Paseo Nuevo is about to get a major upgrade.
The owners of the open-air downtown mall, Paseo Nuevo Owners LLC, plan to invest $20 million on renovations, with $14 million for capital improvements and $6 million toward tenant improvements. The renovations are part of a lease deal with the city through 2065.
The Santa Barbara City Council voted 6-0 Tuesday to approve a development agreement that will ensure that the city and the mall are partners for decades to come.
The deal includes 156,000 square feet of space, but does not include the Nordstrom or former Macy’s buildings. The city now refers to the Macy’s building, at the intersection of State and Ortega streets, as the Ortega Building.
Paseo Nuevo will also make a one-time donation of $200,000 to the city for services for the homeless, and assume payment of Parking and Business Improvement Area assessments of up to $300,000 annually, starting in the fifth year after agreement.
The renovations will largely focus on the outdoor paseo areas, courtyard gathering spaces, dining areas, and curated art installations. Additionally, Paseo Nuevo’s service-based businesses and al fresco dining will be prominently featured by linking the innermost part of the mall to Chapala Street restaurants and retail stores, according to a news release.
“As stewards of Paseo Nuevo, we are committed to providing a quality retail and cultural experience for residents and visitors, supporting the longtime vitality and success of the downtown corridor and honoring Santa Barbara’s unique historic character,” said Mary Lynn Harms-Romo, marketing manager for Paseo Nuevo.
“This project is poised to reboot State Street’s retail vibrancy with a multimillion-dollar renovation,” she said. “Renovations will provide clean, inviting public spaces.”
The plans also include a fire pit, bocce ball court, new benches, signs, landscaping, and decorative lights.
“We have a wonderful public space over there that is in need of refreshment,” Councilman Randy Rowse said Tuesday.
The agreement calls for capital improvements in the mall areas to be completed within four years and tenant improvements within five years, although Paseo Nuevo representatives told the city that it intends for the mall work to be finished by end of 2019.
The city expects that the mall owners will operate and maintain the mall as a “first-class retail center” and that the city will conduct maintenance inspections.
According to the development agreement, if Paseo Nuevo owners were planning to sell the mall, the city would have to consent to the deal.
Paseo Nuevo has also agreed to take over paying $60,000 annually for trash and recycling service, a cost the city currently pays.
“Representing one-third of the retail and restaurant gross leasable area of downtown, Paseo Nuevo is the city’s top destination for commerce, community and culture,” said Brian Okrent, executive director of Real Estate Americas at J.P. Morgan Asset Management, one of the owners of the mall. “The acquisition of the former Macy’s building last year and the announcement of this renovation further solidifies our commitment to this community.”
The mall was built in 1989 in a private-public partnership, with help from Redevelopment Agency funding. The current lease between the city and Paseo Nuevo Owners extends through 2065.
“They have been amazing downtown partners,” said Carrie Kelly, executive director of the Downtown Santa Barbara.
— Noozhawk staff writer Joshua Molina can be reached at jmolina@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
