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Is Developer Breaking Promise To Liberty Station Residents?

Is Developer Breaking Promise To Liberty Station Residents?
Questions are continuing to be raised about who truly benefits from the development of Liberty Station.

GLORIA PENNER (Host): So now we go from the county to the City of San Diego. It’s been 10 years since the San Diego City Council awarded the former Naval Training Station land in Point Loma to the Corky McMillin Companies. The deal was sweet by any standards. McMillin paid nothing but promised to split profits with the city and make a new community out of NTC. The community is now called Liberty Station. So, Ricky, how did the city do on that deal?

RICKY YOUNG (Watchdog Editor, San Diego Union-Tribune): Well, not as well, I guess, as some had hoped. And now – But McMillin has had problems of its own given the economy. And, you know, the original deal was 350 homes and they’ve built 349. But they are now coming forward with a proposal to build an additional 30 that weren’t in the original deal and also to build an additional 350 hotel rooms. They say this will help make it a better deal for them. And this is causing a good deal of controversy because they’re going to tear down a couple of buildings, including one that the community was hoping it would be able to use as a conference center. It’s an old chapel there that was built…

PENNER: Is that a historic building? One that’s been there for…

YOUNG: No, it was built in ’91, interestingly.

PENNER: Umm-hmm.

YOUNG: There’s a lot of older buildings that either are historic and you wouldn’t want to tear down or just old and – and maybe you would want to tear down. This one was built in ’91 and it looks pretty good to me but they say that it’s not getting a lot of use and so they would like to tear it down to make way for the additional homes and the hotel. Now, the people in the community complain that the reason it’s not getting a lot of use is because it costs too much to use it. They were supposed to, under the terms set forth by the Coastal Commission, they were supposed to have use of this building at little or no cost…

PENNER: Right.

YOUNG: …for public uses. And in a subsequent interpretation of that by the City, there was an allowance to let McMillin charge to cover their costs. And so McMillin has calculated those costs in such a way that it can cost like $3,000 to rent this place.

PENNER: I want to ask you, John, about something that Ricky said. He said something about financial problems with the McMillin Company because of the economy. I thought the economy was booming in 2000, 2001, 2002, 2003, ’04, ’05, ’06, and it wasn’t until 2007 that it started dropping off.

JOHN WARREN (Editor/Publisher, San Diego Voice & Viewpoint): Well, there are two things here. The McMillin Company had financial problems before 2000. They ran into difficulty when they were doing the Eastlake Development and at one point they almost went out of business. Now when I look at this project here, I call it the audacity of greed in terms of what they’ve done here. I mean, I never understood why with the concern for the airport we didn’t give the land to the airport to expand the runway in the first place to 230-some acres. But, nevertheless, the City entered into another one of its bad deals and didn’t ask for any share from the sale of the houses, and what we have now is McMillin probably expected to make about $78 million and made over perhaps $300 million in terms of the homes being sold during the time that the subprime scenario was taking off. And it was structured in such a way that they get to take undeclared expenses before even considering giving anything back to the City. So now here we are looking at owing them $14 million to help with the maintenance and upkeep of a place…

PENNER: You mean the City…

WARREN: The City owing…

PENNER: …owes McMillin?


PENNER: $14 million.

WARREN: $14.4 million to help here. And you’re looking at tearing down facilities that were not a part of the original deal and the city still doesn’t get any money out of it.

PENNER: Well, we’re kind of lucky. Somebody from the McMillin Company is calling in and we can get that side of…

WARREN: Oh, please, put them on.

PENNER: …the story and – and, John, you’re all prepared for this. I can see that. So, Kim from San Diego with the Corky McMillin Company is with us. Kim, welcome to the Editors Roundtable.

KIM (Caller, San Diego): Hi, Gloria.

PENNER: Hi. Yes, what did you want to say?

KIM: First of all, I – You started talking about the community center. It’s actually a conference center that was intended to be a viable business. And when the NTC plans were approved at the Coastal Commission back in 2001, during the hearing they put a requirement on that it be available to the public for 50% of the time. And what wasn’t known at that time was that there would be a lot of other space at Liberty Station that would be available to the community primarily through the NTC Foundation who are the stewards of the arts and cultural district. They have a lot of wonderful space intended for public use and community meetings there. And other folks here at Liberty Station, High Tech High, the Rock Church, I believe, have made rooms available to the public. And to be honest, the folks in the community that have been raising these issues that it hasn’t been available, we haven’t had a single call from those community folks to use the conference center.

PENNER: Okay, thank you, Kim. I appreciate that. John Warren.

WARREN: Well, first I’d say to Kim that the fact that these other things have come online do not negate the language of the original agreement. The wording was little or no cost, number one. $3200.00 a day is not little or no cost in terms of making a facility available. And whether or not people call – have called goes to the very nature of how you have not marketed the facility in terms of making it available. People from the community did go to NTC, did use the facilities, the conference center, they did use the chapel before. They made use of all of these things. And so that doesn’t wash in terms of the High Tech High and the church and everybody else. Those things do not cancel the existing agreement which you did go back and try to change the definition of public in.

PENNER: Well, Ricky, let me go back to you on this. And, Miriam, any time you want to pop in, please feel free to do that. In order to approve the plan now to demolish Building 623 and build a hotel and some residential units, will it have to go back to the city council? Will they have to approve it?

YOUNG: Yes. It’s sort of prelim – it’s very preliminary at this point. It’s gone to some community meetings where, as Kim mentioned, it hasn’t necessarily been well received and there’s been some controversy about it. So who knows if it’ll change before it gets to the council and then I think eventually it has to go back to the Coastal Commission. So…

PENNER: Well, we haven’t – except for Kim, there doesn’t seem to be any monumental amount of interest among our listeners in weighing in on this so maybe it’s okay for the – with the general public if something like a conference center is torn down to build a hotel, which I’m sure is going to be, you know, a healthy investment for the McMillin Company. Go ahead, Miriam.

MIRIAM RAFTERY (Editor, East County Magazine): This is not an east county issue so I don’t know how tall this conference center that’s proposed – or that’s there is, but I question can’t they do something multi-use where they could have a hotel that would include a conference center that could be open to the public but also maybe the upper stories could be some hotel rooms.

PENNER: Okay, well, I don’t have the answer to that, John, but it has to go to the city council for final approval on this. How does this council and mayor compare to the council and mayor who in 2000 went ahead and approved giving McMillin this project and at that time, just to refresh you…

WARREN: Susan Golding…

PENNER: …Susan Golding was mayor and on the city council we had Harry Mathis, Byron Wear, Christine Kehoe, George Stevens, Barbara Warden, Valerie Stallings, Judy McCarty and Juan Vargas.

WARREN: And in those days, the vote was 7-2 in favor of this project, number one. Things have changed considerably. Susan Golding is also the one that brought us the ballpark ticket problem, so she made a lot of deals that she shouldn’t have made and that were not in the best interest of the city. Mike Aguirre is the one that started digging into this issue in terms of the sweetheart deals that were put together perhaps and raising questions, and now we’re back with a new city council, we have a new city attorney, we have a requirement that this thing goes forth and be examined and I think that will happen but the reason we don’t have calls and we don’t have any interest is because the whole thing has been kept quite for so long.

PENNER: Well, not anymore.

WARREN: The public didn’t know it’s there.

PENNER: Not anymore. Okay, I’m going to have to kind of limit this so if you give a brief statement, Miriam and then I’m going to let Ricky wrap up.

RAFTERY: Sure. Well, there is an east county angle to this. Interestingly, McMillin’s vice president of acquisitions was James Hunter, the brother of then-Congressman Duncan Hunter, who put through the legislation that provided this sweetheart deal where the federal government simply gave this land to the City.

PENNER: You get five seconds, Ricky.

YOUNG: All I was going to say in terms of the change of the council is one of those council members who approved it ended up having to leave the council over taking gifts from developers, so at least there’s one less of those.

PENNER: Okay. Well thank you all to the editors. Before we close, we want to thank Voice of San Diego for contributing to the accuracy of Editors Roundtable. Their fact check has served us before and did again recently when one of our editors magnified the cost of recycling water. During last week’s show, KUSI’s Bob Kittle stated that purifying sewage for drinking water was more expensive than desalination or processing reclaimed non-potable water. The Voice of San Diego did a fact check on that, determined it was incorrect. And according to the Voice’s research, it would be less expensive to convert sewage to drinking water. This has been the Editors Roundtable. I’m Gloria Penner.