City of Santa Barbara to Publicly Discuss Draft of Paseo Nuevo Revitalization/Adaptive Reuse Proposal

Housing proposed at former Nordstrom building by DSP partners; Yardi Systems corporate offices at former Macy’s; Paseo Nuevo inline shopping center unlocked for revitalization; a draft deal framework will be presented to City Council for discussion and community input on June 2nd

After months of discussions, City staff are sharing details of an emerging proposal to redevelop the Paseo Nuevo shopping center that would reactivate the center of downtown as a true mixed-use hub, anchored by renovation and adaptive reuse rather than demolition, enabling downtown revitalization to move faster, with less disruption, and with significant community benefits. City staff plan to bring the negotiated framework to the full City Council for public discussion and direction at the June 2nd Council Meeting.

“After weeks of collaborative work amongst the parties, staff are bringing forward a potential plan to breathe new life into the center of our downtown while respecting Santa Barbara’s character through adaptive reuse of the former Macy’s and Nordstrom buildings. The ultimate decision rests with the City Council, and we look forward to engaging with residents and stakeholders as more details come forward,” said Kelly McAdoo, City Administrator.

Under the current draft concept, DSP (a joint venture of Dune, Shopoff Realty Investments, and Praelium) proposes new homes within the former Nordstrom building, through adaptive reuse. DSP would deliver 80 to 112 total apartments, onsite affordable units (10% of total units constructed), a $1 million public benefit contribution to enhance downtown, and a $700,000 contribution to the City’s Local Housing Trust Fund. The City would transfer ownership of the land under the Nordstrom building to DSP.

Yardi Systems is exploring the potential reactivation and renovation of the old Macy’s building for its corporate offices. To make the potential deal happen, Yardi Systems would acquire all of Paseo Propco, LLC’s, interests at Paseo Nuevo, including the former Macy’s building, the inline shopping center, and the mall’s parking lot (Lot 1). The City would also transfer ownership of the land under the inline mall and the former Macy’s building to Yardi Systems.

To enhance the public benefits of this approach, Yardi Systems would contribute $5 million to the City’s Local Housing Trust Fund and $700,000 to support the City’s Downtown Plaza and Parking Program.

This draft approach, with all parties working together, could finally unlock Paseo Nuevo for redevelopment, a cornerstone achievement in our community’s efforts to revitalize State Street and Downtown. It would greatly increase daily foot traffic, support local businesses, and bring hundreds of residents and employees to State Street.

Project Benefits:

• 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: Hundreds of Yardi Systems employees downtown would mean more daily customers for restaurants, cafés, retail, and entertainment. 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.
• Community benefit contributions:
  • Yardi Systems would contribute $5 million to the City’s Local Housing Trust Fund and $700,000 to support the City’s Downtown Plaza and Parking Program.
  • DSP would deliver onsite affordable units (10% of total units constructed), a $1 million public benefit contribution to enhance downtown, and $700,000 to the Local Housing Trust Fund.

Negotiations remain in progress, with Yardi Systems and DSP in active discussions with the City to assess feasibility and community benefits. A potential purchase agreement between Yardi Systems and Paseo Propco LLC is also still subject to further private negotiations.

As a complex, multi‑party effort, many details are being worked through. Staff anticipate sharing more details and a draft framework at the June 2, 2026, City Council meeting; agenda documents are posted the Thursday prior at City Council Meetings (SantaBarbaraCA.gov/cap).

Yardi Systems Contact
Ben Romo 
(805) 680-7623, ben@romoandassociates.com

DSP Contacts
Terrain Consulting
Jim Youngson (or Brian Robinson after May 29th) 
(805) 886-6041, jim@terrainconsulting.com
 
Brian Robinson
(805) 886-3167, brian@terrainconsulting.com