Santa Barbara City Council Votes to Pursue Plans to Demolish Paseo Nuevo for Housing

By the edhat staff

In a surprising move, the City of Santa Barbara has set forth an ambitious plan to pursue the possibility of demolishing the downtown Paseo Nuevo mall and replace it with a housing development containing approximately 500 residential units and 60,000 square feet of commercial space.

The City Council voted unanimously Tuesday to initiate negotiations for a project agreement, marking a significant step towards the realization of this transformative endeavor.

The mall structure is a little complicated as there are different owners for different sections. Currently the proposed plan is to demolish the vacant Macy’s building, located at the corner of State and Ortega streets, and the rest of the mall structure except for the vacant Nordstrom building at the corner of Chapala and Canon Perdido, which has different owners.  

The Paseo Nuevo Mall was erected in 1990 to attract more visitors and local shopping to the downtown area. With the rise of online shopping and retail giants restructuring, the outdoor shopping mall has received fewer and fewer visitors. Its flagship stores flanked on either side, Macy’s and Nordstrom, vacated their spaces several years ago. 

In April of 2019, a $20 million renovation project broke ground at the mall with hopes to reinvigorate the shopping center. The updates included entertainment space, community areas with group games including a bocce ball and giant chess pieces, charging stations, increased al-fresco dining, art installations with enhanced lighting and water/fire features, an updated logo, refreshed Spanish tile steps near the Arts Terrace, drought-tolerant landscaping, and new “shopping experiences.” At the time the Paseo Nuevo Management also committed $200,000 to identify supportive solutions for Santa Barbara’s homeless population. 

During Tuesday’s meeting, city leaders expressed their belief that repurposing Paseo Nuevo into a housing project will revitalize the downtown area. 

Under a complex arrangement, the city intends to work out a project agreement and subsequently a development agreement. Alliance Bernstein Commercial, which holds the mall’s leases, is collaborating with The Georgetown Company to develop the housing portion of the project. While Nordstrom is not currently involved, one of the owners expressed optimism about the reinvestment in the community.

The new development would likely consist of buildings reaching 60 feet in height and encompass a mix of market-rate and affordable housing units including a significant number of below-market-rate units, specifically two-bedroom units for families.

While rental prices remain uncertain, the project’s financial viability could hinge on the construction of a substantial amount of market-rate housing.

City council members expressed various priorities for the development. These include preserving community event spaces, maintaining current architectural elements, and ensuring the development remains open and connected to State Street.

Georgetown has enlisted architectural firm Gensler, along with local firm DMHA, to contribute to the project. Council members have expressed enthusiasm and excitement about the potential benefits this housing project would bring to the community, viewing it as a catalyst for downtown revitalization.

Edhat Staff

Written by Edhat Staff

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29 Comments

  1. You got to be kidding me there must be a new mover and shaker just one that’s working at the City ?City developed Paseo Nueva and now they’re going to develop housing for affordable. Are they gonna let the same management company that manages Paseo Nuevo manage it and not have to pay anything.? they need to start doing drug testing at the city, and tightening the flow of our money for wasteful things

  2. Such a dumb idea. If you want to develop, there are plenty of places that don’t require demolishing dozens of existing business and jobs.
    Paseo Nuevo, though imperfect, is n joyous part of State St and every tourist’s experience as they walk from Wharf past SB’s own McConnell’s and Habit through Paseo Nuevo to the Grenada and the Courthouse to Kids’ World…. the dozens of successful shops there pay testament to that.
    State St LANDLORDS want this because reduced competition will allow for more extortionary commercial and retail rent. Here’s an idea, if your storefront is empty, lower the rent. If this idiotic idea were to go forward, we would spend hundreds of millions and make a small problem into a big one.

  3. Having all of these new units will definitely make for a much more vibrant downtown Santa Barbara. People can walk/cycle to shopping and to restaurants, and won’t really need to use their vehicles much at all (much like in Manhattan or Tokyo). Many people across the country will now potentially have a nice place to retire. Affordability is secondary IF you can afford to live here, and plenty of people who can afford to live here WILL move into these new units. I would simply assume that no one is really going to do much to prevent this project from going forward, as well as going forward with the long-term plans to do the same at the La Cumbre Shopping Center…..only on a much larger scale. The Yardi property on South Fairview is a “no brainer” and should be completed very/very quickly since Yardi pretty much has all the cash needed to expedite their plans. More housing means more people, but more housing is what we want so things will be more affordable….I think that’s the idea. Time will tell.

  4. Housing and mix use seems like a wonderful idea. It’s a lot like beautiful older cities that have shops and housing above them. Often people don’t use their cars as much because so many of their needs are in walking range. It will add vitality in an area that has been closed for some time. This is the council taking action on state street which is a positive thing.

    • True, housing and shops is a great mix, but this is California, with its dream of open spaces tattered but still existing. Santa Barbara is not Manhattan or Paris or London or even Boston, all of where I lived without a car, all of which had great public transit.
      The major employers that create so much of the freeway traffic are UCSB, Goleta businesses and government —- many of our higher-salaried city and county employees live by choice in Ventura, preferring having yards to concrete. Cars (and their parking) will continue here but luckily there are city-owned garages, not part of this deal that could be given over to the residents since relatively few shoppers from out of downtown will visit. What about the relatively-recently updated Paseo Nuevo Theatre, will it exist?

    • The big question is why is this being rushed through with essentially no public input – the council was near empty and no advance publicity about this? Two of the Councilmembers were bumps on the log saying either nothing, one of them, or asking one simple question. The Council chambers were near empty, without one speaker, the (paid) Downtown Org., and 3 online speakers, the two regular callers, A- M Gott — “Why no public survey?” (Answered by Bjork, you, the Council, have your noses to the ground and know what the public wants -they agreed, they know!) and Lee Heller who praised the council.
      Administrator Bjork, who is leaving at the end of the year and is pushing this through as her
      farewell present, said SB has many theaters now and does not need the Center Stage or the Community Arts. Luckily, all the councilmembers did not agree. Councilmember Sneddon spoke up strongly for the arts and theater. Others agreed.
      This was probably the most significant Council meeting in a l o n g time, with no advance notice, with a staff report that was slight, less than two full pages, basically asking for the council to listen to the presentation, with a rush forward date of the end of the year, with the stated belief that a lot of market rate “work force” housing of varying sizes will turn around State Street, with no consideration that a lot, if not most of the users of the Paseo Nuevo and the overflow to State Street stores and shops came from out of the Downtown area but will most certainly not come to visit all the new housing.
      It was a fascinating presentation, an urban engineer’s dream: essentially no pesky public and only 3 of the 7-member council saying much — Friedman who did not seem to know that commercial zoning is 60’ and needn’t have worried about lower heights, Jordan, and Sneddon. Our mayor, the only one who represents all of us, said little.

    • 6:25am – That is troubling. Something of this magnitude and impact should warrant more public input. This would be a drastic change to downtown and not sure it would be for the better. The whole “Euro vibe” they seem to be aiming for won’t happen, even in our cute little pretentious town. Americans will never relinquish their cars.

  5. Why not build housing in either the abandoned Macy’s or Nordstrom’s and see if that helps revitalize the area? As others have noted, there are wonderful parts of the existing Paseo Nuevo. We regularly attend events at Center Stage Theater and the art museum and eat at some of the restaurants. Tondi Gelato is the best ice cream between SF and LA. Why does it have to be all or none?
    If anyone sane on the City Council is listening, can we please keep most of Paseo Nuevo as it is and build the housing in one of the abandoned department stores?

    • Good idea, SBRobert, but Nordstroms is not presently available, not part of this deal. At least they were firm, no vacation rentals! And also, no consideration was given to prior studies that have shown that market rate housing creates a need for serving-affordable housing, you know, house cleaners, etc., perhaps coming from the shrinking poorer areas of the city.

  6. “Market rate” housing – $2500/mo 1BR apartments. Many of these will be rented out as vacation homes to part-time residents. This will not provide housing for service workers, teachers, or the many others who are constantly stressed about annual rent increases. Nor will it tip the supply side of the supply/demand equation enough to reduce rental prices across the board.

  7. How sad is this. Remember dropping off your young teen and their friend as their first teen outing without mom who was near by lol. It was at the mall they would see friends. This means both malls are never to be enjoyed again since macys at la cumbre is also in the wotrk s of becoming housing. Our town is quickly turning into a extremely congested not so beautiful place. Traffic is getting so bad do we really believe 500 units at paseo will not be a traffic nightmare.

  8. I think this could be good. I mean, mixed use is great, as long as there’s a small grocery store of some kind. Does anyone remember the old Vons on Chapala? Just me? The other thing though, is the lack of jobs there – as someone already mentioned, a lot of the big employers are in Goleta. I live in SB and work in Goleta…there was a brief period where I considered applying at the new Amazon spot downtown (I could bike to work more easily!)
    And is that going to happen? More employers downtown? The building rents need to be affordable for that to happen.
    Plus, unless at least 50% of the units are affordable, then what’s the point? Affordable housing/ apartments, run by the housing authority, etc., with resale requirements, occupancy requirement, no AirBNB – that’s the kind of thing we need.

  9. Socialism doesn’t work! It’s really that simple. Providing “affordable housing units” (socialist housing) will not solve the affordable housing issue and is frankly incompatible with the vision of a vibrant and attractive downtown. Santa Barbara will never be an affordable place to live, unless its appeal is destroyed. It seems that is the direction we are headed. Capitalism achieves better results than socialism. The capitalist approach would be to allow the property owners to develop their properties as they see fit. This would lead to a vibrant and prosperous downtown. The socialist approach, which Santa Barbara is increasingly taking, is to take more and more away from the property owners by limiting their rights to choose how their properties are developed and to force them to give away portions of their properties in order to get the city’s permission to do anything. This dramatically impairs the ability of owners to adapt their properties to a rapidly changing economic landscape, leading to the steepening decline of the state street area we are seeing. I think this video pretty well summs up the approach the city of Santa Barbara takes to supporting businesses and the revitalization of the state street area:
    https://m.youtube.com/watch?v=ppfplBvq6UU&pp=ygUUYWRkYW1zIGZhbWlseSByb3NlcyA%3D

    • Take from the property owners in accordance with their means, and give to others in accordance with their need. That’s socialism if I’ve ever seen it, but “affordable housing” helps disguise it and make it seem more appealing. If you want state street to be a nice place, get the city out of the way and let the property owners do what they do best. If you want to run state street into the ground, put burdensome restrictions on the property owners, make the permitting process as slow and expensive as possible, and reduce the potential to make profits with socialist housing programs. I can tell you one thing, I sure as hell wouldn’t invest my money in a property subject to the whims of the city of Santa Barbara.

  10. this is just AWFUL.
    What on earth is wrong with this city council? these guys and ladies are actively and collectively RUINING downtown Santa Barbara. One poor decision and vote after another, disregarding precedent, disregarding what the locals needs and want.
    Closing the entire downtown main street for a few restaurants, letting the rest of the businesses suffer. Adding in more hotels, hotels hotels, hotels. Disregarding the SOLID FACT that we are short on affordable housing. Spending 11 million to “revitalize” the State Street underpass when Castillo underpass is a massive nightmare and MUCH more heavily used. Now you want to demolish the Paseo Nuevo for more super expensive apartments that people in town can’t afford (aside of maybe 10% of the population).
    How about TRYING to get more businesses to move to SB? How about reducing fees and get retail businesses fast tracked to open? How about STOP building hotels, build homes.
    There are 4 massive hotel projects going on right now.
    I’m calling the council members out by name that are doing this, Alejandra, Kristen, Mike, Oscar. These 4 are voting to continue the demise of downtown. Seems Eric and Randy have it right. Can’t believe i’m saying that, but I am 100% with those two guys.

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