San Diego hires real estate firm to evaluate bids for the sports arena site
San Diego officials will lean on the affordable housing and sports-venue expertise of international real estate investment management and services firm Jones Lange LaSalle as it takes a closer look at proposals from three development teams in the running to lease and remake the city’s property at 3220, 3240, 3250 and 3500 Sports Arena Blvd.
Tuesday, San Diego City Council unanimously approved a one-year, $250,000 consultant agreement with JLL. The firm, which was selected through a competitive bidding process, will begin work immediately and start by vetting the financial assumptions in the bids submitted by Midway Rising, HomeTownSD and Midway Village+.
The contract can be extended on an annual basis for a maximum of five years. JLL is expected to help the city pick a winning team to redo San Diego’s 48-acre sports arena site in the Midway District. It will also assist with negotiating the long-term ground lease and site development conditions.
“JLL is really going to dive into the economics that were proposed by each team, review their (financial models) and identify if they see any issues,” Penny Maus, who heads the city’s real estate department, told the Union-Tribune. ” JLL’s team includes experts in the affordable housing industry, as well as in the sports industry. So they’ll be able to focus on those two key components at a level that city staff otherwise could not.”
San Diego’s sports arena site has been on and off the market since February 2020. In its second attempt to offload the site, the city is following by the book California’s Surplus Land Act, which requires municipalities to make affordable housing the priority when selling or leasing their excess land.
Last month, City Council narrowed the field of contenders vying for the site, advancing the three teams proposing the most affordable units — or up to 2,000 units set aside for families making 80 percent of the area median income. The groups are also pitching market-rate units and brand-new sports arenas of varying sizes alongside parks and a mix of commercial uses. The short-list decision was based on the advice of Mayor Todd Gloria and Maus, and came in spite of objections from community members who advocated for evaluation of all five teams.
Now the city, with JLL’s help, will work to determine if the remaining development teams can produce what they’ve promised.
“It’s really about financial feasibility. Are the projects likely to come together as they’ve been proposed?,” said Matt Do, who is the San Diego-based executive vice president of JLL’s public institutions division.
The firm, he said, will assemble a core team of four of five people to assist the city, but will also pull in subject-matter experts from around the country to consult as needed.
“We have a dedicated affordable housing practice that specializes in underwriting and financing affordable housing. Affordable housing, oftentimes, is one of the most challenging development uses to get done,” Do said.
JLL is a frequent adviser to the city of San Diego. The firm was also hired to help with the sale of the city’s Mission Valley stadium site to San Diego State University, and to assist with evaluating the Tailgate Park lot sale to a development team lead by the San Diego Padres. JLL is also representing the Port of San Diego in negotiations with developer 1HWY1 for its Seaport San Diego project.
The not-to-exceed $250,000 annual contract, which equates to around $20,830 per month, buys the city roughly 656 hours of expertise, according to JLL’s proposal. The firm’s rates range from $140 to $495 per hour, depending on team member seniority.