Financial problems continue to mount at the city of San Diego’s new central library even though the $185 million project broke ground in July.
The San Diego Unified School District has not paid the city the $5 million it owed when construction on the library began. The money now is seven months late. The district, whose $20 million pledge two years ago reinvigorated the moribund proposal, plans to put a charter high school on the library’s sixth and seventh floors.
“We have not made any payment to the city as of this date,” district spokesman Bernie Rhinerson said in an interview Thursday.
Rhinerson said the district has good reason for not paying: The city hasn’t met its requirements under the 40-year lease the two sides signed before the city began construction.
The lease requires the district to pay its $20 million total contribution in five installments. The lease also requires the city to provide the district with $30 million in property as collateral in case the library isn’t finished.
“We’re just waiting for the city to meet that requirement,” Rhinerson said, adding he wasn’t concerned about the project’s viability.
“I know they’re working on it,” he said.
Both sides agreed the city would use the land underlying the Hilton La Jolla Torrey Pines hotel for the collateral, a property estimated to be worth $32 million. This requires consent by the hotel developers that are leasing the land. The city needs the hoteliers to sign such an agreement, mayoral spokeswoman Rachel Laing said. The district also is requiring an updated title on the library property, she said.
Laing said the city was working out final details on both items and expected to reach a resolution “within the next few weeks.” She added that the delay hasn’t affected the library’s construction schedule, and called it a minor problem.
“There’s no reason to make this out to be a bigger deal than it is,” Laing said.
It is unclear what affect signing an agreement would have on the hotel’s lease or operations or why an agreement wasn’t signed by now. Patrick Duffy, the hotel’s general manager, couldn’t be reached for comment Thursday.
Phil Rath, a former mayoral staffer who was in charge of the library project at the time, recalled being told the property was clean during negotiations.
“I never heard somebody saying we need the Hilton’s permission,” Rath said. “If somebody did, I would have said we need to go get that.”
The school district is one of numerous contributors to the library’s construction bill. A state grant will cover $20 million and the city’s downtown redevelopment agency is paying $80 million. Most of the remainder is coming from private donations — about $63 million. The district will spend an additional $10 million to add flooring, interior walls and other improvements.
Money problems aren’t new at the library. The project had been long delayed because of funding problems before breaking ground last year. Donors still need to raise about $30 million by next January to meet construction deadlines. So far, fundraising has been slow, raising concerns that taxpayers would need to contribute more to the library or it would be left incomplete. In the worst case scenario, if the city doesn’t finish the library it would owe the state its $20 million back.
The nine-story library, located at Park Boulevard and J Street, is scheduled to open in July 2013.
Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.