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Officials Point to Paseo Nuevo as Shining Example of Santa Barbara Redevelopment Agency’s Value

While advocates tout projects' net benefit to communities, Brown targets tax revenue to help balance state budget

To complete Paseo Nuevo in the late 1980s, Santa Barbara's Redevelopment Agency spent $42 million to acquire the land, compensate three dozen affected businesses, demolish existing buildings, relocate utilities and build two parking structures.
To complete Paseo Nuevo in the late 1980s, Santa Barbara’s Redevelopment Agency spent $42 million to acquire the land, compensate three dozen affected businesses, demolish existing buildings, relocate utilities and build two parking structures. (JuedMartinez.com photo)

By Giana Magnoli, Noozhawk Staff Writer | @magnoli |

[Noozhawk’s note: This is one in a series of articles on Noozhawk’s Santa Barbara Challenge, our public-engagement project on the city of Santa Barbara’s budget. Related links are below.]

In the post-war 1940s, the state of California authorized the creation of redevelopment agencies to fix up blighted, decaying and forgotten neighborhoods. By raising the value of nearby properties, proponents argued, more tax revenue would be created for the community, which in turn would result in further improvements.

Since 1972, the city of Santa Barbara has had a redevelopment agency overseeing 850 acres of the downtown core and the waterfront. The RDA, which operates off local tax dollars and is financially independent from the rest of the city, is scheduled to expire in 2015.

Its demise could come much sooner, however, with Gov. Jerry Brown’s proposal to eliminate the 425 redevelopment agencies currently operating throughout California.

After years of state raids on municipalities’ property tax revenue, including RDA funds, voters in November passed Proposition 22 to protect the local funding sources. But facing a staggering $26.6 billion deficit, Brown wants to end the program and thus end the RDAs’ guaranteed cut of future incremental tax increases, which are the difference between the pre-improvement property tax revenue and the increase in revenue after redevelopment.

                  Santa Barbara Challenge Survey  |  Complete Series Index  |

With the expiration — or elimination — of an RDA, the tax increments would be redistributed to local governments and school districts. Local leaders have come out on both sides of the debate, arguing that RDAs are necessary for economic development or the funds are often abused with a lack of accountability.

Santa Barbara’s RDA has accumulated incremental tax revenues for capital projects and infrastructure. In 1982, the annual revenues were $2.19 million, but by 2000, more than $10.5 million was coming in each year. The agency’s net assets were $123.1 million as of June 30, 2010, a decrease of $1.5 million from 2009.

Millions of dollars have gone to building affordable housing complexes, parking structures and railroad station improvements — to name a few projects — and there is a long list of projects to finish before the 2015 deadline.

The RDA’s biggest project was Paseo Nuevo, the 462,000-square-foot open-air hub of downtown shops and parking structures that was completed in 1990.

Waterfront director John Bridley, who was the assistant director of the RDA for 15 years, remembers the work that went into making Paseo Nuevo a reality.

Because of the shopping centers built on Upper State Street and planned for Goleta, Santa Barbara decided to pursue one downtown, he said.

The RDA spent about $42 million in acquiring the land, compensating businesses that were forced out by eminent domain, demolishing buildings, relocating utilities and building two parking structures. The developer put in about $90 million to build and lease the smaller retail stores, while the two anchor department stores were practically given the land and paid their own costs to build the stores, since they were essential to the center’s success, Bridley said.

Given the scale, the proposed project came with a lot of community involvement, including public education, scale models by developers, and approvals by all the design review entities, including the Planning Commission.

In all, 35 businesses were relocated from 15 parcels, Bridley said. Two others went to trial over the eminent domain question and how much they should be compensated to either relocate or go out of business, he said.

One building — which now houses Folk Mote Music Store at 1035 Santa Barbara St. — was literally picked up and moved to the corner of Figueroa and Santa Barbara streets.

Paseo Nuevo still has its critics, as it changed the type of retailing that goes on downtown, increased rents and put a lot of mom-and-pop shops out of business.

“I started (with the RDA) in 1981, and what you see today is nothing like what you saw at that time,” Bridley said. “It is vibrant, it is alive, it has spurred private development and it has cleaned up an area that you could say was blighted, much more so than Upper State Street was at the time.”

The influx of larger chain stores — with H&M, Marshalls and REI scheduled to open this year on State Street — is a testament to the healthy marketplace that Paseo Nuevo created, Bridley said.

The shopping center is now the city’s top source of property taxes.

In 2010, the Paseo Nuevo Association had a taxable net assessed value of $87 million compared to about $78 million in 2001, according to Santa Barbara’s Comprehensive Annual Financial Reports. The RDA still owns the property and leases it to the PNA, which pays the property taxes.

Other large projects to date include parking structures, renovating the Carrillo Street Gym, 102 E. Carrillo St., and Los Baños del Mar Pool, 401 Shoreline Drive; the expansion of Chase Palm Park on East Cabrillo Boulevard; and the Santa Barbara Train Station improvement project at 209 State St.

Recent RDA-funded construction projects include:

» Brinkerhoff Street, four street lights, $200,000

» Carrillo Recreation Center, renovation, $6.7 million

» East Cabrillo Boulevard, sidewalks, $1.58 million

» West Beach, pedestrian improvements, $3.5 million

» West Downtown, pedestrian improvements, $3.75 million

» Westside Center, park improvements, $250,000 design

                  Santa Barbara Challenge Survey  |  Complete Series Index  |

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews. Become a fan of Noozhawk on Facebook.



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