San Diego is poised to sell or lease the soon-to-be vacant City Operations Building (COB) located at 1222 First Ave, following a decisive vote from the city’s Land Use and Housing Committee, which approved a surplus designation on Wednesday with a unanimous 3-0 vote.
This action paves the way for the full City Council to consider the recommendation later this month, indicating the city’s intention to seek developer interest for the 1.4-acre property after decades of neglect and underutilization.
Declaring the COB as surplus is a formal requirement under California’s Surplus Land Act, signifying that the city no longer needs the building for municipal purposes.
With this designation in place, the city can look to sell or lease the site for redevelopment but must adhere to the state’s housing law’s notice and negotiation processes.
According to the law, any potential developers are mandated to allocate at least 25% of the residential units as affordable housing, aimed at supporting low- and very-low-income families with incomes at 80% or less of the area median income.
Despite the challenges posed by these requirements, which might increase project expenses and have previously thwarted solicitation efforts in the past, the city is also focused on generating revenue from this future transaction.
The City Operations Building, constructed in 1970, stands on the western edge of San Diego’s downtown Civic Center compound and occupies an entire city block formed by A Street, First Avenue, B Street, and Front Street.
The building has served as the home of the Development Services Department (DSD) for many years.
However, it has suffered from significant neglect over the years, as city redevelopment initiatives failed to come to fruition.
In a nine-year-old facility condition assessment report, it was noted that nearly $129 million in improvements and maintenance were required to restore the building.
Currently, DSD is in the process of relocating its services to two new properties: a new headquarters in Mission Valley and an office space at 550 W. C St.
By August, the City Operations Building is expected to be free of municipal office use, with the exception of Fire Station 1.
This latest development comes after previous plans under Mayor Todd Gloria aimed to revitalize the entire Civic Center, envisioning the COB site as the future location for a new City Hall skyscraper.
At that time, the city attempted to market neighboring properties, expecting that leasing or selling the land could significantly contribute to funding the new City Hall.
However, the solicitation failed to attract any interest, attributed largely to the restrictions imposed by the Surplus Land Act.
In December, Gloria announced that, due to existing budget constraints, he plans to keep the main civic quad while looking to house more of the city’s downtown workforce within the existing City Administration Building and Civic Center Plaza.
He is also working on plans to long-term lease an adjacent vacant office tower at 101 Ash St. to a developer interested in converting it into residential units for low-income families.
Consequently, the city is now about to solicit interest in the 1222 First Ave. site but must proceed under the guidelines dictated by the Surplus Land Act.
The act was revised in 2019, placing a greater emphasis on the development of affordable housing when government-owned land is sold or leased.
The process will begin with a notice of availability, which notifies registered affordable housing developers in the state about the city’s intention to sell or lease the property.
This notice will kickstart a 60-day period for interested bidders to submit their redevelopment proposals.
Following this period, the law stipulates a 90-day negotiation period where the city must prioritize discussions with the entity proposing the highest number of affordable housing units.
According to the draft notice of availability, the city also intends to maximize its revenue from the COB site.
“The successful respondent will be the respondent who can maximize the monetary payments to the city while redeveloping the site as a high-quality mixed-use, mixed-income development that includes low- and moderate-income residential units,” the draft indicates.
Councilmembers Kent Lee, Sean Elo-Rivera, and Raul Campillo expressed their strong support for making the COB site available for redevelopment during the committee meeting.
Councilmember Vivian Moreno was absent from the discussion.
Elo-Rivera seconded a motion by Lee to recommend the surplus designation to the full council, which was later modified to include a requirement for bidders to enter into a project labor agreement.
Project labor agreements are collective bargaining contracts that outline wages, hours, and working conditions for construction projects managed by the city.
The committee meeting also featured a presentation from the Downtown San Diego Partnership and its affiliates, who shared their aspirations for a revitalized Civic Center complex.
This vision, created with the collaboration of U3 Advisors and backed by the Prebys Foundation, aims to transform the area into an arts and education hub, featuring a vibrant public space, thousands of residential units, shops, restaurants, and even a hotel.
While the vision has garnered the mayor’s endorsement, it differentiates itself from previous plans tied to the idea of a new City Hall.
Lee voiced concerns about the practicalities of realizing this vision without a clear future role for the city in the space.
“The real estate market is very peculiar right now, and it seems discrepancies exist in current city policies, which could hamper potential opportunities,” Lee stated.
Elo-Rivera echoed this sentiment, emphasizing that the mayor’s decision to halt discussions on a new City Hall could hinder progress toward creating a Civic Center that truly serves the public.
“This isn’t just about sound fiscal policy; it’s about public trust and benefiting the community, while we are investing millions into maintaining an inefficient building, letting our valuable land remain underutilized,” he noted.
Looking ahead, Christina Bibler, director of San Diego’s Economic Development Department, indicated that the notice of availability for the COB site is expected to be published in late July or early August, contingent upon approval from the full council.
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