S1: Hey there , San Diego. It's Andrew Bracken in for Jade Hyneman on today's show. Economic issues usually play an important role in election results , and this year proved no different. We check in on San Diego's economic picture on the heels of the midterm election. This is KPBS Midday Edition. Connecting our communities through conversation. Late yesterday , the San Diego City Council voted unanimously to move forward with a plan to redevelop the area around the San Diego Sports Arena. The Midway Rising project would build a new arena , retail space , parks and housing. The vote comes after years of delays , legal challenges and some controversy as well. Joining me with more is KPBS Metro reporter Andrew Bowen. Andrew. Hey. Hey , Andrew. So , you know , tell us about the vote and the meeting yesterday. And I think it's , what , six plus hours of it , you know?
S2: Seven , actually. Seven hours? Yeah. No , it was a long night for me , but yeah , it started with about an hour of staff presentations. Um , there were three items , technically , that the city had to vote on. After that , there were two hours of organized presentations from the public. Then a couple hours of public comment from individuals , and then the council got to its deliberations. So it was , you know , a very large and complicated deal. Um , the Midway Rising team was selected for exclusive negotiations with the city four years ago , and the city just wanted to make sure every possibility was thought through and accounted for. This is a really long timeline. You know , a roughly a century that the city is giving up the rights to , you know , do anything with this public land. So , you know , I heard some complaints in the public comment that these documents are so long , how could anyone ever , you know , read through these and understand them. That's just , I think , the nature of big deals like this , a simpler and shorter version of this agreement , would probably have fewer protections for taxpayers and less clarity over how to respond to things that might arise over the next century. So , you know , the complexity of the deal just made it a long meeting. Right.
S1: Right. And as you mentioned , you know , this has been going on quite , quite a while. And just to recap here , we're talking about like 50 acres of space. You mentioned this like 105 year lease involved. You know , and there's been so much debate since this was first proposed. You know , remind us what supporters of the project say about why it's important. Yeah.
S2: Yeah. Supporters say this land is underutilized. This you know , this site is very close to downtown. It's close to mission Bay. It's close to the Old Town Transit Center , with rail connections to all of the county and even Los Angeles. And the land is owned by the city. So they say it's a waste of taxpayer resources to have it in such bad condition. Most of this is just like crumbling asphalt , you know , surface parking lots. And , you know , one story commercial buildings that , you know , have been there for a really long time and are not in the best of shape. Um , they also point to the very high portion of housing in the project , and in particular , the portion of the housing that is set aside as affordable housing for low income renters. It's a little under half of the 4250 units. So 2000 units of affordable housing. Um , and then , of course , there's the 16,000 seat arena , 14.5 acres of parks , new infrastructure like new streets , bus lanes of bike and pedestrian paths. So there is a lot of public benefit in the whole deal.
S1: Um , so , you know , this project involves the lease , as we said. What do we know about the expected economic impact this could have for the city? Yeah.
S2: Yeah. So the independent budget analyst , and the city staff both estimated it'll be about $4.2 billion in total investments in the land. So this is money coming from private parties. It's not coming from taxpayers. It's all private investment in a publicly owned real estate. So , you know , that's just a lot of money that that will create construction jobs , that will create economic opportunities , places for people to live. Of course. And then in addition , there is some revenue sharing agreements between the city and the developers for the the rental housing and ticket fees that come from the new arena. So over the entirety of the ground lease that would equal the IBA estimated it would equal about 884 million to $1.23 billion in revenue for the city. Now that revenue is in future years. And so when they look at it as how much is that worth? In today's dollars , it's significantly less. They said 38.1 million to 68.5 million in present value. And there was some discussion about , you know , what is the right financial approach for this? Should the city seek to maximize cash revenue from this development and just say , you know , let's let's get this money in the city coffers so that we can close our budget deficit and use that money , you know , to to provide better services and infrastructure for all the rest of the city. Instead , what the city opted for is taking a cut from some of those that potential revenue they could get in cash and instead reinvesting it in the property itself in the form of the below market rate , affordable housing , the new infrastructure. And so I think the , the , the EBA ultimately included that the independent budget analyst ultimately concluded , this is a reasonable transaction that you have to weigh the risks and the things that you're giving up against the rewards and the things that you are gaining. And ultimately , you just have to make a judgment call on that calculus. And they felt it was reasonable.
S1: So , you know , among the issues that there's a lot , you know , to break down here , um , the city says this would be the largest affordable housing project in the state's history. Last month , the council brought up concerns , you know , around that housing and how much of it the affordable housing would be net new versus part of a receiver receiver site. Can you explain what that debate's all about? Yes.
S2: Yes. So the city has multiple programs that incentivize developers of market rate housing to set aside a portion of the units in their projects as affordable , low income housing. So let's say you're building 100 units. Maybe five of them will be low income housing. These programs , these bonus or incentive programs also allow these market rate developers to transfer these affordable housing units that would be in their. Their project to another project at another site. And that's called the receiver site. So you can have a receiver site that is basically taking on the affordable housing obligations of multiple projects across the city , and that can create some efficiencies. It can help that affordable housing project get financed faster. And the council wanted to assure ensure that midway rising , these 2000 affordable units on on the site don't are actually new affordable housing units that would not be created otherwise. So if you're looking at , you know , a development that's happening in Banker's Hill or even downtown or Hillcrest , we they wanted to make sure that all of those 2000 units are net new affordable units , and they negotiated some language in the deal that provides some assurances that ensures that the developer , you know , they have to make every effort to finance the affordable housing without those transfers from other projects. And , you know , the city needs to give its explicit permission for that to happen.
S1: This project faced , you know , numerous obstacles which you've covered , you know , for the last few years. Among those was around environmental concerns. Um , Governor Gavin Newsom signed , you know , a pair of laws earlier this year to really change Ceqa , the California Environmental Quality Act , and some rules around there. How did those laws kind of pave the way for yesterday's vote? Yeah.
S2: Yeah. So let's start with let's go all the way back to 1974. I think it was when the city adopted the 30 foot height limit for all of the , the , quote unquote , coastal neighborhoods in San Diego. Basically any land west of I-5 is limited to 30ft , and that would have prevented the Midway Rising project or really any project there from actually penciling. No developer is going to go in to this massive piece of land and build , you know , three story townhomes. So because just there's more potential there and it wouldn't have made economic sense. So what the the concern was that the city had two public votes to basically exempt the midway district from that 30 foot height limit. Both of them passed , and both of them were overturned by a judge because the judge determined and the opponents convinced the judge to , you know , that the the city had not properly analyzed the environmental impacts of taller buildings. Now , the California Environmental Quality Act defines the environment much more broadly than I think regular people understand what the environment means. And so , you know , there were questions about whether this project could actually move forward if these ballot measures were overturned in the court. And , you know , this 30 foot height limit were remaining in place. Now , there's other laws in the state that allow exemptions from height limit when you include more affordable housing in projects. So that provided one pathway. But there was still some uncertainty and the developer wanted more certainty. And so ultimately the state passed a law. The legislature passed it , and the governor signed it to ensure that , you know , once the city council certifies the environmental impact report for this project , then it's deemed complete and sufficient for the purposes of state law. So that basically removed this potential for a lawsuit that could derail the whole thing. And it inoculated midway , rising from those legal challenges and gave the developer more certainty , which they really need in order to actually invest these more than $4 billion in this property.
S1: So concerns about transit traffic , I think that that kind of came up quite a bit in yesterday's public comments , as well as just discussions of this project more broadly , you know , how are those being addressed and what's what's the transit plan there? Because it is an area where there's just a lot , lot happening , right? Yeah.
S2: Yeah. And , um , not only is it a pretty congested area , but it's also right between Point Loma , which is a peninsula. You know , there's not a whole lot of places to get out of Point Loma , but one of them is through the midway district. So there are a lot of the opposition came from Point Loma , you know , concerned and people concerned about this new dense development , basically making it harder for them to access the rest of the city. There are plans for bike and pedestrian paths in and around the property. Um , you know , to encourage more walkability , help people get out of cars and meet their needs without driving. There are plans for bus only lanes along Sports Arena Boulevard to give a faster and more reliable connection to the Trolley. And.
S1: And.
S2: Old Town station , and also mission Bay. Um transit advocates wanted those transit improvements to be moved up to phase one instead of phase two , which is what the developer in the city agreed to. The city staff said that moving up that timeline wasn't feasible or necessary because the phase one doesn't have enough housing , and they didn't feel like there was enough demand for the improved transit. Early on in the project. You know , that's their opinion. Other people had other opinions , of course , but the supporters and the developers also pointed out there are plans for a free shuttle to connect people going to the arena with the Old Town Transit Center. So during special events , people will be able to take the trolley to Old Town , hop on a free shuttle and get to the arena without ever having to drive there.
S1: You mentioned phase one. Phase two. Um , you know , and I'm almost , I don't know , like , afraid to ask because we've been through so many starts and stops with this project. But I'm wondering , can you break down a little bit of , of the development , how it actually worked? Do you have any idea , like when construction could theoretically start and finish? Like how long off are we talking? Yeah.
S2: Yeah. So the timeline in the staff report estimated about 18 years until all of it is complete , and they fully transition to just operating the property that it could be longer , it could be shorter. We don't exactly know. It's hard to predict when you're looking that far into the future , but the next step is that this team will pull permits. So actual building permits. They got the entitlement saying this is what's legal to build. And now they actually have to go through more detailed design work , figure out the exact configuration of the buildings. One interesting thing is that the Pechanga Arena , which is what stands there today , is actually going to remain open and in operation during the first phase while they're building the new arena , kind of like how they built the Sdsu Stadium. Wow. You know , while the other , the old stadium was still there. So that allows for continuous operation of the building. The new arena is going on the east end of the property , so they'll be building on a separate portion of the land , which allows the existing arena to stay until the new arena opens , and then they can tear it down and start building there. So interesting kind of phasing. Very strategic and well thought out I think phasing of all of the construction. Um , but yeah , that's it's going to be a long time. It's , it'll be a long time before the entire property is actually finished and built.
S1: So this vote was the final approval from the city. Right.
S2: Well , they still have to issue permits , but that's not something that will go before the city council or , you know , it's not a discretionary action. It'll just be staff reviewing the , you know , the building code basically. Okay.
S1: Okay. So what are you following next? Like what's what's next on your radar for this project?
S2: Well , you know , there's also there's always a possibility that opponents could try and sue , you know , through some other legal avenue that we haven't thought of yet , but it's certainly with the the exemptions from lawsuits under Ceqa that removes the the easiest or the most logical way that they would try that. Um , but yeah , no , it'll just I mean , I'm , you know , we most of us drive around that property fairly often. It's easy to see from the freeways. And so it'll just be really interesting to see , you know , what happens to to all of that land and see it as it grows. Absolutely.
S1: Absolutely. I've been speaking with KPBS. Metro reporter Andrew Bowen will link to his reporting on our show notes and at KPBS. Andrew , thanks. Yeah.
S2: Yeah. Thanks , Andrew.
S3: That's our show for today. I'm your host , Jade Hindman. Thanks for tuning in to Midday Edition. Be sure to have a great day on purpose , everyone.
