The vote means the city can restart its plan to develop 48 acres in the Midway District.
BY PHILLIP MOLNAR AUG. 3, 2021 3:55 PM PT
The San Diego City Council approved a plan Tuesday to restart its effort to develop the 48-acre Pechanga Arena site.
The city envisions transforming the site in Midway District into a major entertainment focal point with a new (or refurbished) stadium, housing and retail. It approved a plan last year but that plan was scrapped by the state’s housing authority because it didn’t first offer the site to subsidized housing developers.
The City Council unanimously approved declaring the space around the arena as surplus land, which kickstarts the process to solicit subsidized housing developers. The distinction was necessary to appease the state housing authority, which must now approve the new plan, but also was welcomed by councilmembers who said it is an opportunity to create housing for low-income San Diegans.
“This is a sizable property with proximity to the trolley, coastal zone, shoreline parks, downtown and more,” said Councilman Joe LaCava. “This is a unique opportunity we must not squander.”
The 55-year-old Pechanga Arena is home to the American Hockey League’s San Diego Gulls and Major Arena Soccer League’s San Diego Sockers. It brings in major events, including a taping of WWE Monday Night Raw later this month and upcoming concerts from Maluma, James Taylor, Harry Styles and Tyler, the Creator. It has 16,000 seats.
The city has envisioned the site since at least 2018 as a location for a new entertainment district because of its unique position between Mission Bay, the airport, Old Town and San Diego’s beach communities. While much of the focus on Tuesday’s vote was on housing, the city has made clear its surplus land declaration was contingent on the sports arena being refurbished or replaced.
Brookfield Properties won a bid last year to remake the site with an all-new sports arena, 2,100 housing units and 590,000 square feet of retail space and 5 acres of public parks. California’s housing authority, the Department of Housing and Community Development, denied the project in June because it said it violated the state’s Surplus Land Act — which would require San Diego to first offer the property to subsidized housing providers that must reserve 25 percent of housing units for low-income families.
While the department must still approve San Diego’s latest move, it was seen by public officials as a positive step in restarting the effort to remake the site. A timeline for when the new plan will be approved is not set but the city’s department of real estate and airport management said it expected the state to respond in two to four weeks. It will be up to the department to sign off on the total plan, not just the housing component, which includes the stipulation about a new sports arena.
If the state approves, the city will then issue a notice alerting a list of affordable housing developers, who will have 60 days to respond with their interest. State law says San Diego is then required to engage in a 90-day negotiation period with all interested parties.
If no one responds or a deal cannot be reached, the city can solicit interest from the open market with developers required to set aside 15 percent of housing units for low-income families.
During public comments, several housing advocates called into the council meeting to urge officials to maximize the space for affordable housing. Stephen Russell, president of the San Diego Housing Federation, said 15 percent subsidized housing would be the minimum required by law.
“The city should require more from a site,” he said, “with so much housing potential.”
Councilmembers were eager to require more subsidized housing on site, but it remains to be seen if an affordable housing developer will bid on a project with such a large scope. Councilman Sean Elo-Rivera said 25 percent subsidized housing should be the minimum and the site should maximize its overall housing potential.
“We need to send a clear message to bidders that we expect the highest level of affordability,” he said.
The cost for a new arena is not clear. Brookfield’s proposal didn’t specify a price, but a rival development team that lost the bid, Toll Brothers, estimated a new stadium would cost $300 million to $600 million. It said the more expensive estimate was necessary only if the city wants an arena large enough to attract a franchise from the National Basketball Association or the National Hockey League.
Despite a different City Council and mayor now than when the process started, current leaders have expressed a strong desire to continue the plan. Mayor Todd Gloria has called the redevelopment of the site a “once-in-a-generation” opportunity to build a modern arena and create a project that prioritizes subsidized housing.
The Brookfield contract was never signed and no formal commitment was made to build subsidized housing. The Surplus Land Act dates to the 1980s, but a revised version that went into effect in 2020 makes cities declare land as surplus and then reach out to affordable housing developers first. If the city did not restart the process, it could have faced a large fine — 30 percent of the final sale price of the land.
Pechanga Arena has been known by different names throughout the years, including San Diego International Sports Arena, San Diego Sports Arena, iPayOne Center and Valley View Casino Center.
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