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San Diego State University officials wanted a tentative deal this summer to buy 132 acres of city-owned land in Mission Valley so they could begin a $3.8 billion campus expansion early next year.
That hasn’t happened. Behind closed doors there appears to be significant tension between the university and the city over the terms of any deal.
Voters overwhelmingly approved Measure G last fall, which directed the city to sell the land to the university. Within hours of the vote, the city and the university began negotiating what could be one of the largest transfers of developable land left in urban California.
The first public sign of those talks was a hunky-dory Nov. 8 photo-op with Mayor Kevin Faulconer and SDSU President Adela de la Torre. Both leaders wore “I Am SDSU” scarves and announced they were “excited to join together.”
Eight months later, the public excitement has given way to a secret slog.
The university’s main deadline is to break ground early next year. Officials there say things are still on track for that to happen. But one of the university’s first deadlines – a tentative deal this summer – will almost certainly be missed, if it hasn’t been already.
Other aspects of any deal are at least slightly behind schedule if not entirely up in the air, according to interviews, public comments, court filings and other government records, some of which were obtained through Public Records Act requests by Voice of San Diego.
The basic plan voters approved is relatively clear, as far as multibillion-dollar campus expansions go. SDSU will pay fair market value for the former Chargers stadium site. Then the university will tear down the old stadium, put up a new stadium, create a park along the denuded San Diego River and work with private developers to build classrooms, research space and thousands of housing units.
Easier said than done.
This spring, the university’s senior vice president for Mission Valley development, Thomas McCarron, told the City Council that SDSU wanted some sort of preliminary deal “pretty much in place by this summer.”
The university wanted some certainty about purchase price and terms as it went about hiring architects and construction firms.
Instead, the university has been hiring contractors to build a stadium and develop a campus on land it will own for a price it does not yet know.
The city wanted to wait to reach a deal until after the parties had completed an environmental impact report for the project. A draft report, required by California law, is expected to be released soon.
Once the draft report is out, there will be a 60-day public comment period before it can be finished.
The city and university also obviously don’t yet agree on what the land is worth. That’s because they can’t. They’re also waiting on an appraisal of the land.
While appraisers have reviewed the whole stadium site in the past, there hasn’t been a specific appraisal of the exact slice of land the university wants to buy.
A draft appraisal came in earlier this month. Both sides are now going back and forth about it.
None of this means the whole project is delayed.
The city and university point to the university’s main deadline.
“Our goal all along has been to break ground in early 2020 and SDSU is on track to hit that mark,” Gina Jacobs, the university’s associate vice president for Mission Valley development, said in a statement.
(Yes, SDSU now has two vice presidents for Mission Valley development.)
Christina Chadwick, a spokeswoman for the mayor, said “the city looks forward to continuing to work with the university to strike a deal that makes financial sense; relieves San Diego taxpayers of the operation and maintenance for the stadium; and upholds commitments made by SDSU during the campaign, including building a world-class river park.”
Both the university and the city declined to say much more, citing ongoing and confidential negotiations.
Still, the university has been proceeding as if a deal will happen around the end of the year or early next.
SDSU has been on a hiring spree to get aboard architects, construction firms and other consultants:
- In February and April, the university hired Clark Construction Group and the architectural firm Gensler to design and build a new football stadium, which is expected to cost about $250 million.
- In May, the university hired Legends to help raise money to pay for the new stadium. The company will get 6 percent of whatever it can sell the stadium’s naming rights for, as well as other commissions for fundraising and premium seat sales, according to the terms of a contract that SDSU made public only after Voice of San Diego threatened to sue the university for withholding it.
- In June, the university hired Clark under a separate contract to demolish the old stadium and prepare the land around the new stadium for a river park and the full campus expansion. Clark estimated that will cost about $130 million, according to a partly redacted budget that includes trees for the river park, a pavilion café at a trolley stop on the site and places to play soccer, baseball, basketball and volleyball.
The university also hired traffic engineers, a water and sewer consultant and a floodplain adviser, among others.
Exactly where the money will come from remains unclear. Earlier this year, Voice of San Diego sued SDSU for withholding public records that may show how the university plans to do all this without raising student tuition and fees, a promise university officials repeatedly made during last year’s campaign.
In a recent court filing related to that lawsuit, McCarron said the university’s financial models are subject to change as assumptions about the stadium’s design changes. He also said that SDSU staff and consultants are using the models to prepare for “if the stadium does not meet the revenue projections.”
SDSU also argued that the university’s promise not to raise student tuition and fees wasn’t based on models showing the university could afford to pay for the whole project without raising student tuition and fees. Instead, McCarron said the university’s promise was based on a legal reality.
“In fact, the University does not have the authority – through state law or [Cal State University] policy – to unilaterally raise funds for property development through taxes or student fee increases,” he said in a July 8 court filing. “SDSU does not have legal authority to raise taxes. Nor can the university unilaterally increase student fees for property acquisition and development.”
The statement may not change the promise, but it appears to change why the promise was made. Last year, a top SDSU consultant said he’d run a series of models analyzing the risks to students and found a low chance student money would be needed to pay for the expansion.
The meetings may be private but there’s no question that price is being discussed. There are clear disputes between the city and the university over how much the land is worth. Most of those became apparent in April when de la Torre, McCarron and Jacobs appeared before the City Council.
There, McCarron said SDSU believes that the cost of demolishing the stadium should be deducted from the sale price. He said a previous appraisal of the site factored in demolition costs. A few of the Council members – namely Mark Kersey and Scott Sherman – didn’t buy that argument. Sherman said the university will be buying a stadium where it will play football for a season or two before its new stadium is built. Thus, the stadium is part of the deal.
Measure G specifically advised that the city and university “may fairly” consider the costs of the stadium demolishing effort and other needs for the site in their negotiations about the price. But it doesn’t appear to lock in any considerations.
There are likely similar tensions over the river park, transit upgrades and the effect of past floods on the value of the land.
We don’t know what’s being discussed because members of the negotiating teams are bound by a confidentiality agreement each team’s leader signed on March 21. Kris Michell, the city’s chief operating officer, leads the city team. McCarron leads the university’s team.
According to their agreement, the two parties are only supposed to talk publicly about terms when a deal is reached or if negotiations “permanently cease.” So, the public is supposed to know what is going on not at all, and then very suddenly learn everything.
When asked specifically why such an agreement was necessary, the mayor’s office referred questions to City Attorney Mara Elliott’s office. Her office then referred questions back to the mayor’s people.
Eventually, Chadwick said attorneys for city and the university developed the confidentiality agreement to “facilitate negotiations that are productive and result in the best possible deal for the taxpayers of San Diego.”
The confidentiality agreement encourages city and university officials to stamp every document generated as “confidential.”
The agreement, though, doesn’t prevent any members of the teams from talking freely with members of the City Council or the university’s Board of Trustees. Though, it’s not clear if that’s been happening.
In April, Council President Georgette Gómez worried that the city team would negotiate a deal that would not have the Council’s support.