The luxurious dreams of a five-star hotel in downtown San Diego are now pivoting towards an alternative vision – affordable housing. City officials are showing a preference for transforming the publicly owned parcel at Seventh Avenue and Market Street into a space that houses more than 400 units for lower-income households.
In a memo circulated by Mayor Todd Gloria’s office, the city has indicated its intentions to engage in a 90-day negotiation with Chelsea Investment Corp., a company based in Carlsbad. The developer has proposed building a total of 405 housing units, all earmarked as affordable for the city’s lower-income residents, according to a report in The San Diego Union-Tribune.
The city’s decision to consider this proposal is guided by the Surplus Land Act, a state legislation that promotes the construction of affordable housing. Prospective bidders for the site, located at 534 Eighth Ave., were mandated to earmark at least a quarter of their units as affordable. Remarkably, Chelsea’s proposal makes all units available at affordable rates. Depending on the size, the rents for these units will be accessible to those earning between 30 percent to 80 percent of the area’s median income.
Jim Andersen, Chelsea’s chief development officer, expressed excitement at the prospect of collaborating with the city on another significant initiative. Chelsea has a track record of being chosen for projects of this scale. For instance, they’re also part of the Midway Rising development team selected to overhaul the city’s 48-acre sports arena site.
Though Chelsea’s proposal was one among four, the city’s six-member selection committee found its vision the most aligned with maximizing housing at the site. The decision to commence negotiations does not require an additional nod from the San Diego City Council. Christina Bibler, the city’s economic development director, highlighted that the city aims to utilize the site to its utmost potential for affordable housing.
However, this shift in vision comes after a protracted saga for the city’s real estate. Over seven years ago, a $700 million project envisioned by San Diego’s Cisterra included a Ritz-Carlton hotel, luxury condos, a gourmet grocery, offices, and housing. But the project faced several roadblocks, from legal issues to the pandemic and financial troubles. Eventually, the city ended its agreement with Cisterra due to multiple issues, leading to the present scenario.
Chelsea’s proposal goes above and beyond by offering a more extensive array of affordable housing than even Cisterra’s revised plan. As per California’s tax credit guidelines, for a family of four that earns 30 percent of the median income, a three-bedroom apartment might be available for as little as $1,075 per month. If they earn 80 percent of the median income, the same space would cost $2,866 per month, the report stated.
The company, which will collaborate with San Diego’s architect Doug Austin, envisions three eight-story buildings with underground parking, community spaces with computer labs, and external decks and spaces. Importantly, Chelsea will partner with nonprofits to work closely with the tenants.
While the financial terms concerning the city-owned site are yet to be determined, Andersen mentioned that the likely funding avenues would include low-income tax credits and tax-exempt bonds.
This new direction is not just a win for affordable housing proponents but also a testament to Chelsea’s reputation, according to the report. The firm also has a good record working with projects such as the Mercado del Barrio in Barrio Logan and St. Teresa of Calcutta Villa.
