Tuesday was the first chance the council and community members had to publicly discuss the redevelopment’s draft Disposition and Development Agreement (DDA). Though councilmembers praised the project and stressed the need to build housing in Paseo Nuevo, they felt more feedback and discussion was warranted before signing any papers.
“This is like having a finished cake with candles being delivered to you and the first opportunity to talk about the flavor or the ingredients in that cake,” said Councilmember Mike Jordan.
The DDA also arrived with closed-door threats.
Councilmember Kristen Sneddon claimed that AB Commercial representatives privately told her that they would leave the mall “fallow,” as they had with other projects in Los Angeles, if the deal on the table did not go through.
She additionally stated that AB Commercial had misrepresented its affordable housing intentions in private discussions, giving promises that were not reflected in the DDA.
“I will say in earlier meetings I asked directly, ‘Will you be building affordable housing and then handing the keys over to the housing authority?’ And in the divide-and-conquer style of meeting with us one-on-one, you told me yes,” Sneddon said to the AB Commercial representatives present at the meting. “You told me ‘yes,’ and that is what I based my yes votes on up until this point.”
Paseo Nuevo’s redevelopment plans present a dramatic trade offer: In exchange for the city of Santa Barbara transferring the land under the mall to AB Commercial’s ownership, the developer would construct 233 market rate apartments in an up-to-75-foot-tall complex at the former downtown Macy’s site; 80 affordable housing units would also be constructed in an up-to-70-foot-tall building on top of Parking Lot 2.
Yet in the days leading up to the Tuesday meeting, critics said AB Commercial backtracked on initial claims that it would build over the minimum required number of affordable housing units. The draft DDA outlined that AB Commercial, working with The Georgetown Company, would only be required to build 24 affordable housing units, to be located inside the Macy’s apartment complex, at the outset. And the developer could also pursue but would not promise to build up to 80 affordable units, which could be done either on the parking lot site or adjacent, privately owned land if purchased.
This drop from a guarantee of 80 to 24 affordable units turned local residents’ and councilmembers’ heads.
“When we are only conceding the minimum amount of affordable units that the law requires and nothing beyond that, that is what is giving the public the perception that we are just giving the land away,” said Councilmember Wendy Santamaria.
The city has designated Parking Lot 2 as exempt surplus land, which would allow for the transfer of fee title, according to details the city shared about the project.
Moreover, the DDA outlines that if AB Commercial were interested in building additional affordable units, those could be built concurrently with the Macy’s construction or within five years of receiving a certificate of occupancy for the Macy’s building.
Harmon called out the move as presenting an illusion of choice for the city.
“We don’t have any choices,” Harmon said. “These are someone else’s choices to make that we do not have a say over.”
City Administrator Kelly McAdoo continued to champion Paseo Nuevo’s trade deal, which has been three years in the making, on Tuesday. McAdoo, who picked up the project’s reins from past city administrators, has insisted that giving away Paseo Nuevo’s land is the best — and only — option. Due to the mall’s complex three-way ownership between the city, which owns the land; AB Commercial, which owns the mall buildings; and Shopoff, which owns the Nordstrom site, the State Department of Finance has determined that Paseo Nuevo’s land has no monetary value as it is currently encumbered.
In a tense exchange, Sneddon asked city staff who had seen the proposal’s pro forma. City staff replied that they have seen the exact financial details of the proposed project, but they are subject to an NDA. Sneddon pressed staff to momentarily ignore the encumbrances and provide a dollar amount for Paseo Nuevo’s value, land and buildings included. She was told further assessment was needed.
All councilmembers agreed that it was a win that both the Museum of Contemporary Art Santa Barbara and Center Stage Theater would be protected under the current DDA. They also supported prohibiting any of the new apartments from being used as short-term vacation rentals and called for the city, AB Commercial and Shopoff, which also hopes to build apartments in Paseo Nuevo’s Nordstrom building, to collaborate together.
Mayor Randy Rowse said that while the project does not currently meet everything the city wants, he feels it should keep moving forward because any amount of potential housing is better than the zero apartments currently in Paseo Nuevo.
“We need to get housing downtown. That project is really the light switch we’ve been looking for to get the downtown back up and running and back on its feet. We need to do that,” Rowse said. “We’ve had five years of absolute stagnation, probably a couple years before that. We need to get something going on.”
“My fear is equivocation and delay to the point where we kill something again,” he added. “We’ve done it before, and that’s kind of where the process goes.”
Councilmember Eric Friedman adopted a positive outlook, reflecting on the years of hard work and collaborative spirit to get the Paseo Nuevo redevelopment to this stage. He stressed his peers’ unanimous support of creating more housing downtown, expressing that the project needed to progress with additional open conversations.
“I think there is a path if AB will continue on the discussions to get somewhere, where we might be able to get something that benefits the community as a whole,” Friedman said. “It’s something I think that we can all get behind, which is important because this is a huge decision.”
The City Council directed staff to investigate drafting a charter amendment that would allow the city to remove the 50-year lease requirement for city-owned assets. The ad hoc committee will be formed and begin meeting with city staff as they conduct further negotiations with AB Commercial in the new year.
Daisy Scott is the City Desk editor and Arts writer for VOICE magazine. She has reported on Santa Barbara news and arts and culture for over five years. An award-winning journalist, she holds a master’s degree in English from San Diego State University and a bachelor’s in literature and writing from UC San Diego, where she was editor-in-chief of The Guardian. Daisy enjoys teaching and working with students, and celebrating all opportunities to connect with others through writing.