Calling it a “miracle,” and a “generational transformation,” the Santa Barbara City Council on Tuesday gave unanimous, enthusiastic support to Yardi Systems’ plan to acquire Paseo Nuevo mall and move 600 workers downtown.
“I am so grateful that you see a vision of shared prosperity, of shared energy, of vitality for downtown Santa Barbara, and that you are willing to act on it,” councilwoman Meagan Harmon told the Yardi family at Tuesday’s meeting. “I see that vision too.”
In addition to Yardi Systems’ plan, the council also blessed Shopoff Realty Investments, and Praelium, the owners of the former Nordstrom building, and their plan to build 80 to 112 apartments.
“These proposals honor what Santa Barbara is while creating space for what it needs to become,” Harmon said. These two concepts present a generational opportunity to jumpstart our downtown core.”
The support marks a swift and sudden turn of events for the mall, less than six months after the property was deep in controversy and its future was mired in mystery. The Santa Barbara City Council last year voted against transferring the land underneath the mall to AB Commercial which owns the lease on the mall. AB was working with a developer to build housing at the Macy’s building, but only on the condition that the city give away the land it owns under the mall, which is valued between $32 and $39 million.
AB had threatened to walk away from the deal and leave the mall “fallow” if the council did not approve its terms. The council paused, and voted not to move forward on the project in December.
Yardi Systems then entered the picture. The company started negotiations with AB Commercial and the city of Santa Barbara to acquire the mall and preserve the retail tenants. The Macy’s building, instead, would be home to Yardi’s corporate headquarters, a move that would bring 600 workers downtown to eat and shop in an area that has struggled financially.
Yardi Systems, which is owned by brothers Jason and Kevin Yardi, is revered in the community for its financial contributions and involvement.
Kevin Yardi spoke to the council at Tuesday’s meeting and told the story of how his parents Anant and Eileen Yardi moved to California from Detroit in 1972. He explained that he went to school at Santa Barbara Junior High and Santa Barbara High School.
His parents worked at Burroughs in Goleta, and when the plant closed in 1981, Anant toyed with the idea of starting a hardware store, but Eileen convinced him that it was a bad idea. The couple opted instead to start a software company that focused on real estate management.
Since then, it has become one of the region’s shining stars.
Yardi said the company pays 100% of health care premiums for its employees and 85% for dependents. The average tenure of employment is 10 years and the company has never had to do layoffs.
“We told our employees there will never be layoffs because of AI,” Yardi said. “That’s sort of a unique thing and I don’t hear many other tech companies saying that.”
Yardi said the company supports about 50 nonprofits for a total of several million dollars a year. Much of its philanthropy, he said, is quiet, and is not widely publicized.
Many people who spoke at Tuesday’s meeting supported the project.
Brent Baldwin said he is a Santa Barbara resident and he supports Yardi’s takeover of the mall.
“It revitalizes our downtown core with local workers, good jobs,” Baldwin said. “It supports our local businesses, the restaurants, hotels. It’s a straight shot to bring revitalization to our downtown core.”
Architect Cass Ensberg said the Yardi System is committed to Santa Barbara.
“I am grateful the Yardis have stepped up to make this well-thought-out offer,” Ensberg said. “It is absolutely significant that this proposal is coming from this local family that is principled and not looking for local recognition.”
Activist Lee Heller said she is glad that the council stood up to AB Commercial and its attempt to “bully” the city.
“This is the salvation of the death of that project,” Heller said.
Heller descibed Yardi Systems as a local company that cares about the community.
“There’s enormous promise here to revitalize the downtown,” Heller said.
Yardi plans to donate $5 million to Santa Barbara’s Local Housing Trust Fund and $700,000 to the city’s Downtown Plaza and Parking Program.
The first floor of the Macy’s building would be for special events, and the second for employees, Yardi said. Some nonprofit organizations could use the first-floor space. Yardi promised not to make any changes to the parking lot under Paseo Nuevo, and maintain the theater and museum.
He said Yardi Systems’ overall investment in the mall would be about $100 million.
Beth Collins, an attorney, represents Shopoff Realty Investments, and Praelium. Collins said DSP would make a $1 million contribution to improve downtown and $700,000 to Santa Barbara’s Local Housing Trust Fund.
“We are thrilled to be here today to be part of this transformational project for downtown,” Collins said.
Santa Barbara Mayor Randy Rowse said he is pleased with all the players involved in the discussion. He said the proposal is financially viable. He urged his colleagues on the council to let the city staff and the interests finalize the deal, and that the council should get out of the way, and just support the project.
“We need to move forward,” Rowse said.
The council is set to formally approve the contracts on June 16.
