San Diego Drops Firm It Picked for Office-to-Resi Project

San Diego has formally severed ties with a La Jolla-based developer it selected in August to convert an empty 21-story office building into affordable housing.

In a letter delivered via email last week, the city notified Reven Capital that it was ending talks on terms for an exclusive negotiating agreement (ENA) for the project, which aimed to turn the tower at 101 Ash street into a 393-unit residential building with 100% of the units reserved for households making 80% or less.

In the letter, the city said couldn’t accept terms that would have obligated the city to reimburse the developer for its upfront expenses if the project did not come to fruition, according to a report in the San Diego Union-Tribune.

The office building on Ash Street, which occupies an entire block between First and Second avenues, was purchased by the city in 2022. Last year, the city put the Ash Street block as well as an adjacent four-block civic complex—including the City Administration Building—on the market as a redevelopment site under the conditions of California’s Surplus Land Act.

The Ash Street block was the only part of the site that drew an offer. After it was selected in August, Reven partnered with affordable housing developer Lincoln Avenue Communities.

“Based on the significant distance that continues to exist between our interests, the unreasonable risk proposed to be assumed by the city, and no clear path for the ENA to move forward, we have determined that these negotiations have concluded, and the city will not be moving forward with your proposal,” the city said in its letter to Reven, which was signed by Jay Goldstone, special adviser to Mayor Todd Gloria, and Christina Bibler, San Diego’s economic development director.

Chad Carpenter, Reven’s CEO, told the newspaper the city’s letter “blindsided” the company.

“We’re disappointed,” he told the Union-Tribune. “We figured out the puzzle in how to repurpose the building for its best use. We figured out how to make it pencil so everybody could make money on the deal.”

According to the report, Reven was seeking to be reimbursed for $500K in upfront expenses. In its letter to the developer, the city said it had fulfilled the requirement of the Surplus Land Act to negotiate in good faith for a 90-day period.

The city is planning another marketing push later this year for 101 Ash and the neighboring Civic Center assets, which in addition to the administration building include the Civic Center Plaza office tower, Golden Hall, the 3,000-seat Civic Theater.

The real estate package will be marketed for sale or lease, the report said. Earlier this month, the Downtown San Diego Partnership, with backing from the Prebys Foundation, announced it has hired a consultant to come up with a “big-picture vision” for the real estate package.