In the final stretch of negotiations between the city of San Diego and San Diego State University, it’s emerged as an issue that “the city” is not a single entity. SDSU and California State University are marching in lockstep. They have no elected leadership.
The city, on the other hand, has several different elected leaders. The mayor is one. His staff has negotiated the deal points with SDSU.
The city attorney is another. She has vetted the mammoth purchase and sale agreement that the university produced and had the CSU chancellor actually sign. She doesn’t appear to be a fan.
The City Council is composed of nine other elected officials. Soon, they’ll decide whether to approve the deal.
Or will they?
City Attorney Mara Elliott has never approved of the plan to transfer the city’s Mission Valley stadium land to San Diego State University. She thought Measure G, which authorized and mandated the sale, was plainly illegal. And she verified not that long ago that she still thinks that, but she couldn’t get the mayor and City Council to agree.
Now the mayor’s office really wants the deal to be done. It both a) wants the money and b) wants to not spend the money maintaining the old stadium after July. To get that done, the Council needs to approve a purchase and sale agreement by May 19.
In other words, if the deal doesn’t get done soon, the city’s budget is going to be even harder to hash out than it is with the country’s economic catastrophe ravaging it.
SDSU officials are eager to accommodate the city and submitted their final agreement, in full, this week.
The city attorney, though, is unmoved. On Tuesday, she sent over 14 points of concern to the City Council. Most of them are in the family of “____ is unclear and it could open the city up to liability in the future.”
The mayor met with SDSU officials and Jack McGrory, member of the California State University Board of Trustees and the original booster of the project – no lawyers – to go through the concerns. And Thursday, SDSU offered a written, point-by-point response to Elliott’s concerns. Most of the university’s responses are in the family of “Don’t worry about _____.”
Here’s an abridged version of the biggest points:
The closing date and lease: The city attorney’s worried about the lease for the stadium. She thinks the deal should include a new lease for SDSU to keep operating the stadium if the deal doesn’t get done by July. “If the CSU New Lease is not in place by July 1, the City will continue to incur close to One Million Dollars ($1,000,000) each month in costs to maintain and operate the Existing Stadium …”
She’s also worried that it’s unclear what happens if they don’t make the closing date of the sale because of concerns like this.
SDSU says this is pointless: Just sell the land, and any lease becomes moot. “CSU/SDSU is ready to get this deal done and meet the City’s deadline of a July close.”
Poop processing: The city attorney is worried that the city may need to put in various sewer or water facilities on the land. It also may need to build other pieces of infrastructure to support the new Pure Water wastewater recycling program.
SDSU says that should be fine. They think it would be “unreasonable and unfair for the city to remove parts of the new river park” they’re building for these facilities but they will accommodate it.
“We think our offer establishes fair parameters for that,” said John Kratzer, the CEO of JMI Realty, which consulted on the deal.
The park: The city attorney says that the university may prioritize university events at the park and thus may open the city up to lawsuits from others who want to use it. It is, after all, the city’s park.
SDSU’s response: Don’t worry. “CSU/SDSU does not intend to limit the community’s access to the River Park and agrees that City ordinances regarding public parks should apply until River Park-specific regulations are developed in the future and approved by the City Council,” the university wrote.
Affordable housing: This one is kind of sticky. The university agrees to reserve 10 percent of the 4,500 or so homes for low-income residents. And it will do so over time. So for about every 1,000 homes it builds, about 100 will be for people who meet income qualifications.
But it wants to do it the way other California State University campuses handle the issue. And as the city attorney puts it, the university made “massive revisions to the Housing Commission’s standard template” for how these rules are established.
Put simply, the city’s Housing Commission won’t be in charge. And that could be an issue. The city attorney thinks the university won’t be as diligent about proving that people actually qualify for the affordable housing units they’ll be in.
The university says, of course, not to worry.
“CSU/SDSU looks forward to creating a successful affordable housing program in partnership with the Housing Commission as a model for other universities,” reads the response.
Kratzer pointed out that the university has agreed to build the homes, rather than pay a fee the city allows developers to pay to avoid building the low-income homes themselves.
“SDSU has the right to manage and administer this program as they see fit as long as they abide by provisions of Measure G, which doesn’t speak to administrative details,” he said.
The bottom line: The mayor has had his say. The city attorney has had her say. Now the Council will.
Unless the city attorney somehow keeps it from them.
SDSU Will Borrow $660 Million to Get Started in Mission Valley
We learned more about SDSU’s financing plans for its construction on the land this week as well.
The university plans two initial phases for construction. The first phase involves buying the land from the city, grading it, pulling important parts of it out of the flood plain and preparing it for all the other stuff it wants to build.
That will cost $350 million. The university already secured the loan at 2.99 percent (“It’s a phenomenal time to be in the market,” said McGrory.)
The university does not plan to pay back the money for up to 20 years. Until then, it will only pay interest.
“You basically finance or borrow what you need for debt service until such time as you have income-producing assets in place and, at that point, you begin to pay down the debt,” said Kratzer.
The university plans to partner with developers to build more than 4,500 housing units, a hotel and residential serving retail along with the stadium and river park.
The stadium will be financed separately. The university plans to borrow $310 million to build it. And the stadium, officials say, will generate money to pay itself off.
“The financial plan and analysis conservatively assume revenues from football games, naming rights, concessions, and some special events,” read’s the university’s purchase and sale agreement submitted to the city.
(Football games, special events, concerts … man, remember those things? Sounds fun!)
But that won’t be quite enough. The university also intends to raise $60 million from donors. It also plans to sell seat licenses.
McGrory said the university is ready to wire the money for the land to the city the moment the deal closes.
The Hot Mic Heard ‘Round City Hall
As far as moments in a budget hearing conducted remotely during a vicious pandemic go, this one was pretty funny.
Two hours into the Wednesday hearing of the City Council’s budget review committee, it became clear that Councilwoman Jen Campbell had decided to have a personal phone call, but forgot to mute whatever device she was using to attend the hearing.
Suddenly, instead of hearing Councilwoman Vivian Moreno’s budget thoughts, we were hearing one end of Campbell’s personal phone call.
“Everything’s pretty good,” she said. “We’re healthy. We’re tired of quarantine, but what the hell.”
Taking on the height limit: It became clear she was telling whoever she was talking to how excited she was about a potential ballot measure she’s co-sponsored that would rescind the 30-foot coastal height limit in the Midway community, surrounding the Sports Arena and Pacific Highway.
Since the height limit was imposed by a ballot measure, it can only be rescinded or altered by a ballot measure, too.
The height limit has been a sacred cow in city politics since it was enacted in 1970. Even discussing a change to it – even one in an area that is not especially near the coast, where there are no ocean views – was a bold move, as Campbell acknowledged in her phone call.
“I’m not chicken at all about it,” she said. “What have I got to lose, right?”
Unfortunately (for us), Councilwoman Barbara Bry kept (understandably) trying to convey to Campbell that she was on a hot mic, and her conversation was being broadcast on City TV, depriving us of some interesting moments in the one-sided conversation. But here’s what we were able to discern.
“The Midway citizens have been asking … (inaudible) … where the Sports Arena is … (inaudible) … yeah, you know about that (inaudible) … I’m doing it with Chris Cate … and so far, we have almost 100 percent approval by everybody, so I think that’s great. The only people who disapprove are … (inaudible).”
Well, it would have been great to hear the last part of that quote. We reached out to Campbell’s office to see if she wanted to finish her thought to us. No dice. In any case, coastal activists at the OB Rag have already voiced opposition to the measure. The Midway-Pacific Highway community planning group, meanwhile, voted unanimously to support putting the measure on the ballot.
Failed Biden recruiting: Campbell’s also apparently having a hard time rustling up support for former Vice President Joe Biden’s presidential campaign.
“He can’t stand Trump – the latest thing is I was trying to convince him to help Biden, but I couldn’t get him involved,” she said of an unnamed third party. “But that’s alright. He doesn’t want to campaign anymore. He’s busy with his own stuff.”
It was around this point that the Council members who were in Council chambers for the meeting, Bry and Council President Georgette Gomez – between stifled laughter – started to get worried.
“She’s going to say something … ” Bry said, before deciding to call the meeting to a five-minute break so they could get in touch with Campbell and tell her what happened.
The next morning, Campbell began the next round of budget hearings with an apology to Moreno, Bry, city staff and the community.
“This unfortunately interrupted our proceedings, and I’m very sorry and I’ll be sure it won’t happen again. I thank you all for your patience.”
Don’t be so hard on yourself, councilwoman. We’ve all had our share of Zoom mishaps during the pandemic. I kissed my dog on the mouth in front of the whole company on Thursday, for instance (in my defense, Bertha is a very good girl).
The Struggle to Spend Other People’s Money
Councilwoman Vivian Moreno caught our attention last week with comments at a budget review hearing about the $248 million that the federal government dropped into a city account last month to help deal with the coronavirus pandemic.
The CARES Act that appropriated the money stipulated that it could only be spent in direct response to the COVID-19 pandemic. There’s been persistent questions about just how restrictive that standard is, but Moreno took a stand.
“There is enough latitude within the legislation itself, and the guidelines set forth recently by the Treasury Department, to allow the city to use every dollar of this funding,” she said.
Despite questions about what, specifically, the money could go toward, we had not heard anyone from City Hall say the city might not be able to use it all. The question seemed to be how and where, but not if.
In his appearance on the Voice of San Diego podcast this week, Councilman Chris Cate changed that.
We asked if, given all the ways we know the money can be spent, if it would really be difficult for the city to find a place for all 248 million of those dollar bills.
“I think it will be, no, I absolutely think it will be hard to spend all of the money,” he said.
“You know, there is some wiggle room there, and that’s where I would like to have a greater conversation with the mayor’s office’s staff that – we could use money to provide the grants and loans we had for our small business relief program,” Cate said. “You know, let’s say we spend $150 million that we could arguably say is COVID-related … could we take the remaining $100 million and say we want to give small businesses relief grants, and that way we make up the balance of what’s left out there? I don’t know the answer to that question, but my gut tells me we probably can’t do that.”
In other words, there’s a very real difference of opinion on the Council about not just where the city can appropriate the quarter of a billion dollars it received from the feds, but even over whether we can hope to spend it all in the first place.