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State supports selection of sports arena sites in San Diego

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California endorses San Diego Mayor Todd Gloria and his realtors in choosing Midway Rising to redesign properties at the city’s sports arena in the Midway neighborhood.

On Tuesday, David Zisser, deputy director of the California Department of Housing and Community Development (HCD), told San Diego real estate director Penny Maus that the city has so far successfully completed “all applicable requirements” for the surplus land. completed in 2018.” activity.

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Zisser said the city has followed the law correctly, which was amended in 2019 to make excess government-owned land available for affordable housing. By law, the city must give “first priority” to the bidder with the highest number of affordable housing units.

Midway Rising, one of three finalists, is proposing to develop the city’s sports arena property. Residential units are restricted to low and ultra-low income residents. That means 2,000 units at an average affordable price of 48% of the regional median income. .

The agency’s written comments precede major city council votes. They serve as a key endorsement of the City’s method for evaluating development teams competing for leases and re-work of properties at 3220, 3240, 3250, and 3500 Sports Arena Blvd. The stamp of approval could become even more important as San Diego seeks to complete a major real estate transaction that stands the test of time, as well as avoiding the failure of previous disposal attempts that were aborted in violation of the law. There is a possibility

“This administration has committed to resuming the sports arena recruitment process and complying with the law,” Maus told the Union-Tribune. We were delighted to receive their affirmation for our efforts.”

Local representatives are expected to decide next week whether to accept or reject the mayor’s and staff’s proposals. Entering into an exclusive negotiation agreement with Midway Rising.Builder Chelsea Investment Corporation

The decision to go ahead with Midway Rising ends nearly a year of real estate competition and gives the city and developers two years to decide on site development and lease terms.

On Thursday, the city council’s four-member Land Use and Housing Committee will consider Midway Rising’s selections ahead of a full council review on Sept. 13.

Plans for Midway Rising call for a total of 4,250 residential units, a brand-new 16,000-seat arena, a 200-room hotel, and 20 acres of plaza and park space, including a 4.2-acre rooftop park. The cost of the project is undisclosed, but Midway Rising is seeking minimal financial assistance from the city, according to an evaluation conducted by outside real estate consultant Jones Lange LaSalle.

A second attempt to offload a sports arena site in San Diego follows a state-mandated surplus land disposal process, according to the book. This process is different from submitting a request for proposal.

On September 21, 2021, city councilors officially declared the land “surplus.” On October 4, 2021, the City will put the property back on the market with a “Notice of Availability” as required by law, and will distribute solicitations to state-registered affordable housing developers. did.

San Diego received 7 responses to notices of availability during the required 60-day notice period, but 2 were deemed not to respond. On December 4, 2021, City began his 90-day “good faith” negotiation period with his five remaining teams. On May 23, members of the city council narrowed the field of contenders to his three teams: Midway Rising, HomeTownSD and Midway Village+.

The real estate department then entered the due diligence phase, using JLL to scrutinize the team’s financial model and capabilities.

Midway Rising is now HCD approved and recommended for final selection.

“The City has provided HCD with a copy and summary of the proposal, detailing the number of affordable housing units by median income in the area and by affordability level. Midway Rising has proposed to develop the largest number of affordable housing units and the largest number of total housing units,” HCD official Zisser wrote in a written comment. As a result, city officials recommend choosing Midway (Rising). A review of five proposals established that the City met the requirements (of the Surplus Land Act) and his SLA guidelines for his HCD. ”

For this process, affordable housing is defined as family-restricted units earning less than 80% of the local median income. According to the state’s 2022 income limit list for affordable housing units, the median income for a family of four in San Diego is $106,900.

“Midway Rising has demonstrated a deep understanding of[the Surplus Land Act]and the city’s priority to create more affordable housing since the beginning of this process,” said Maus. “We are delighted that HCD, along with the city, recognized that Midway Rising would be a great partner.”

This recommendation has been challenged by HomeTownSD and Midway Village+, who may argue that the city’s dedication to affordable units is short-sighted and not mandated by law.

The Surplus Land Act gives local agencies discretionary powers. That means they can pick housing developers who don’t offer to build affordable units to the max. San Diego could take into account the price and terms of the deal, bedroom mix, time to market, anticipated subsidies, arena proposals and other factors, HCD previously said. .

“If the City Council decides to select a developer other than the one offering the most affordable units, the City will be required to submit additional documentation to the HCD providing the basis for its selection. There is,” said Megan Kirkeby, Deputy Director of HCD. of housing policy.

Monarch Group’s HomeTownSD and Toll Brothers Housing’s Midway Village+ have tried to increase the number of affordable homes in recent weeks and months. The city decided to take into account the number of units considered in the financial model submitted to JLL. However, Midway Village increased its proposed affordable units from 1,610 to 1,780 after a 90-day “good faith” negotiation period. HomeTownSD also tried to bolster its affordable housing proposal by at least 300 units more than the total of 1,726 units submitted, but the request came too late after JLL finished its work, the city said.

HCD’s decisions are not final. San Diego will need to provide an update on negotiations and a draft contract for the Affordable Housing Limit before closing a deal with Midway Rising, the agency said.