The metropolis of San Diego’s efforts to lease the 48 acres of land it owns round Pechanga Arena to developer Brookfield Properties might run afoul of newly finalized state pointers, leaving the way forward for the location in limbo.

The guidelines, launched Tuesday by the California Department of Housing and Community Development, or HCD, clarify that the Surplus Land Act, as amended by the state legislature in late 2019, applies to native company property that’s for lease. The interpretation quantities to a heftier blow to the already on-hold sports arena redevelopment deal, because it implies that San Diego ought to have supplied the Midway District web site to inexpensive housing builders earlier than soliciting curiosity from different builders.

“The city is thoroughly reviewing the final guidelines and will engage with HCD to get clearer assessment on what our options may be regarding the Sports Arena Development. Those options could include rebidding the property to an affordable housing developer or receiving an exemption if a certain number of affordable units are built on the site,” San Diego’s Chief Operating Officer Jay Goldstone mentioned in an announcement to the Union-Tribune. “However, there is no intention to issue a new request for proposals at this time.”

The what-happens-now conundrum comes greater than a yr after San Diego issued a request for redevelopment proposals for its sports arena property within the Midway District. In August, the town, beneath then-Mayor Kevin Faulconer, selected Brookfield Properties to redo the location with an all-new sports arena, 5 acres of public parks, 2,100 housing items and 590,000 sq. toes of retail area.

As of February, when the town hit the pause button on formal talks with the developer, negotiations had been nonetheless preliminary and phrases remained undecided.

Meanwhile, because the transaction was inching ahead, the Housing and Community Development company was drafting its guidelines of enforcement for the Surplus Land Act, which had been expanded by Assembly Bill 1486 to release extra land for inexpensive housing. The rulebook in query, referred to as the Surplus Land Act Guidelines, defines how cities, counties and different businesses can switch their actual property property.

HCD launched a draft model in November, signaling for the primary time a extra stringent software of the regulation and creating uncertainty across the definition of surplus land.

In the ultimate model, the state company notes that native government-owned land, whether or not it’s on the market or lease, should undergo a particular disposition course of that begins with a proper declaration as to whether or not the property is surplus land or exempt surplus land. HCD’s guidelines embody particular exemptions for small parcels, land marketed for mixed-use initiatives with no less than 25 % inexpensive housing, belief lands, short-term leases and offers already beneath contract, amongst different issues. Otherwise, an area company should concern what’s referred to as a “notice of availability,” providing surplus land to a listing of inexpensive housing builders who’ve 60 days to reply. Municipalities are then required to conduct a 90-day, “good faith” negotiation interval with events.

The steps should happen, so as, earlier than a metropolis can solicit bids by way of a regular procurement course of, the rules state. However, it’s unclear whether or not HCD will make exceptions for cities, corresponding to San Diego, that had been exploring long-term floor leases earlier than the rules had been finalized.

“It’s too early to draw any conclusions,” mentioned Ted Lohman from Brookfield Properties. “Brookfield Properties is still reviewing the just-released final HCD guidelines to determine next steps. That said, we remain committed to continuing our dialogue with community members, stakeholders and the city, as appropriate.”

Beyond the sports arena property, the state company’s pointers have unknown implications for government-owned land throughout the state that’s leased to inns, theme parks, cultural establishments and different companies.

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