State Law Puts Sport Arena Development On Hold

Speaker 1: 00:00 This week, the city of San Diego got some bad news about plans to renovate the midway district, a large area around the pitcher. Sangha arena, formerly known as the sports arena is slated to become a new entertainment district with a new arena, parks, retail, and housing voters even approved a ballot measure, raising the building height limit in the area to allow for the development. But a new state law has now been clarified and it would seem to put a hall to the city's plans instead of being able to lease the land to the chosen developer. The city may have to open up bids again for affordable housing on the site. Joining me is Andrew Keats, senior investigative reporter with voice of San Diego. Andrew, welcome. Thank you for having me. There's been concerned for a while now that the new law called the surplus lands act could apply to the midway district proposal. Can you explain why Speaker 2: 00:54 This is an old law it's been in place for a while? There was recent legislation that altered it. And the specific change that is relevant here is that it now applies to long-term leases that cities might enter into for property that they have. So it used to be perceived as something that only applied. If you were actually going to sell what public land to a private entity. Now it says, even if you're just going to hold, you're going to keep ownership of it, but you're going to do a ground lease and let some private company come in and develop on top of it and pay you money every year that still applies. And it is that interpretation of that new law that has, has caught the city off guard here and disrupted the plans that were already to some degree underway. Speaker 1: 01:37 Mayor Gloria vote for that new law when he was in the assembly. Speaker 2: 01:41 Mayor Gloria did vote for that new law when he was in the assembly. Yes. Speaker 1: 01:44 I'm wondering housing is a part of the midway district proposal. Isn't it? Speaker 2: 01:49 Housing is, uh, is a part of the midway district proposal. And that is actually quite relevant here. It, because the new law stipulates an amount of affordable income, restricted housing, that's going to need to be a part of this project, regardless of what happens going forward. Speaker 1: 02:05 And would that housing part of the proposal that's already on the table, would that suffice this new Speaker 2: 02:12 Act basically the way, and this is, there are some moving parts here, so we could learn that this isn't quite right, but the way it's understood right now is that the city's going to need to most likely offer this land up to affordable housing developers for about 60 days. If no one responds, presumably they would be able to go back to the developer that they chose last year and renew negotiations with them. That's if no one responds, if, if an affordable housing developer does respond, then all bets are off. We sort of go down a different divergent path and things are potentially very different, but if no one responds, you can go back to the previously chosen developer, but even in that case, it would now stipulate that at least 15% of the housing in that project be restricted to people with, for people with low incomes. Speaker 2: 03:06 I think mayor Gloria in his negotiations was going to try to secure some amount of affordable housing above the 10% bare minimum legal requirement that any development has to has to provide. And this sort of moves that bottom line number from 10% to 15%. So there's no reason it has to just kill the project. The only reason it would have to kill the project is if the developer that was selected, Brookfield had no desire ever, and is still unwilling today to build 15% affordable units as part of that project instead of 10%. So, you know, it's a change, it's a 50% increase, but it still leaves, you know, th the vast majority of the, of the project to be built for a market rate housing, Speaker 1: 03:49 How far along was the city and finalizing the project with Brookfield. Speaker 2: 03:53 That's part of the thing that's interesting here is that they don't appear to have been all that close. Now, when the previous administration put this project out for bids from developers, they laid out a timeline that was pretty aggressive, that suggested that the mayor's office, and they did acknowledge that the new mayor would be the one to finalize the deal, to make some agreements and come to a project, a project management deal. They thought that that could happen at the beginning of this year and that the city council could be voting to give final approval by spring. And frankly, that's how this story came about is spring crept around. And not only was no one at city council voting on it, but there was the mum was the word coming out of city hall about whether negotiations were progressing at all. Um, and it was when I, when I inquired into the status of those negotiations that I found out there was this, this big bump in the road, the bump in the road being the surplus lands act. And it seems that essentially, uh, the developer and the city sort of put negotiations on hold until they got some clarity on what this new law was going to mean. And now it's on hold again, because they're going to have to put this project out to see if any affordable housing developers want to build on it. That'll be for at least 60 days. And then best case scenario after that negotiations could remit Speaker 1: 05:05 Does this interpretation of this new addition to the surplus lands act, create problems for other leases on city owned land. Speaker 2: 05:15 There are exceptions built into the law. So certain small projects are exempted. There are ways you could structure a project that would mean you sort of skate right by it. If you agree to have a certain amount of affordable housing. So there are still ways around it. But yeah, theoretically, the entire way that the city handles its real estate and not just the city of San Diego, all the cities in the County and the County of San Diego and MTS and North County transit district, any public agency that has some sort of real estate arm that does development agreements with private entities now falls under the auspices of this law and needs to change their policies to comply with it. Speaker 1: 05:53 All right, then I've been speaking with Andrew Cates, senior investigative reporter with voice of San Diego. Thank you so much. Thank you, Marie.