Paseo Nuevo Shopping Mall Hit with Triple Whammy

After three public meetings that consumed no less than 15 hours, the Santa Barbara Planning Commission had a unanimous one-word answer for owners of the Paseo Nuevo shopping center: “No.” Specifically, the commissioners rejected a development agreement that would have extended the mall owners’ master lease with City Hall — which technically controls the land under the mall — by 28 years. Currently, the mall lease expires in 2065, and the owners are asking for an extension that would take them to 2093.

In light of massive changes afflicting retail shopping in general and the direction of State Street more specifically, the commissioners argued it made no sense to lock the mall into the status quo. It made even less sense, they said, given the mall owners’ reluctance to provide detailed information about their plans to redevelop the Ortega Building, formerly occupied by Macy’s until late 2017. To the extent such information was shared at all, Commissioner Leslie Wiscomb objected, it wasn’t until a day and a half before the Planning Commission’s marathon meeting last Thursday.

“It was a lot of pretty pictures,” Wiscomb said, “but it wasn’t in keeping with Santa Barbara’s character.”

The Planning Commission vote stands in stark opposition to a vote in favor of the development agreement by the City Council late this April.

A lot has changed since April. Not long after the council vote that month, Nordstrom announced it was shutting down its Santa Barbara store. Late in May, seven blocks of State Street were shut down to automobile traffic and opened up to dinner tables and pedestrian foot traffic. By most reckonings the State Street Promenade, as it’s called, appears to be here for good. On top of that, Santa Barbara’s community of architects has thrown itself into a vast collective project to reimagine what State Street should look like, and at least two developers have submitted plans to build major rental housing projects on State Street.

Well before the pandemic hit, Paseo Nuevo Owners approached City Hall for the lease extension. As a sweetener, the owners announced they would spend $20 million on upgrades — including infrastructure improvements and wheelchair access — that critics of the deal have argued were necessary with or without the extension.

In addition, the mall had agreed to certain new terms and conditions having to do with trash collection and parking that would add $195,000 to the city’s coffers. On top of that, the mall agreed to make a one-time payment of $200,000 to an as-yet-unspecified homeless program.

Back in April, the deal was praised by many of the established business groups as a much needed, reassuring investment in a troubled downtown by the biggest retail operator in town. Leading the charge against the deal, however, has been Ed St. George, a well-known developer and landlord who has emerged as an outspoken critic of what he’s termed City Hall’s lack of leadership and vision. Leading the charge in favor of the deal has been former mayor and councilmember Hal Conklin, who now represents an organization of commercial property owners and some business interests known as Santa Barbara Leadership Team.

Members of the Planning Commission were singularly unimpressed with the terms and conditions negotiated by city administrators with Paseo Nuevo Owners — which purchased the mall in 2015 — and argued the city could do better. The agreement will now be appealed back to the council for the final word.

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