Chula Vista Looks to Barren Waterfront after Inland Boom

Tuesday, Dec. 26, 2007 | An assembly of mud banks, industrial buildings and weekend boaters, Chula Vista’s sleepy harbor yearns for a wake-up call.

A vision for rousing the potentially valuable 550-acre bay front, which could amplify the South Bay boomtown’s already burgeoning marquee image as well as its economy, has excited local boosters. The bay front, long neglected, should be treated to the shimmer and buzz that has been afforded to the city’s Eastside recently, they say.

Plans to do so are underway. A private company, along with the port and city governments, would transform that rugged patch of shoreline into a hustling resort, complete with a 400,000 square-foot convention center, one of the county’s largest hotels, a signature park and a state-of-the-art marina.

In addition to the resort, 2,000 waterfront condos, towering as high as 200 feet, would also pop up on the marshy site, and money would be squirreled away to restore the surrounding wetlands habitat.

But as the proposal came into clearer focus this year, the specifics of crafting this potentially iconic project hinges on 2007 decisions. Several milestones must be surpassed in the next year before the multiplex can be realized.

A sizable land swap of state-protected tidelands and the construction of dense new buildings on sensitive waterfront land will need to gain the approval of key agencies in the next several months.

Officials expect negotiations with Gaylord Entertainment, the handpicked developer for the convention center and resort, over the financing of the billion-dollar project to be wrapped up before summer.

Meanwhile, the leaders who have carried the project this far from its early stages have all departed or are departing from posts key to the development’s survival.

Backers of the project say they are confident it will reach fruition, even with difficult decisions ahead.

“We’re not there yet, but we’re continuing to make progress,” said Cheryl Cox, the incoming mayor of Chula Vista.

Financing the Fun

After defeating the incumbent Mayor Steve Padilla in the Nov. 7 election, Cox quickly established increased public access to San Diego Bay as one of the 10 priorities she has outlined for her first term.

While Cox said that the booming city was “well-positioned” in the continued talks with Gaylord and the port, she acknowledged in an interview last week that there is a “matrix of concerns” over the use of the bay front land: Who will pay for the infrastructure costs? And how much debt is the city of Chula Vista will be willing to shoulder.

Key to those questions, Cox said, are the city’s fiscal practices, which have been criticized as being overambitious and free-wheeling. The mayor has vowed to commission an independent review of the city’s financial health that she hopes will conclude in the spring – before the city wraps up its bargaining with Gaylord and the port.

The basic tenets of the expected obligations for the city and the port are known. In principle, the city of Chula Vista, the Unified Port of San Diego and Gaylord agreed that $178 million for the initial infrastructure improvements – such as roads, parks, promenades and a fire station – would come from the two public agencies.

Another $130 million in public monies, either through the hotel taxes the city collects or the lease revenues received by the port, will be shelled out to foot the port and city’s share of the convention center’s cost, according to the tentative pact.

These improvements, as well as others further along in a 25-year development plan, will also be paid for with the property tax derived from now-dormant properties once they are transformed into high-end condominiums and a resort. State law allows increased property tax dollars within the redevelopment district to be channeled directly back into the project area, bypassing normal tax-dollar recipients such as the city’s day-to-day budget or the county government.

Maria Kachadoorian, Chula Vista’s finance director, said that the city hopes to keep the sales tax that will be churned out at the proposed shops and restaurants there for the rest of the city instead of using it to pay off the project’s costs. However, she acknowledged that other local governments that host Gaylord resorts were forced to cough up sales tax dollars to pay back the loans.

Jack Blakely, executive director of the Chula Vista Downtown Business Association, said that he admires the city’s public stance against using sales tax to pay for the development. But he said he would still back the project if the city had to dip into the sales tax receipts to make the project pencil out.

Blakely said Gaylord is interested in staking a claim on the West Coast after already erecting facilities in the South and the East Coast, but warned that the conglomerate’s Pacific Rim destination needn’t be Chula Vista if a better offer comes along.

“We can hold Gaylord’s feet to the fire, but without them we have nothing. This project would be dead,” said Blakely, referring to Gaylord’s commitment to spend several hundred millions of dollars on the planned facility.

TaxpayersAdvocate.org president Scott Barnett, whose organization has released a study that was skeptical of the city’s finances, predicts that it will be difficult for the agencies to pay back loans for the project with the bay front’s tax windfalls alone – at least until the project is being fully utilized. He expects the city’s day-to-day budget to take a hit in paying back the debt in the first four years.

“I have serious concerns whether project will produce sufficient revenues to cover debt-service obligations,” Barnett said. “Given the city’s overall financial analysis, it needs to be cautious and make sure all the liabilities are covered.”

A Clean Handoff?

“We can hold Gaylord’s feet to the fire, but without them we have nothing. This project would be dead.”

– Jack Blakely, Chula Vista Downtown Business Association executive director

Besides the Chula Vista Mayor’s Office, other posts vital to the progress of the bay front vision have changed hands recently, meaning Cox and a new set of leaders will be expected to start fresh in a planning process that has already been running for three years.

William Hall, Chula Vista’s representative to the Port Commission, stepped down in July after spearheading the port’s push to develop its real estate holdings on the city’s bay front. Hall is credited with rounding up various factions within the community to collaborate on a vision, a move that has resulted in near-consensus among groups that could just as likely diverge over the plans.

Hall’s replacement, Mike Najera, is up for reappointment in January. It’s uncertain whether he will return to the post or whether the city will have its third commissioner in just six months.

The second term for Port Commissioner Stephen Cushman, a city of San Diego representative, is also expiring. There is resistance among San Diego’s leaders to reappoint him to a third four-year term when tradition has held that the city’s delegates bow out after two.

With a reputation as a deal broker between the various interest groups at the port, such as labor, maritime business and environmentalists, Cushman plays a role in the continued bargaining of the project’s intricacies: Can the workers at the convention center and hotel unionize if they like? Will the rumors of a Chargers stadium proposal materialize on the site? Will the proper barriers be set up between the expected throngs of visitors and the surrounding wildlife? Can the existing San Diego Convention Center remain profitable when a competing facility begins soliciting big meeting four years from now?

That last point could be critical to Cushman’s reappointment. Some within the city of San Diego have been critical of the Gaylord proposal because they suspect that the new convention facility there will siphon business away from San Diego’s waterfront meeting space, which at 615,000 square feet is about one-and-a-half times the size of the proposed Gaylord site.

The San Diego Convention Center Corp. conducted a study that showed the addition of the Gaylord facility costing nearby hotels up to 60,000 room-nights per year and the cash-strapped San Diego city government’s coffers about $2 million in lost hotel tax revenue. On the other hand, a subsequent study by the port found the city’s loss would be minimal.

Behind the scenes, San Diego Mayor Jerry Sanders, who doesn’t have a vote on the matter, has been fighting Cushman’s reappointment by trying to round up support for an alternative candidate. Sanders didn’t outright say that he disagreed with Cushman’s support for the Gaylord project, but did propose a candidate that sees “the bigger picture about economic and development and what’s best for our city.”

Also, Padilla vacated another important office when he was defeated by Cox in November: the California Coastal Commission. Because Padilla is no longer an elected official, another local officeholder will be chosen by state Assembly Speaker Fabian Nuñez in the coming months. San Diego City Councilman Ben Hueso, a boyhood chum of the speaker’s, is being propped up as the likely replacement.

Whoever fills the seat on the coastal panel will likely have an involved role in championing the project. The Coastal Commission holds the key to some of the crucial environmental barriers that must be bested, such as amending the blueprints for growth at the port and along Chula Vista’s coast to accommodate the massive development.

Having Padilla, who enjoyed the support of environmental groups, on the coastal panel was viewed as being an asset for the project because he could have kept the developers and the agencies involved informed about the commission’s normally strict expectations.

“The Coastal Commission is where a project of this size often runs into trouble,” said Environmental Health Coalition spokeswoman Laura Hunter. “He could have made sure that what was moving forward could meet the commission’s standards, but it’s not impossible to still do that with someone else.”

A Complicated Sale

Pedestrians enjoying the nature trails that would wrap around the resort are bound to impact the encapsulating wetlands habitat. Thousands of new vehicles that will travel to the site everyday will churn out new pollution. Birds from the nearby sanctuary may have trouble avoiding the shiny towers that will house thousands of guests and residents.

Those are just some of the concerns that observers have logged with the Port District, which is charged with blessing the 2,400-page study of the development’s environmental impacts on the surrounding locale.

After groups wrap up their comments on the study Jan. 11, the Port Commission will consider certifying the report – a decision that will set off a chain of approvals that are expected to be weighed by various local, state and federal agencies in the next year.

Aside from forging a development contract with Gaylord by the end of May, the hurdles remaining include amending zoning laws to govern the project as well as addressing environmental effects.

The harborside development’s proposed land trade with a private landholder will likely draw heavy scrutiny, observers said.

Pacifica Companies owns about 100 acres on the north end of the project, adjacent to the Sweetwater National Wildlife Refuge.

Because the Pacifica acreage is considered sensitive environmentally, the port has asked Pacifica to cede the land for habitat restoration in exchange for an equivalent value of land south of the proposed convention center. The port land is barred from hosting residential development, and so the state Lands Commission will have to approve removing it from the tidelands trust.

Hearings on that proposal are expected to take place in July or August. A Pacifica representative said the proceedings are normally tricky. But he was confident the transaction would be approved.

“Unofficially, the commission loves the idea, at least since last time we talked,” said Richard Campbell, Pacifica’s director of special projects. “The port gets property that is more important to the port’s goals, which is to provide access to the bay and protect environmental resources.”

In addition to those two state panels, the port and the city will have to make changes to their own zoning laws. Also, the state Department of Fish and Game, the San Diego Regional Water Quality Control Board and the U.S. Army Corps of Engineers will have to OK the proposed development. The Lands Commission may have an added step as well, as any dredging to make way for a ferry terminal will have to gain its approval, but that hurdle is at least a decade away.

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