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Navy Relinquishes Lease on 3.4 Acres of Prized Downtown Land for Port to Redevelop

The Port of San Diego‘s board of commissioners Tuesday agreed with the U.S. Navy to end a lengthy lease early on a downtown San Diego waterfront property, freeing the site up for development.

The Navy signed a 100-year lease at 1220 Pacific Highway with the city of San Diego on Aug. 9, 1949. The Port of San Diego then inherited the lease when it was formed in 1962. Tuesday’s actions breaks the lease decades early.

“This is historic. We are thrilled we have a deal with the Navy that means there will soon be more for visitors and our communities to enjoy and experience along our San Diego Bay waterfront,” said Port Chairman Rafael Castellanos. “Additional park and open space, better access, and more staycation and vacation choices are all in store for the bayfront.”

The 3.4-acre site of four parcels opposite the B Street Pier consists of parking lots and office buildings. It is surrounded by high-end hotels and the port-owned Lane Field Park.

In 2022, the port and Navy signed an agreement giving the Navy access to California’s Low Carbon Fuel Standard market to help provide millions of dollars for electrification projects around San Diego Bay. The two organizations also work together on natural resources management in the bay and coordinate on initiatives related to sea level rise, a statement from the port reads.

“The Navy will relinquish its lease of the 1220 Pacific Highway property to the Port of San Diego although 27 years remained on the lease,” said Rear Adm. Brad Rosen, commander of Navy Region Southwest. “The Navy negotiated with the port on an agreement that meets our requirements while accommodating the port’s interest for redevelopment with their Central Embarcadero redevelopment plan.”

In exchange, the port will fund one or more Navy-selected projects for a new facility or improvements to an existing facility at a cost not-to-exceed $5.75 million. However, the port is also responsible for any demolition, improvements or retrofitting at the site.

“This historic deal reflects the important spirit of the San Diego-Navy partnership,” said Rep. Scott Peters. “I am thrilled to see the development of this land into a space that will promote the commercial and public interest of San Diego.”

Additionally, the port will “advance land use planning goals to deliver new public access and recreation spaces,” including adding more park space and pedestrian promenades by extending Lane Field Park northward along Harbor Drive, extending B Street to San Diego Bay, adding more visitor-serving amenities and parking and enhancing mobility connections, a statement read.

“This agreement creates the opportunity to continue the reimagination of our Downtown waterfront and transform this portion of San Diego’s “front porch” into open space and amenities for San Diegans and visitors to enjoy, said Mayor Todd Gloria. “I’m grateful for the partnership of the Navy, which is demonstrating its continued commitment to the San Diego region and the mutually beneficial relationship that has served our city and our nation so well for over a century.”

The port now plans to explore development opportunities, a step anticipated to take two to four years. Therefore, the lease termination agreement allows continued use of the property by the Navy during that period.

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