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COMMENTARY: Remove These Roadblocks to Development

Do you want to have a glimpse into what I see as the future of the San Diego entitlement process for most development projects?

That glimpse is provided courtesy of Jonathan Segal and GLJ Partners, the developer and the money partner, whose Fat City Lofts will offer up a 237-unit apartment project with commercial on the former Top’s/Fat City restaurants property at Hawthorn and Pacific Highway at Little Italy’s northern edge.

Purchased from the estate of Tom Hom, a fearless promoter of downtown redevelopment, this mixed-use project is a testimony to the ongoing architectural aspirations of Segal, developer of some 15 urban projects and more than 300 units built over a 25-year span.

The project is being conceptualized on a site that many see on their way to and from the San Diego International Airport. It is a “window” to our city and, as such, the project may help to soften the appearance of the old industrial usage area which characterized that portion of the waterfront for the better part of the last century.

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History Lessons

The push-back came in two forms: one from Save Our Heritage Organisation, also known as Soho, which declared that the Fat City restaurant was historically important. The other comes from the neighbor Solar Turbines (a division of Caterpillar) which drudged up the “co-location” issue to argue that residents do not make for “good friends” with turbine producers.

The city’s Historical Resource Board voted almost unanimously to accept a preservation solution and support the project after it was redesigned to include some of the old structures, incorporating the restoration of the Top’s façade in its original 1941 appearance. Previously, Soho voted unanimously in favor of the project.

The remaining stumbling block: Solar Turbines does not want people as neighbors. It argues for a “buffer” so that it may continue to receive pollution permits in the future, which it argues would be in jeopardy if housing is built close to its operation.

This is the latest salvo in an ongoing conflict which resulted in the City of San Diego creating a “co-location” ordinance which essentially favors the industrial past over a residential future.

Defensive Posture

However, there is a more than subtle difference in this case. There appears to be no co-location land use conflict at this location; Fat City Lofts does not attempt to change the zoning code. Rather, Solar Turbines is acting as if there were such a conflict, as if it were in Miramar or Sorrento Mesa.

This is not designated prime industrial land. Solar Turbines is surrounded by North Embarcadero, San Diego Bay and Little Italy; it is directly adjacent to the planned North Embarcadero Park. If Solar Turbines is worried about being driven out, it is hardly because of a residential project.

In essence, the company argues that if residential comes, the company cannot operate. Maybe the company is right, although, it should have known this was coming when the existing plan was approved in 1992. The company is operating on leased land, on land that is at the gateway to San Diego.

While I support the development project, I am not involved with it in any way.

The reason I profile this particular conflict is that it is prototypical of the kind of arguments that will be made and repeated often when an urban infill project is proposed in the city.

One can hardly get away from these kinds of arguments. Historical designation has become a whole new art form at City Hall, such that most any structure more than 40 years old is subject to being designated a historical structure. This means that the developer has to prove that the structure (or, in some cases, something in it) is not of historical significance before it can be demolished or altered.

The rules are so broad so as to invite opposition of a similar type to what we often see in the suburbs from neighbors who pull the environmental, traffic, or open-space card to prevent the construction of homes for new neighbors.

A Familiar (Battle) Tune

The battle involves the same contempt for new development with the addition of trumped up charges based on the old, predictable nature of Homo sapiens not wanting change in their neighborhoods.

Segal has a proven track record of combining the old with the new in some of his signature projects, including the preservation of the Waterfront Bar and his latest India Street project “The Q” in which he integrated Little Italy’s oldest house, an 1889 historically designated Gothic Victorian structure and made it the front door of his shining new mixed-use high-rise (which includes his residence).

He has proven his credentials in preserving historically significant structures. But no matter: He could not be entrusted with Fat City without the threat of development push-back from the influential preservationists. To everyone’s credit, a deal was negotiated.

The battle did cause delays, uncertainty, hard feelings and expenses.

And the next developer may not be so lucky. Even in this time of relatively few new development proposals, my firm has worked on at least six projects which might conceivably be challenged on the historical front.

Equally disturbing is the fight that Solar Turbines has put up to prevent this project.

Zoned for Mixed-Use

The property is actually zoned for mixed-use, including residential (it is both codified in the 1992 Community Plan Update as well as the 2006 Centre City Planned District Ordinance). Despite the fact that Fat City Lofts is 100 percent in conformance, not requiring a single variance or deviation, it can apparently still be argued that the development is somehow nonconforming.

The problem is that Solar Turbines is acting in the same manner as other industrial companies around town. It argues that to permit housing in the industrial neighborhood paves a slippery slope: by allowing complaining residents to chip away at the industrial fabric of the neighborhood at a time when we need jobs.

In profiling this struggle, one sees that people come up with stuff to fight new developments. It seldom matters if it is legitimate stuff. The development opponents use it anyway. And when they do, it costs developers a lot of time and money, whether the project is approved or not.

Perhaps, you don’t feel sorry for developers. They are in the risk-taking business. They should expect this push-back. I don’t feel sorry for them. Who I feel sorry for is the greater community which needs and deserves a more seamless system — one which the Centre City Development Corp. provided for many years — to focus on encouraging new urban development and smoothing of its entitlement course.

Instead we have created an environment of trumped up charges which inevitably will result in fewer development initiatives at the very moment in time when we really need these new developments.

The irony is that if we don’t allow new residential infill projects in the old communities then we cannot effectively accommodate new jobs — employees need housing — to grow and cure our economic ailments. The very position that Solar Turbines takes might solve the company’s problem, or delay its eventual move out of their heritage location, but it is not for the greater economic good of San Diego.

Similarly, the relentless quest for preservation has invited the possibility of using the historical tag as a weapon for the NIMBYs to combat new development.

I hope that the San Diego City Council and the mayor — who have to be torn between these various interests — will see the issues involving this particular project in the broader context. They will witness the debate on this one, and that debate will be repeated ad nauseam as new projects are proposed with similar or related issues.

Our officials ought to recognize this, and try to work out some guidelines so that some of these push-back arguments need never take place.

Gary H. London is president of The London Group Realty Advisors, which provides real estate consulting and economic analysis. Check him out on the Web at londongroup.com.

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