Paseo Nuevo Project Too Big, Santa Barbara Review Board Says

The proposed redevelopment of the Paseo Nuevo shopping mall in downtown Santa Barbara will likely receive a height exemption — allowing the new buildings to reach up to 75 feet high — but members of the city’s Historic Landmarks Commission (HLC) are asking the designers to find a way to scale down the overall massing of the development before it makes its way through city review.

The proposal came before the HLC for a pre-application review on September 24, where City Administrator Kelly McAdoo provided a brief history of the project, which requires the collaboration of the city, which owns the ground lease for Paseo Nuevo, and AllianceBernstein, an investment firm that became the “accidental owner” of the majority of the mall when the previous owners defaulted on a loan from the firm in 2022.

Originally, the proposed plan included the rehaul of the entire mail with up to 500 units of housing. That plan fell through when AllianceBernstein discovered the foundation would require a costly reconstruction. The planning team went back to the drawing board, and a second proposal was revealed with a more modest plan to build 233 units of market rate above the Macy’s building and another 80 units of affordable housing above the city parking lot across from Paseo Nuevo on Canon Perdido.

HLC board members had questions about the overall plan, but most were focused on the massing of the buildings designed by Duncan Paterson of Gensler Architecture and Clay Aurell with AB Design Studio.

The renderings were true to Santa Barbara’s Spanish Colonial style with white walls and red-tile roofs. The largest building stretches the length of Ortega Street from Chapala to State, where the 233 market-rate units will be built. The upper floors include “mirador” lookouts, a pool, and decks for residents. The major market apartments will be on the State and Ortega side. The affordable units will be built in collaboration with the city Housing Authority.

Commissioner Cass Ensberg asked why the low-income units were being built on a separate parcel, and whether the city and the developers considered integrating the affordable and market-rate units. McAdoo explained the separation was due to the state’s process for financing affordable housing, which requires a building to be 100 percent affordable in order to qualify for tax credit financing — “So you cannot mix income levels,” she said.

Commissioner Dennis Doordan asked architects to be mindful of the design to ensure affordable housing doesn’t convey a sense of segregation. “I hope to see a refined architectural design in the next iteration that avoids coding one building as barracks for workers and one building as market-rate residential,” he said.

Commissioner Sheila Lodge pushed back on the height exemption, saying she was “troubled” by the prospect of allowing a building 15 feet higher than the city’s charter limit. Assistant City Attorney Dan Hentschke explained that the city had no control over the height concession, which was dictated by the state’s affordable housing laws. 

“It’s a legal matter,” Hentschke said. “The city attorney’s office has opined on that, and the city council understands that, with regard to the charter height limit, we have to allow them to go the height they’ve requested because of the affordable units they’re providing.”

HLC board members asked the design team to consider breaking up the two large residential buildings to create a collection of buildings and to prioritize walkways, arcades, and paseos that fostered the flow of pedestrians.

The project is expected to return to the city council for approval of the development agreement by the end of the year. The developer will likely submit an official application for city review early next year.