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The San Diego City Council Tuesday confirmed Mayor Todd Gloria’s selection of a developer to revamp the Sports Arena area, making way for its proposal to rebuild the arena and build over 4,000 new homes in the Midway community.
The team was selected over two other development groups, and the selection was complicated ahead of the meeting over reporting from the Union-Tribune and La Prensa last week over a donation two years ago from the developer to a committee supporting Gloria’s mayoral election, and over past lawsuits against the developer that it had not disclosed when it bid on the opportunity.
Those accusations figured prominently among public commenters before the vote, but the City Council fixed its attention on other aspects of the transaction. The sharpest line of questioning came from Councilman Raul Campillo, who was the lone vote against the project.
He interrogated members of the development team over the arena developer’s experience leading projects this large, allegations of wage theft from contractors who had worked for the group in charge of affordable housing in the project, the use of a complex tax subsidy arrangement to upgrade infrastructure near the property and the proposal’s lack of attention to childcare for future residents.
Before voting against the project, he said the proposal’s reliance on round numbers for the homes it includes – 4,250 overall and 2,000 with price controls – indicated it was a vague promise rather than a realistic proposal based on firm analysis.
Campillo also took issue with repeated assurances throughout the meeting that the Council’s vote merely selected the developer to begin formal negotiations, and was not a final decision. City staff reiterated that the Council could approve a final development agreement after the city had completed an environmental analysis, in 18 months to two years.
Realistically, he said, once the city devotes time and energy to one team and the other bidders move on, the city will not be incentivized to walk away from a deal and start over in two years.
“It matters to me not just what you can propose but what you can deliver, and not just what you promise but what your track record is,” he said.
The Council’s approval included the caveat that its independent budget analyst be allowed to sit in on negotiations between city staff and the developer – based on a request from Councilwoman Monica Montgomery Steppe – and that the developer and staff provide quarterly updates to City Council and the developer provide quarterly updates to the community.
Penny Maus, the city’s director of real estate and airport management, and a representative from Jones Lang Lasalle, a consultant the city hired to assess the three development proposals, each said multiple times that the project could undergo significant changes before the Council approves a final deal. The developer couldn’t assess the physical limitations of the site yet, Maus said, and once it did so it could learn that certain parts of its proposal weren’t feasible. The consultant’s analysis determined that the financial assumptions in the plan translated into a coherent financial strategy, but said there was “a lot more work to do to establish financial viability, to make sure proposals being made can become a commitment.”
A representative for the state’s housing department, meanwhile, said the city had to this point complied with a state law requiring that low-income housing be prioritized in the development of public land. The winning bid – called Midway Rising, including the developer Zephyr, the arena team Legends and Chelsea Investment Corporation for affordable housing – offered both the most homes and the most price-restricted homes. If the city had selected a different team, it would need to provide an adequate explanation of why it did so. The IBA said that would be difficult, since neither staff nor JLL expressed concern about the team’s ability to build those homes.
Councilwoman Marni von Wilpert said that was part of why she voted for the project.
“I don’t think we have an adequate explanation of why we wouldn’t choose the most units,” she said.