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How San Diego's Biggest Developers Swarmed Against SoccerCity

If SoccerCity goes down, many will claim the kill shot. But it was the biggest developers in town who actually put hundreds of thousands of dollars into a professional campaign to stop it and they worked together to find the best arguments. Some of them have competing visions for the land. Some of them don't believe it's a good project. Some think it will hurt their projects and other plans for Mission Valley.

In an email exchange last month, an elite group of San Diego’s most prominent developers traded talking points on how to kill SoccerCity, the private plan to redevelop the Qualcomm Stadium property in Mission Valley into a dense urban district built around an expansion Major League Soccer team.

The project, proposed by La Jolla-based private FS Investors, finds itself on the wrong end of virtually every entrenched interest in San Diego politics. Organized labor, San Diego State University, anti-development community groups and rival developers have all lined up against it.

The City Council could end the project’s fledgling hopes on Monday. The Council already opted against scheduling a November special election and is now expected to put SoccerCity to voters in 2018. FS Investors says that’s too late for the MLS’s expansion decision.

If SoccerCity goes down, many will claim the kill shot. But it was the biggest developers in town who actually put hundreds of thousands of dollars into a professional campaign to stop it and they worked together to find the best arguments.

In late May, it was not clear that the City Council would reject the special election FS Investors say they need to make soccer happen.  The cadre of developers opposed were still aligning their closing arguments.

The May 30 email exchange began when Fred Pierce, former head of redevelopment for the San Diego State University Foundation and current developer of student housing and university-reated projects, forwarded a TV appearance he made to Perry Dealy, whose company Dealy Development often works with Doug Manchester.

Manchester is President Trump’s nominee to be the ambassador to Bahamas, former owner of the Union-Tribune, and a hotel developer.

Dealy then forwarded the appearance to a dozen of the city’s highest profile developers and political donors, suggesting they follow Pierce’s talking points.

He sent it to Manchester and two other employees at Manchester’s firm, plus John Lynch, who was Manchester’s CEO at the Union-Tribune. It also went to Mike Neal and Tom Sudberry, executives for H.G. Fenton Company and Sudberry Properties, two major Mission Valley developers who have spent over $500,000 opposing SoccerCity.

Others on the email included Casey Brown, who is redeveloping the old Mission Valley home of the Union-Tribune; Ernie Hahn, the general manager of the Valley View Casino Center in Point Loma, who has vocally advocated for a new sports arena for the city; Brad Raulston, former director of National City’s redevelopment agency; Jack McGrory, CEO of a real estate investment company and San Diego’s former city manager who is now advising SDSU on the issue and who FS Investors last week accused of undermining negotiations with SDSU in a UT story that referenced the emails; Mike Turk, a condo developer active in the coastal area and board member on the pro-business Lincoln Club; and David Malcolm, a former Chula Vista Councilman, Port Commissioner and developer.

The list includes all San Diego’s top-tier developers except notably one: Dene Oliver, of OliverMcMillan. Oliver brokered FS Investors’ initial meetings with the mayor and SDSU but he’s not a partner, he says.

“I am not, nor have I ever been the developer of Soccer City, nor have I ever had any financial interest what so ever in SoccerCity,” Oliver wrote in an email.

Dealy was circulating ideal messaging for the developers opposed to the project.

“This is the most professional compelling argument to postpone the vote until November 2018 along with the city moving forward with a competitive process for the redevelopment of the Q property,” Dealy wrote.

The argument, he said, was to focus on three things. First, the need for a solution at SDSU. Second, a full reuse study for Qualcomm that would accommodate SDSU football, an NFL team and soccer. Third, launching a competitive process to choose a developer to get the best use of the land and meet regional needs.

“We need to engage in a full court press with City Council to block the Nov 2017 vote!!” he wrote. “Barbara Bry is already leading the fight to postpone the vote and initiate a public process, we have two other council members who appear to support Barbara’s position. Need a total of 5 votes!!”

“The unifying principle of this right now is that we’re not one of them,” said Nick Stone, partner at FS Investors. “I’m surprised but not stunned that the traditional, old guard development core has come together to oppose this. That said, the Manchester-McGory-Bry alignment is surprising.”

In an interview, Dealy said the common denominator between all the people he sent the email to was regular involvement in major civic issues – which can’t be said of FS Investors, which has never been a major player on city issues.

“These guys have no history here,” Dealy said. “They are not those you see out in the community, on boards and commissions, showing up for charitable organizations. I never see them.”

Dealy said the group shares the concern that the deal isn’t good enough for SDSU – originally, FS Investors said it could accommodate Aztecs football at its new stadium and make way for some westward expansion for the campus, but SDSU since ended negotiations and said it doesn’t work for them.

The developers also don’t think the project did enough to mitigate traffic and parking near Mission Valley, which threatens other developments in the area. Dealy conceded there could be some concerns over competition from neighboring developers.

Pierce said the developers on the email chain had already publicly stated they opposed SoccerCity.

“Maybe with these complicated things, you need to be in the business to know what’s good business and what’s bad business,” he said. “I’ve had people point the finger at me and say I’m one of the country’s largest developers of student housing. I’m on record from day one when I weighed in saying I am not now and will not ever in the future pursue a business interest at the Qualcomm site.”

Unlike Dealy, Turk said he doesn’t really care that Mike Stone and Nick Stone, the principals at FS Investors, aren’t active in local civic affairs.

“To tell you the truth, if it was a good project, I don’t care about that,” he said. “Some developers from outside the city could do a good job too.”

Turk signed on with others on the Lincoln Club board supporting an open competition to develop the land, but said he wouldn’t be part of any teams that pursue the site.

FS Investors saw the antipathy as expected.

“All we’re trying to do is bring an innovative and younger sport to this city, and it doesn’t surprise me that it isn’t understood by that group,” Stone said.

Some of them have their own ideas for the land.

In March, Manchester sent a letter to NFL owners informing them of his plans to spearhead a redevelopment of the property with eyes on bringing the NFL back to town. He said he’d already put together a master plan with a team that included Dealy, McGory, Brown, Hahn, an executive at his company named Dick Gibbons who also received the email, and urban designer Randy Morton, who didn’t. Morton’s firm, though, was also part of a bid Manchester made last year to redevelop the Seaport Village area.

McGory and Manchester told the UT there was no conflict between McGory’s work with SDSU on SoccerCity, and the alternative proposal for the Qualcomm Site, because McGory was not part of a redevelopment team or financially connected to any redevelopment efforts.

Pierce laid out two scenarios he’d like to see play out at Qualcomm, assuming SoccerCity goes before voters in November 2018 (potentially without an MLS team at that time). Dealy expressed similar wishes.

Pierce wants the city to pursue an open competition, soon, so it can put an alternative on the ballot alongside SoccerCity.

That could mean running a full request for proposal process and choosing the best option, then letting voters decide whether to approve it. It could also mean simply asking voters on the ballot whether they want to do an RFP process, though Pierce said that’s worse.

“It’s important for voters to have a choice, not just up or down on a flawed initiative,” he said.

Either case would be unusual for San Diego, where developments selected by an RFP are usually adopted by the agency overseeing them. That was the case last year, for instance, when the Unified Port of San Diego selected development groups to remake Seaport Village and Harbor Island, or when Civic San Diego’s board elected a project proposal for a property in southeast San Diego.

Stone also thinks the city is going to have practical and legal problems that keep it from moving fast on an RFP – in fact, he thinks nothing could happen on the site for another 10 years if his plan goes down. Stone provided a letter from FS Investor’s law firm, Latham & Watkins, outlining some of those issues.

The Mission Valley puzzle.

The city could have done more to position itself to issue an RFP, if that’s what it wants to do at the property, or if it hopes to move the process along quickly.

City planners since 2014 have been updating the Mission Valley community plan, a comprehensive outline for future growth and development in the area.

That process, though, has ignored Qualcomm Stadium site.

Marco Sessa, a senior vice president at Sudberry Properties – one of the firms funding opposition to SoccerCity – and a member of the Mission Valley community planning group, said that’s because the city leadership instructed planners working on the update not to work on anything for Qualcomm while the city was still trying to keep the Chargers from leaving town.

“We were frustrated,” he said. “We said, shouldn’t we be thinking about what should go on that site, so that someone else doesn’t come and tell us what should be there, which is exactly what happened?”

Sessa said he doesn’t believe the decision not to plan for the stadium site’s future was because the mayor was already talking to SoccerCity; rather, there was uncertainty about the site, and it’s possible they just didn’t want to waste time on it until the Chargers made a decision.

“The frustration is, for over a year there has been a group meeting and talking about the Valley, there could have been a process to build consensus,” he said. “If the city does go forward with an RFP, the biggest thing will be having something vetted and in public that would be a roadmap. From a planning perspective, it’s a lost opportunity.”

Mark Steele’s company, MW Steele Group Inc., is one of the contractors hired to write Mission Valley’s new community plan. He said they haven’t put anything together for the Qualcomm Site yet, but they intend to.

“We’ve really been holding off as a practical matter, because there’s so much other activity,” Steele said.

Diego Velasco, an urban planner and principal at the firm agreed.

“There are a lot of politics around that project,” he said. “You can’t plan when there’s an initiative out there.”

They said the SoccerCity plan, like Measure D on last year’s election before it, would have implications for all of Mission Valley.

You can’t just leave a hole in the plan and drop the initiative into it. If voters approve it, it would change the baseline assumptions for traffic throughout the area, and might require planners to call for less development in other parts of the Valley as a result.

“The initiative process is a strange one for us in the planning field,” Steele said. “It’s a really interesting dilemma. I’m sure someone has thought it through, but we haven’t.”

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