Ten months into the do-over real estate competition for the city’s 48-acre sports arena property, San Diego Mayor Todd Gloria has picked as his winner the group proposing to construct the most affordable residential units.
Monday, the mayor said he is recommending development team Midway Rising for selection by San Diego’s City Council, which has the final say. The city’s Land Use and Housing Committee will consider the mayor’s pick to lease and redo the Midway District property on Sept. 8, followed by the full council on Sept. 13.
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The mayor’s preference comes in the form of a staff recommendation from the city’s real estate department and will be explained in more detail in a report to council members expected to be published later this week. It follows a nearly three-month-long vetting process performed by the department with help from outside consultant Jones Lang LaSalle.
The team that is ultimately selected will still need to negotiate development terms with the city before a deal is finalized.
“I’m excited to announce that I am recommending an exclusive negotiation agreement with Midway Rising to redevelop the Sports Arena property,” Gloria said in a statement. “After a transparent process in accordance with state regulations, I am confident Midway Rising will deliver on my vision of creating thousands of new affordable and middle-income homes, good-paying local jobs, and a new world-class arena and entertainment district. This project represents big city energy and I look forward to getting this done for the Midway community and our city.”
One of three finalists, Midway Rising is proposing to develop the city’s real estate holdings at 3220, 3240, 3250 and 3500 Sports Arena Blvd. with 2,000 deed-restricted units at average affordability of 40 percent of the area median income.
The plan calls for a total of 4,250 residential units, a brand-new 16,000-seat arena, a 200-room hotel and 20 acres of open space. The group is also proposing 250,000 square feet of commercial space concentrated in a central public plaza.
The master development team is comprised of market-rate housing developer Zephyr, sports-and-entertainment venue operator Legends and affordable-housing builder Chelsea Investment Corp. The group’s development program would be completed in phases over a 10-year period, result in $2.5 billion in direct spending on construction and produce $27.5 million in annual tax revenue, according to the team’s response to the city’s notice of availability.
City staff’s preference to work with Midway Rising aligns with California’s recently updated Surplus Land Act. The law dates to the 1980s but was amended in late 2019 to ensure that excess government-owned land is made available for affordable housing. It is enforced by California’s Department of Housing and Community Development, or HDC, which mandates that local agency land must be offloaded in a prescribed manner. As such, the city is required to “give first priority” to the entity with the highest number of affordable units.
In this process, the state defines affordable housing as units reserved for families making 80 percent of the area median income. The median income for a family of four in San Diego is $106,900, according to the state’s 2022 list of income limits for affordable housing units.
San Diego’s first attempt to offload the sports arena site ran afoul of the Surplus Land Act.
The second effort, which started with a “notice of availability” in October, is following HCD’s guidelines by the book. Seven teams responded to the notice of availability, although two were deemed inadequate and eliminated in December. In May, the City Council pared the field of competitors down from five teams to three, leaning on the mayor and his real estate department’s recommendation to further evaluate the teams with the most affordable units.
HomeTownSD from Monarch Group and Midway Village+ from Toll Brothers Housing — then proposing 1,726 and 1,610 affordable units, respectively — were included on the short list alongside affordable housing leader Midway Rising.
The challengers will likely plead their case directly to council members, who are not obligated to accept the staff recommendation.
In addition to affordable housing, San Diego can take into account price and terms, bedroom mix, time to market, anticipated subsidies, the sports arena plan and other factors when making its final selection, HCD officials have said.
The recommendation to select a winning team now could boost the prospects of a repeat ballot proposal. The measure will ask city voters in November to lift the 30-foot building height limit in the Midway District, and the winning sports arena team is expected to help finance the campaign.
This story is developing.
