Overlooked State Law Could Delay or Block Midway Redevelopment Unless Affordable Housing Is Included

by on March 26, 2021 · 3 comments

in Ocean Beach, San Diego

Andrew Keatts over at Voice of San Diego bylined an explosive article yesterday that charged an overlooked change to state law could delay or even block the City’s efforts to “redevelop the area around the Sports Arena into an urban entertainment district.”

And Keats also found out that “City officials have paused negotiations” with Brookfield Properties – the developer who was chosen by former Mayor Faulconer to redevelop the nearly 50-acre area.

It turns out that while Mayor Todd Gloria was in the State Assembly, the California legislature in 2019 passed AB 1486 which strengthened the Surplus Lands Act. The Surplus Lands Act has a requirement that before any state public agency sells land it doesn’t want, it first must offer it to other state and public agencies OR affordable housing developers. If none of these want the land, then the public agency can move forward with the sale to private parties.

A new wrinkle for the City and Brookfield appeared in December 2020 when the Department of Housing and Community Development published guidelines on how the new strengthened law will be implemented, and specified as Keats explains to leases of public lands – not just sales. These new guidelines are still “unofficial” and should be finalized within the next few weeks.

What this means is the before the City and Brookfield can proceed, there have to be clarifications. Keats quotes Jay Goldstone, the city’s chief operating officer, who told him the city is waiting to see the new state regulations before it figures out what its doing, and whether new bids from would-be developers need to be requested. Goldstone wrote Keatts in an email:

“The city will wait to see the final HCD guidelines. This may require the city to issue a (request for bids) to affordable housing developers.  If so, this action is no reflection on the negotiations with Brookfield, but rather HCD’s interpretation of (state law), which the city does not agree with.”

What a kerfuffle!

Not only did the city go through a bidding process already – in which Brookfield was chosen – , a majority of city voters endorsed Jen Campbell’s plan to diss the 30 foot height limit in the Midway area.

But wait! All this kerfuffle could actually play out where more affordable housing units are built in the Midway.

Keatts at the Voice explains:

But the change in state regulations doesn’t mean the city’s tentative agreement with Brookfield is dead.

For one, the law doesn’t prohibit private leases. It requires the city to notify other public agencies and affordable housing developers – non-profits that build new homes reserved for people with low incomes – that the land is available, and give them 60 days to respond. If anyone does, the city then needs to conduct good-faith negotiations with them to take over the property.

In other words, if the state agency’s final regulations look like its first draft, that could delay negotiations a while longer, but another public agency or nonprofit developer would need to step forward to really imperil the project.

But even when they resume, the city’s negotiations with Brookfield could look very different than they did at the start of the year, thanks to recent changes to the Surplus Lands Act.

The city could avoid all this hassle by reserving more of the homes Brookfield builds on the land for people with low incomes.

That’s because the law says any mixed-use project with more than 300 homes – like the Sports Arena project – is not subject to the law if 25 percent of those homes are reserved for people with low incomes. If Brookfield wanted to get cracking on negotiations, it could agree to put income restrictions on a quarter of its new homes, and could skip the public noticing requirement.

More likely is what happens if no one responds to the city’s offer to take up the property.

In that case, 2018’s AB 2065 would mean that Brookfield would nonetheless need to reserve 15 percent of the new units for low-income residents.

That could be welcome news to needy residents and would help to mitigate the misshapen plan to turn the Midway into an entertainment district. The original bidding process never guaranteed any affordable housing. Neither did Measure E which destroyed the height limit. What will Gloria do? He ran for mayor on building more affordable housing.

{ 3 comments… read them below or add one }

Frank Gormlie Frank Gormlie March 27, 2021 at 10:10 am

This was front page news at the U-T this morning.

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Avatar Dike Anyiwo March 27, 2021 at 9:36 pm

It’s spelled Keatts* not Keats.

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Avatar triggerfinger March 29, 2021 at 6:58 pm

Doh! And the entire point of waiving the height limit was so they could build larger more profitable (expensive) homes. It didn’t actually increase the unit density. The builders were very clear that it wasn’t worth their bother otherwise.

Maybe they can give all the tweakers and beggars a roof instead of pushing them into neighboring communities.

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