Land Pricing Remains Sticking Point for Pivotal San Diego Project on Stadium Site

University, City At Odds Over Value of Property Targeted for Mixed-Use Campus

LOU HIRSH (via CoStar Group)

Plans for San Diego State University's western campus include offices, apartments, retail and hotels along with a new stadium. (San Diego State University)
Plans for San Diego State University’s western campus include offices, apartments, retail and hotels along with a new stadium. (San Diego State University)

San Diego State University offered almost $20 million less than the amount city officials were seeking for a property that includes the former National Football League Stadium used for decades by the Chargers team. This reflects a disagreement that could stall high-profile plans to redevelop one of the largest available sites in the heart of one of the 10 biggest U.S. cities.

SDSU has formally submitted a $68.2 million bid to acquire 132 acres of city-owned land where it plans to build a new western campus, a plan approved by voters last year. But city officials contend that amount is well below the $86.2 million that its own appraisers believe the property is worth.

Now, the city and university are at odds over issues including how the land should be appraised, and how to factor in demolition, park construction and other costs that the university will be assuming.

At stake is a major mixed-use project, including a planned new $250 million stadium, that could significantly impact the direction of future commercial development in the highly-trafficked central San Diego neighborhood of Mission Valley. The property is among the last large swaths of commercially developable land available in a neighborhood at the geographic center of San Diego, the eighth-biggest U.S. city, and officials say they want to ensure that its value is maximized.

“This project means a lot for the entire region,” said Council President Georgette Gomez at the council’s meeting on Monday.

The City Council meeting marked the first time the land negotiations have been discussed publicly since they began nearly a year ago. San Diego voters in November 2018 approved a ballot measure calling for the city to sell the stadium site that formerly housed the NFL’s Chargers, which moved to Los Angeles two years ago, to the university.

In addition to a 35,000-seat stadium, the university’s plans for the new western campus include offices and classrooms, 4,600 apartments, 95,000 square feet of retail and other commercial development including hotels, though expected total costs for those non-stadium elements have not been announced.

University President Adela de la Torre told San Diego City Council members at the meeting that the university has “thoughtfully considered” its public mission and broader community needs in presenting its letter of intent to purchase the land.

“This offer represents not only fair market value, but a fair and equitable price to the tax-paying public we both represent and support,” she said.

John Kratzer, chief executive of development firm JMI Realty, which is advising the university, said SDSU is planning to foot the bill for a package of improvements on the site that total around $150 million, including a new river park, a new roadway bridge crossing the San Diego River and all demolition costs related to the old stadium. When the land deal closes, he said, the university will also immediately assume all of the city’s costs to operate the current 52-year-old stadium, previously estimated by the city at more than $10 million annually.

City officials contend the price should be based on the value of the land at the time the deal closes, rather than the university’s number based on a 2017 land value. The city’s appraiser has put the desired figure at $86.2 million based on 2019 numbers, and Andrea Tevlin, the city’s independent budget analyst who advises the City Council, said the value could be as high as $91.9 million if pricing is indexed to 2020 dollars, in a presumed September closing of the sale.

City staff is scheduled to report back to the San Diego Council within the next two to four weeks as to how to resolve the differences and close the sale sometime in early 2020.

Council members said pricing and other project deal issues can be resolved in a reasonable time frame, with the university still in the process of completing its environmental reviews for a master-planned campus.