In the real estate competition to lease and redo the city’s 48-acre sports arena site, San Diego has selected as its winner the development team proposing the most affordable residential units.
Tuesday, City Council members voted 7-1 to select Midway Rising. The vote came after a sometimes-heated discussion that put the team, its partners and even potential subcontractors under the microscope on a variety of topics, including allegations of deceptive labor practices.
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“Today’s approval is a major step forward in our goal of revitalizing the Midway District with much-needed affordable homes along with a world-class entertainment venue and great amenities for the community,” San Diego Mayor Todd Gloria said in a statement. “The Midway Rising team has not only the most compelling vision for re-using the site, but also the experience and financial wherewithal to execute.”
The council action ends a nearly year-long contest and starts a new phase in the effort to remake the Midway District property. The city and the team will have, once an exclusive negotiating agreement is signed, around two years to hammer out lease and development terms, with staff required to provide quarterly updates to the council and include the independent budget analyst’s office in discussions.
Midway Rising includes market-rate housing developer Zephyr, sports-and-entertainment venue operator Legends and affordable-housing builder Chelsea Investment Corp. The team is proposing to develop the city’s sports arena holdings with 2,000 units deed-restricted for low- and very-low-income families at an average affordability of 48 percent of the area median income.
The group’s plan also calls for 250 middle-income units, 2,000 market-rate units, a new 16,000-seat arena, a 200-room hotel and 4,500 parking spaces. The project includes 20 acres of plaza and park space, including 4.2 acres of rooftop parks.
“The Midway Rising team is grateful to the San Diego City Council for voting to move forward with Mayor Gloria and city staff’s recommendation,” said Bill Rhoda, a project development executive with Legends. “We are committed to delivering an inclusive, affordable and economically vibrant community that includes 2,000 affordable homes, 20 plus acres of new parks, 8,500 jobs for working families, and a modern sports arena for all San Diegans.”
This is San Diego’s second attempt to offload its sports arena site. The first effort ran afoul of California’s newly amended Surplus Land Act. The law is designed to maximize affordable housing on land no longer needed by municipalities. It requires local agencies to give “first priority” to the bidder proposing the highest number of residential units deed-restricted for families making 80 percent or less of the area median income.
“Restarting the prior administration’s sports arena process was a setback for the city, but today’s selection of the Midway Rising team results in a monumental step towards a revitalized Midway District that San Diegans will enjoy living, working and playing in for decades to come,” said Penny Maus, who heads the city’s real estate department.
The current real estate competition started in earnest in October, when the city put its Midway District property back on the market with a “notice of availability,” as required by the statute.
San Diego received seven responses during the required 60-day noticing period, although two were deemed not responsive. In December, the city began a 90-day, “good faith” negotiation period with the five remaining teams, as was also required by the law. In May, City Council members narrowed the field of contenders to three teams: Midway Rising, HomeTownSD and Midway Village+.
The real estate department then entered into a due diligence phase and used JLL to vet the team’s financial models and capabilities. Last month, Midway Rising was recommended for final selection by staff and the mayor.
This story is developing.
