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San Diego prepares to offer sports arena site to affordable-housing builders — with one condition

Pechanga Arena in the Midway District
San Diego’s Land Use and Housing Committee voted to recommend that the City Council declare the 48 acres the city owns near Pechanga Arena in the Midway District “surplus land,” on condition that the existing sports arena is refurbished or replaced.
(Nelvin C. Cepeda / The San Diego Union-Tribune)

The preliminary action sets in motion a chain of events for eventually leasing 48 acres around Pechanga Arena for redevelopment.

San Diego is again moving forward with a plan to remake the 48 acres it owns near Pechanga Arena in the Midway District, this time following a state-prescribed leasing process meant to ensure that excess government-owned land is made available for affordable housing.

The city’s Land Use and Housing Committee voted unanimously July 23 in favor of recommending that the City Council declare the property “surplus land” — meaning not needed for the city’s use — on condition that the existing sports arena is refurbished or replaced.

The preliminary action sets in motion a specific chain of events for eventually leasing land that had, under the previous mayoral administration, been promised to Brookfield Properties.

A state agency has determined that if San Diego were to move forward with the housing, retail and arena deal being contemplated, it would be in violation of the Surplus Land Act and subject to fines.

First, the full City Council must make the surplus declaration. Then the city must get the OK from California’s Department of Housing and Community Development, or HCD, that it can require the sports arena terms in its solicitation. Once those steps are completed, San Diego must offer the property to a state-vetted list of affordable-housing builders who would be required to reserve 25 percent of housing units for low-income families.

“It’s been a winding road to get to this point, but I’m excited that we’re here and that we, as a new council with a new mayor, get to determine the future of this sports arena site,” said Councilman Sean Elo-Rivera, noting that he wants to make clear to prospective bidders that the city is taking affordable housing seriously. “This is a once-in-a-generation opportunity to create a future that we all envision, that is a walkable, bikeable, transit-accessible, sustainable, inclusive and transformative in a way that benefits all San Diegans.”

The current path to redevelopment is a forced departure from a plan that dates to February 2020, when the city first sought developer interest in redoing its parcels around Pechanga Arena. Brookfield won a competitive bidding process for the plots — located north of San Diego International Airport, south of Mission Bay and bounded by Kurtz Street on the north and Sports Arena Boulevard on the south — with its plan to erect an all-new sports arena alongside five acres of public parks, 2,100 housing units and 590,000 square feet of retail space.

That redevelopment effort was scrapped in June after HCD informed city officials that the contemplated deal ran afoul of the recently amended Surplus Land Act. The state agency is charged with oversight and its new guidelines imply that San Diego should have offered the Midway District site to affordable-housing builders before garnering interest from other developers.

San Diego will correct for its missteps with a letter-of-the-law disposition of the sports arena property, as initiated by the Land Use and Housing Committee. The process likely will see the city issue a “notice of availability” alerting a list of affordable-housing developers, who will have 60 days to respond with their interest. The city is then required to engage in a 90-day negotiation period with all interested parties. If no one responds or a deal cannot be reached, the city can solicit interest from the open market, with developers required to set aside 15 percent of housing units for low-income families.

Among the unknowns in the process is whether the state oversight agency will sign off on the city’s desired development condition. The city’s notice of availability will require that future development of the property include renovation or replacement of the sports arena as an entertainment venue, said Mary Carlson, the city’s real estate program manager.

“If the city wants to have a development condition or restriction, we need to reach out to HCD regarding that restriction, and they will let us know whether or not our plans are reasonable,” she said.


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