In a stunning turnaround for Santa Barbara’s Paseo Nuevo mall, Goleta-based Yardi Systems is looking to acquire the former Macy’s building, the in-line shopping center, Parking Lot 1, and the land underneath, currently owned by the city of Santa Barbara.
Santa Barbara, Yardi Systems, and Alliance Bernstein have been in negotiations on the deal, a move that would effectively rescue the mall and bring 600 workers downtown, reinvigorating State Street.
“I’m so excited about the proposals that are coming before us,” Meagan Harmon, city council member for District 6, said. “I think it’s a generational opportunity for the city to revitalize downtown.”
The Santa Barbara City Council will discuss the new plan at Tuesday’s meeting.
Yardi entered the discussion after the Santa Barbara City Council last year voted against transferring the land underneath the mall, valued between $32 and $39 million.
At the time, housing advocates and some council members pushed for more affordable housing at the building. The deal was lost in a larger discussion about housing, along with a separate proposal at the former Nordstrom building at Paseo Nuevo.
The Yardi plan appears to unite some of the disparate interests and create a path that creates housing, brings workers downtown and preserves the mall for locals and tourists.
Yardi plans to donate $5 million to Santa Barbara’s Local Housing Trust Fund and $700,000 to the city’s Downtown Plaza and Parking Program.
Housing in old Nordstrom building
The new plans also include Dune, Shopoff Realty Investments, and Praelium, the owners of the former Nordstrom building, erecting 80 to 112 apartments, along with affordable housing. DSP would donate a $1 million contribution to improve downtown and $700,000 to Santa Barbara’s Local Housing Trust Fund.
Harmon said she has felt significantly better about the two proposals approaching the council on June 2.
“By almost every metric, I feel that this project is an improvement,” Harmon said. “It’s an adaptive reuse project. We’re going to be bringing people downtown who can make use of the downtown amenities every day.”
Harmon said housing remains a part of downtown’s future. Since Yardi would be for corporate offices and DSP’s main focus is housing, she said they balance each other out.
“We’re still keeping the elements of the mall that we all know and love,” Harmon said.
City Council thoughts
Paseo Nuevo mall comes with a sense of nostalgia. It’s a mall, Harmon pointed out, the community doesn’t want to lose. The previous proposal included demolishing and rebuilding the Macy’s building taller than allowed under Santa Barbara’s charter.
“I think with the combination of Yardi Systems in the Macy’s building, some housing going into Nordstrom, but still maintaining the fundamental character of the mall,” Harmon said, “We have somehow managed miracles of miracles to do it all.”
For the deal to happen, Yardi would acquire all of Paseo Propco LLC’s assets for Paseo Nuevo. Their ownership would not include the businesses facing directly toward State Street.
“The City would also transfer ownership of the land under the inline mall,” Bryan Latchford, spokesman for the City of Santa Barbara, said.
Santa Barbara Mayor Randy Rowse said the two plans benefit the downtown community and bring more foot traffic to State Street.
“We’re trying to facilitate it, but me, personally, I’m excited,” Rowse said.
Since the COVID-19 pandemic, the 500 to 1200 block of State Street has been closed to vehicles, with only one-way traffic on the 1200 block.
For the past six years, some storefronts have gone empty and downtown shops have seen sales decline.
Rowse explained that the proponents of a continued closed street have only focused on preventing cars from returning to State Street.
“We have done that for six years and the proof of failure is in the decline of an area that was the wellspring of sales tax traditionally,” Rowse said. “The Yardi deal will bring up to 600 employees downtown, an element that has been missing.”
He also said the lack of traffic circulation for the downtown business corridor has hurt even those side streets, which are not closed.
“Whether the return of automobile access is a key to revitalization remains to be seen, but what we do know is that the lack of it has not worked,” Rowse said. “We have an opportunity to open in the interim plan, something we should have tried over the past 6 years, and we can have a look at all options.”
All of that, he said, would bring more people to walk on State Street.
With the hope of more foot traffic, Yardi and DSP moving into Paseo Nuevo allows local businesses, restaurants, and shops the chance to redevelop.
“Everybody, I think, can agree that this is a really good opportunity for the city of Santa Barbara,” Rowse said.
Fate of the proposals
The city is still in negotiations with Yardi Systems and DSP for feasibility and how the possible revamp benefits the community.
The meeting on June 2 allows community members to give feedback and for the two parties to present their plan to the council.
Harmon said she’s going in with an open mind, listening to all perspectives, but has already heard positive comments from the community.
“I think we’re in for an exciting, happy meeting,” Harmon said.
If passed on June 2, Yardi Systems and DSP will go back to the council with the final drafted documents to receive a vote on whether they will move forward with the purchase of the buildings.
