Aug 2, 2023 - Development

Scoop: San Diego doesn't expect full City Hall redevelopment bid

Illustration: Megan Robinson/Axios

San Diego officials expect to pivot from their original plan to redevelop five downtown blocks as part of a new City Hall project, Jay Goldstone, Mayor Todd Gloria's special adviser, told Axios.

Driving the news: The deadline for bids is Friday at 2pm, after a city-issued extension that came in late June.

  • Goldstone told Axios that no developers have submitted bids yet, and he doesn't anticipate a proposal for the full five-block area.
  • "I would be pleasantly surprised if I receive anything on the full five blocks," he said. "I'm expecting to get something on one or more of the blocks, and depending on what happens, the city will regroup and determine what our best approach would be."

Why it matters: Without any bids, the city can pursue redevelopment without elevated affordable housing requirements imposed by a state law on developing public land.

Zoom out: The city's development dreams are tempered by the state's Surplus Lands Act, which required bidders to reserve 25% of homes included in a project for residents earning less than 80% of the median income.

  • "If we don't get proposals, we would then satisfy the [state law] and could do basically anything we want," Goldstone said.

Yes, but: Any development on those blocks that includes housing would still need to set aside 15% for people earning less than 80% of the median income.

  • Otherwise, developers could propose projects without any housing at all, Goldstone said.

Meanwhile, the city has asked consultants to submit bids to help decide how to build a new City Hall.

  • The city issued that request last Friday, and submissions are due Aug. 28.
  • Those bidders could pitch building a new City Hall as a capital works project, by striking a partnership with a private developer to foot the bill, or relying on an existing building.

What they're saying: We asked Goldstone whether the lukewarm response from developers was due to the project requirements, or larger economic headwinds for downtown efforts.

  • "It's a combination of both," he said.
  • "Where interest rates are, the availability of financing is a challenge, even for housing. And given the office glut, I don't think anyone will propose office. Therefore, it's housing and retail, basically, which limits their revenue stream. Throw in the state's 25% requirement, and some in the city's desire for even deeper affordability, and I think it all plays into it."

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