What’s Going on at Liberty Station with ‘Ownership War’ Between City and Developer?

By David Garrick / SD Union-Tribune / March 10, 20226

San Diego took a key step Tuesday toward cementing long-term control of the Liberty Station mixed-use complex — despite objections from the company that manages much of the area.

The City Council unanimously approved payouts to the county and some other local agencies — mostly school districts, community college districts and health districts — that have a financial interest in Liberty Station. The council’s approval shifts the power to those agencies, which now must approve the payouts they will receive in exchange for relinquishing to the city their long-term rights over the sprawling property east of Point Loma.

Of the 13 agencies with a financial stake, four have approved their compensation agreements, one was slated to vote Tuesday night, three are scheduled to vote next week and five haven’t taken action. Those approvals are crucial to finalizing the city’s efforts to declare Liberty Station a “future development” site, which will allow the city to continue owning it, instead of a “liquidation” site that the city must sell.

In 2012 when the state dissolved redevelopment agencies, cities were required to categorize the properties they received from those agencies after they were dissolved.

To cement Liberty Station as a future development site, the city is required under a 2023 court ruling to keep making progress toward completing compensation agreements and then working on plans for future development of Liberty Station. That ruling was prompted by a 2022 lawsuit filed by Seligman Properties, which controls 330 acres of Liberty Station’s commercial areas under no-rent leases that run through 2070.

Seligman contends in the lawsuit that the city’s designation of Liberty Station as a “future development” property is bogus because redevelopment at Liberty Station “had already been completed and there is no ‘future development’ planned or proposed.”

On Tuesday, officials representing Seligman urged the council to reject the compensation agreements and instead sell the property to Seligman.

They argued that the city’s insistence on maintaining ownership will cost it millions in tax revenue and lead to long-term deterioration of the site.

They said that without ownership and long-term control, Seligman and the other leaseholders won’t invest in the property and won’t maintain it well during the later years of leases that run through 2070.

The council did not request a summary of the issues before approving the compensation agreements Tuesday and did not discuss the issue before approving those agreements unanimously.

While city officials haven’t revealed any plans to redevelop Liberty Station, they have repeatedly insisted that the city should retain ownership.

“Liberty Station is an important public asset that should remain in the city’s control for the long term,” officials said in documents for Tuesday’s hearing.

They also contend it makes no sense to sell to Seligman.

City officials say the long-term leases make buying Liberty Station a poor investment for any potential buyer other than Seligman. They contend that a bidding war would be unlikely, and that Seligman would ultimately get most of Liberty Station at a substantially deflated purchase price.

The agencies that have already approved compensation agreements are San Diego County, Lemon Grove School District, Grossmont-Cuyamaca Community College District and San Diego Community College District.

Grossmont Union High School District was slated to vote on its compensation agreement Tuesday night. Agencies scheduled to vote on theirs next week are the Southwestern Community College District, Grossmont Healthcare District and San Diego County Water Authority.

The five agencies with no votes scheduled are San Diego Unified School District, San Ysidro School District, Sweetwater Union High School District, the San Diego County Office of Education and the Educational Revenue Augmentation Fund.