Did San Diego Mayor Kevin Faulconer make a deal for the city to spend millions to secure a coastal plot of land next to the San Diego Convention Center?
Depends on whom you ask.
According to his staff, no such deal was ever made formally or even informally. But executives from Fifth Avenue Landing — the company that holds a port lease to the property eyed for an expansion for another eight years — say a deal has been made.
Fifth Avenue Landing partners Ray Carpenter and Art Engel put the City Council on notice last Monday that Faulconer had reached an “informal agreement” to purchase their lease to prevent them from putting a hotel on the site.
What’s more, they claim Faulconer agreed to buy the lease for the same price negotiated in 2010 — at least $13.8 million.
The site is crucial for an expansion of the Convention Center on its current footprint and, if true, an agreement between the city and Fifth Avenue Landing would be yet another indication that Faulconer is committed to that type of expansion. Another proposal to do an annex to the Convention Center as opposed to a contiguous expansion is part of a ballot measure for which supporters are collecting signatures to put on the ballot.
Recall the Convention Center Corp. spent millions in recent years to control the neighboring four-acre parcel and was supposed to make a final $13.8 million balloon payment to Fifth Avenue Landing in May. It was essentially the city government paying a company not to do anything with public land they had a lease on.
With all expansion funding lost to a legal challenge last year, the payment was missed and the land was taken back by Fifth Avenue Landing.
Port officials confirmed the company resumed making its own lease payments this year for the first time since 2010. The lease, about $400,000 a year, expires in 2024.
Convention Center Corp. board member Gil Cabrera and others balked at staff’s efforts to extend the lease earlier this year, and said they should let the old deal and its price tag disappear. The board directed staff to end negotiations May 28.
Now comes Carpenter and Engel writing that the mayor has promised to revive the dead deal.
“We have agreed to allow the City until March 1, 2016 to complete the purchase of our leasehold interest under the same terms as our former agreement,” they wrote.
Craig Gustafson, a spokesman for the mayor, confirmed Faulconer attended an Oct. 30 meeting with Engel, Carpenter and Faulconer’s chief of staff, Stephen Puetz. Faulconer also made an appearance at a Nov. 23 meeting with Fifth Avenue Landing consultant Charles Black, Puetz and his deputy chief of staff, Jaymie Bradford.
But “there is no agreement, informal or otherwise,” Gustafson said.
“It is premature to speak to a March 1 deadline or any other deadline while litigation regarding the Convention Center expansion project remains ongoing, with a court ruling expected in January,” Gustafson wrote in an email. “We’ve always been clear that we support a contiguous expansion. This piece of property is an important part of the expansion plan.”
Carpenter and Engel did not respond to multiple inquiries, leaving quite the “he said-they said” scenario.
Either Faulconer’s team isn’t being forthright about the talks, or Carpenter and Engel are wildly mistaken or they’re making a power play by threatening to put a hotel on the site. That could be a shrewd move, or an empty threat without backing from their landlord, the Port.
Ironically, it was Port officials years ago who required Fifth Avenue Landing to develop a hotel on the property if the convention project fell through, and put in a strict deadline of June 30, 2016, to have the hotel approved, according to a 2010 Port staff report. Now the Port must abide by the terms of the deal, knowing the mayor and other leaders are still trying to salvage the project.
Stephen Cushman, chairman of the San Diego Convention Center Corp. and the mayor’s point man on the expansion project, said he’s unaware of any new lease purchase deal and hasn’t participated in any lease talks with Fifth Avenue Landing since the spring, nor has Convention Center staff.
Port of San Diego board Chairman Dan Malcolm and board member Bob Nelson said they haven’t been involved. Nelson and Cushman both endorsed the initial lease deal five years ago when Nelson was on the Convention Center board and Cushman was on the Port board.
The Fifth Avenue Landing letter, addressed to City Councilman David Alvarez and copied to his Council colleagues, has Alvarez’s attention. He’s seeking more information from the mayor’s office.
“At a minimum, I appreciate hearing from somebody about this,” said Alvarez. “That would be a horrible, horrible deal for the city.”
“I think Fifth Avenue Landing have been successful business people. They understand how to make money,” he said. “I think it’s foolish for anyone to think we are anywhere near building an expansion on that site. … I think the city needs to move on.”