Tuesday, Aug. 19, 2008 | Gaylord Entertainment’s proposal for a massive hotel/convention center on the Chula Vista bay front — which a year ago was pronounced dead — has been quietly inching forward in recent months, with those close to the billion-dollar deal showing renewed optimism that it will actually happen.
Touted in recent years as the best chance for redevelopment of the beleaguered bay front to come along in a generation, the proposal still faces many hurdles — from a raft of environmental issues to a tanking economy. And if a deal does end up coming together, the project will be built years later than originally planned.
But interviews with key players indicate that last summer’s bare-knuckled and very public fight between Gaylord and local union leaders over the use of union labor on the project was not the death knell many thought it was.
Officials from the Port of San Diego and Chula Vista, as well as Nashville-based Gaylord’s CEO Colin Reed, have said recently that they are optimistic about a deal being hammered out, even if it does end up taking considerably longer than they had envisioned it would two years ago.
“They said ‘[People in San Diego] are making comments that could affect our company, I’m not sure we should do business here,’” said Chula Vista Mayor Cheryl Cox, describing the executives’ reactions last year. “But they came back quietly a month later.”
The environmental impact report for Chula Vista’s Bayfront Master Plan — which includes the Gaylord project — continues to move along. The public comment period, an important step, ended this month, and Port spokeswoman Irene McCormack characterized the comments as substantial, but nonetheless, manageable.
She said officials are hopeful that the Port Commission will certify the document before the end of the year. Closely following that action should be a lease agreement between the port and Gaylord, McCormack said. Then the project would go before the California Coastal Commission, and in a best-case scenario, Gaylord could be breaking ground by 2010, and opening by 2013.
When Gaylord first proposed the project in 2006, it was scripted for a 2011 opening.
“We are making good progress,” Cox said. “We are being methodical and meticulous.”
They are also being much quieter than they were last summer when a stalemate between Gaylord and the unions concerning whether the project would be built under a “project labor agreement” boiled over into an all-out public relations battle that ended badly for all involved.
Cox said Gaylord, which had become accustomed to being welcomed with open arms by communities where it had built projects in recent years — namely Grapevine, Texas, and Orlando — was not prepared for the thrashing it received by opponents in San Diego County.
The unions demanded an agreement that would mandate a union workforce during the construction of the project. Gaylord initially said no to any such agreement, but later offered a modified agreement that would call for union labor on the project, but give the company the power to decide which workers would be union and which would not.
Gaylord executives were said to come off like out-of-town suits trying to impose their values on a local community; while union leaders were seen by many as selfish obstructionists who were torpedoing the city’s chances of bringing in a bona fide jobs generator.
Meanwhile, Chula Vista officials — most notably Cox — were accused of being incapable of doing what they were elected to do, namely bring divergent groups together for the common good.
The nadir came in early July 2007 when Gaylord announced it was abandoning the project, saying it was killed by the unions’ “unwavering and unreasonable demands.” A month later the unions rejected what was termed a “last ditch” effort by Gaylord to reach an agreement.
“We aren’t talking to Gaylord anymore,” said Tom Lemmon, business manager of the San Diego County Building and Construction Trades Council on Aug. 1 of last year.
But talks did continue. And though both sides have been tight-lipped regarding the nature of the negotiations, comments by Reed during a recent conference call with stock analysts indicate that they are going better than they were a year ago.
“We’ve had more discussions with organized labor,” Reed said during the call earlier this month. “I’m not privileged to say, because of confidentialities we have with organized labor, where we sit with that, but the bottom line is I’m optimistic that will not be an impediment to the future.”
Labor leaders would not go so far as to say that they share Reed’s optimism, but they aren’t voicing the same pessimism they were a year ago.
“There has always been a dialogue,” Lemmon said last week. “It’s just not playing out in the press anymore.”
Gaylord entered into formal negotiations with Chula Vista and port officials in 2006 to build up to 2,000 hotel rooms and 400,000 square feet of convention space. It would be the centerpiece of the redevelopment of 550 acres of largely port-owned industrial and marsh land that stretches from the Sweetwater Marsh Wildlife Refuge to just south of the South Bay Power Plant.
The proposal, sketched out in a July 2006 letter of intent, called for a $1 billion project, which would include a $308 million public subsidy paid through bonds and revenue generated by the development.
Gaylord spokeswoman Leslie Wade said the company is “very encouraged” by the environmental report, noting that the company is trying for a certification from LEED, or Leadership in Energy and Environmental Design, which is given by the Green Building Council to projects that demonstrate leadership by using the latest in environmentally friendly technology and architecture.
“Gaylord is still very committed to this project, and we wish the process could be accelerated,” Wade said. “But we understand that it is a large public process dealing with one of the largest waterfront redevelopment projects in the nation.”
Laura Hunter, spokeswoman for the Environmental Health Coalition, offered a tempered response. She said improvements have been made in some areas, but significant problems remain in others. Among them are concerns about mitigating impacts to wildlife, public access issues and energy use.
“I’m not over-the-top excited about it,” Hunter said.
Another hurdle is the power plant. The city of Chula Vista has said it wants the decades-old power plant to be torn down, and Gaylord has said it will not build the project if the hulking structure is a neighbor. But that cannot happen until a replacement power source is created.
The California Independent System Operator, the state agency responsible for maintaining electricity reliability, has designated the plant as being essential to San Diego’s electricity needs.
And even if the environmental concerns are addressed, the project could be threatened by an economy that has soured considerably since officials signed the letter of intent two years ago. Gaylord, like so many other businesses, has been hurt by a toxic combination of spiraling fuel and construction materials costs along with a significant pullback in consumer spending brought on in large part by the real estate bust.
“(We) certainly have noticed a slowdown of projects going from planning to construction,” said Duane Vinson, vice president of Smith Travel Research, a lodging industry research firm. “Across the country there is a bubble of projects that are just sitting there.”
The stock market has not been kind either — Gaylord’s stock has plummeted over the past two years, going from $50 a share a year ago to $34.59 on Friday.
Yet analysts say that the recent downturn will not keep Gaylord from its long-term goal of having a West Coast property in its portfolio.
“It is definitely something they are interested in doing,” said Napoleon Overton, a hospitality industry analyst with Morgan Keegan & Company. “And it is something they should do.”
Though Chula Vista may be the most desirable location, Overton said, the company has other options.
“Yes, they are pursuing other sites,” Overton said. “And no, they cannot wait forever.”