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New California Rules Could Delay San Diego Sports Arena Redevelopment

City Seeks Clarification on Change Requiring Land To Be Offered First to Affordable Housing Developers

By Lou Hirsh CoStar News

April 8, 2021 | 4:13 P.M.

Brookfield Properties’ planned $1 billion mixed-use redevelopment of property near San Diego Sports Arena could be delayed by a California rule change, stemming from state legislation that calls for city-owned surplus properties to first be offered up to developers of affordable housing.

Brookfield and city officials have paused negotiations on terms for a ground lease that would clear the way for the developer to build out 100 city-owned acres on and near the sports arena site with new apartments, a hotel, offices, retail and entertainment venues. Plans call for about half the total acreage in the redevelopment plan — 48 acres adjacent to the arena — to be leased to the developer.

City officials are seeking clarification from the California Department of Housing and Community Development, or HCD, regarding how new guidelines issued April 6 by the agency will impact final planning for what actually goes into the redevelopment of the 54-year-old arena and surrounding land.

The new guidelines stem from state legislation passed in late 2019 amending California’s Surplus Land Act to require that government-owned properties placed up for lease, not just for sale, be made available first to affordable housing builders before being offered to other developers.

The 2019 legislation was part of a multipronged state effort to boost construction of housing amid a worsening shortage of houses and apartments affordable to working families.

“The city is thoroughly reviewing the final guidelines and will engage with HCD to get clearer assessment on what our options may be regarding the Sports Arena Development," Jay Goldstone, the city’s chief operating officer, said in a statement.

“Those options could include rebidding the property to an affordable housing developer or receiving an exemption if a certain number of affordable units are built on the site,” Goldstone said. “However, there is no intention to issue a new request for proposals at this time.”

San Diego officials last year chose Brookfield to redevelop the sports arena and adjacent land in the city’s Midway District following a competitive proposal process that also drew a competing submission from developer Toll Brothers.

“It’s too early to draw any conclusions,” Ted Lohman, vice president of mixed-use development for Brookfield, said in an email to CoStar News.

“Brookfield Properties is still reviewing the just-released final HCD guidelines to determine next steps,” Lohman said. “That said, we remain committed to continuing our dialogue with community members, stakeholders and the city, as appropriate.”

New York-based Brookfield’s concept plans include renovating the aging sports venue in partnership with arena operator ASM Global and building adjacent elements, including 2,100 residential units, a hotel and more than 590,000 square feet of retail, office and other commercial space with 5 acres of parks and recreational elements.

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