Mayor Kevin Faulconer may have just gotten the boost he needed to keep alive his push for a special election that could define his legacy.

The city’s real estate department sent city leaders on Tuesday the appraisal it commissioned of the city-owned land that a development group would need to acquire to build SoccerCity, a mixed-use project that includes a new MLS soccer stadium.

The land is worth $110 million, according to the appraisal, which was completed by a third party hired by the city. It includes not only the area under and around Qualcomm Stadium, but the property and office space in Murphy Canyon — the former Chargers headquarters.

The SoccerCity initiative, if successful, would require investors in the project pay a “fair market value” for the land. The initiative says the mayor would determine the fair market value based on an independent appraisal.

That valuation is supposed to consider the challenges of redeveloping the land, which houses an old stadium. The land is uneven and subject to flooding.

This is that independent appraisal. It considers things like the cost of demolishing Qualcomm Stadium ($11.5 million) and what a normal developer would likely have to pay to get it permitted ($8 million).

We Stand Up for You. Will You Stand Up for Us?

If this is indeed the mayor’s determination of fair market value the investors would have to pay, all eyes would turn to the SoccerCity team to see if they still want the deal. If the land is worth $110 million, it would have to be adjusted to SoccerCity’s actual plan, which is to buy 79 acres and lease the rest. A long-term lease at that valuation could be even more expensive.

In a letter last month to the mayor, FS Investors pledged to pay 10 percent of the fair market value every year for the land it leases.

If the investors stay the course, it could be a game-changer for the politics of the situation. For a City Council staring next year at yet another projected deficit, that could be too much money to brush off.

The appraiser, David F. Davis, wrote this to define what he and his team meant by market value of the property: “The most probable price that the portion being disposed of should bring in a competitive and open market under all conditions requisite to a fair sale, the willing buyer and willing seller each acting prudently and knowledgeably, and assuming that the price is not affected by coercion or undue stimulus.”

The valuation could scare off the developers and it could factor heavily into other future proposals for the site, including San Diego State University’s longtime desire to take over the land. It is the first formal appraisal of the land — at least the first released publicly — despite years of discussion about what to do with it while the Chargers negotiated with the city.

FS Investors, the group that put together the plan and collected the needed signatures to get it on the ballot, has said the issue must be decided in a special election this year. If not, the investors say they will miss their chance to get a team in Major League Soccer, the organization that is considering an expansion of two teams.

The City Council voted Monday not to spend $5 million for a November election, where voters could weigh in on the two biggest initiatives of the mayor’s administration: a plan to raise hotel taxes to expand the Convention Center and fund homelessness and infrastructure needs, and the SoccerCity plan to redevelop the Qualcomm Stadium site.

Democrats on the Council pushed a vote to 2018 and allocated the money for other things. In the end it didn’t matter: Thanks to authority few in City Hall knew he had, Faulconer can find the money he wants anyway so long as six City Council members don’t veto his changes.

The mayor can fund the election, but he still needs five Council votes to schedule it. The Council’s Democratic majority has already said it won’t comply.

The appraisal, however, may change minds. City Council President Myrtle Cole was one of four members of the body to publicly offer the Chargers a lease for the whole land for only $1. The framing of this sort of deal with the Chargers has been on the city’s radar since a stadium task force proposed it in 2003: Give the Chargers land and let them build around a new stadium to subsidize the project.

But the appraisal changes the calculus in favor of the city.

If that is indeed the price developers would have to pay for the land, it disarms one of the biggest criticisms of SoccerCity. The initiative’s language had previously left open the possibility that FS Investors could pay as little as $10,000 for the land. The appraisal seems to clarify the city will get real money for a real asset.

It wouldn’t be unprecedented for the city to subtract the costs of public improvements FS Investors makes to the property from annual lease payments. That’s what the city does for the operators of Belmont Park, for instance, where repairs made to the aging beachfront property are deducted out of annual lease payments through subsidies referred to as “rent credits.”

Late Monday, Cole issued an unambiguous statement: She won’t be changing her vote on budgeting money for a special election. All five Democrats on the Council were similarly clear: Voting on SoccerCity and the mayor’s hotel tax hike for a Convention Center could wait until 2018.

And they still may not budge. Their comments in support of Measure L, a voter-approved measure that defers initiatives to general elections, didn’t include caveats for potential windfalls from land sales. They’d have to backtrack in just a few weeks, and potentially abandon a progressive coalition standing behind them.

But for the mayor’s funding gambit to matter at all, something material in the deal needed to change. There needed to be something a Council member could point to as explanation for a change of heart. The city’s land appraisal may be that thing.

    This article relates to: Land Use, Must Reads, SoccerCity

    Written by Scott Lewis and Andrew Keatts

    shawn fox
    shawn fox subscriber

    The soccer city initiative appears to fall under the purview of Measure L, but I am unsure about the other.

    Is the TOT tax increase one that was proposed directly by the Mayor?  If so then I don't think that would fall under measure L.  The Mayor seems to have taken a risky gamble since he needs 5 votes to schedule the election. This article could be telling us the very reason why he took that gamble.  I presume that the scheduling of the other special election falls under different rules.

    sdjakeblues subscriber

    The truth why the rush for sucker city land grab, Kevin Faulkners legacy, of course it's not to get a soccer expansion team or capitalize on FS investors, his time is running out and he needs a larger "accomplishment" when he makes the run for governor and waiting until 2018 would cause him to loose an opportunity to "show leadership" and "success". If he overrides the will of the people VOTERS by holding a special election it telegraphs his real motivation and loyalty is not to the people or the city but land grabbers, special interests and those who would line HIS pockets. WOW and I use to support this guy...

    Makes me think of that old song "Smiling Faces" Say NO to Sucker City because there's only one Qualcomm site, one piece of "open land", one chance to get it right so let's get it right for San Diego!

    shawn fox
    shawn fox subscriber

    @sdjakeblues Other articles have indicated an answer to your question.  It has to do with getting a soccer team.  There supposedly exists a conundrum that a financing and stadium plan needs to be in place in order to get a team.  Coordinating the process of building a stadium with getting a team could be difficult.  

    craig Nelson
    craig Nelson

    Not to go Oliver Stone, but the timing of the release of this appraisal is more than a little suspicious. 

    Bob Stein
    Bob Stein subscriber

    Why did the city wait until the day after the council vote to release this information?

    Why did Faulconer not tell the council he would veto a no vote until after the vote was taken?

    Why are we suddenly seeing TV commercials for and against Soccer/Sucker City?

    Why is the pro-convention center group suddenly sending out emails and holding rally’s promoting the value of the expansion (and the importance of addressing homelessness)?

    All this to influence a popular vote that may or may not happen in five or 17 months?Seems unlikely.

    What’s up?Their strategies elude me.

    Molly Cook
    Molly Cook

    @Bob Stein  Hey, Bob...I picked up "Under the Perfect Sun" on your recommendation.  Eyes wide open.  Thanks.

    Bob Stein
    Bob Stein subscriber

    Enjoy.If you want a live view of how things work take in a downtown Rotary Club, Chamber of Commerce or San Diego Business Journal lunch, dinner or event.

    bgetzel subscriber

    The possible deductions from the $110 million for infrastructure improvements could be substantial, making the City's net take minuscule. Just ask the City of Seattle of the infrastructure improvements they got stuck with in the building of Safeco Field. Work on the access roads, San Diego river flood prevention, etc. could run into many millions. There is also a question on who pays for the environmental clean-up (re: the possible oil plume under the property). Is that also an infrastructure improvement that the City deducts from the property purchase price?  

    Chris Brewster
    Chris Brewster subscribermember

    The only way to truly determine the price of an asset is to put it on the market. Appraisals are educated guesses and it's important to remember here that an ardent supporter of the concept picked the appraiser.

    Greg Martin
    Greg Martin subscriber

    "The initiative says the mayor would determine the fair market value based on an independent appraisal."

    That's one of the many examples of loose wording in the proposal that could result in what's being delivered being a lot less than what's being promised.  The mayor could just search for the independent appraisal that gives him the value he wants, either low favoring the developer or higher favoring the city.

    There're a lot more issues with this proposal beyond an appraised value of the land. 

    john stump
    john stump subscriber

    Wait a minute is this appraisal Gross or Net after paying off the current stadium bond financing company?  I thought the city already owes more than $100 million just to  pay off the current debt?

    There ain't no such thing as a Free Lunch !

    john stump
    john stump subscriber

    Thank you for citing a media source on a financial fact.  Given the known and obvious biases of this SDSU media source, could you please cite actual facts from the City's Auditor or CAFR.  KPBS is not a reliable source for actual facts.

    You also state that Appraisals should be stated in GROSS  terms and not take into account the encumbrances, liens, and other conditions that effect the cash out to the City seller.  Please let me know your basis for this statement as a Real Estate industry standard.

    Finally, thank you for turning over at least one rock and revealing that even the GROSS appraisal number will need to be reduced by some $26 + million in reported debt.

    Keep up the good work

    craig Nelson
    craig Nelson

    @john stump Perhaps I am not reading your question correctly, but appraisals state the value of the property. They look at comparable sales, income and replacement cost. Debt and liens are not an issue in the appraised value of property. 

    An easement could impact the value ( i.e. road through the middle or a requirement of use) .

    Regardless of the appraised value , this is a terrible backroom deal.