BY MARK LARSON
With the California Coastal Commission’s recent approval of the $400 million Lane Field waterfront development, financing for the downtown San Diego project , while not yet inked , inches closer.
Lane Field is slated to include a 525-room InterContinental Hotel, another 275-room hotel, 80,000 square feet of restaurants and retail shops, 1,330 underground parking spaces and a 2-acre public plaza. It is projected to generate 500 construction jobs and once open, employ 2,000.
Although a recent published report said financing was “lined up” for the project at the northeast corner of Broadway and Harbor Drive, Jerry Trammer, the project’s developer, told the Business Journal that financing for it isn’t a done deal and that legal issues remain as obstacles.
“There really isn’t any locked up financing at this point,” Trammer said last week. He and his wife make up his San Diego firm, J & T; Consulting, which averages one project a year and generates $200,000 in annual sales.
The Coastal Commission’s approval of the Lane Field project was a major move forward that Trammer figures will perk up investor interest.
Hurdles To Investments
But he said a pair of hurdles remain to be cleared before a group of investors he’s working with , which he would not identify for confidentiality reasons , are likely to finance the project.
The first is a pending lawsuit in San Diego Superior Court filed by Unite Here Local 30, a local hotel and restaurant workers union, alleging the Port of San Diego didn’t properly fulfill the requirements of the California Environmental Quality Act for the Lane Field project. Beyond that, there’s a 60-day period that allows for any lawsuits protesting the Coastal Commission’s approval of Lane Field. Trammer said the CEQA suit must be resolved and the 60-day period needs to pass without further lawsuits for Lane Field financing to have a chance at becoming reality.
Stephen Cushman, board chairman of the Unified Port of San Diego, which is leasing 5.7 acres of land for the project, is confident Lane Field will break ground in September.
Asked if he expects the project to be financed as planned, Cushman said, “I do sir, yes I do.”
Once built, the Port is slated to receive a percentage of its revenue: 7 percent from hotel room revenue; 3 percent of food sales and 5 percent of beverage sales. Rent will be paid to the Port during the three years of planned construction, ranging from $900,000 to $1.8 million annually on the north lease, to $2.5 million annually for three years on the south lease.
Lease revenue generated by Lane Field would enable Port financing for the $28 million first phase of the North Embarcadero Visionary Plan in November. That plan is aimed at revitalization of downtown’s western waterfront.
That project will move Harbor Drive east and build in waterfront improvements from the Navy Pier to the B Street Pier.
To finance that effort, the Port will have to issue a pair of $14 million bonds, and then pay them off with revenue from Lane Field.
Temporary Setbacks
Trammer acknowledged that the slumped economy has brought more challenges to seeing the big project through. But he’s confident that tough economic times won’t last forever. “We firmly believe the market will come back,” he said.
Beyond that, he sees Lane Field as a project with huge long-term upside potential.
“We saw a market for a hotel development that is absolutely a prime piece of property,” he said of the site that was once a baseball field and is now a waterfront parking lot.
Karen Weymann, the Port’s assistant director of real estate, says Trammer has until October to exercise his option to go forward with, or back out of, the Lane Field project.
Unite Here initially protested the Port’s approval of the Lane Field project a year ago to the Coastal Commission. That led to changes added into the project and the commission’s recent approval. Changes include:
– & #8201;Construction of a 400-bed youth hostel to offset public coastal access lost to the project. The developer would have to pay the Coastal Commission $6 million if the plan falls through.
– & #8201;A summertime shuttle bus between Lane Field, the Gaslamp Quarter and the San Diego Convention Center.
Mark Larson is a freelance writer for the Business Journal.
