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Council extends legal team's contract for SDSU stadium sale

SDSU West initiative deadline set for Tuesday
Posted at 3:24 PM, May 19, 2020
and last updated 2020-05-19 18:24:03-04

SAN DIEGO (CNS) - The San Diego City Council voted 7-2 Tuesday to extend the contract of the law firm working on the city's behalf to sell the Mission Valley stadium property to San Diego State University, a step which could lead to more negotiations in what some city council members believed was a done deal.

The law firm Kane, Ballmer & Berkman was initially contracted for $250,000 to assist city attorneys and complete the sale of the property on Friars Road. Tuesday's amendment to the contract adds another $150,000 to the bill as negotiations continue.

SDSU intends to turn the property into a secondary campus and build a 35,000-seat stadium, classrooms, affordable housing and a river park on the land. On May 5, the university sent a signed purchase and sale agreement for the city to consider.

Initially, the university sent the agreement with the plan to place it on the city council's docket for consideration Tuesday, but Mayor Kevin Faulconer's office responded to the agreement with some considerable revisions, necessitating the agreement to come before full council at a later date.

That delay resulted in additional costs for the services of Kane, Ballmer & Berkman, which has represented others cities in the past in similar deals, including Inglewood's National Football League stadium purchase.

Council President Pro Tem Barbara Bry has been vocal with her frustration over the delay in recent weeks, noting that the city cannot afford to waste time and money while facing a $300 million COVID-19-related budget shortfall.

"Further delay runs the real risk of torpedoing this deal for all time," she said. "We need to approve the agreement and get this on the docket."

In November 2019, SDSU revised an initial offer of $68.2 million up to $86.2 million for the city-owned property, which includes SDCCU Stadium.

SDSU's planned "Aztec Stadium" is estimated to cost $310 million and will be funded through donations as well as system-wide revenue bonds that will be paid back with revenue generated by the facility -- including ticket revenue, naming rights and concessions.

San Diegans voted 54.4% in favor of selling the stadium property in 2018 as part of Measure G. The city currently operates the stadium at a loss of $12 million per year, city staff said Tuesday.

Nearly all the council members agreed the sale should be approved as soon as possible. Councilman Mark Kersey said he was reluctantly supporting the amendment to the law firm contract, and was doing so only because the city's bill with the firm had already topped $200,000. He urged city staff to report sooner next time when the bill was coming due.

Councilman Scott Sherman agreed that the voters made their will clear in 2018, but he supported using caution and taking time to make sure the deal was done right.

"We've had deals in the past we were told to move quickly on or they would be gone," he said, referencing 101 Ash St. and Othello Avenue, two real estate deals the city had expedited in the past several years only to find out after the fact renovations were required or major health hazards prevented occupation. "And it turned out it wasn't such a good deal after all."

Councilman Chris Ward agreed, stating time was of the essence, but it was "important to get the details right."

When the purchase and sale agreement was first submitted to the city, SDSU President Adela de la Torre this month said the university's lawyers believed they had met all the legal requirements.

"After well over a year of negotiations, including hundreds of hours of meetings, my team and I believe this agreement encompasses and addresses all major issues for the city of San Diego, the California State University and San Diego State University," she said. "What is before you today is fair and equitable to both parties and represents the best interests of the public that we both serve."

In a response document to concerns raised by City Attorney Mara Elliott, the university pledged to complete the sale as soon as possible, obey the city's water and environmental regulations, accept all liability for environmental and wage issues after the sale was completed and "is in no way backing away from its extraordinary commitments" toward developing affordable housing on the site.