Watch: "There Is No Plan B" for Paseo Nuevo, SB City Hall Chief Says, as Key Council Vote Looms

Santa Barbara City Administrator Kelly McAdoo and members of her team take a deep and detailed dive into the plan for the downtown mall, defending its finances, design and plans for more housing.

On December 2, City Council is scheduled to vote on a new, proposed agreement to redevelop the Paseo Nuevo shopping center, Santa Barbara’s most consequential and complex land use decision of the century.

The plan, contained in a 110-page “Disposition and Development Agreement” (that’s 36,344 words for those keeping score at home), raises a host of economic, budgetary, design and housing questions about the future of the city’s downtown.

On Friday, city Administrator Kelly McAdoo, with three members of her team who helped negotiate the proposal, dropped by Newsmakers TV to answer a barrage of questions about the project from Josh Molina, Nick Welsh and the genial host.

“There are some times when government steps in to do something the market won’t do,” McAdoo said. “We have a shopping center that is no longer relevant, and we are struggling to build housing downtown because it’s not feasible.

“So we think this is a place where the city can strategically step in, without spending money…and help restart State Street, because I think we’re a bit stagnant,” she added.

McAdoo, joined by State Street Master Planner Tess Harris and financial consultants Dena Belzer and Patricia Flynn, has been working overtime to make the case for the Paseo plan, meeting with individuals and organizations of every stripe in a bid for support for a project that she says is a crucial “catalyst,” both for addressing Santa Barbara’s shortage of affordable housing and for downtown economic renewal.

The job became tougher after both the Planning Commission and the Historic Landmarks Commission panned the plan, however, and it is uncertain how it will fare before council.

Among the key controversies and conflicts:

Land transfer. The agreement calls for the city, which owns the land beneath Paseo Nuevo, to hand the property over to a development consortium led by Alliance Bernstein Commercial, the global investment firm known as “AB,” which holds a 40-year master lease on most of the built property above; critics have complained it’s a sweetheart deal worth nearly $40 million, but McAdoo and her team argue that the property, as is, is essentially worthless, and that getting the housing and retail space called for in the agreement is a good trade-off for taxpayers.

Affordable housing. The project originally was presented to the public as providing 80 units for low-income households; the proposed agreement document makes clear, however, that it may yield as few as 24, depending on how the development is structured or plays out, with the AB group having “sole discretion” over much of the matter.

Design: Members of the Historic Landmarks Commission attacked the proposal for its size and bulk, particularly the 75-foot height of part of it; McAdoo noted that new housing regulations which Sacramento has forced on local jurisdictions mean that private developers would not be bound by the city charter’s 60-foot limit.

Nordstrom. The agreement focuses on redeveloping the building once occupied by Macy’s, which formerly was one of two anchor tenants, with a Nordstrom department store once flourishing on the other end of the mall; the proposed agreement is between the city and AB, and does not include owners of the vacant Nordstrom building, and it is unclear what, if anything, would be built in that space.

Politics. Among others, City Council member Kristen Sneddon, a candidate for mayor, has called for a popular vote of the people on the project; McAdoo said that delaying project approval to await a campaign and election balloting would mean the opportunity for development would be lost, leaving the city in the lurch.

“I would challenge the assumptions (about) the value of this real estate, because of the various (leasehold) encumbrances that are on the property,” she said.

“There’s no plan B because we have no control over what happens on that site,” McAdoo said. “So if Alliance Bernstein gets angry at us and says, ‘we’re out,’ they could just for the next, however many years, say, ‘we’re just going to write this loss off on our books, and we’re not going to approve anything the city comes back and asks us for.’ So I mean we’re in this prisoner’s dilemma - we’re like, who’s going to move first? Who’s going to say no? And it’s a really complicated conversation.”

Check out our full conversation with McAdoo, Harris, Belzer and Flynn via YouTube below, or by clicking through this link. Our podcast is available on Apple, Spotify, or on Soundcloud here. TVSB, Channel 17, airs the show every weeknight at 5 p.m. and at 9 a.m. on weekends. KCSB, 91.9 FM, broadcasts the program at 5:30 p.m. on weekends.