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San Diego owns nearly 100 acres of land in the Midway District, and almost half of it could be put up for grabs to private developers in mid-2020, if the city gets its way.
Meanwhile, businesses that lease the land are trying to secure extensions from the city.
Something’s gotta give.
“You’re not going to tear down an arena that is doing 130 events a year,” Ernie Hahn, General Manager of Valley View Casino Center said. “It’s the only place that a hockey team can play in town.”
Valley View is operated by AEG management, and its lease with the city ends in May 2020. The two parties are currently in lease negotiations for a possible extension, with Hahn and his team seeking a five- to seven-year deal.
The city owns not only the arena and its parking lot, but also the land under businesses like Pier 1 Imports, Dixieline Lumber and the Salvation Army. If the city doesn’t extend those leases beyond 2020, the stage will be set for a major redevelopment of the entire area, perhaps orchestrated by one developer following a competitive city bidding process.
The city is also moving this summer to update the Midway District’s community plan, which will vastly expand the amount of development that could occur there. If fully developed, the new plan could expand the neighborhood’s population by nearly six times what it is now.
Hahn said he has been talking to the city about wanting to extend the Valley View lease for over a year, but just recently started the negotiation process. The extension is “100 percent” going to happen, he said, and he expects it to be similar to what they have had in the past: a rolling rent model, with step increases each year.
San Diego confirmed that it’s currently negotiating for a possible extension of the Valley View site, but would not answer questions or provide specifics.
Joe Lawrence, president and CEO of Dixieline Lumber and Home Centers, said he has yet to approach the city about a lease extension, but he plans to soon. He said he’s hoping to keep his business in the area for 10-15 more years, at least.
“We are praying to the man above that the project does not go forward,” he said. “We have been here since 1967 and do not intend to go anywhere. We will ask for as much time as we can get.”
Lawrence and Hahn have been through these negotiations before. Both said the process went smoothly, with the Dixieline negotiation process taking a year to complete.
“We had a lease renewal about three years ago that gave us the 2020 deadline,” Lawrence said. “We were investing in our property at the time and were notified after we had begun construction that extensions were not being granted past 2020 because of potential (to redevelop) the Sports Arena…We need to get started now. The end of 2020 will be here quickly.”
Hahn, who has been the general manager of the arena for more than 20 years, said extending the Valley View lease several years gives the San Diego Gulls a long-term home. The Gulls’ current agreement to play at Valley View expires in 2020.
The team plans to stay in San Diego, according to Gulls communications manager Steve Brown.
“In terms of what we want to do, playing hockey, whether that is a new arena or AEG extending the lease, we are hoping to be in San Diego,” he said. “So many iterations of the Gulls have bolted, left or changed, but we are invested long term.”
In addition to the Gulls, San Diego’s new National Lacrosse League team, the San Diego Seals, will begin playing at Valley View in November. Their agreement with the arena also ends in 2020. Hahn said the San Diego Gulls bring 350,000 people a year to the arena and expects the Seals to bring in more than 100,000 fans a year.
“Extending (the lease) really gives us the ability to really work with the key entities at hand that want more time, that are a part of the San Diego community,” Hahn said. “It’s the best use of the land right now with the facility that’s there… Then down the line, should a new building get built, it gives the option to the city to get that land back while allowing the teams to continue to have a venue.”
Talks and plans for a new sports venue or event arena in San Diego have been ongoing for years. Most recently the focus has been on the Mission Valley area, which is home to SDCCU Stadium, formerly Qualcomm Stadium, and an expansion of the downtown convention center.
Last month, someone was polling residents about a potential ballot initiative to replace the Valley View Casino Center. It asked what type of additional development they would support in the area. Katie Keach, a San Diego spokeswoman, and Hahn both said they are not behind the polling.
Valley View arena opened in 1966, before San Diego voters passed a restriction on how high buildings could be west of Interstate 5. To build a new arena of the same height or higher, voters would have to sign off on the plan.
But one of San Diego’s most influential lobbyists, California Strategies and Advocacy, has registered with the city to lobby on behalf of H&S Ventures, LLC, the company that owns the San Diego Gulls and the Anaheim Ducks, according to lobbying records filed with the city.
The Gulls owners are seeking “improvement of Valley View Casino Center/Sports Arena…or entitlement of a facility in the San Diego region to host the San Diego Gulls.”
Benjamin Haddad and Craig Benedetto are the two lobbyists registered from the firm for this project.
Benedetto also lobbies on behalf of FS Investors, the developers behind the SoccerCity initiative. He made headlines recently after news broke that San Diego City Councilman Chris Cate leaked him a confidential city attorney’s memo that addressed legal questions related to the SoccerCity initiative.
The law firm Sheppard, Mullin, Richter and Hampton also registered as lobbyists with the city on behalf of H&S Ventures to discuss the Midway-Pacific Highway Community Plan Update.
Calls from Voice of San Diego to Benedetto and Sheppard, Mullin, Richter and Hampton law firm were not returned.
Hahn said he is supportive of a new arena but doesn’t see one being built in the near future. He questioned whether the Sports Arena area is the best location.
“I love grandiose ideas but I believe the next arena that should be built in San Diego should be in the spec and scale, whether it is downtown or Mission Valley or somewhere, that allows us to look at NBA or NHL capacities,” he said. “I think that is six to eight years out best case… As far as looking at this area for it, I think there are so many challenges… I see it fairly far down the list as far as the best locations in San Diego.”
In addition to being the home of the San Diego Gulls and now the Seals, the arena’s parking lot each weekend hosts the Kobey’s Swap Meet, an outdoor flea market. Hahn said the market has been there for 38 years and represents over 350 local businesses.
“This (Valley View) is still the juggernaut when it comes to entertainment and sports in San Diego,” Hahn said. “For the next six, eight, 10 years, we have it covered.”
Hahn said he is OK with extending Valley View’s lease for just a few more years, but Lawrence is hoping for something more. The Sports Arena Dixieline Lumber store is both a home center and a corporate headquarters, and Lawrence said it is one of his company’s better performing stores.
“Relocating the homecenter facility would be challenging,” he said. “We could find office space elsewhere, but having that home center footprint is very critical for us.”
Hahn said negotiations are going smoothly, and he can’t imagine failing to reach an agreement.
“It’s hard for me to think that a mayor and a city would just say we are going to close down the arena,” he said. “I don’t think the mayor is looking to lose anymore teams and he has been very supportive of the Gulls from the get-go… Based on conversations we’ve had with the mayor, I am excited we are going to get something done.”
One thing that could be included in the lease terms, Hahn said, is an option for the city to take the land back earlier. He said he could see this happening if another arena or venue is built with the capacity to host the sports teams and other events currently at Valley View.
In addition to the property lease expiring, the venue’s naming rights agreement with Valley View Casino and Hotel expires in December. They are talking with the company about a possible renewal and are open to potential new opportunities as well, Hahn said. The Valley View team will work to secure the naming rights agreement on their own, but the city has to sign off on it and receives a portion of the money. Currently, according to Hahn, the city earns 10 percent of the naming rights agreement between the arena and Valley View Casino and Hotel.