Let’s make a deal.

That’s what the Santa Barbara City Council wants to do with the developers behind the 642-unit housing proposal at La Cumbre Plaza.

The City Council voted 7-0 on Tuesday to begin negotiations with father-and-son team Matthew and Jim Taylor to increase the amount of affordable housing at the site.

“It’s one of the largest redevelopment projects in the city’s history, and it will impact the city for decades to come,” Councilman Eric Friedman said.

Friedman, along with Councilman Mike Jordan, wrote a joint memo to direct staff to create a term sheet for the development. In exchange, the Taylors would like a development agreement, which would give them some assurance of final approval.

As it stands, about 54 of the units would be deemed “affordable,” but the council wants an additional 15%. Right now, affordable would mean people earning between 80% and 200% of the area median income. In Santa Barbara, the current median income is about $119,000.

“I pretty much have no doubt that this and Paseo Nuevo will be the two largest residential developments in this city in anybody’s lifetime sitting in this room,” Jordan said at Tuesday’s City Council meeting.

The council voted to pursue a plan with the Taylors for 10% of the project to be for people earning less than 80% of the area median income and another 15% between 80% and 120%.

The project also would need a public park, prioritize an on-site child care facility and partner with the Santa Barbara South Coast Chamber of Commerce for an employee-sponsored housing program that would give priority to local workers.

The developers’ plan is to knock down the Macy’s building and build 76 studio, 341 one-bedroom, 205 two-bedroom, 20 three-bedroom units, a total of 1,039 parking spaces, 13 loading spaces and 642 bicycle parking spaces. The interior of the mall would remain, with the development wrapping around half of it, facing State Street and Hope Avenue.

Parts of the building would reach six stories.

From a public relations standpoint, the La Cumbre Plaza project has stumbled every step of the way. It first got introduced to the public during a Santa Barbara County Association of Governments meeting in December 2022.

The city wanted to create a specific plan, which would have allowed the three property owners in La Cumbre Plaza to come together to meet with the city to create an overall agreement for housing, a move that would have significantly increased the number of affordable housing units.

The city at the time, 2022, was eligible for a $1.1 million grant from the state to fund the Specific Plan, but a majority of the board of the Santa Barbara County Association of Governments, led by then-chair Das Williams, tanked the funding for the specific plan.

The city had sought the funding from REAP 2.0, Regional Early Action Planning Grants to fund “equitable, affordable housing and sustainable transportation projects.”

The SBCAG technical advisory committee had recommended funding for the La Cumbre Plaza Specific Plan.

The SBCAG board’s denial of the funding for a specific plan was not forgotten at Tuesday’s meeting.

“Awhile back, the discussion of having a specific plan came up through SBCAG to look at the comprehensive nature of the whole entire La Cumbre Plaza project, and that unfortunately wasn’t approved by SBCAG,” Friedman said.

He said the rejection of that specific plan hurt residents in that area who have concerns about housing affordability, traffic congestion, circulation, impact on schools and the lack of public amenities.

Councilwoman Kristen Sneddon also noted that the funding at the SBCAG board meeting was “torpedoed,” which was unfortunate.

“A specific plan is actually what is needed here,” Sneddon said.

She also recited the recent history of the project and noted how only supporters of the La Cumbre Plaza project were given electronic updates. She said she has been “put off” by the transparency of the process so far.

“I am very happy these conversations are happening,” Sneddon said. “I am very happy we are moving into the transparent phase and handing negotiations over to the experts of our team.”

Sneddon also said she prefers that the affordability be for people earning below 120% of the area median income, and not up to 200%. She said the city has created too many studios and not enough larger units.

“If we are going to be talking about the missing middle, we need to be talking about the 80 to 120% of AMI and not higher,” Sneddon said.

She said that someone who earns 200% of AMI makes about $238,000 annually and they already can afford more expensive housing.

“That is a lot of money,” she said. “We have a high supply of units in that affordability amount, above the 120% AMI.”

Dianne Black, a member of the League of Women Voters of Santa Barbara, agreed.

“What we need is affordable housing for people earning 120% or below, and we need for sale housing that people who have a more substantial income can actually buy,” Black said.

Black also said it’s time for the city to start serving families.

“Almost all of the rentals we have been providing have been studios, one-bedroom, a couple of two-bedrooms, and we really need to start housing some of our families,” Black said.

She asked to apply local preference.

“The biggest failure we could have is for La Cumbre Plaza and Paseo Nuevo to be bought up by a bunch of people who don’t work and live here,” Black said.