Midway Rising’s Affordable Housing Proposal Makes It a Clear Choice for Sports Arena Site, City Says

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On Wednesday, the City of San Diego Real Estate Department officially recommended Midway Rising as the winning candidate for the redesign of the 48-acre sports arena site in the Midway District, citing the project’s commitment to a high number of affordable housing units.

The staff recommendation, along with a financial assessment by outside real estate consultant Jones Lange LaSalle, comes just two days after Mayor Todd Gloria announced he was also in favor of Midway Rising’s plan to
redevelop the city’s housing stock at 3220, 3240, 3250 and 3500 Sports Arena Blvd.

The project team’s plans to include 2,000 restricted-act units at an average affordability of 48% of the region’s median income represent the highest number of affordable units among the three teams competing to develop the owned site. in the city. His low-cost housing plans also position him favorably in light of California’s surplus land law, which states that surplus government-owned land must be made available for affordable housing.

In addition to an in-depth analysis, city officials also conducted recent site visits to affordable housing projects and arena/stadium developments previously undertaken by each of the competing teams to assess their ability to execute the type of major development sought for the site of the sports arena.

“After visiting city sites, reviewing reference letters and receiving analysis from JLL, it was clear that while all teams were capable of completing a project, Midway Rising would not only receive the “first priority” under the SLA (Surplus Land Act), but would also be the best partner for the city,” the staff report concludes. “They have demonstrated a clear and consistent vision for the entire site and a stability throughout the process.”

Similarly, Jones Lang LaSalle highlighted the greater number and average size of affordable units, as well as a financing strategy that “limits direct city funding requests and provided a pro forma financial model with key assumptions.” which generally align with the current market environment. .”

The city staff report was released ahead of two crucial meetings next month when elected leaders will make their selections for the next stage of Midway Ward’s reinvention – a Sept. 8 session of the Land Use and Development Committee. city ​​housing, followed on September 13. with a meeting of the full council.

Midway Rising’s plan calls for a total of 4,250 residential units, an all-new 16,000-seat arena, a 200-room hotel, and 20 acres of open space. The group also offers 250,000 square feet of retail space concentrated in a central public plaza.

Its development team includes market-rate housing developer Zephyr, sports and entertainment venue operator Legends and affordable housing builder Chelsea Investment Corp.

Staff’s recommendation to move forward with Midway Rising drew heavy criticism on Wednesday from rival Midway Village+, which increased its number of affordable units on offer from 1,610 to 1,780 after the end of the 90-day “good faith” trading period. Spokesman Tony Manolatos noted that the development team, led by Toll Brothers Housing, is the only one with affordable housing for sale.

“It appears the city misinterpreted the state surplus land law and therefore it appears the city placed too much emphasis on one factor,” he added. “Because of this, many other important factors have not received the attention they should have had, important questions have not been asked or answered, and the community has never had the opportunity to weigh in. on competing plans or on the city’s process.”

City staff noted in their report that, as an added precaution, they contacted the state housing department to gauge their reaction to Midway Rising’s recommendation based on the team’s level of affordable housing. . The department, according to the staff report, was pleased with the decision and the city’s willingness to give “first priority” under the Surplus Land Act to the developer with the most affordable housing.

The state defines affordable housing as units reserved for families making 80 percent of the area’s median income. The median income for a family of four in San Diego is $106,900, according to the state’s 2022 list of income limits for affordable housing.

“City staff and JLL have done an exceptional job sifting through volumes of data and responses and confirming with HCD that the Surplus Land Act has been properly followed given our commitment to providing the most affordable housing. of all teams,” said Brad Termini, CEO of Zephyr Partners and Midway Rising Principal.

Like Midway Village+, Monarch Group’s HomeTownSD has also sought to increase the number of its affordable units. A few days ago, he informed the city that he wanted to add at least 300 affordable housing units to his submitted total of 1,726, the city’s real estate department reported. HomeTownSD decided to do so after it became clear to the development group that affordable housing was a “single priority” in the assessment process, the staff report said.

The city has concluded that it would be unfair for all developers submitting proposals to begin allowing changes after the negotiation period ends on March 4, said Penny Maus, who heads San Diego’s real estate department.

Sara Kruer Jager, project manager for HomeTownSD, issued a statement in response to the staff recommendation.

“Trust. Integrity. Commitment. These are the values ​​that HomeTownSD brings to this process and that the San Diegans deserve in the team that is chosen to develop their public land,” she said. engage in a robust conversation with the community and city officials in the coming weeks about our background, our proposition and, most importantly, our values.”

In addition to evaluating affordable housing proposals and the means of individual teams to develop a large arena, the city also considered grants and financial assistance sought by developers. Of the three applicants, Midway Rising, Maus said, was seeking the least amount of financial aid.

The report notes that Midway Village+ is asking the city to allow it to take a 50% share of the arena’s event parking revenue, while HomeTown SD is proposing that the city own and maintain all streets developed as part. of his proposed project.

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