A plan to redevelop the area surrounding San Diego’s 60-year-old Pechanga Arena and build a new state-of-the-art arena and thousands of housing units on city-owned land heads to the city council for approval on Monday.
If built as proposed, the Midway Rising project, led by billionaire developer and professional sports team owner Stan Kroenke, will be the largest affordable housing project to be built on public land in state history.
The project, estimated to cost $4.2 billion, includes a new 16,000-seat sports arena, 4,224 housing units (including 2,000 designated as affordable) and 130,000 square feet of retail.
Add in a 15-acre park, plus an upfront $460 million investment in infrastructure improvements — and much of the latter could get reimbursed through a future tax-increment infrastructure financing district if approved by the city.
In exchange for the upfront investment, if passed as currently structured, the city agrees to forego collecting major lease payments for the 49-acre parcel. As proposed, Midway Rising will continue to pay the city a portion of ticket sales at the current arena until the new venue is completed. Upon completion, the Midway Rising team will keep the ticket revenue to reimburse the cost of the arena.
San Diego’s Independent Budget Analyst estimates the city will collect between $38.1 and $68.5 million in combined arena and development revenue over the life of the 105-year deal, not factoring in inflation.
City staff and Midway Rising representatives say the development will create tens of thousands of jobs and an estimated $18.4 billion in long-term economic output.
But opponents are asking the city council to delay Monday’s vote to allow more time to address environmental concerns, financing questions and provisions that opponents say could change the project’s affordable housing obligations.
During an Oct. 16 council committee hearing, councilmembers raised concerns about a provision that could allow affordable housing obligations from other developments to be transferred to the Midway Rising site. That means while there still will be 2,000 affordable units at the sports arena site, it could result in reductions of affordable housing in other parts of Midway.
Councilmembers said the provision opened the door for the sports arena site to absorb some off-site affordable housing units, potentially reducing the number of affordable units by as many as 800 apartments.
In response, Midway Rising agreed not to use the site as a receiver location for affordable units from other projects unless it cannot secure financing for its own affordable housing and receives city approval.
Midway Rising representatives say the billion-plus investment and bringing what, if built as proposed, would be the largest affordable housing project to be placed on city-owned land, is a no-brainer for the region and for the city of San Diego.
Resident Tom Delaney says San Diego residents could be on the hook if the council moves forward with the plan as is.
“This is an inferior site and just isn’t suitable for major residential development,” Delaney told Times of San Diego. “The number of dangers is so great, I think this needs to be postponed until these questions have been answered.”
Delaney says first and foremost, the area is prone to flooding. The flooding will only worsen as sea levels rise. The flooding events, says Delaney, will bring contamination, heavy metals, and other pollution left over from the West Point Loma Dump, a 120-year-old landfill.
“The asphalt surrounding the sports arena has likely trapped the toxins underground,” said Delaney. “Opening that asphalt up will bring all of that contamination up to the surface.”
Environmental reports for the project identified heavy metals and buried ash beneath the site.
“[A] 1-to-2-foot-thick layer of burn ash was observed buried at depths of approximately 2 to 5 feet with elevated concentrations of metals including antimony, arsenic, cobalt, lead, and/or mercury that exceed residential health risk-based screening levels, along with old household debris including bottles, ceramics, and other trash,” reads the project’s Subsequent Environmental Impact Report.
“… Project grading and excavation would have the potential to encounter contaminated soil during construction activities, which could create a significant hazard to the public or environment,” the analysis added.
A representative for Midway Rising said the Midway Rising team will work closely with the city to ensure any waste from the old landfill is disposed of properly.
“The environmental conditions at the site have been thoroughly studied by our project team and environmental experts,” said project spokesperson Jeff Meyer. “Midway Rising provides a unique opportunity to responsibly address these existing conditions, modernize aging infrastructure, and transform an underutilized City-owned property into a vibrant mixed-use community featuring new housing, public open spaces, and a world-class entertainment district that will benefit San Diegans for generations to come.”
Another issue raised by opponents is the creation of an Enhanced Infrastructure Financing District, which captures future property tax revenue growth at current levels within a designated area, in this case part of the Midway District. As property tax revenues increase, the additional revenue would fund infrastructure improvements or, in the case of Midway Rising, reimburse Kroenke for the upfront investment. The city’s Independent Budget Analyst estimates the financing mechanism could generate about $378 million if approved.
Creating the Enhanced Infrastructure Financing District requires approval from the city and county. If either declines to create the district, then Midway Rising can opt to terminate the agreement or pursue alternative financing.
Meyer says the Midway Rising project will address immediate needs.
“Midway Rising represents a significant opportunity to deliver meaningful infrastructure improvements throughout the entire Midway community,” he said. “By leveraging more than $400 million in upfront investments by the project team through an innovative financing tool, we can accelerate critical infrastructure improvements, address longstanding neighborhood needs, and deliver lasting benefits to the broader community.”
