The man with the troubled past walked into the downtown San Diego elevator.
In itself, this incident wouldn’t be notable. The man walks into lots of downtown elevators. His bank is downtown. So is his business and the top-floor, invitation-only private club he attends where you have to wear a jacket at dinnertime. He lives downtown, too.
This time people noticed. They were about to walk into a meeting on the source of one of the man’s greatest triumphs and greatest troubles.
The man in question, David Malcolm, wasn’t invited to the meeting.
It had been more than 10 years since Malcolm put together a $100 million deal to buy 165 acres of bay-front land without cash or credit. A man accustomed to crafting big land deals for private gain did this one for the public, snagging one of the few undeveloped urban coastal parcels in Southern California.
“It could possibly be one of the single best financial deals done in the state of California’s history,” Malcolm said.
It had been more than five years since the deal became the noose that hung his public career and, according to a close friend, nearly killed him. Malcolm pleaded guilty to a felony conflict of interest charge after it was revealed his company was working as a $20,000-a-month consultant for the land’s tenant and he didn’t leave his public position. Despite the plea, Malcolm maintained that he’s innocent or, at worst, an innocent victim. He even successfully fought to get the charge reduced to a misdemeanor and the conviction expunged from his record.
It’s not money, he said, that motivates him. His vision for the land’s future is something big. This fall when the opportunity came to do something about the obsolete monstrosity that inhabits the land, he seized it.
Thanks to him, the South Bay Power Plant is coming down. And, damn it all, David Malcolm wants to help.
“Is it a crime for me doing it, or would the crime be for me knowing how to do it and not bringing it down?” Malcolm asked in his gravelly voice. “What is worse? What is worse?”
Dozens of crisscrossing wires keep everyone away from the water.
The wires are barbed, chain-linked, power lines and rusty copper. They all protect or serve a power plant that’s been little more than a ward of the state for the past decade. Instead of parks and promenades, there are patches of brown grass, dirt, scaffolding and exhaust stacks.
They don’t make power plants like the one on Chula Vista’s bay any more, those that suck water in and spew it out. The state slowly has moved to take the plant off the grid.
The plant’s eventual demise has been foretold since Malcolm, then chairman of the Unified Port of San Diego, helped purchase the plant in 1999 from San Diego Gas & Electric and leased its operations to a North Carolina power company. The lease deal covered the plant’s purchase price, and the Port got the land for free. The land is part of 550 acres along the bay that have been mostly vacant since the early 1970s.
It’s land many have coveted. Just in the last couple years, the Chargers considered building a new stadium on it and a Nashville hotelier wanted to build a $1 billion convention center-hotel there.
Those plans fell through like all the rest. A hulking anachronism on the land doesn’t help deals get done.
But in late October, everything changed. State regulators said they didn’t need the 309 megawatts of power the plant still produces. The power plant can come down in as soon as two weeks.
Future development along the Chula Vista bay depends on the economy and many other factors, said Charles Adolphe, a senior vice president at Grubb & Ellis and a South County commercial real estate expert. But the plant coming down is key.
“With that power plant gone, you can look at the window of your condo or your office building and you don’t see this big, jumbled mass of ugly metal,” Adolphe said.
The Port envisions waterfront condominiums, retail shops, hotels, offices, parks and bike trails all along the bay. On the power plant site, plans calls for an industrial business park, an RV park, public parks and other open space.
Malcolm’s thinking much bigger. He has done some rough calculations of what the land’s worth. He figured the plant coming down added between $50 and $100 per square foot for the 16 million square feet in and around the power plant property.
If downtown San Diego land is worth $100 a square foot and waterfront San Diego land is worth five times that, Malcolm surmised, then waterfront land in Chula Vista should be worth at least the same as downtown San Diego. That means, he said, the overall property value could be as high as $1.6 billion. New development means new jobs and new tax revenues.
“This thing,” Malcolm said, “could bring in tens of millions, hundreds of millions of dollars.”
Malcolm said he doesn’t want any part of potential development. There’s no “Malcolm Plaza” on the Chula Vista bay front’s future.
The only reason he’s involved, he said, is to make things better.
Lines darken Malcolm’s face. He’s wearing a lavender shirt with matching cufflinks during an interview in his downtown office 14 floors up. Pictures of him with presidents and the pope line the walls. Malcolm’s continuing prowess is clear.
The day before the interview, Malcolm, who is 56 years old, emailed me a news brief about a recent $97 million financing for an office building he helped arrange in Texas.
“The point,” Malcolm said, “is that I’m still doing $100 million-plus deals regularly.”
Ever since he became a Chula Vista city councilman 28 years ago, Malcolm’s public life and his life as a real estate wheeler and dealer rarely has been without controversy. For 20 years, all the allegations against him — including one in which he was accused of plotting arson to collect insurance money — came to nothing.
Then the power plant happened. The deal Malcolm brokered as chairman of the Port turned over the plant’s operations to Duke Energy, a power company in North Carolina. Duke, in turn, hired a company Malcolm ran for $20,000 a month to try to make similar deals happen elsewhere. In essence, Malcolm began working for a major Port tenant.
Malcolm stayed on the Port, which was negotiating tax breaks for businesses, like Duke, operating on Port lands in the South Bay.
Scandal followed. The District Attorney’s Office pursued charges against him for violating conflict-of-interest laws. Malcolm, in response, waved a legal advice from a Port attorney saying he didn’t need to resign, but only remove himself from votes related to Duke. Malcolm had done that.
The pressure built. Malcolm passed out while driving because of the stress.
“David was going to die,” said Steve Peace, a former state senator and close friend of Malcolm’s.
Malcolm pleaded guilty to a felony charge. The judge said he eroded the public trust. A well-known supporter who ran a homeless services program downtown asked the court to put Malcolm in his custody. “I see David cleaning toilets in his thousand-dollar suits,” said Father Joe Carroll at sentencing.
Instead, Malcolm was sentenced to 120 days in a county-lockdown facility, probation and almost $300,000 in fines and court fees. His public career was over.
But Malcolm didn’t leave the issue alone.
He sued the Port unsuccessfully over its legal advice. Three years after his plea, Malcolm won a fight to get the charge reduced to a misdemeanor and the conviction expunged from his record. The topic remains raw. Malcolm speaks in extended monologues about the case’s arcane details. He keeps legal filings supporting his position at the ready.
“I’m innocent,” Malcolm said.
It was staff members at the Port that spotted Malcolm entering the downtown elevator. Though they aren’t saying it publicly, Port officials are spooked by Malcolm’s involvement in power plant discussions.
Malcolm’s downtown-elevator cameo made it into a Port report when its staff last updated Port commissioners on the power plant.
They also mentioned that he called a Port environmental director asking for information about the environmental status of the land surrounding the plant. With Malcolm was his cousin Dan Malcolm, an incoming Port commissioner from Imperial Beach. David Malcolm said that he and Dan were “very close,” according to a Port memorandum on the conversation. The memo added the environmental director felt uncomfortable discussing the power plant and the conversation ended.
“This information is included only for public disclosure and to avoid any appearance that the District has been cooperating or in any way engaged with David Malcolm on matters related to the South Bay Power Plant,” the Port report states.
It’s not just future development that’s at stake. There’s about $60 million set aside to pay for the plant’s demolition. The Houston-based company that currently owns the plant, Dynegy, pays the Port rent. Dynegy also is for sale.
The city of Chula Vista wants in, too. Its leaders were the ones who contacted Malcolm, Peace and other South Bay leaders over the summer to get the plant down. Malcolm and Peace helped arrange a meeting with state regulators this fall to push for the plant’s closure.
“I had a choice of saying, ‘Oooh, I’m not going to call David Malcolm,’” said Chula Vista Mayor Cheryl Cox. “Why wouldn’t you call someone who knows as much about it as he does?”
After its success with the state, Malcolm and Peace’s group began advocating for Chula Vista to take over Dynegy’s responsibilities to demolish the plant, assuming the city can get insurance. Chula Vista has more of an interest in taking the plant down quickly than some power company, Cox, Peace and Malcolm all argue.
Not once, Malcolm and Peace said, have they asked anyone for money for their help.
“Just to go to the next level of paranoia, nor does anybody have any economic interest that directly, indirectly, peripherally or on the same planet have any benefit associated with an outcome,” Peace said.
As for now, Chula Vista, the Port and the power company are all negotiating how the South Bay Power Plant is going to come down.
Late last month, the Union-Tribune published an editorial about Malcolm’s renewed role in South Bay Power Plant discussions.
After that, Malcolm said, he backed out of direct involvement in talks over the plant’s future. Chula Vista’s city manager said it was too political for Malcolm to be mixed up in it. Malcolm respected the decision, but said he would help again if asked.
Last week, that ask came. A Chula Vista councilwoman emailed Malcolm, Peace and others requesting advice for responding to the Port’s latest demands.
Malcolm does have a vision for the land he helped secure, land that finally can realize its promise. It shouldn’t be a hotel, he said. That’s too small. He has connections with some prominent theme park operators in Anaheim. He’s offered to take Chula Vista officials up to see them. Maybe they could build something on the South Bay.
“I think Disney ought to be there,” Malcolm said.
Please contact Liam Dillon directly at email@example.com or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.