Mayor Confirms Sale of Liberty Station Leases by McMillin – But Questions Remain

by on November 30, 2018 · 2 comments

in Ocean Beach

After the Times of San Diego story of the sale of Liberty Station leases by McMillin Company to a Michigan company broke on Wednesday, there have been further developments in the unwinding of just what and when it all happened.

To recap briefly, it was reported that McMillin sold leases to Seligman Group on Wednesday, but nobody in city government appeared to have heard about it. The city is supposed to monitor and approve any sales of the leases at Liberty Station by terms of its agreement with McMillin. Especially of concern is the fate of the North Chapel at Liberty Station.

But by the next day, things had changed. Thursday afternoon, as the Times of SD reported, Christina Chadwick, a spokeswoman for Mayor Kevin Faulconer, had confirmed the deal and added an operator has been found by the new owner who would continue to allow religious worship at the chapel.

Here is part of the Mayor’s statement:

“The mayor’s priority is to ensure that the historic North Chapel is preserved and maintained for future generations to enjoy. We’ve been in close contact with the new owner at Liberty Station and have received assurances that the North Chapel will continue to be used for a variety of purposes as allowed for under the ground lease.”

The Mayor’s statement in addition said the new owner’s operator of North Chapel will book a wide range of events at the site, “including but not limited to religious gatherings and weddings.”

Chadwick also stated that former Deputy Chief Operating Officer David Graham approved the McMillin-Seligman agreement on November 15 in conjunction with staff of the city’s Economic Development Department.

As the Times of SD reported:

On Thursday, a spokeswoman for Mayor Kevin Faulconer’s office said the Seligman Group is a real estate investment firm partnering with Irvine-based Pendulum Partners, and “the experience of this new ownership group gives the city confidence they will be good stewards.”

Christina Chadwick, the spokeswoman, said the city’s role is to oversee terms of the so-called DDA (disposition and development agreement) and the transfer under the terms of the ground lease.

“The City was responsible for ensuring the new lease holder has a good reputation as well as the experience and financial capability necessary to fulfill the terms of the ground lease,” she said.

She also added:

“As long as the leaseholder meets those requirements, the city must approve the transfer.”

The San Diego Union-Tribune has also confirmed the deal, which the San Diego Reader says is worth $71 million. The U-T reported:

… documents recorded with the county in recent days show McMillin-owned companies transferred properties along Historic Decatur and Truxton roads to an out-of-state company that manages premier commercial and residential properties in California and beyond.

Not everyone is happy with the new arrangement. The U-T explained:

News of the transfer did not sit well with Councilwoman Barbara Bry, who previously requested an investigation by the city attorney’s office into McMillin’s handling of the historic U.S. Navy base that was turned over to the city in the 1990s.

“I am incredibly frustrated and disheartened that the public and I are learning about McMillin selling Liberty Station’s master leasehold in the newspaper,” she said in a statement Thursday.

Bry has not received responses to a series of questions she posed to City Attorney Mara Elliott two weeks ago.

“We need to get to the bottom of this and reassert the city of San Diego’s authority to hold McMillin accountable for maintaining and protecting the Naval Training Center, which should be viewed as a regional treasurer, not a commodity that can be re-sold to a newly formed LLC based out of Michigan,” she added. “San Diegans deserve better than that.”

The U-T also quoted Ronald Slayen, a Liberty Station tenant and organizer of the campaign to save the chapel:

“The only thing I can hope for is that Seligman is going to do what McMillin has never done — and that is to be open to something other than just gutting the chapel.”

Also, Henry Garon is not happy. He’s an attorney who attends services at North Chapel and is considering legal action as a way of retaining rights to the 1940s church. He told the SDU-T:

“It’s supposed to be used in the manner it has been used. There’s grounds for an injunction to continue to use it until a new permit has been approved.”

Meanwhile, Matt Potter at the San Diego Reader has dug up some interesting dirt on the guy who runs Seligman Group / Seligman & Associates. Turns out Scott Seligman is known in San Francisco as a big gentrifier:

Seligman honcho Scott Seligman, son of company founder Irving R. Seligman and part owner of the San Francisco Giants, is not universally admired in the Bay Area.

“Seligman has been singled out as the ugly face of gentrification in San Francisco by non-other than Lawrence Ferlinghetti, the famed poet and owner of City Lights books,” noted Pueblo Lands.

“Back in 2001 Seligman was in the process of evicting tenants from a building he controlled in the Mid-Market area (the same part of San Francisco now being colonized by Twitter thanks to a big tax break the Board of Supervisors gave the company). In a press release Ferlinghetti lashed out:

“A developer from Michigan, Scott Seligman, who runs Sterling Bank and Seligman Western Enterprises, wants to gentrify the Mid-Market zone. Not to make the City a better place but to make his bank account a little fatter. He wants a better class of tenant. No more photographers or poets or translators or editors or painters. No more small businesses serving the city. No more small nonprofits, like Streetside Stories, which publishes work by 650 middle school kids every year to foster a love of reading and writing.”

This is not the last word on this bubbling stew.



{ 2 comments… read them below or add one }

Katheryn Rhodes December 2, 2018 at 4:12 pm

First of all the City of San Diego is the Owner of all our public property.

The April 30, 2002 Master Ground Lease for 66-years was originally between the Redevelopment Agency of the City of San Diego (“Landlord”) and McMillin-NTC, LLC. a Delaware Limited Liability Company (“Tenant”).

On November 6, 2018 we approved Measure J – Amending City Charter Section 225 Mandatory Disclosure of Business Interest with 85% Approval.

In theory, Mayor Faulconer’s Real Estate and Assets Department (READ) would have to make McMillin-NTC, LLC, and their 22 Subleases, disclosure the actual ownership of the Tenants, which may hide a conflict-of-interest.

Hence, a new Tenant by selling of ownership interests of the Master Group Lease from McMillin-NTC, LLC to Seligman Group.


Vern December 6, 2018 at 9:26 am

The new owners could work with Failconer and his DSD folks to turn LS into high density luxury condos and apartments, naturally with all the wonderful retail benefits below. LS parking lots can be converted to paid parking and more high density living and folks can use Bird scooters to visit this new and improved LS. Now that’s progress, SD-Style.


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