CCDC Puts Off Decision in Gaslamp Parcel Tug of War
San Diego’s Centre City Development Corp. is facing a dilemma. Two leading downtown developers--both with impressive track records--want to build separate multimillion-dollar projects.
The problem is, they want to do it on the same piece of property.
CCDC, the agency in charge of downtown redevelopment, wants to accommodate both developers, as much to please them as to further some of its own goals. But the agency is not sure it can be done.
“These are the men we want to help and support. These are both excellent projects,” said CCDC director Janay Kruger, echoing the sentiments of the seven-member board, which on Friday put off a decision for another month.
The men Kruger is talking about are Chris Mortenson and Dan Pearson, both aggressive, high-profile builders, which doesn’t make the CCDC directors’ decision any easier. Both men have been at the forefront of major restoration projects in the historic Gaslamp Quarter and adjacent neighborhoods.
Mortenson, a partner in both Win-Mor Investors and Lincoln Investments, is perhaps best known for the renovation of the Golden Lion Tavern and Exchange Building at 4th Avenue and F Street. His company is also slated to transform the historic Balboa Theater into the San Diego Art Center.
Pearson, owner of Gaslamp Quarter Enterprises, a company that has completed several restoration projects, is working on the $12-million reconstruction of the Horton Grand Hotel. The hotel, at 4th Avenue and Island Street, is scheduled for completion in May.
The property both developers want is a 30,000-square-foot parcel fronting on J Street, between 3rd and 4th avenues, across from the new Cost Plus store. Warehouses dominate the terrain, which is in the city’s Marina Redevelopment district. But the area is in transition.
The parcel Mortenson and Pearson want is only two blocks from the future waterfront convention center, due to open in the summer of 1988. The property is now used to store large pipes.
Mortenson wants to construct a $6-million, 230- to 280-unit residential hotel. The hotel, a cross between a hotel and an apartment house, is aimed at providing rental housing to those who work downtown, particularly those who earn $20,000 a year and less. Rents would average about $400 a month, for a studio-like unit with a small kitchen, bathroom and Murphy bed.
“With the opening of Horton Plaza and the U.S. Grant Hotel in the last five months, 2,500 new service jobs have been created,” Mortenson said after the meeting. “These are affordable units that people who work at these service jobs could rent.”
Mortenson’s proposal is doubly attractive to CCDC. First, it provides the type of housing for which there is a documented need: housing organizations and City Hall have called for more housing to meet the growing demand from low- and moderate-income workers. Mortenson says he can break ground and finish the residential hotel this year, if there are no delays.
Second, CCDC is under increasing pressure to provide more housing downtown. The agency’s stated goal is to provide 4,000 housing units, but questions are being raised about how hard CCDC is pushing to meet that goal. So far, about 1,500 housing units have either been built or are planned, leaving the agency about 2,500 units short of its objective.
Going into Friday’s CCDC directors’ meeting, the agency’s top administrator, Gerald Trimble, had recommended that the agency sign an exclusive negotiating agreement with Mortenson.
Hotel Reproduction
Pearson, who said he wasn’t aware of an impending Mortenson-CCDC agreement until two weeks ago, wants to use the parcel to build a hotel. Not just any hotel, but an authentic reproduction of the stately Horton House, the hotel built by Alonzo Horton, the founder of modern San Diego.
The 110-room Horton House was demolished in 1905 to make way for the U.S. Grant Hotel, which itself recently reopened after an $80-million restoration. Pearson said that before Horton House was torn down, Alonzo Horton had photographs and architectural drawings made of the hotel, which have been stored in local archives. Pearson plans to use these as the basis for the $12-million reconstruction.
There is symmetry to Pearson’s proposal, which he emphasized to the CCDC directors. His Horton Grand Hotel, which is nearing completion, is on the opposite end of the block from the disputed property. In between will be a 250-seat theater, which won CCDC approval Friday. The facility will present plays at night and be a conference center during the day.
Pearson says having the reconstructed historic hotels anchored on both ends of the block not only provides business to the theater, which his company owns, but makes the most sense economically and architecturally.
But unlike Mortenson, who says he can start construction almost immediately, Pearson said he will need to wait six to eight months after the Horton Grand opening--or about a year from now--before he can commit himself to the Horton House project. He says this is because banks want to make sure the Horton Grand is successful before they give him any more loans.
‘A Tough Decision’
One thing both developers have in common is that they want CCDC to give them the land, a subsidy Pearson says is worth $1.5 million. The land is now privately owned, but CCDC can take it over through eminent domain.
“There’s no doubt we have a tough decision on this,” said CCDC President Peter Davis. “The Horton House proposal offers us a once-in-a-lifetime chance.” But Davis quickly added that Mortenson’s project gives downtown “the housing we need and it’s in the right location.”
“I think we can find another site (for either project) and make both of them work,” said Jan Richard Anton, another CCDC director.
So for the next month, the CCDC staff will again attempt to find property that might accommodate either project, while the board of directors studies both proposals.
“The trouble is, there’s not a block down here that’s a slam dunk,” Davis said after the meeting, explaining that there are various problems, including historical buildings that should be saved or land owners who don’t want to sell, with properties throughout the area.
Mortenson and Pearson are both very complimentary about the other’s project, but maintain that their own proposal is best for the site.
“It’s real tough because we need 30,000 square feet and to get that anywhere else, they’d have to condemn the whole block,” Mortenson said. “Our location, for the people we want to attract, is very important. We can’t be in the middle of no-man’s land. We have to be in a location people will want to walk to, that’s safe and close to their jobs.”
Pearson, who says his competitor’s proposal is “the right project in the wrong location,” is steadfast in his position: “We have to go on that block or not anywhere else. It doesn’t make sense for us anywhere else. I think of the 14 (redevelopment) blocks around there, they can find a site that’s suitable for him.”
