Paseo Nuevo Redevelopment

Former Macy’s (State / Ortega / Chapala)

• Use: Corporate offices (adaptive reuse).
• Ownership: Fee transfer of the Macy’s parcel, inline retail parcels, and Lot #1 to Yardi Systems per the DDA.
• Public Parking: Lot #1 remains open to the public and is operated by the owner (see Section 8 for allocations).

Former Nordstrom — 817 State (Chapala & Canon Perdido)

• Use: 80–112 rental homes via adaptive reuse of the existing building; 10% inclusionary (moderate‑income).
• Street Activation: Potential ground‑floor commercial area to enhance the edges facing Chapala/Canon Perdido.
• Concept Design: Maintains Santa Barbara massing and style while adding a central courtyard/lightwell to bring daylight to residences.

Inline Retail & Paseos

• Approach: Continue and re‑tenant/upgrade shops and paseos to support daily needs and cultural uses.

• Reactivating the downtown core: The former Nordstrom and Macy’s buildings have been largely vacant for years; complementary corporate offices and housing uses would significantly increase activity on State Street and the surrounding downtown business district.
• Foot traffic and visitor economy: Relocation of Yardi Systems' corporate headquarters will bring roughly 600 employees downtown—supporting local restaurants, cafés, retailers, and services. Yardi’s events and conferences draw out of town visitors (at least 5,000 local hotel room nights last year), boosting the visitor economy.
• Housing at Paseo Nuevo: DSP’s proposal would add approximately 120–220 residents within the former Nordstrom building, supporting a 24/7 downtown and reducing car trips; 10% of units would be constructed as onsite affordable housing.
• Adaptive reuse advantages: Converting existing buildings, rather than full demolition and rebuild, means faster activation with less construction disruption and significant environmental benefits from reusing structures.
• Public realm and parking: Nonprofit community uses, such as the theater and museum spaces, at Paseo Nuevo would remain supported; City Lots 2 and 10 remain intact, and public parking at Lot 1 continues to be available.
• Downtown & Parking Fund Contributions — $1.7M total
  • DSP: $1,000,000 for downtown improvements—funds may support early catalytic actions of the State Street Master Plan (upon adoption).
  • Yardi: $700,000 to the Downtown Parking Fund for maintenance of critical parking structures.
• Local Housing Trust Fund Contributions — $5.7M total
  • Yardi: $5,000,000; DSP: $700,000. Contributions are unrestricted, enabling the City to leverage more deed‑restricted affordable and workforce housing downtown.
• Ongoing local spending & City revenues
  • Estimated ~$5M/year in additional local spending (residents, employees, hotel nights).
  • Estimated >$700,000/year in net new City revenues (TOT, sales tax, property tax share, and parking permits).

• Adaptive reuse, not full demolition—most work involves interior modifications and minor exterior improvements to existing structures, accelerating activation while reducing construction disruption.
• No subsurface excavation or grading anticipated under the current concept.
• Historic Landmarks Commission (HLC) will conduct design review for exterior changes, ensuring compatibility with Santa Barbara’s character.
• 817 State concept features a new central courtyard/lightwell to bring natural light into residential levels while keeping the iconic massing and style.

Lot #1 (under the mall; ~556 spaces):

• 49 spaces dedicated for residents of the 817 State housing.
• 115 spaces dedicated for Yardi Systems employees/associates/visitors.
• ~392 spaces remain open to the public; the lot will continue to be operated by the property owner consistent with downtown parking practices.

Lots #2 and #10 (City‑operated garages):

• Commuter/residential permits will be made available for employees and residents (quantities and terms specified in the agreements).

• Total homes at 817 State:
  • DSP has a pending application for 112 rental units under the City’s Adaptive Reuse Ordinance. Final unit count may be adjusted during design review if additional ground‑floor commercial space is incorporated.
  • The City’s deal framework anticipates a range of 80–112 units to allow for potential ground‑floor commercial activation along Chapala and Canon Perdido.
• Unit mix (concept): The residential program includes micro, studio, one‑bedroom, and two‑bedroom apartments. A new central courtyard/lightwell is proposed to bring natural light into the building’s interior while maintaining its iconic Santa Barbara form.
• Inclusionary housing (onsite): 10% inclusionary (moderate‑income) units onsite, affordable to households at 80%–120% AMI, consistent with City policy.
• Parking for residents: 49 dedicated spaces in Lot #1 (under the mall) for 817 State residents, plus residential/commuter permits in Lot #2 (quantities/terms set in the agreements).
• Citywide housing impact (Trust Fund): Separate from the onsite homes, the proposal contributes $5.7M to the Local Housing Trust Fund (Yardi $5M + DSP $700K). Because these dollars are unrestricted, they can be leveraged to help produce ~100–200 deed‑restricted affordable units at 80% AMI or below, and/or workforce housing downtown where traditional subsidies are limited.

• DDAs (Disposition & Development Agreements): Binding contracts that implement the redevelopment, establish pre‑transfer obligations, and set ongoing obligations after transfer.
• Fee transfers: To enable long‑term investment and remove outdated constraints, the City will transfer fee title of the appropriate parcels to the project partners (Macy’s, inline retail, and Lot #1 to Yardi; Nordstrom parcel to DSP).
• Use restrictions: The proposal includes termination of certain legacy reciprocal easement agreement (REA) limits, allowing housing and mixed‑use consistent with the City’s General Plan and zoning.

Why adaptive reuse rather than full demolition?
Adaptive reuse lets the City and partners activate vacant buildings faster, with less disruption and meaningful environmental benefits, while preserving downtown’s character.

How many homes will be created onsite?
The 817 State adaptive reuse will create 80–112 rental homes, with 10% inclusionary (moderate‑income) units onsite.

Will there still be public parking?
Yes. Lot #1 remains open to the public with ~392 public spaces, alongside dedicated spaces for residents and employees. Additional commuter/residential permits will be made available in Lots #2 and #10.

What community benefits are included?
The proposal delivers $1.7M to downtown and parking funds and $5.7M to the Local Housing Trust Fund—resources that can help deliver more deed‑restricted affordable and workforce housing downtown.

How is the project reviewed?
The City Council reviews and may approve the DDAs and related agreements; HLC handles design review. Proposed work is consistent with the City’s General Plan and zoning, and CEQA documentation/exemptions will be presented alongside DDAs.