The gaping maws of belly-up businesses line State Street.
Paul Wellman

Facing down a record number of vacancies on State Street and a citywide backlog of building permit applications, the Santa Barbara City Council voted unanimously this Tuesday to enact a six-month pilot program to improve and accelerate the review process for prospective commercial tenants along the downtown business corridor.

Applicants for properties between Sola and Cabrillo streets, where more than 30 storefronts currently sit empty, will now be bumped to the front of the line at design review board hearings. Two members of the city’s Planning Division and a Building and Safety staffer will also be assigned as dedicated points of contact to help business owners and commercial real estate brokers navigate the complex approval process. And hopeful State Street tenants will have exclusive use of a new question-and-answer phone line answered by staff reporting directly to the Community Development Director George Buell.

“Whatever we can do as a city to expedite, to facilitate, to allow the private sector to flourish and do better, is better for all of us,” said Councilmember Randy Rowse. The pilot program, with its additional time and staffing requirements, is expected to cost $267,500 over the next six months.

An epidemic of empty storefronts on State Street became a hot campaign issue as community leaders grapple with
Paul Wellman

Buell explained to the council that the improvement plan is necessary to help his office untangle a logjam of project proposals and plan checks that has forced applicants to endure exceptionally long wait times. “That’s not acceptable,” he said. The problem started in 2014, when the overall number of plan submittals — spurred by a sustained post-recession surge in land development and construction — started to increase.

As staff struggled to keep up, other factors came into play that over the last seven months have prolonged wait times even further—unexpected staffing vacancies, new state and local housing initiatives, other major city planning efforts (the new zoning ordinance, substandard housing enforcement, etc.), and an overall decrease in the quality of initial building plans as applicants rush to file their blueprints and paperwork before regulations change even further.

City officials are also beginning to study ways to incorporate housing into some of State Street’s commercial properties. Both Rowse and Councilmember Bendy White, who is now running for mayor, expressed an interest in the subject of adding apartments above or behind businesses, and wondered if it might be a way to inject fresh “vitality” into the area, where 13,000 employees work. City planner Renee Brooke said she’s fielded “soft interest” from property owners curious about the mechanics of such land-use changes. “We’re just beginning to explore those ideas,” she told the council, noting no specific projects have been put forward. The Santa Barbara chapter of the American Institute of Architects, it was announced, will be hosting a forum on the topic in the coming weeks.

Paul Wellman

The adoption of the pilot program comes as city leaders feel heavy pressure from business and political interests to intervene in the downtown retail slump. In its mid-year review, Hayes Commercial Group highlighted that available retail space throughout Santa Barbara has ballooned 99 percent in the past six months, due mainly to the loss of the Paseo Nuevo Macy’s. Meanwhile, average lease asking rates have increased 5.9 percent (to $4.62 per square foot) while achieved rates have dropped 11.1 percent (to $3.73 per square foot).

Looking ahead, Hayes predicted, “Market forces should apply some corrective pressure in response to State Street’s unprecedented supply of retail space, most likely in the form of lower rents or lease concessions by landlords. We expect it to get better before it gets worse, but it will still be bad.” Nevertheless, the Hayes report went on, there are glimmers of hope: Aside from the Macy’s space, Paseo Nuevo mall is fully leased; Just Play Music is moving into the former Goorin Bros. Hat space on lower State; Perfume Plus Outlet leased 911½ State Street; and the owners of the Sportsman are opening a new cocktail lounge in the 1200 block.


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