San Diego Union-Tribune (Sunday)
DID SAN DIEGO MAKE THE RIGHT CALLING TERMINATING THE RITZ-CARLTON DEAL?
ECONOMISTS
YES
Given the time that has passed since the Ritzcarlton project agreement and the requirements of the Surplus Land Act, the decision by the city of San Diego appears reasonable. While it is disappointing to see the termination of a project with a number of appealing components, taking steps to involve other prospective developers should increase the likelihood that the land can be deployed in a way that benefits East Village.
YES
The developer missed the deadline for financing and breaking ground. The city would have lost credibility if the deadline passed without consequences. The ball is now in San Diego’s court to issue a new call for proposals. The Ritz-carlton developers can still compete, but the land should not sit idle for years waiting for financing that may never materialize.
NO
The city says the developers took too long to arrange final financing and break ground. COVID and rising interest rates contributed to those delays. But so did lawsuits by union activists and changes in the city’s terms that make it harder to earn a profit. The city and state need to streamline the regulatory process to enable businesses to follow through on plans in a timely fashion. Seven-year delays don’t help anyone.
NO
One reason our real estate costs are so high is because it takes forever to get entitlement and the city imposes double jeopardy risks.
If a developer spends several hundred thousand on feasibility and design studies, they may find out that the city has screwed up in terms of state requirements or due diligence, i.e. Midway sports arena district. These delays and hurdles make it impossible to predict what market conditions will be at the time of delivery.
EXECUTIVES
NO
I understand that it may be state mandated that the land be offered for affordable housing, like the Midway site, but San Diego needs the prestige of a luxury hotel at the Ritz-carlton or Four Seasons level. Hope it was not union opposition to the Whole Foods that killed the deal when it was hot and financeable.
YES
This isn’t cut and dry. Bringing a Ritz-carlton hotel to downtown would be a great addition to San Diego’s travel and tourism industry. Seven years ago, it was a promising opportunity to bring that brand to San Diego and to redevelop the land at 7th and Market. Unfortunately, the project has been mired in delays, lawsuits, politics and funding issues. Add in a pandemic and an affordable housing crisis, and this project’s cards were stacked against it.
YES
The development of large housing complexes downtown, even if a majority of the units are luxury, helps the city address the housing shortage. While I am unfamiliar with the details, I wish the committee had worked with the developer to come to an agreeable resolution. I have attended events at Ritz housing projects in other cities and believe their impact to be quite positive, even beyond the low-income residences.
NO
This was a bad call because 7th & Market is in dire need of an anchor project that can stimulate the completion of this neighborhood. Building a hotel requires a clear return on equity and repayment of debt. The cost to build a Ritz is too high for the market — a Ritz was tried on UCSD land and it ended up being the Estancia Hotel, a nice 4-star resort. That would jump-start the neighborhood.