More Details and History of NAVWAR Selection Process for Its Redevelopment Team

Here are some more details about the Navy’s selection of its redevelopment team for the NAVWAR properties (gleamed from U-T reporter Jennifer Van Grove’s subscriber-only article in today’s paper) and the history of the selection process – as the Rag has reported over the last 3 years.

Owned by the Navy since the mid-1990s, the Naval Base Point Loma, Old Town Complex — commonly known as NAVWAR — is home to the military’s Naval Information Warfare Systems Command and Naval Information Warfare Center Pacific divisions.

Reportedly, a mix of 5,000 full-time and contract cybersecurity professionals currently work in the World War II-era hangars that the government says are past their useful life. Here’s a timeline:

• 2019 – Navy prepared a Draft Environmental Impact Statement (Draft EIS) for the NAVWAR facilities; the Draft EIS evaluated the potential environmental effects associated with “modernization” of the properties;
• January 2020 – the Navy began the public involvement process as required by National Environmental Policy Act of 1969 (NEPA);
• January and February 2020 – the public participated in a 30-day public scoping period for development of the Draft EIS;
• May 14, 2021 — the Navy recommended that the NAVWAR site in Old Town be redeveloped with 10,000 high-density residential units and high-rise business towers – and a transit facility in a notice published in the Federal Register announcing the public review and comment period for the Draft EIS and dates of virtual public meetings, and public review and comment pursuant to Section 106 of the National Historic Preservation Act;
• public comment ran from May 14 through July 13, 2021 – but this period was extended to August 12, 2021, mainly due to the volume and intensity of the community’s push-back on the designs;

The problem at this point was the Navy’s “preferred alternative” in the draft environmental impact report called for over 100 buildings, 10,000 residences and 2.5 million square feet of office and retail space. The tallest buildings would be 32 stories high, creating a new skyline in the Midway area over a 30-year development period. Other alternatives featured lower buildings, less housing and no transit center, despite the proximity of railroad and trolley lines and the airport.

Renderings released by the Navy displayed different options, but most showed a stark over-developed new skyline that would dramatically change the entire area. The Navy stressed that they were “conceptual at this early stage.”

Beginning in mid-May 2021, the push-back erupted and was partially led by Save Our Heritage Organisation, the OB Rag, KUSI and the residents and businesses of the surrounding neighborhoods. In sum, more than 1,000 comments, letters etc were sent to the Navy in response to the plans.

Meanwhile, a group called Save San Diego’s Character mobilized its membership to oppose the worst of the models and to put pressure on the Navy to downsize the project. In response, residents, and business owners in Midway, Old Town, Mission Hills, Bankers Hill, Point Loma, and Ocean Beach enlisted an aggressive campaign to support Alternative 1, which encouraged the Navy to rebuild a suitable facility for NAVWAR.

Then in mid-April 2022, the Navy acknowledged its mistake in pursuing a redevelopment model for its NAVWAR site that included “very scary” (their words) high-rise buildings and plans for 10,000 housing units. The Navy admitted the public reaction was so negative that it had to dump the plans. A Navy spokesperson stated:

“I think it’s fair to say that when we released those ideas last summer, those computer models of density were very scary to a lot of members of the community. We really heard what the public said, and we said, ‘ya know, we need more detail before we finalize our way forward,’ and that’s what bringing a developer on board would help us do.”

It was also disclosed that the Navy had dropped its joint pursuit with SANDAG of a “Grand Central” station as part of a massive redevelopment of the NAVWAR site.

In November 2022, the federal government issued a solicitation for the long-term lease and development of the property. The Navy offered the land for “in-kind” consideration, meaning it expected to exchange the land for new NAVWAR facilities, identified in the solicitation as 1.43 million square feet of replacement administrative, lab and warehouse space, and 3,208 parking spaces. The Navy facilities, the solicitation document stated, are required to be built first and at no cost to the agency.

The solicitation involved the largest real estate deal in the Navy’s history. It encouraged proponents to come up with plans that fit the surrounding areas, noting that the site may be able to accommodate:

• thousands of homes,
• provide ample space for large corporations and community shops,
• and make room for hotels in towers up to 350 feet tall, according to preliminary environmental analysis.
• The draft plan, released in May of 2021, studies 19.6 million square feet of development spread over 109 buildings.
• The environmental work is sidelined until the Navy chooses the winning bidder.
•  the federal agency’s priority is replacement facilities, which must, at a minimum, be valued at the fair market value of the leasehold interest, the document states.

Proposing teams had some flexibility in how they accommodated facilities requirements, although the Navy said it wanted 887,568 square feet of space and 3,208 parking spaces at the NAVWAR site, and another 541,068 square feet for warehouses, labs and space off-site.

On Dec. 7, 2022, members of the public, government, Navy, NAVWAR and potential developers gathered to learn about why the revitalization efforts were needed and what the Navy wanted in a master developer. Over 100 companies registered for the event, representing all aspects of the construction and housing industry.

In February 2023, calls began for city leaders to ensure that affordable housing was included and built within the redevelopment project.

By mid-August 2023, the Navy had received numerous proposals from redevelopment teams for the NAVWAR property but was absolutely mum on the number and types of proposals and who were the teams and their financial models and development schedules. It was the final leg of the real estate competition.

After receiving a harsh backlash “to conceptual models that depicted a wall of skyscrapers towering over Interstate 5,” the Navy was fairly sensitive. Navy officials repeatedly stated a desire to be good neighbors, but took a closed-door approach to its solicitation process in an effort to maintain the confidentiality of negotiations. Participating teams, bound by a non-disclosure agreement, had been barred from talking to the media or openly discussing their plans for the site with community groups.

It also became known that the Navy’s land is not subject to local zoning laws or building height restrictions. This, plus all the secrecy and the Navy’s earlier redevelopment models, caused a deep anxiety among residents over what will eventually come down. Residents and community members pleaded that affordable housing be built. Others expressed concerns about the potential loss of an important part of San Diego’s character and visual nature.

On August 23, 2023, the Navy announced Mayor Gloria’s endorsement of the redevelopment project — but neither he nor the Navy mentioned affordable housing in their statements.

January 2024 – the Navy announced its selection of a development team led by San Diego-based Manchester Financial Group and McLean, Virgina-based Edgemoor Infrastructure and Real Estate. The Navy remains tight lipped about the current real estate competition, its largest in history. The three other teams selected in April to submit detailed proposals were not revealed.

Secrecy continues as the community is left to wait for an indefinite amount of time before learning what is actually being contemplated for the NAVWAR property. Potential development concepts will not become public until the Navy is ready to resume its environmental analysis.

As van Grove reported:

The winning Manchester/Edgemoor team consists of the two lead firms, which will take a 50-50 ownership stake.

Manchester, a prominent hotel and commercial development firm chaired by Doug Manchester, was similarly awarded the 12-acre Navy Broadway Complex in 2006. As part of that deal, the developer erected a waterfront office building for the Navy Region Southwest, Naval Facilities Engineering Command Southwest and Navy Region Southwest Reserve Component Command. But it sold off most of the leasehold in 2020 to real estate developer IQHQ.

Started in 2001, Edgemoor is an affiliate of Clark Construction and specializes in public-private partnerships. … The NAVWAR project is Edgemoor’s first project in San Diego. The master developers have also pulled in Clark Construction as the project’s design-builder. The construction firm has served as the general contractor for many high-profile developments in town, including Snapdragon Stadium and Petco Park.

HKS Architects … is designing the new government facilities. Planning firm HOK is handling the master plan for the project’s private development. And San Diego-based Dealy Development Inc. is in charge of securing entitlements.

The Manchester/Edgemoor team also expects to eventually bring in three, multi-family housing developers.

In admitting details were slim, van Grove reported that, “the Manchester/Edgemoor team pitched turning the NAVWAR complex into a mini city of its own with”:

• new government facilities,
• ample housing,
• office space,
• a few hundred hotel rooms,
• parks,
• a trolley stop, and
• an assortment of ground-level shops and restaurants that could help the project rival downtown San Diego as a popular destination.

The environmental report, meanwhile, has been on hold pending the outcome of the solicitation process. And any development concepts will not become public until the Navy is ready to resume its environmental analysis. As van Grove wrote:

The proposed land exchange is modeled after the agency’s 2006 agreement with Manchester Financial Group for the Navy Broadway Complex. The developer received a 99-year leasehold for the 12-acre property between Pacific Highway and North Harbor Drive in exchange for building the Navy a new, administrative headquarters. The 17-story skyscraper, completed in 2020 and now known as Navy Building One, was built and paid for entirely by Manchester Financial for an undisclosed sum.

As van Grove acknowledges, “The reluctance to share the proposed development concepts likely stems, at least in part, from the public’s reaction to the draft environmental impact statement, which included visual simulations of buildings towering of Interstate 5 and Old Town, and also interfering with views from Mission Hills. The document received more than 1,000 comment letters. The Navy then shifted its approach, opting to secure a development partner to solidify the vision before completing the environmental work.”

Spokespeople for the Manchester/Edgemoor team claim the developers want to be considerate of the project’s neighbors and will also work alongside the city of San Diego, even though the federal land is exempt from local zoning restrictions. Ted Eldredge, the president and CEO of Manchester Financial, said:

“I would not want to just hide behind the federal government. We all want to do what’s best for San Diego. Density is important but also we don’t want to be walling off of something either. It’s important that it’s done right. We’re very sensitive to that. … We’re going to do the best we can to make everybody happy.”

The environmental work needs to be completed before a transaction can be finalized but the Navy declined to say how long the process will take.