Developer still needs the City Council to sign off on a deed change that would allow for less retail use on the property.
The proposed redo of Horton Plaza as a modern tech campus is one step closer to becoming a reality, despite concerns raised by two disgruntled mall tenants and a historic preservation group.
Thursday, San Diego’s four-person economic development committee voted unanimously in support of a change to a deed agreement that would allow the owner, Stockdale Capital Partners, to replace the retail center with a mixed-use office campus. The amendment is required because of a land-use restriction that’s been in place since 1981. The committee’s action means the developer can seek final approval from the full City Council.
Opened in August 1985, Horton Plaza was, until recent years, an acclaimed mall in the heart of downtown. Stockdale purchased the 10-block property last year seeking to pump hundreds of millions into the center and re-brand it as, “The Campus at Horton.” Its plan involves converting empty storefronts into around 772,000 square feet of modern office space. Roughly 300,000 square feet of ground-floor space is reserved for food, beverage and fitness tenants.
The real estate investment firm, anxious to get started, would like to wrap up construction by the end of 2020. First the firm must get the city to sign off on the reduced retail footprint. Currently, the property must include a minimum of 600,000 square feet of retail.
The draft agreement that was blessed by the economic development committee on Thursday reduces the retail requirement by 50 percent in exchange for a number of commitments from the developer, including more density on the site and full responsibility over the city’s Horton Plaza Park.
The pitch, from Stockdale co-founder Dan Michaels, was this: Give us this amendment and we’ll turn downtown San Diego into a hotbed for high-paying tech jobs.
“We have done this before,” he said in his presentation to the committee, referring to the Scottsdale, Arizona, mall his firm bought in 2013 and turned into a thriving office park. That project, called the Galleria, has a number of notable tech tenants, including Yelp, Zillow and Square. “(Horton) is the opportunity incarnate.”
Committee members Chris Ward, Monica Montgomery, Barbara Bry and Mark Kersey all spoke favorably of the reuse project. They were keen on elite tech firms such as Facebook and Apple moving to town, and liked the prospect of up to 4,000 private-sector jobs in the city’s core.
“I think the redevelopment of Horton into a tech hub is essential to this city going forward,” Bry said, adding that she would like to see the developer involve local schools in internship opportunities with the site’s future tech tenants.
The enthusiastic remarks, echoed by the other committee members, came in spite of several concerns raised by public speakers. Some took issue with a perceived rush to construction, which could lead to the destruction of what preservationists, including the Save Our Heritage Organisation, see as a historic, post-modern asset.
The most contentious complaints, however, came from two of the last remaining tenants at Horton Plaza: Jimbo’s Naturally and Macy’s.
“Stockdale has not been completely forthright with the city on the status of the negotiations with us. We have not approved any plans. We have clear rights,” said Opio Dupree, vice president of government and public affairs for Macy’s. Dupree noted that Macy’s has what’s called a reciprocal easement agreement in place with the mall owner. The agreement, he said, gives Macy’s a say in what happens to the property surrounding its store.
“This right is designed to ensure that we have the benefit of the original bargain: A vibrant retail environment that complements our store. Westfield respected this right and this new group has ignored this right,” he said.
The tenant disputes, which the city believes it is not a party to, will hopefully be resolved before City Council takes up the proposed deed change at a yet-to-be-scheduled date. Committee members said they wanted to see progress on those talks, along with a stronger commitment from the developer that Horton Plaza’s Lyceum Theatre will stay put, before they formally sign off on the retail land-use reduction.