CALLING THEIR BLUFF: Perhaps if you are a global investment firm with more than $800 billion in assets under management — such as AllianceBernstein (AB) — then maybe you are excused for never having read Dale Carnegie’s self-help classic, How to Win Friends and Influence People. But considering AllianceBernstein’s conspicuous absence at this Tuesday’s council meeting, I’d say they might give it a quick read.
After six hours of watching the hearing, one thing was clear: The council was not going to be intimidated. Some sought to teach the art of “How to Santa Barbara” to the team of architects, lawyers, and developers AllianceBernstein paid to be present. Others — Kristen Sneddon and Meagan Harmon come to mind — seemed more inclined to kick ’em in the nuts.
How did this play with AllianceBernstein? They were not in the room. They’d been invited and urged to attend, but their RSVP to the council was: “We’re not attending. And we’re not negotiating.”
AB representatives told councilmembers that if they didn’t vote in favor of AB’s proposal to build 233 units of rental housing in Paseo Nuevo with only some indeterminate number of units to be affordable, then the deal was off; they were walking.
Councilmember Sneddon was told that AB would let it “lie fallow” for 14 years. Councilmember Harmon was told she should be grateful AB took the trouble to send their reps to Santa Barbara to talk to them in the first place.
Councilmembers bristled at the my-way-or-get-run-over-on-my-highway nature of AB’s ultimatum. And many said so at great length — really letting AB have it. But they were really talking to Kelly McAdoo, the get-shit-done, remarkably comfortable-in-her-own-skin city administrator leading the charge for the project.
McAdoo and her team of City Hall negotiators, the council fears, have drunk the AB Kool-Aid. They believe the land rights to the two square blocks under the mall that City Hall owns is worth nothing.
Two square blocks of downtown Santa Barbara. Worth nothing?
Yes, for the record, that is the official judgement of state finance officials; and yes, the land is straitjacketed by a smorgasbord of complicated legal and contractual encumbrances. Hell, AB holds a 40-year lease on everything at the mall except for the Nordstrom building. That gives the company all but total control over what happens in Paseo Nuevo’s built environment for 40 years.
Councilmember Sneddon — now running for mayor — and Councilmember Wendy Santamaria both asked how the city could negotiate meaningfully with AB without knowing what the company could afford to walk away from. Is it $120 million, they asked, one of the many unconfirmed estimates thrown around for how much money AllianceBernstein lost when the previous mall owner declared bankruptcy a few years back? Is it zero? Maybe it doesn’t matter. But when your negotiating partner is holding a gun to your head, it’s a good idea to know if the gun is loaded and how inclined your partner might be to pull the trigger.
The big bugaboo, of course, was affordable housing. Initially, AB proposed building 500 units, which meant we’d get 50 low-income rental units. Then the deal changed to 233 units, with only 80 units of low-income rentals. That was still a big number. Then it changed to maybe 45. Then to maybe 24, the bare minimum required by law. Councilmember Harmon had to all but give Assistant City Attorney Dan Henschke the third degree to get a clear understanding of just how many affordable units the proposed projects actually guaranteed.
That number, by the way, is 24. Harmon, by the way, is a whiz-bang real estate finance attorney in her other life; she of all people should not have had to work so hard to get such basic information.
No vote was taken. But the council unanimously told staff to go back to the negotiating table with the people who already said they are not negotiating. (See Ryan Cruz’s article here for all the details.) In the meantime, staff will work with the mayor to appoint an ad hoc committee to keep up to speed on the state of these non-negotiations. The people AllianceBernstein paid to show up in their stead said they were hoping for an affirmation. “This hearing should be a celebration,” said one, “not a stampede of acrimony.”
Next time, try showing up.
My favorite last word goes to Councilmember Eric Friedman, who may or may not be running for mayor. Friedman expressed great hope and optimism that a path to yes could still be forged. But there had to be trust. Addressing AllianceBernstein’s paid stand-ins directly, Friedman said, “You tried to flex a little bit — or a lot — but what you found out is that nobody puts Santa Barbara in a corner. So here we are.”
And where that is exactly will take time to figure out. In the meantime, the folks from AB need to take a crash course in Dale Carnegie. Or better yet, How to Santa Barbara, written by the late, great Erin Graffy. It explains this whole mess.
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