By JENNIFER VAN GROVE | OCT. 14, 2019 | The San Diego Union-Tribune
After months of private meetings with city negotiators, San Diego State University leaders publicly proposed purchase terms for 132 acres of Mission Valley land, formalizing its intent to pay $68.2 million for the site while also providing millions more in community benefits.
The initial offer, made in letter form and presented at City Council on Monday, represents a package deal that the university says is worth more than $150 million. A detailed break down was not provided, but the larger sum considers a number of potential deal sweeteners, such as the $30 million SDSU plans to spend on a 34-acre river park and the upfront expenses associated with building a future north-south roadway, known as the Fenton Parkway Bridge.
“Today, we have thoughtfully considered our public mission and the broader community needs in bringing our purchase offer to you,” said Adela de la Torre, the university’s president. “This offer represents not only fair market value, but a fair and equitable price to the tax-paying public we both represent and support.”
The offer does not address the city’s biggest concern: That the terms, particularly the purchase price, may be inconsistent with a voter-approved initiative. Still, it symbolizes an important turning point in a lengthy land-sale process that has until recently been governed by a strict confidentiality agreement.
In November, voters passed a citizens’ initiative, known as Measure G, that created a framework for SDSU to buy the city-owned property, where it is proposing to build a 35,000-capacity stadium and satellite campus in place of the existing SDCCU stadium and its parking lot. The city and the university, through their respective negotiating teams, have been actively negotiating sale terms in private for the better part of a year.
However, last week’s public release of an independently prepared site appraisal, which pegs the 2017 land value at $68.2 million, has changed the nature of discussions going forward. San Diego State has since pulled out of the agreement that mandated deal secrecy, and the city has agreed to host purchase and sale discussions in front of council members going forward.
Monday, council members were briefed on the terms outlined in SDSU’s offer letter, which had not been shared prior with the city’s negotiators.
John Kratzer, who is the CEO of JMI Realty and a consultant for the university, called attention to several items of note. For starters, the university, he said, would pay $68.2 million in cash at the close of the transaction. Beyond the purchase price, SDSU would also assume the operating costs associated with running the existing stadium once in possession of the land, he said.
Plus, the university would front-load the $22 million expense of extending Fenton Parkway over the San Diego River, with the expectation that it would be later reimbursed for 75 percent of the project, Kratzer said. The offer letter further pledges to erect the bridge before 65 percent of the project’s housing units are occupied. And he reiterated SDSU’s commitment to construct a 34-acre river park at an estimated of cost of $30 million, while also taking responsibility for $578,000 in annual maintenance fees.
While most of the terms were expected, there was at least one new revelation.
“The city has asked us to take ownership of (Murphy Canyon Creek) and our position is pretty straightforward,” Kratzer said. “We’re willing to take ownership of it, but we would look to the city to complete any deferred maintenance costs or any pending capital improvement items that are necessary.”
The assurance is a reversal of the university’s previous position. It had maintained that the creek, which is known to flood the site, would remain in the city’s possession.
City Council members said they were encouraged by the public discussion, but wished to evaluate the proposal in more detail before weighing in on specific terms. Still, some of the remarks from Scott Sherman, Chris Cate, Mark Kersey and Monica Montgomery underscored a discrepancy in how the city and the university interpret the text of Measure G.
“I just want to put on the record that I do believe there have been, whether intentionally or not, misrepresentations about where the city stands out there in the public,”
Montgomery said. “I think that we are really trying to adhere to what the voters believe they were voting on. And in our municipal code, which is a derivative of the measure, it does say that river park improvements shall not be made at the cost of the general fund. If we take that as a deduction, my interpretation is that, in effect, that’s what it would be. ... It also has very strong language about demolition.”
In other words, the city cannot absorb river park improvements or demolition costs in the purchase price. The disparity equates to about $18 million in 2017 dollars with fair market value climbing to $86.2 million — and even more in 2020 dollars.
A separate debate exists around whether fair market value should be indexed by an annual appreciation rate of more than 2 percent. Last week, a city report said that the land value could be as high as $104.5 million in 2020 dollars. However, Andrea Tevlin, the city’s independent budget analyst, altered her office’s determination on Monday, saying instead that the value would be as high as $91.9 million, assuming a close date in September 2020.
Meanwhile, because the university is simultaneously working to complete its environmental review of a campus master plan for the site, council members Cate and Kersey expressed concern around potential litigation with the state-mandated process.
Kris Michell, San Diego’s chief operating officer, told council members that city staff will now study the offer and work toward providing an update in two to four weeks.
All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner of will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
Keywords: San Diego Commercial Real Estate For Sale, Commercial Property In San Diego, Commercial Real Estate In San Diego, San Diego Investment Real Estate, Commercial Property Management In San Diego, San Diego Commercial Property Management, Commercial Property Management San Diego, Managed Commercial Property San Diego, Commercial Property For Sale San Diego, San Diego Commercial Real Estate Leasing, Top Real Estate Agents in San Diego, Commercial Property in San Diego, Property Management Company San Diego, Real Estate Agent in San Diego, San Diego Commercial Real Estate Real Estate Agent Contact Us Brokerage, Property Management