This story has been updated.
Otay Mesa is a sprawling 9,300-acre community along San Diego’s Mexican border that’s in the midst of formulating its plan for future growth. But one 50-acre property could blow it all up.
Otay Mesa’s new community plan has been in the works since 2001 and has cost millions to produce. It’s expected to go before the City Council for final approval next month.
As the project moves forward, however, there’s major disagreement over the future of one particular property, despite widespread agreement over the other 9,250 acres.
Torrey Pines Bank owns 50 acres just east of La Media Road, bisected by I-905. The southern, 33-acre piece has been designated for commercial use since 1981. City planners now want to designate it for industrial space.
That would make the property considerably less valuable, a possibility that prompted Torrey Pines to hire a lobbyist to protect its interests.
The bank’s CEO, Gary Cady, has promised a fight.
“If the city devalues the property, if our advisers tell us we should pursue our rights, we’ll do what’s in the best interests of our shareholders,” he said.
That could mean a lawsuit, a referendum or just a push to get the Council to see things their way.
City planners are resolute that their plans represent what’s best for Otay Mesa’s future.
“Our market study suggested that there is no need for additional commercial land,” said planning director Bill Fulton. “What they want would be the only commercial property south of the 905.”
Theresa Millette, senior planner for the area, said because the property sits at the intersection of two six-lane roads, the higher traffic demands that come with a retail project could create a safety issue.
But late last year, Torrey Pines enlisted Southwest Strategies — the same firm hired by the shipbuilding industry to fight Barrio Logan’s new community plan — to lead their battle.
“Of course, in Barrio Logan, the argument in favor of the referendum is to protect industrial land, which is what we are trying to do here,” Fulton said. “I’m simply making a factual statement.”
The plan has the property designated for a specific type of industrial use called “international business and trade.” It’s a flexible classification that would allow anything from warehouse space to research space as the area changes in the coming decades.
Cady said the bank, in addition to protecting its property rights, thinks it’s advocating for a better overall outcome, too.
“It’s just better community planning for those 33 acres,” he said. “The other industrial users nearby could make better use of restaurants or retail instead of driving farther north.”
In the last quarter of 2013, Torrey Pines paid $8,000 to Southwest, which lobbied Councilwoman Sherri Lightner and staffers for Council members Myrtle Cole, Lorie Zapf and David Alvarez to maintain the property’s commercial designation.
That $8,000 is a small investment, considering it’s meant to protect the value of a property that’s currently for sale for $8 million, or $240,000 per acre. (The full property, including the northern parcel, is going for $12 million).
But there are a couple more wrinkles in the face-off between the city and Torrey Pines Bank.
For one, the bank’s already submitted an application to the city to build a retail project under the existing designation. The city has acknowledged the application, which means it will be reviewed by development services under the existing zoning. Torrey Pines can pursue a retail project — or sell it to a developer to pursue a retail project — no matter what the city decides with the new plan.
So, why pay a lobbyist and wage a fight if you can already lock in the designation you want?
“We’re wondering the same thing,” Fulton said.
(One possible explanation: A retail project could go forward despite the industrial zoning, because it would be counted as a “previously conforming use,” but its ability to expand in the future would be limited.)
The question makes more sense, Cady said, in reverse: Why would the city change the designation knowing the bank can already secure a commercial entitlement anyway?
(That one’s easier to answer: Real estate projects fall apart all the time. If something were to happen to this one, the city would rather fall back on its preference to limit the property to industrial use).
Cady said the city’s claim that the existing application would allow the bank to secure a possible retail project offers little comfort.
“We want a clear public designation to our property rights,” Cady said. “It puts us in dispute if it’s zoned industrial but we’re developing commercial. It creates confusion and risk to the future of our property.”
In other words: The city says it’ll lock in the old zoning; Torrey Pines isn’t buying it.
Otay Mesa’s local planning group has sided with the bank. It voted to approve the new plan, but said the city should let the bank’s property keep its commercial designation.
“We think they should keep the zoning they have today,” said Rob Hixson, the group’s chair. “I don’t like seeing somebody’s property downzoned, leading to a loss of value. Also, that’s a major center of Otay that would make a lot of sense for commercial.”
He also said he disagrees with the city’s claim that there’s already enough retail — in part because some planned projects have been changed — and thinks it makes sense to have a retail site just off a freeway exit.
But Hixson’s not just the planning chair. He’s also a commercial real estate broker – and he just so happens to be the broker for the disputed property listing.
It doesn’t appear the city would consider Hixson’s role a conflict of interest, since the group is weighing in on the entire community plan, not just the fate of the Torrey Pines property. In the past, Hixson’s recused himself from at least one discussion specific to the property.
“Community planning groups are supposed to represent residents, business owners, property owners … so I think by design people who have a financial interest in that community are allowed if not encouraged to participate in the community planning group,” Fulton said.
Update: The San Diego Planning Commission voted Thursday morning to recommend approval of the Otay Mesa plan and did not suggest any changes to staff’s recommendation (including the Torrey Pines Bank property). The City Council is expected to vote on the plan next month.