The Port of San Diego has agreed in principle to lease for 40 years a 9.5-acre site on East Harbor Island to Topgolf International for a flagship driving-range venue that will offer panoramic views of San Diego Bay and the downtown skyline.
On Tuesday, Port of San Diego Commissioners voted unanimously to sign a non-binding term sheet with Topgolf on condition that the venue operator take financial responsibility for the entirety of its parking needs. Commissioner Dan Malcolm was absent.
The vote came in spite of 19 public comments opposed to putting a large, for-charge venue at the water’s edge, with people objecting the most to the overall appearance of the proposed facility and to the project’s tall netting system.
The action, which does not constitute project approval, tees up a process that should see a full-fledged lease agreement return to the board for approval in the second half of 2024. Construction is anticipated to start in mid-2025.
With the action, commissioners also approved a new direction for 6.5 acres of neighboring land along North Harbor Drive, just west of the Topgolf site, where staff will early next year solicit market interest in building complementary “eatertainment” concepts.
“Topgolf is a proven attraction estimated to bring in over half a million guests to the waterfront every single year. Together with other concepts … we could bring over a million guests every year down to a place that has not had public access in 70 years,” Shaun Sumner, a port executive who oversees the agency’s real estate department, told board members during staff’s presentation on the item. “And there are approximately 11 acres of no-cost, public realm amenity plans, including a park plaza, new landscaping, new public access to the bay and widened promenades.”
Topgolf is planning to build a 70,700-square-foot, three-level facility on nearly 10 acres of land on the basin side of East Harbor Island along North Harbor Drive just west of Liberator Way. The facility has been in the works for several years as the port has wrestled with how best to use land directly opposite San Diego’s airport where three car rental companies used to operate.
The entertainment venue, as proposed, includes 102 hitting bays, a 4.5-acre outfield with 10 underground golf targets, and a polyester barrier netting system suspended on poles up to 170 feet in height.
The location will also feature multiple restaurant and bar areas, event space and 293 surface parking spaces, according to project documents. A previous iteration of the project included a public viewing platform, although that has since been scrapped in favor of maximizing open space in nearby areas.
“We have enjoyed working with your staff to have an opportunity to be a catalyst for the redevelopment of East Harbor Island,” said Matt Smith, who is Topgolf’s senior director of real estate. “With Topgolf being a leader in the entertainment retail space, we believe we are a very solid, natural fit to fulfill the goals of the East Harbor Island redevelopment to … encourage and celebrate access to the waterfront, as well as enjoying the game of golf at Topgolf.”
An interior rendering of the Topgolf East Harbor Island venue.
(Courtesy, Port of San Diego/Topgolf)
The just-approved term sheet calls for a 20-year base term with four, five-year options to extend — or 40 years in total — with Topgolf’s minimum annual rent starting at $1.53 million. However, the company, which must spend at least $61 million on the venue, will likely pay rent as a percentage of sales, starting at 5.5 percent of sales and increasing to 7 percent of sales toward the end of the full term.
Negotiated deal terms also obligate the firm to pay for a chunk of public infrastructure costs for the broader redevelopment of East Harbor Island — namely, parks, promenades and roads — although the exact amount remains to be determined.
Commissioners told Topgolf Tuesday that the $4 million sum currently included in the term sheet is subject to change, pending the results of an ongoing environmental analysis of the area. Public comments on the notice of preparation for a draft environmental impact report for East Harbor Island redevelopment and the Topgolf project are due by Dec. 18.
The board, at the insistence of Commissioner Ann Moore, also made clear in its motion to approve the term sheet that the port would not be on the hook, legally or financially, for 100 additional parking spaces. The document’s original language, which states that the port will “provide” the off-site spaces, is too broad and could be viewed as a parking subsidy, Moore said. Topgolf and agency staff agreed to consider alternative options, including expanding the project site by an acre to accommodate 400 total spaces.
In general, though, commissioners viewed favorably the idea of transforming a currently unremarkable area — distinct from the picturesque bayside portion of Harbor Island — fenced off for private commercial use or industrial operations for decades.
“The entertainment district plan and the ideas for this entertainment venue that we’re talking about — primarily Topgolf and especially the adjacent possibilities — I think are incredibly exciting,” said Commissioner Michael Zucchet, pointing to the potential public benefits associated with boosting economic activity in the area.
“(They) have the potential to bring a million people down to this area, where currently there are zero coming, to help pay for an incredible expansion from zero (acres) currently to more than 10 acres of waterfront, public-dedicated open space, promenades, walking, biking, running areas, and entertainment venues that people want to come to,” he said. “There’s nothing wrong with that.”
The Topgolf term sheet garnered the support of local business associations, the carpenter’s union, area hotels and community groups, including a few non-profit leaders who noted that Topgolf has agreed to allow young athletes to play for free during off-peak hours. The program, called Youth Play it Forward, is a part of Topgolf’s community benefits package, which also proposes discounts for military, police, fire and emergency medical workers.
The majority of public speakers, however, railed against the project, labeling it a “monstrosity” and an “eye sore.”
“I’m horrified that the artist’s rendering might come to reality,” said Judith Wenker. “I do not think that this is a good idea at all. I think you’re going to get a lot of opposition and a lot of unhappy people if this thing was to go through. This is not the place to put this. You must have some other property where you can do that.”
The port anticipates publishing a draft of the aforementioned environmental impact report in the first half of 2024.
