The Paseo Nuevo owner and Pacific Retail’s development agreement for a multimillion-dollar deal that shifts financial obligations contained in the existing lease from the city to PNO for at least 45 years was unanimously disapproved by the planning commission, citing that the agreement is not in the best interests of the city.
The Santa Barbara Planning Commission unanimously disapproved of the Paseo Nuevo development agreement at Thursday’s meeting, thereby recommending that the City Council not adopt the pact.
Vice Chair Lesley Wiscomb compiled a list of findings to back the disapproval, writing, “The draft development agreement does not represent the best interests of the city and its citizens regarding the downtown core and the efforts currently underway to revitalize downtown.”
She stated the agreement “lacks the Paseo Nuevo Owner’s/Pacific Retail’s commitment and requirement to work with the Downtown Revitalization Council Subcommittee and other interested and involved groups as a partner in developing an integrated plan to improve our downtown.”
Furthermore, she said the development agreement “does not provide ‘significant economic benefits’ to the city while providing significant economic benefits to the company through an unencumbered optional lease extension.”
The multimillion-dollar deal by PNO shifts financial obligations contained in the existing lease from the city to PNO, and at the end of the 45-year term of the agreement, PNO could extend the ground lease for 28 years.
“Pacific Retail has been, in my view, unwilling to share their balanced redevelopment plan, in spite of the many references to such a plan in the draft development agreement,” Ms. Wiscomb said at the meeting. “A delay doesn’t suggest a good-faith partnership with the city. I believe the city and its citizens are entitled to and should insist that PNO provide the balanced redevelopment plan that’s stipulated in the draft development agreement, and one that is based on a holistic approach.”
Ms. Wiscomb wrote that the draft development agreement “excludes the Ortega (Macy’s) building and therefore raises questions about the ‘company’s commitment to the balanced redevelopment plan for the lease premises.’”
She wrote that the commission believes the Ortega building and Nordstrom building should be included in any redevelopment plan.
“The draft development agreement lacks objective and measurable performance standards to ‘operate the lease premises as a first class retail and commercial center,’” the vice chair wrote.
“The city must get adequate compensation out of this, and the proposed DA does not provide it,” said commissioner Sheila Lodge, who added that she agreed with Ms. Wiscomb. “It’s just a losing deal for the city, and I can’t approve anything that doesn’t turn that around and give the city the kind of return on this very valuable property that it should be getting.”
Other items within Ms. Wiscomb’s findings included that the development agreement “does not expunge the city’s liability for the $2 million loan,” “includes mixed use with a residential component” which is not currently permitted, “is not accompanied by a cost-benefit analysis,” “does not include a market rate payment to the city,” “does not contain any reference to or any requirement that company make measurable efforts to adhere to policies supporting local and small businesses,” “contains grossly inadequate daily liquidated damages for company’s failure to maintain the premises to the designated ‘first class mall’ standard” and “contains a City Profit Participation clause that disadvantages the city’s ability to ever participate in profits in the event of a lease sale.”
The next step for the development agreement is to be evaluated and voted on by the City Council, along with the recommendations and findings of the planning commission.
email: gmccormick@newspress.com
