“The vision of building a new City Hall or acquiring a new building to relocate city operations is not going to be happening, at least for the foreseeable future,” Gloria said, in a statement to The San Diego Union-Tribune.

“We’re going to be faced with a number of very difficult choices in order to address the structural deficit that we’re dealing with, and this is one of those. But this is one of the (choices) that we have total control over,” Gloria said.

The decision means all work on the project will stop, including consultants who were hired to help the municipality evaluate options for a new City Hall and to market the Civic Center property, which is bordered by A Street, C Street, First Avenue and Third Avenue.

As part of its budget-cutting effort, the city will attempt to renegotiate or terminate office leases elsewhere downtown that are paid for by the general fund, Gloria said, and it will attempt to move more of its downtown workforce back into the aging Civic Center complex.

“If we own it, we should use it,” Gloria said, adding “I’ve worked for the city since 2008 and I’m intimately familiar with the shortcomings of the facilities that we have.”

In May 2023, San Diego offered five of the six blocks of property it owns in and around the Civic Center for sale or lease under the terms of California’s updated Surplus Land Act, requiring developers to set aside 25% of proposed residential units as affordable for households making 80% or less of the area median income. The solicitation did not attract significant interest from developers.

At the beginning of this year, the city hired Canadian firm P3 Advisors to evaluate whether it should build a new City Hall or acquire an existing property. The city council initially allocated $2M for the analysis, which now will be left unfinished.