Convention hotel developer to city of San Diego: Back off

The developer of a $300 million hotel complex planned for the same bayfront site as a proposed convention center expansion has filed suit against the city of San Diego, claiming that it is interfering with its contractual right to move forward with its project.

The lawsuit, which also names the San Diego Convention Center Corp., is asking for a court order that would effectively bar the city and the corporation from continuing to pursue an expansion of the center on land they do not control.

The developer of Fifth Avenue Landing, as it is known, asserts that continued efforts to push a convention center expansion are a “direct breach” of a lease agreement it has with the Port of San Diego and the Convention Center Corp. governing the five-acre project site.

Filed last week, the lawsuit comes amid ongoing efforts by hoteliers, tourism leaders and other stakeholders to draft a citizens initiative seeking an increase in the hotel room tax to finance a more than $600 million expansion. The initiative effort, which is targeting the November 2018 ballot, would also seek funding for expanded homeless services.

Earlier this year, Mayor Kevin Faulconer failed to persuade the City Council to authorize a special election to put a similar measure on the ballot this November.

“Nothing has changed. Just because there is an effort to put together a citizens initiative, the city is still proposing to expand the convention center on our land,” said developer Robert Green, who is teaming with longtime Port of San Diego tenants Ray Carpenter and Art Engel on the hotel project. “The mayor asked the head of the Downtown San Diego Partnership, Kris Michell, to resign and work for him on major projects, among them a convention center expansion.”

In addition to an 830-room, four-star hotel rising 44 stories, Fifth Avenue Landing calls for two acres of public plazas, open-air cafes along the bayfront promenade, an expansive rooftop garden plaza and a second hotel catering to budget-minded guests.

Green also developed the recently opened 317-room Pendry hotel in the Gaslamp Quarter and is working on other lodging projects in Sonoma County and La Quinta.

Early last year, San Diego port commissioners, who oversee bayfront land, gave the development team the go-ahead to begin processing its plans, including working with the port on an extensive environmental review. That analysis, Green said, is due to be released within the next couple of weeks, after which there will be a 45-day period for public comment.

It’s likely that the port commission will consider the project by early next year, Green said.

Spokespersons for the Convention Center Corp. and San Diego City Attorney’s office said Monday that they are reviewing the lawsuit and cannot comment at this time.

The lease held by Carpenter and Engle, which is not due to expire until 2024, requires that they develop a hotel of at least 400 rooms comparable in quality to other bayfront properties.

Up until two years ago, the Convention Center Corp. had control over the land but opted to back out of a deal it struck in 2010 to acquire the leasehold at a cost of $13.5 million as part of its plans to enlarge the convention center. But the expansion project fell apart after a judge ruled in 2014 that the plan to finance it with a hotelier-approved room tax hike was unconstitutional.

“Despite the fact that the City's and the Corporation's default (on payment obligations) extinguished any development rights or other legal interest they had in the property, Defendants have continued ever since then to actively pursue a Phase III Expansion on the Property, in direct breach of the…lease's terms,” the suit claims.

Green noted that the lawsuit follows an unsuccessful effort at mediation with the city in which the developer tried to focus the talks on the alleged breach of its lease agreement.

“The city only wanted to come in and talk about making a deal to take our land,” Green said in an interview in August following the failed mediation effort.

Green said Monday that to date there has been no offer he considers acceptable.

“There has never been any kind of meaningful proposal from the city to keep us from doing what we are doing,” Green said. “Our official position is that we intend to build a hotel and nothing has been conveyed to us that would change that.”

 

lori.weisberg@sduniontribune.com

(619) 293-2251

Twitter: @loriweisberg

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