SAN DIEGO -- The financial arm of the local development firm headed by Doug Manchester signed a lease with the Department of the Navy to move ahead with redevelopment of downtown San Diego's Navy Broadway Complex, it was announced Friday.

Manchester and the Navy had until Jan. 1 to sign a binding lease or the 14.7-acre waterfront property would fall back under the federal base closure process.

If the property had fallen under the Base Realignment and Closure Commission process, known as BRAC, it would have left the future of the more than $1 billion redevelopment project uncertain.

"This action no longer places this property under the BRAC cloud," Adm. Len Hering, commander of Navy Region Southwest, said at a news conference at the Manchester Grand Hyatt to announce the inking of the lease with Manchester Financial Group.

He said the deal "marks a new era for the Navy's future" in San Diego.

"Together we will build a magnificent cornerstone of what will be San Diego's bayfront properties," Hering said.

Manchester was awarded a contract by the Navy last April to redevelop the site as Pacific Gateway. The area is now home to unsightly 1920s-era military buildings, which are protected by metal fencing.

In addition to office, commercial, hotel and retail space, the redevelopment plan calls for the construction of a building to serve as the future headquarters of Navy Region Southwest.

It will also include about five acres of public and open space, which includes about three acres of new "view corridors" and public access to the waterfront, according to the developer.

Manchester said he hopes to break ground on the project within a year.

"We are confident that we are creating a project of which the entire region will be proud and will serve as a symbol for the front porch of our downtown," he said. "We are excited about what the future holds."

The Centre City Development Corp. board has approved the overall site plan for the project, but individual components, including the design of buildings and public spaces remain under consideration.

Critics have said the proposed development walls off San Diego Bay's waterfront, the buildings are unsightly and the project includes too few public and open spaces, like parks and museums.

The city is negotiating with the developer to purchase a half-block of the property to build an additional park, effectively removing 250,000 square feet of the proposed 2.9 million square feet of commercial space.

Manchester said he is still "amenable" to the idea.

"I don't anticipate any problems," he said. "We don't have any problem with that becoming a reality."

A San Diego-area resident has also filed an appeal of the city's 1992 environmental review of the project. City Attorney Michael Aguirre, however, expressed the opinion that the developer and Navy can proceed with the lease despite the pending appeal of related environmental documents.

"We believe, and we have had more than one expert look at this, that we are consistent," Manchester said.