Developer backs out of 42-story remodel of old Central Library

One of downtown San Diego’s biggest developers has backed out of a project that would have turned the former Central Library into a 42-story apartment tower.

Canada-based Bosa Development has been a golden child for city planners in recent years, developing major condo towers and is building the tallest residential building in San Diego history.

Its plan for the former Central Library at 820 E St. easily got an exclusive negotiation agreement in September from Civic San Diego, downtown’s planning agency. But, the company said the building cost more than expected.

“Basically, we looked into it and there was a lot more cost associated with it then what we thought,” said Nat Bosa, president of the company on Tuesday. “We didn’t want to waste anyone’s time.”

Bosa declined to get into specifics, but had previously told the San Diego Union-Tribune the increasing cost of steel was driving up the costs of projects by millions of dollars. In communication with Civic staff, the company said construction costs appeared to be “escalating out of control” and was concerned about the “general development climate.”

The cost of steel has risen dramatically since the Trump administration announced tariffs in March on nations importing to the United States. Automaker GM, which has said the increased cost of steel and aluminum cut into profits, recently announced it would idle five North American plants and lay off 14,000 workers.

Bosa’s planned tower may have faced some criticism going forward.

While the Civic San Diego board largely approved of the project because it would greatly add to the city’s need for more housing, board director Stephen Russell opposed the project because he felt it did not preserve the history of the library, built in 1954.

Russell argued the Bosa project would mainly just keep the facade of the library. He called the plan a “hollowing out” of the building.

There was a chance it could face more opposition. It still needed City Council approval as Bosa had yet to purchase the city-owned asset.

The Civic staff is now recommending the board Wednesday accept a proposal from Dallas-based Lincoln Property Company that calls for rehabilitating the building mainly for office space. The three-story proposal would not include housing, which may cause some board members to balk.

In September, some board members said there were already several large office projects downtown — such as Horton Plaza — and what the city really needs is more housing.

However, the staff report for Wednesday’s meeting says Lincoln plans to develop other adjacent properties on the block that will include either rental or for-sale housing. But, it unlikely will reach the same level as Bosa’s plan for 392 rental apartments (including 30 subsidized units for low-income renters).

It’s unclear what all the factors were that led to Bosa pulling out. Real estate analyst Gary London said developers, in general, are facing high labor and hard costs that have not caught up with current market conditions.

He said rent increases are starting to slow, making it likely gains will not be as big the next year. Bosa is already constructing a 45-story rental tower with 296 apartments on Broadway.

“We’re at a market transition point right now,” London said. “The prospect for revenue at apartment projects is, at best, a stabilization of rental rates or perhaps some prospective reduction in the next couple of years.”

The city left the 75,000-square-foot library building in September 2013 when it moved to the new Central Library on Park Boulevard across from Petco Park. The first effort to get proposals for the site, focused on technology and innovation uses, received only underwhelming responses, said Civic San Diego staff.

In late 2017, the agency instead issued new proposals that were more broad and allowed for a sale of the land, instead of a lease.

phillip.molnar@sduniontribune.com (619) 293-1891 Twitter: @phillipmolnar

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