Midway Rising Drops Plans for Mid-Income Housing, Hotel

The entities redeveloping San Diego’s 48-acre sports arena project in the Midway District has revised its plans to drop 250 residential units for middle-income families and a 200-room hotel from the project.

The revisions were revealed this week by the city’s real estate department, which attributed the changes to infrastructure and financing complications, according to a report in the San Diego Union-Tribune.

The project, known as Midway Rising, is expected to have 4,250 residential units, a new 16K-seat arena, 250K SF of commercial space, and 20 acres of parks and plazas.

The developers selected by the city to build the project-market-rate housing developer Zephyr, sports-and-entertainment venue operator Legends and affordable housing builder Chelsea Investment-are required to reserve 2,000 units in the project as affordable housing.

In June, The Kroenke Group, the real estate firm owned by billionaire Stan Kroenke, owner of the LA Rams NFL franchise, acquired a 90% ownership stake in the Midway Rising development.

Penny Maus, who heads the city’s real estate department, noted in her update to the city council that the middle-income housing units now being eliminated from the project were not required under the deal with the developers.

This did not sit well with one council member, who noted that two billionaires are now backing Midway Rising (Kroenke and Dallas Cowboys owner Jerry Jones, whose family is part of the ownership group behind Legends).

“You’re telling us that this venture that has two billionaires at the helm, who between them own four or five national sports franchises, can’t figure out how to build 250 middle-income units for us?” Marni von Wilpert, a council member said, the newspaper reported.

“We have a homelessness crisis. We have an affordability crisis,” Wilpert added. “Please figure this out and put the 250 units back in and help us get what we deserve for our property.”

Middle-income housing includes units are reserved for families making between 80% and 120% of the area median income. Zephyr CEO Brad Termini told the Union-Tribune that rising interest rates have made middle-income units difficult to finance.

“The bond market to produce middle-income housing has essentially evaporated in this financial climate,” Termini told the newspaper.

Regarding the 200-room hotel that was planned on a parcel west of the arena, the development team reported that it discovered a 96-inch sewer line near the location for the new arena, forcing the developers to shift the arena onto the hotel site.