The Ritz-Carlton in East Village is Dead
After 7 years, the City of San Diego officially ended its agreement with Cisterra Development for the city’s first Ritz-Carlton branded Hotel. The city claims it’s hands were tied and it needed to terminate the agreement for various reasons. The City of San Diego claimed that the developer didn’t keep their end of the bargain and that they were given a reasonable amount of time to make progress. The other issue, which comes back to timing, is California’s Surplus Land Act that went into effect in 2020.
The Surplus Land Act states that municipal land be leased or sold following specific steps. The City of San Diego will be drafting a Notice of Availability (NOA) that requires a minimum of 25% affordable housing units. These units will be set aside for households making 80% or less of the areas median income. They hope to have that NOA posted before the end of April 2023.
My Thoughts On The Situation
I really don’t think Cisterra was given a fair shot. When the agreement was announced in 2016, it had everyone talking. The idea of a Ritz-Carlton and Whole Foods coming to East Village just 2 blocks away from Petco Park was very exciting. Shortly after the announcement, Cisterra hit several roadblocks, the largest of which was a lawsuit brought on by the union. Once they cleared that hurdle, the world shut down due to COVID. While the real estate market took off, majority of the project was geared towards hotel/office space which faced lower demand.
In order to finance something of this caliber, the lender has a say in the feasibility of the project. The developer was working to redesign the project in order to get financing. They were going to increase the number of Ritz Carlton branded condo units and turn the office space into apartments. The plan was to also increase the number of affordable housing units to appease the city. Unfortunately, it sounds like the new plan never had a chance because the City wanted to pull the plug on the Ritz-Carlton project. According to the Union Tribune, the city’s Economic Development Director said city staff couldn’t support such changes because “they are not viable”, “raise potential legal issues” and “are not in the city’s best interests”.
I really think it is unfortunate the project is no longer going to work out. I do feel like it would have added so much to the neighborhood. I understand the city’s need to push for affordable housing, but I do not think killing a project that had the potential to make a huge impact on the city is the best way to go about it. In addition, the developer was willing to add in affordable housing units and from what I read, it sounds like they weren’t given an opportunity.
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Give me a call today at (619) 228-6790 or email me at Ryan@www.livingthesandiegolife.com for more information or to schedule a tour of the neighborhood!
