SAN DIEGO — The development team behind a massive effort to reconfigure the city-owned Sports Arena site has scrapped 250 middle-income housing units from its initial proposal citing high interest rates and other financial reasons as well as a proposal to build a 200-room hotel.
Representatives from Midway Rising appeared alongside staff from San Diego's Department of Real Estate and Airport Management to inform the San Diego City Council and the public that plans have changed.
The latest proposal will change out 250 housing units that were reserved for moderate-income earners who make between $77,200 to $98,100 a year.
The reason, says city staff and representatives from Midway Rising, is that the numbers just don't pencil out and the developer will replace the units with market-rate apartments for those making more than 120% of the median income.
"I think we are all aware of the ever-changing financial market and the challenges that are out there," said Director of the city's Department of Real Estate and Airport Management (DREAM), Penny Maus of the Stan Kroenke-owned development group's decision. "Due to limited financing, high-interest rates and some regulatory challenges in obtaining [joint powers agency bonds], this isn't something that they are able to provide at this point."
"I can't say how frustrating that is," said Councilmember Raul Campillo, who said he plans to hold the developer to their word.
"They made a promise to the City Council, to the people of San Diego over a year ago, and said they were gong to deliver no matter what," Campillo told CBS 8.
"We have to hold them accountable to the promises they made and won the application for the Midway site on," he added.
As for the hotel, Maus says a large sewer pipe that the city had failed to mention to the development team prevents them from building the hotel on the site.
The update comes 13 months after Mayor Todd Gloria selected the Midway Rising team to reimagine the Sports Arena site, with its vision for a new arena, 2,250 low to moderate-income housing units, a hotel, as well as commercial and park space.
Jettisoning the hotel and the moderate-income units has not been Midway Rising's only change since the city selected it to lead the redevelopment. In June of this year, the group which included developer Brad Termini, Legends Management, and Chelsea Affordable Development Group, announced that billionaire sports team owner, Stan Kroenke would become the lead investor for the project.
Yet, despite the billionaire mogul's backing, the team says it could not afford to include the moderate housing, leaving some councilmembers concerned about the direction of the project.
"I don't understand how we didn't know there was a sewer line there," said councilmember Marni von Wilpert. "You're telling me that two billionaires that own four or five professional sports teams [Kroenke and Jerry Jones which owned Legends] can't figure out how to build 250 middle-income housing units for us. We have a homelessness crisis. We have an affordability crisis. We picked your team because we believed you."
As for the next step in the process, Midway Rising is expected back in late October 2023 to provide a formal project description as required by state environmental laws. Another workshop is then slated by December as is another update to the city council.