The Morning Report
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A rushed agreement between the city, the Port of San Diego and developers who want to build a hotel on the same plot of land where the city wants to expand the Convention Center is in question after an initiative to fund that expansion failed to make it onto the November ballot.
Also unclear: whether the city must quickly fork over $5.3 million to development group Fifth Avenue Landing to hold up its end of the bargain.
The agreement, approved by Port commissioners and the City Council in June, didn’t specifically outline next steps if the hotel-tax initiative didn’t qualify for the November ballot.
Fifth Avenue Landing owns the lease to a parcel behind the Convention Center that’s managed by the Port. Years ago, the partnership agreed to sell the lease to the city so it could expand the Convention Center but then leaders stopped making payments as plans for an expansion stalled. That decision threw a wrench into the latest effort to expand the Convention Center, escalating costs to proceed.
Now Fifth Avenue Landing and officials at the city and the Port are wrestling with what to do next after yet another miscalculation. Port commissioners were set to discuss the situation in a closed-session meeting on Tuesday morning.
Here are the two big questions before them:
Does the city owe Fifth Avenue Landing a $5.3 million deposit?
The agreement with Fifth Avenue Landing required that the developer get a $5 million down payment within 60 days after city officials signed a purchase and sale agreement for the bayfront property.
But there’s disagreement over whether the payment is required now that the measure didn’t make the ballot.
The city must decide what to do within days – perhaps as soon as Monday. Officials have said no funds have been transferred yet.
The city attorney’s office has said city wouldn’t need to make the upfront deposit if the measure didn’t qualify.
The developer is unlikely to stand down if city officials decide they don’t have to pay, meaning the city could also be forced to further hash out the agreement in court if it doesn’t pay the deposit.
Is a bayfront Convention Center expansion officially dead?
Boosters have long envisioned a Convention Center expansion on the plot that Fifth Avenue Landing now owns the right to develop. The city’s deal with Fifth Avenue Landing relied on voters to decide if that should happen.
If voters approved a ballot measure to increase hotel taxes to pay for the expansion, the deal said Fifth Avenue Landing would eventually get about $33 million for the land, including the $5 million upfront payment. If the measure failed, the agreement said Fifth Avenue Landing could proceed with its hotel project and seek needed Port commission approvals without protests from the city.
The agreement didn’t lay out the exact scenario that’s played out – or the possibility that the Convention Center measure could instead end up on the 2020 ballot.
The county registrar of voters has until Sept. 20 to finish a full count of initiative signatures. If there are at least 71,646 valid signatures, the measure could qualify for the 2020 ballot and Convention Center expansion boosters would likely want to build on the bayfront property.
Yet Fifth Avenue Landing probably won’t want to put its plans on hold for two years. Still, its project could struggle to win necessary approvals from the Port if commissioners believe supporting it could prevent the long-wanted bayfront Convention Center expansion.
There is a potential way around this: A front-yard Convention Center expansion, meaning one that goes up to or over Harbor Drive, rather than along the bayfront. The citizens’ initiative opened the door to this option.
For now, though, the city, Port and Fifth Avenue Landing aren’t saying how they plan to proceed.