The hotel developers likely to remake the old Navy property at 1220 Pacific Highway will get three more months to consider an unsolicited proposition from an unnamed entertainment venue operator that wants to be folded into the redevelopment plan for the 3.4 acre, waterfront site.
Thursday, Port of San Diego Commissioners voted unanimously in favor of amending the agency’s First Right to Negotiate Agreement with LPP Lane Field, LLC. The action gives the entity an additional 90 days — through April 16 — to submit a development plan for the property, which is currently home to dated Navy administration buildings that will be vacated in coming years.
LPP Lane Field, LLC is comprised of Portman Holdings, Hensel Phelps Development and Lankford & Associates. The development team is the entity behind the adjacent, waterfront Lane Field hotels — the dual-branded Marriott SpringHill Suites-Residence Inn and the InterContinental San Diego — at Broadway and Pacific Highway.
The development team and the port agreed that extra time was necessary for refining the 1220 Pacific Highway concept after “representatives from an entertainment venue operator reached out to Lane Field in November to communicate their interest in locating the venue at the site,” according to the staff report prepared for Thursday’s board meeting.
“It’s a very valuable piece of land,” said Commissioner Frank Urtasun, who was sworn in Thursday as the new chair of the seven-member Board of Port Commissioners. “For us, being able to take another 90 days to get a good perspective on what Land Field partners want to propose is well worth the three months. … We’re excited to see what they come up with.”
The latest turn of events comes just months after the port negotiated a “historic” deal to get control of the property opposite B Street Pier.
In September, the United States Navy voluntarily agreed to end its 100-year lease of at 1220 Pacific Highway decades ahead of schedule in exchange for $5.75 million in products and services from the Port of San Diego. The federal government has occupied the land, sandwiched between the Wyndham San Diego Bayfront hotel and the Lane Field hotels, since 1949.
The parties formally terminated the lease on Oct. 13, although the Navy is permitted to continue to use the site for up to four years.
With the termination, the Lane Field developers were given a 90-day window, originally ending Jan. 17, to submit a proposal for the prime real estate, a requirement of the group’s 2014 First Right to Negotiate Agreement with the port. The proposal is expected to include site plans alongside preliminary costs and financial projections, a spokesperson with the agency said.
The first-right-to-negotiate agreement was originally baked into the developer’s 2012 lease for the adjacent site where its dual-branded hotels stand today, meaning the Lane Field developers have been eyeing the redevelopment potential of the Navy site for more than a decade.
The port has so far telegraphed a desire for more hotel rooms on the parcels. The agency’s long-term blueprint, called the Port Master Plan Update, is expected to go before the board for approval later this year. It makes room for 750 additional hotel rooms on tidelands in the area between Ash Street and Broadway. The master plan also calls for more park space along North Harbor Drive and an extension of B Street to the water.
The developer said previously that it was contemplating a concept with hotel rooms, restaurants and public amenities. Its plans shifted unexpectedly in November.
“We were approached by a group and they have a very compelling use that we’re very interested in. … When this concept was presented to us, we contemplated it and realized that it could be an extremely good use for the site and give us an attraction for our existing hotel rooms plus any new hotel rooms that we build,” Alexander Guyott, development manager with Hensel Phelps, told the Union-Tribune. “It’s a significant departure from our original, (all-hotel-room) program. That’s why we need this time to put some structure to it.”
The executive declined to provide additional details about the entertainment venue operator or the type of attraction that is being discussed. The port is being equally vague about the opportunity.
“Staff believes that an attraction, an entertainment or “eatertainment” concept, or an interactive museum could attract more visitors to the North Embarcadero, benefit adjacent projects by increasing demand for hotel rooms, and potentially result in earlier revenue to (the) district compared to a hotel-only development,” the staff report says.
The port has, in recent years, shown an increasing appetite for entertainment uses on tidelands. In December, the agency agreed in principle to lease a 9.5-acre site on East Harbor Island to Topgolf International. The port views the venue as the anchor of a future waterfront entertainment district, and will later this year solicit market interest in developing complementary “eatertainment” concepts on 6.5 acres of neighboring land along North Harbor Drive, just west of the Topgolf site.
