When it comes to the debate over the future of Santa Barbara’s Paseo Nuevo, we can all agree that the subject is complex and has been confusing.
It’s not a new idea, having been initialed back when Rebecca Bjork was still city administrator and introduced to the public in a 2023 City Council meeting.
The idea of a “fee transfer” of the underlying ground lease has also been in place since the beginning, as the holder of the lease, AllianceBernstein Commercial has around 40 years of encumbrance on the property and improvements.
The goals for all parties and partners involved is housing and a revitalized downtown.
The number of housing units in the initial proposal was found to be infeasible for structural reasons, and now stands at 233 for the AB leasehold.
A separate entity holds the lease for the former Nordstrom building and has proposed 120 units of housing.
There is also a “residual easement agreement” (REA) that the City of Santa Barbara, AB and Nordstrom have to agree to resolve prior to anything moving forward.
The minimum amount of deed-restricted affordable housing for AB is 24, and if the Nordstrom project builds 120 units, the minimum there would be 12.
There is a possibility of a number of more “affordable” units or investment in the Local Housing Trust Fund, but those details are pending.
The 40-year encumbrance on the city property means there is virtually no market value to the city, which is why the city was able to participate in this deal via the state Surplus Lands Act.
Our leverage is that nothing transfers without the certainty of the configuration of housing proposed at a minimum.
So what’s in it for us? By replacing an outdated retail mall with housing, and rejuvenated inline retail shops, the city gets the benefit of downtown revitalization as well as significant projected tax revenues.
Paseo Nuevo was originally built in the 1980s for precisely the purpose of downtown vitality, and to gain that much housing in the core of our downtown would add around 700 residents who aren’t there now.
Downtown has stalled with the indecision on State Street’s future, but some very positive things are already in the works.
The Santa Barbara International Film Festival is putting an incredible investment in its new State Street center, the Music Academy of the West is developing a large facility downtown, and UC Santa Barbara is bringing residents and street-level improvements to its recently acquired Soltara building on the first block of East Gutierrez Street.
The new Paseo Nuevo housing and retail project will be at the center of all of this new activity.
This is a generational opportunity for our city. The two Paseo Nuevo projects will bring 350 units of new housing where today there is zero, doubling the current amount of housing that currently exists in our downtown corridor.
No program, master plan or consultant group can have the impact that this project will. I, for one, am very much looking forward to a rejuvenated and vibrant downtown, and our efforts and committed assets will be well worth it.
Wishing you all the best of the holiday season!