When it comes to the debate over the future of Paseo Nuevo, we can all agree that the subject is complex and has been confusing. It’s not a new idea, having been initiated back when Rebecca Bjork was still City Administrator and introduced to the public in council in 2023. The idea of a “fee transfer” of the underlying ground lease has also been in place since the beginning, as the holder of the lease, Alliance/Bernstein holds around 40 years of encumbrance on the property and improvements. The goals for all parties and partners involved is housing and a revitalized downtown.
The number of housing units in the initial proposal was found to be infeasible for structural reasons, and now stands at 233 for the AB leasehold. A separate entity holds the lease for the Nordstrom building and has proposed 120 units of housing. There is also a “Residual Easement Agreement” (REA) which the city, AB, and Nordstrom have to agree to resolve prior to anything moving forward. The minimum amount of deed-restricted affordable housing for AB is 24, and if the Nordstrom project builds 120 units, the minimum there would be 12. There is a possibility of a number more “affordable” units or investment in the Local Housing Trust fund, but those details are pending.
The 40-year encumbrance on the city property means that there is virtually no market value to the city, which is why the city was able to participate in this deal via the Surplus Lands Act. Our leverage is that nothing transfers without the certainty of the configuration of housing proposed at a minimum.