Santa Barbara plans to do a major redevelopment project on the site of the Paseo Nuevo outdoor mall downtown. The city wants hundreds of housing units built there, in addition to retail space. (Joshua Molina / Noozhawk photo)
Santa Barbara plans to do a major redevelopment project on the site of the Paseo Nuevo outdoor mall downtown. The city wants hundreds of housing units built there, in addition to retail space. (Joshua Molina / Noozhawk photo)

The city of Santa Barbara wants to demolish the Paseo Nuevo mall.

In a move that would transform downtown, the city plans to work with an out-of-town developer to build several hundred apartments at the shopping center.

City Administrator Rebecca Bjork told Noozhawk last week that the development would consist of at least 450 residential units, but that number would be the floor. The redevelopment effort, at this time, would not include the Nordstrom building, which is currently vacant.

Alliance Bernstein Commercial acquired the leases in the mall a year ago after Paseo Nuevo went into foreclosure. AB Commercial is now working with The Georgetown-Company, based out of New York, on the redevelopment project.

The mall would be demolished in favor of a project including housing and retail.

The goal is to create a development agreement so that the developer gets the housing density it wants, and the city gets housing that it needs.

A commercial component would remain at the mall with some retail space. The city proactively reached out to AB Commercial to have a strategic hand in the future of the site.

“We aren’t going to let them build all market rate,” Bjork said. “But for this project, they have to get something out of it.”

The Paseo Nuevo lease with the city, which owns the land under it, will expire in 2065. The former Nordstrom’s parcel and the former Macy’s parcel leases have remaining terms of 41 years and will expire in 2064.

Bjork said that the new buildings would likely reach 60 feet tall and include a mix of market-rate, middle-income, low-income and very low-income housing units.

The city has hired two consulting firms, Strategic Economics and Maxima Group, to help determine the best use of the property.

Bjork, who plans to retire in December, said it is her intent to have all of the agreements locked up by the end of the year. After that, the project’s permitting and plan review should take about 18 months.

While a State Street master plan is currently underway, the redevelopment of Paseo Nuevo is a substantial move by the city in its efforts to revitalize downtown retail.

The mall has been the anchor of downtown since 1990. It rescued the area from a proliferation of surf and T-shirt shops and liquor stores.

At the time, the city entered a lease arrangement through which it received $1 a year from the lessee. The city had banked on the sales taxes, and a revitalization of downtown, as a financial incentive.

The decline of retail and the rise of online shopping has weakened the mall’s success, with several big and small companies entering and exiting with some frequency.

The largest tenants, Nordstrom and Macy’s, both fled the mall, leaving it up to make-up shops, boutique clothing and jewelry stores, and the Gap and Victoria’s Secret to lure customers.

At the same time, the state of California is pressuring local jurisdictions to build more housing.

City officials believe that creating housing downtown will instantly inject life and vitality into the area. The residents, they hope, will then shop and eat downtown, creating a new community.

“There’s momentum behind this now,” Bjork said.

Councilwoman Meagan Harmon took an enthusiastic stance on the project.

“This is an incredibly significant opportunity for our community,” Harmon said. “We have been discussing the importance of housing downtown, and at Paseo Nuevo specifically, for many years.”

She said just letting the market on its own decide the future of the mall likely would result in waiting decades for new housing at that location.

“To have this potential deal on the table, one that could get us that transformative, much-needed housing, is very exciting.”

The devil, she said, is always in the details, and that couldn’t be more true than in this case.

“I am hopeful that we’ll move forward to negotiate this deal so that we can dig in to those details,” Harmon said. “What level of affordability will we see, and to what degree will we see it.

She wants the project to have affordability and pay homage to the city’s design standards.

“So some big questions remain, but I’m very, very optimistic about the possibilities,” Harmon said.

The Santa Barbara City Council will discuss redevelopment plans at Tuesday’s meeting. Check back with Noozhawk for updates to this story.