In an effort to save the proposed Paseo Nuevo redevelopment from collapsing, the city of Santa Barbara has decided not to give away a portion of land underneath the Nordstrom building, the site of a separate proposed 112-unit housing project.
Hours after a Noozhawk report about the controversial redevelopment of the mall, City Administrator Kelly McAdoo removed one key element that was snarling the deal.
“We ended up removing the transfer of the parcel of the Nordstrom building,” McAdoo said Monday. “There is still is negotiation that has to happen. This just preserves the negotiation about the Nordstrom parcel at a later date.”
McAdoo said the change came after talks Sunday with Shopoff Realty Investments, the owners of Nordstrom.
But the change only temporarily soothes the concerns about redevelopment plans for Paseo Nuevo, the downtown Santa Barbara shopping center.
The city wants to give away the land underneath Paseo Nuevo, and a portion of property tax revenue, at a total value of $32 million to $39 million, to the owners of the mall’s lease, AB Commercial.
In exchange, AB Commercial and its developer, The Georgetown Company, want to demolish the former Macy’s building to build 209 market-rate apartments and 24 affordable apartments.
Giving away the land is the only way, McAdoo said, to allow AB Commercial to make the deal profitable.
But the benefits have only shrunk since McAdoo announced the deal.
Originally, AB Commercial had proposed 500 units, then it was lowered to 233 market-rate and 80 affordable on City Parking Lot 2. But then, the city negotiated behind the scenes to allow AB Commercial the option not to build the 80 affordable units, and instead only build the 24.
McAdoo removed the Nordstrom parcel because Shopoff was upset that the land underneath its project would get transferred to a private investment firm. This move would essentially force Shopoff to negotiate directly with AB Commercial on the land.
A site map shows the design of the proposed 112 apartments proposed for the former Nordstrom building in downtown Santa Barbara. Credit: Courtesy photo
Although the land transfer underneath Nordstrom appears to be excluded from the deal, both Shopoff and McAdoo said on Monday that negotiations over the land and the housing must still take place.
Shopoff told Noozhawk that it still would prefer a three-way deal with all parties, and as it stands right now, the city wants to cut a deal with AB Commercial now, and Shopoff later.
A “reciprocal easement agreement” exists that requires both AB Commercial and Shopoff to agree to the others’ project before any housing development begins.
The situation is expected to come to a head on Dec. 2, when the Santa Barbara City Council is expected to vote on whether to give the land underneath Paseo Nuevo, excluding the Nordstrom building, to AB Commercial. The staff report will include details of the new agreement.
The Nordstrom project includes 60 one-bedrooms, 23 two-bedrooms, 22 microunits and seven studio apartments. The plan calls for 11 affordable housing units, the amount required by the city’s inclusionary housing ordinance.
