After all the ups and downs of the Midway Rising redevelopment team and its promises, San Diego residents now are being faced with subsidizing Midway Rising’s affordable housing part of the project.
For example, just last October Midway Rising dropped the middle-income family units from its redevelopment plan, which angered a number of City Council members.
Originally, in order to obtain the bid for the massive redevelopment of the Sports Arena area, Midway Rising pledged it would build 2,000 affordable housing units. As U-T reporter Jennifer van Grove stated in yesterday’s (subscriber only) article on the matter:
The team has promised to set aside 2,000 of the project’s residential units for low-income households earning 80 percent or less of the area median income. The affordable housing commitment, which served as the basis for the team’s selection, is now an obligation memorialized in the team’s negotiation contract with the city.
Brad Termini, CEO of Midway Rising team developer Zephy, told the U-T:
“This project is not financially feasible without getting some of the infrastructure paid for.”
So, on Monday, March 11, the San Diego City Council voted unanimously to explore the formation of what’s known as an Enhanced Infrastructure Financing District or EIFD. It’s a method of creating a tax increment financing district to pay for public infrastructure in and around the project area. The council is “willing to trade future general fund dollars to secure thousands of rent-restricted apartments for San Diegans,” van Grove reported.
Jen Campbell weighed in, of course, as the leader of the entire move for the redevelopment of the Midway and Sports Arena area, and said:
“To meet the magnitude of this development and ensure that we are maximizing the public benefits of the plan, this kind of financing mechanism may be needed. While this does not include details at this time, this is a way to create improvements to our infrastructure in Midway, which could lead to more investment in this community with Midway Rising in the center of it all. So this may give us more help for a promising future for that part of our city.”
For background, the City Council in September 2022, selected Midway Rising to redo the city’s 48-acre property in the Sports Arena area. The project calls for 4,250 residential units, a 16,000-seat replacement arena, up to 145,000 square feet of commercial space, and an unspecified number of acres of parks, plazas and public space.
Brad Termini and his spouse were the biggest contributors to Mayor Gloria’s 2020 election campaign for mayor. After his victory, Gloria pressured the City Council to choose Midway Rising.
Midway Rising is comprised of market-rate housing developer Zephyr, sports-and-entertainment venue operator Legends and affordable housing builder Chelsea Investment Corp. The Kroenke Group, a subsidiary of billionaire Stan Kroenke’s real estate firm, is the development entity’s lead investor and limited partner.
Termini said Midway Rising is the largest affordable housing project in the state’s history, making it worthy of the investment. And the money in question would only exist as a result of the new development, he said.
“This is really about taking a tax increment that is derived from the private investment that we’re going to make in Midway Rising and being able to use it locally, to help be a catalyst for affordable housing and to produce infrastructure that the entire community benefits from.”
The rent-restricted units, however, are the most difficult to finance. An Enhanced Infrastructure Financing District, which could help offset construction costs, makes possible the unprecedented sum of subsidized units included in the project, the developer said.
More background from van Grove:
Enhanced Infrastructure Financing Districts were enabled in California in 2014, two years after the dissolution of redevelopment agencies. They do not require voter approval. They are formed by one or more of the affected taxing entities and governed by their own boards.
Once established, an EIFD captures the incremental growth in property tax dollars, above a zero-year baseline, within the geographic boundaries of a defined area. Tax increment dollars can then be used to pay the debt service on bonds or applied to specific infrastructure projects. EIFDs can be used to finance parks, libraries, roads, transit centers, waste water systems and even affordable housing projects.
The relatively new public financing tool is growing in popularity. In 2017, San Diego’s City Council established an EIFD for the entirety of the Otay Mesa community plan area to pay for infrastructure associated with the region’s massive growth. The city and county are also in the midst of forming an EIFD to raise money for upgrades to the San Diego River.
In the case of the Midway Rising project, the city of San Diego and potentially the county would participate in the EIFD, with the agencies forgoing their respective share of future property tax dollars, above an established baseline, collected within the district’s boundaries. The boundaries would likely match the project’s boundaries, although nothing has been decided.
Van Grove:
Council members spoke approvingly of the idea. Several noted that all of the development teams that participated in the sports arena real estate competition were contemplating the financing mechanism. The topic did come up during the selection process, but it has never been discussed in detail with the general public. At the time, the city, citing the need to protect negotiations, did not disclose with specificity any of the financial assumptions, ground lease terms or anticipated subsidies proposed by the teams. (OB Rag emphasis.)
During the Council hearing, van Grove reports, “Nearly three dozen people spoke during the public comment portion of Monday’s council meeting. Most of the speakers were directly or indirectly affiliated with the project, associated affordable housing service providers or local labor unions. They centered their remarks on the city’s need for housing for low-income families and seniors.”
A handful of speakers were critical of the proposed financing mechanism, including our friend Paul Krueger who stated:
“I’m totally flummoxed by this. Midway Rising won this bid. Are they telling you they can’t build this housing for low-income residents without this enhanced (infrastructure) financing district? That’s money that would go to infrastructure. Every time you do this, you take away money by putting it specifically here.”
Van Grove: “The EIFD exploration process will take place alongside ongoing negotiations between the city and the development team. The parties hope to bring a development deal to the city council for approval before the end of the year.”
So, on Monday, March 11, the San Diego City Council voted unanimously to explore the formation of what’s known as an Enhanced Infrastructure Financing District or EIFD. It’s a method of creating a tax increment financing district to pay for public infrastructure in and around the project area. The council is “willing to trade future general fund dollars to secure thousands of rent-restricted apartments for San Diegans,” van Grove reported.
What is that? Another tax increase on the ballot? This council has no business let alone expertise in this type of matter. Only one way to prevent this and that’s at the ballot box.
It’s not a tax increase. It is a diversion of property tax money from future General Fund money. So, probably the city will want a tax increase later to make up for the General Fund loss.
Well yeah, I just went to the inevitable.
Yes, but…..
There will be additional demand on city services that will now be unfunded because of the diversion. In terms of Police, Fire and Education; those added services will be a new expense based on over 9,000 new residents occupying the 4,350 new units – no? The ‘tax increment’ is a shell-game that only considers the added tax revenue over the existing use (Sports Arena and a few shops). I believe that the incremental costs are not factored. Thus, we either experience a tax increase or a general reduction of service for everyone else.
I agree with all you. It’s a shell game, or is it a bait and switch, or is it a way to continue to raise everything possible by the mayor, since he obviously has spent money foolishly to get SD in deep debt, and again the general population suffers, but does he care? Seems to me he does not. does he owe too many people either positions, or favors? Way too much you scratch my back, I’ll scratch yours in this regime.
Can’t say I didn’t call it:
“This proposal is worse than 101 Ash Street because it specifically spurns the lessons that we were supposed to learn (from that deal). So the question you need to ask yourself today is, ‘When excrement hits the fan — and it will — what side of it do you want to be on?”*
* https://www.sandiegouniontribune.com/business/story/2022-09-08/san-diegos-sports-arena-site
Well, I’m more than a little confused. Aren’t we subsidizing the project by giving Midway rising 45 acres of public land to develop?
And I’ll repeat what I said earlier. I’ll be very surprised if all 2,000 subsidized units and park elements make it into the final package.
Does it even really matter anymore? The front page of the UT that shows that the net outflow of San Diegans reached about 30,000 people as per the Census Bureau. We can infer from this that people are leaving because of high housing costs. This is a red alert level issue and at this point does arguing about whether or not the Midway Rising project should be subsidized miss the point? People are leaving, it is too damn expensive here and seriously let’s just get some damn housing built.
It would be great if the Rag came up with some thoughtful proposals regarding what they think can be done to address housing costs because all I ever see on here are complaints and finger pointing and at a certain point it sort of looks like obfuscation.
I also wonder if this will even get through Frank’s filter because I have noticed he doesn’t let my posts through but let’s Mateo’s through and that dude says some pretty out there stuff that seems to go against the progressivism of the Rag.
Again, Zack, San Diego does not have a housing crisis — look at the housing ads in the U-T — we have an affordable housing crisis.
“Does it even really matter anymore?” -Obvious ploy to dismiss legitmate objections to handing public land over for private profit.
“Does arguing about whether or not the Midway Rising project should be subsidized?” -Ditto.
Your comments are always attempts at misdirection: your only ‘solution’ to every problem is to let developers maximize their profits at public expense. The fact that just happens to benefit the electoral campaigns and policies of the politicos in power is ignored. All of which reveals your claims to the mantle of “progressive” a sheep’s clothing.
There are multitudes of “thoughtful proposals regarding what ‘they’ think can be done to address housing costs” on this site; but of course you to ignore that they exist to pursue your agenda of capital-over-people.
It’s not the housing, it’s the cost of the housing.
I can no longer afford my place, plus it’s too small and has steps. I can no longer navigate these steps
There is nothing available that I can afford to rent in Ocean Beach.
So I will probably be leaving California altogether.
Thank you, Airbnb, hedge funds buying up single family homes, etc….these are the things, plus high taxes and the inflated cost of everything, that make it impossible for me ..and so many others….to stay.
Free speech is the cornerstone of our American republic. In debate, an emotional appeal like personal attacks, expose the foundational weaknesses and lack of substantive basis for any proposed argument.
Frank,
What makes housing affordable? Why didn’t we have an affordable housing crisis 20-30 years ago? At what point did housing go from affordable to unaffordable and why? If it is solely a question of an affordable housing crisis, then why wasn’t this an issue decades ago? Why in the last 10-15 years? Corporate greed, greedy developers, and STVRs existed a long time ago and yet housing wasn’t too expensive when I was a kid in the 90s. So what changed?
It’s become mainstream consensus that the housing shortage has led to an affordability issue. Population growth and work from home have led to a demand in housing that often gets taken up by less people (especially with WFH). What is the OB Rag’s answer to this? What realistic solutions has it thought of? Perhaps some kind of policy proposal would be helpful.
Otherwise it just looks like the Rag is kind of obtuse to a lot of hardworking people’s struggles, including my own. Born and raised here, certainly not in the pocket of a developer. Just trying to stay in the city I love close to my aging parents.
Zack,
You spent your life enjoying laws and provisions that helped protect the city and state you purport to love from indiscriminate overdevelopment. Laws created by coalitions with leaders and the public that sought to preserve and protect open space, create parkland, install crosswalks, stop signs, stoplights.
You’ve had the pleasure of enjoying the benefit that community planning groups have given residents; a seat at the table. Participate in to helping to craft our individual community’s futures, coalesce around public safety issues, foster a sense of belonging while maintaining the history and character of our local communities.
Then a slick little career politician from the San Diego City Council went to Sacramento. Todd Gloria first championed AB 2492 to fortify eminent domain laws. Then Todd crafted AB 3243 to nuder and suppress Community Planning Groups and where Wall Street Real Estate Investment Trusts can more easily prey vulnerable communities for hyper gentrification. Now Todd’s fraud squad denigrates community planning groups and castigates them as the “villainous problem” in the absence of Republican boogey men.
If all of the car dealers in San Diego County continually bought up the majority of nice used cars since 2008 and then colluded to implement a rental only policy, what would that do to the price of cars and the price of rental cars?
Now… what if those corporate dealerships were subsidized by the federal government to offset losses of rental income caused by keeping their rental prices artificially high?
This scenario playing out before our very eyes in the commercial real estate industry, in real time. One would think, I know let’s convert commercial office buildings to residential rentals.
Retrofitting commercial to rental costs prohibit that, the infrastructure is not there. It is NOT an option. Ever been in a office building restroom, how many are there on each floor? Plumbing lines alone cannot be retrofitted to accommodate hundreds of bathrooms/kitchens per floor. So many commercial firms are simply walking away to let that debt linger on local bank ledgers.
This in turn leaves John Q. Public stuck with razing commercial buildings; all the while we build a brand-spankin new Sports Arena, (sans any middle class rentals) for our imaginary championship sports team, to be or not to be named at later date. (I figured since it’s imaginary it might as well be a team of championship caliber)
Such an imaginged championship team – Gloria could sell naming rights to it~!
I had worked in a lot of the tract homes that were built in San Diego county from 1978-1990. Housing slowed due to areas being built out and the recession around 1990. There was still a building push up in Laguna Hills then.
Housing affordable to unaffordable. Well, the 1600 sq ft house I bought in 1992 was 160k. Remodeled, added 150 sq ft, and in 2003 sold at 455K. Bought the next one at 495K. The economy crashed in 2008, people were getting loans that had no business getting them, way over their heads, so prices were generally flat for awhile. Housing prices didn’t really snap out of it until 2015. Meanwhile added 1100 sq ft to the original 1800 sq ft. 2150 sq ft a few houses away just went for 1.38m. So IMO, about 25 years ago is when price escalation was beginning.
San Diego metro population from 1980 to now I read as 1.7M to 3.3M. The last 5 years growth at less than 1% per year. And, correct me if I’m wrong, but I think medical, bio, and computer tech like Qualcomm was a part of that 1990-2000 growth.
Median home prices from 1990-present.
https://www.laalmanac.com/economy/ec37.php
Repealing Glass-Steagall – Financial Services Modernization Act of 1999, or the Gramm–Leach–Bliley Act, eliminated the firewall protections between commercial and investment banking. 2008 the elf inflicted gunshot felt round the world or “credit default swap” catastrophe was the result. Markets crash and then the ’08 Smash-And-Grab bailout of incomprehensible size. TARP (Troubled Asset Relief Program eliminates nearly all restrictions on corporate investment in residential real estate, while offering up subsidies still enjoyed by some 192 publicly traded Real Estate Investment Trusts on the NYSE and 24 more on NASDAQ today some 16 years later. We have almost exclusively Built-to-Rent all-the-while Wall Street outbids first time buyers by a $100K to squash young families, and working class folks from the American Dream.
Politicians are running interference for those that suck up all the housing coming onto the market, eliminating home-ownership and feeding the ever increasing rental rates that never stop. Sales used to temper average rents, and have historically until the Politico-Real Estate Complex set out to manipulate the markets globally.
Zack, I have argued here, and elsewhere, that we don’t have a housing problem, we have an income problem.
According to the Center for Income and Policy Research, the minimum wage in 2020, adjusted for inflation and in 2020 dollars, was $7.25. That reflects an increase of $2.25, in 2020 dollars, over the minimum wage in 1940, again in 2020 dollars. By comparison, if the minimum wage kept pace with the increases in productivity over that period it would be $21.45, again in 2020 dollars.
Inflation in our post-pandemic economy has eroded the value of the minimum wage even further. Clearly, wages are not keeping up with the cost of living, with the cost of housing a major contributor, but I believe it is the failure of the ecomony to pay a living wage that is the culprit.
In the 70’s, fresh from graduate school but without a career level job, I could live some what comfortably, but certainly not lavishly, on jobs that paid at or slightly above the minimum wage. And, yes, I was living in OB at the time.
“and STVRs existed a long time ago and yet housing wasn’t too expensive when I was a kid in the 90s. So what changed?”
There are a lot more STVRs then their used to be. You already know this.
Than
Many of the now-named STVRs were called ‘grannies flats’ and housed the students, gardeners, drug store clerks, surfers, etc….i.e those people who needed shelter but could not afford the higher rents of regular apartments or houses. At one time the city was going to grandfather them in as legal residences, which would have eased the problem of homelessness. It was similar to the SRO hotels in downtown that the developers razed in order to build their high rise apartments and hotels. These facilities were very useful…most of which were rented full time to long term residents. What we have evolved to is something wildly different, and less healthy for the community.
Scrap “Midway Rising” if the developer cannot perform. BTY “Mayor Todd Gloria and District 7 Councilmember Raul Campillo are pushing the “Penny for Progress” plan, which would increase the City of San Diego sales tax one percent, from 7.75% to 8.75%.”
Seems only fitting that Todd Gloria would want to increase taxes on SD residents and SD visitors.
OddTodd’s Taxes – Penny for Progress!
Aren’t we already taxed enough ?
Now OddTodd wants SD to to subsidize Brad Termini?
WTF?
More informative investigative reporting from Arturo Castañeres at La Prensa SD on this ridiculous farce:
https://laprensa.org/perspective-grift-expands-midway-rising-development-deal