Santa Fe Trades a Promise for Right to Build Hotel

In what downtown redevelopment officials called a compromise, the San Diego City Council on Tuesday approved an exception to a new development plan that will allow Santa Fe Pacific Realty Corp. to forge ahead with a $37-million waterfront hotel in the Marina Redevelopment Area.

In return, Santa Fe must agree to provide housing on some of its other property before it can build future hotels or other non-housing projects in the Marina area.

Exactly how Santa Fe will do that--which could entail giving up some railroad right-of-way, and selling property to housing developers or to the city--will be worked out over the next several months, according to Gerald Trimble, executive vice president of Centre City Development Corp., the agency in charge of downtown redevelopment.

Trimble emphasized to reporters after the City Council meeting that details of the Santa Fe agreement will have to be negotiated before his agency will recommend approval of Santa Fe’s hotel.

But one person involved in the issue said he didn’t think it was much of a compromise.

“I don’t think Santa Fe gave up anything,” said Bill Sauls, spokesmen for the Marina Park and Park Row condominium projects near the proposed hotel site.

One thing the compromise does, at least for now, is end a showdown between Santa Fe--the largest private landowner in the Marina--and CCDC. Their dispute was based over the development future of the Marina, an area of spectacular bay views and a burgeoning tourist trade that, since 1976, has been designated primarily for housing, not hotels.

The housing specifically forms the backbone of the city’s goal to provide a 24-hour downtown, with 5,000 to 6,000 people expected to live in the Marina area.

Another element in the dispute is a 1983 development agreement between Santa Fe and the city regulating the company’s ambitious, 25-year, $1-billion waterfront building plan. CCDC said that agreement committed Santa Fe to building 600 housing units on the proposed hotel location, which is north of the police station at Pacific Highway and Market Street, near Seaport Village.

Santa Fe responded by saying the company only committed to studying the feasibility of such housing. Ed Levine, Santa Fe’s project manager in San Diego, said his company has no plans to build housing, although he didn’t rule out the firm selling company property to housing developers to meet the city’s demands.

While the city designated the Marina area as the prime location for future downtown housing, it never changed the zoning to reflect that, an oversight CCDC officials acknowledged should have been remedied years ago.

It thus was unclear--at least to some developers, residents and others--what were the limits of development in Marina.

The question was largely academic as the thrust of redevelopment activity, public and private, was focused on and around Horton Plaza. But the equation changed when it was decided to build the $125-million convention center by the waterfront in the Marina area and it was discovered the city was short about 6,000 hotel rooms.

To fill that demand, Santa Fe proposed a $37-million, 335-room Embassy Suites hotel. CCDC said Santa Fe should be stopped from building the hotel without fulfilling its commitment to housing, a commitment Santa Fe said was not required by the 1983 agreement. On Feb. 21, the dispute went back to the City Council, with CCDC and Santa Fe apparently on a collision course.

But during the last two weeks, Santa Fe and CCDC officials negotiated a compromise, which was approved by the City Council.

Specifically, the council approved an interim planning ordinance for the Marina area, officially designating the area primarily for housing while a permanent zoning and urban design ordinance is drafted within the next year.

But an exception was made for the hotel, although the project will have to secure a plan amendment, a time-consuming procedure that gives CCDC the power to extract from the company future housing.

Without such an agreement, Trimble said, it will be nearly impossible for Santa Fe to develop any of its other property for uses other than housing. This is significant, he said, because Santa Fe has plans to build a second hotel in the Marina later.

Also as part of the compromise, Santa Fe said it will not oppose city efforts to rezone the rest of its Marina property for housing. Santa Fe owns two blocks, its railroad right-of-way, and is negotiating for a third block with the San Diego Unified Port District.