San Diego council committee votes to lift deed restrictions on 90 acres of UCSD land

The San Diego City Council’s Land Use and Housing Committee voted unanimously Feb. 18 to recommend that the full council lift deed restrictions on two parcels on the UC San Diego east campus and amend the master agreement with the university to include notification to the city when hotel development on those parcels begins.

The parcels are about 90 acres of 510 acres conveyed by the city to the University of California between 1960 and 1969 to develop the San Diego campus in La Jolla.

The deed restrictions stipulate the land must be used “only for educational or university purposes,” Barry Slotten, a manager in the city’s Real Estate Assets Department, said during the committee’s virtual meeting. Under the restrictions, ownership of the land would revert to the city “if the land ceased to be used for those eligible purposes.”

Slotten said the restrictions are “precluding UCSD from implementing several projects in their 2018 Long Range Development Plan ... delivered through a public-private partnership model.”

The current projects include extended-stay lodging and a conference center for UCSD Health patients, visiting faculty and academic symposiums; intergenerational housing for retired UCSD faculty; technology and life science research space; a wellness center and translational research clinical space, Slotten said.

Slotten said the deed restrictions would mean UCSD and its developers could not secure equity and debt financing for the projects, “valued at hundreds of millions of dollars,” because of the risk that “the city could, at some time in the future, deem that the projects are noncompliant with the deed restrictions, which would result in fee title ownership of the property and all related improvements potentially reverting back to the city.”

UCSD originally sought to have deed restrictions removed on all 510 acres. But Land Use and Housing Committee member and City Councilman Joe LaCava, whose District 1 includes La Jolla, said he had two meetings with UCSD representatives focused on “my interest in reducing the scope of the request and ensuring the city received notice of future actions. Both were motivated by how the city can better protect itself in real estate transactions.”

Displaying a map showing the land conveyed to UCSD in green shading, LaCava said parcels labeled E and L, located on the east campus and east of Interstate 5, “are the location of the projects that are described.”

He said the university “agreed to limit the lifting of the deed restrictions to only Parcels E and L at this time, with the idea that if they ever wanted to pursue privately funded or public-private partnerships west of the 5, it would come back to the city.”

City Councilman Joe LaCava, whose District 1 includes La Jolla, said he had meetings with UCSD representatives on reducing the scope of the university’s request for lifting deed restrictions.

(Elisabeth Frausto)

LaCava moved to forward the matter to the full City Council and remove the deed restrictions “on only those parcels on east campus … described as Parcels E and L.”

The motion also included a stipulation “that the master agreement include notification from the university to the city of San Diego specific to when hotel development within Parcels E and L come on board.”

Slotten said the committee’s action does not constitute approval of the projects proposed in the university’s development plan.

Removing the restrictions and clearing the way for the development would benefit the city, Slotten said, such as through revenue from property and transient occupancy taxes on future hotel developments estimated at $85.6 million from 2025 to 2044. The projects also could mean creation of more than 11,000 jobs.

Jeff Graham, UCSD executive director of real estate, confirmed Slotten’s revenue and job numbers after the meeting.

The city would have first opportunity to buy back the land if UCSD pursues the sale of more than 10 acres of the property in the next 20 years, Slotten said.

During public comments, 13 people spoke to the committee, with only one, La Jolla resident Don Schmidt, opposing lifting the deed restrictions.

“There should be a study on cumulative impacts of what UCSD is doing with the campus,” Schmidt said. “It takes in no regard to the surrounding communities. Lifting these deed restrictions would cost the city and the state billions of dollars to bring our infrastructure in.”

Angeli Calinog of the San Diego Regional Chamber of Commerce said “the chamber is pleased to support” lifting the restrictions because “UCSD is one of the region’s flagship research and academic institutions and this campus expansion plan will provide many benefits to the city.”

LaCava said UCSD “is an important element in our city. We want the university to succeed. However, as the first real estate transaction the new mayor and City Council will be considering, it is worth a more cautious approach.”

LaCava asked Slotten if the parcels discussed were gifted by the city or conveyed at fair market value.

Slotten said “there certainly was a benefit to the city from the conveyance of these properties” but that the history of the transaction is “a little bit sketchy.”

Whether the transaction included “direct payment back to the city for the land or whether it was done as compensation toward improvements that were made around that La Jolla area that the city would have been required to do on its own is a little bit unclear.”

“There were no appraisals done at the time,” he said.

Janie Emerson, president of the La Jolla Shores Association, told the La Jolla Light that the committee “should not make any decision unless they have the actual documents that show fair market appraisal for the property back in the day and escrow documents documenting that UCSD paid for the property as they contend.”

UCSD associate communications director Leslie Sepuka did not immediately respond to a request for comment on whether the university paid for the land and, if so, at what price.

Emerson said the city is “the guardians of the money for the citizens of San Diego, and they should not be leaving any money on the table.”

She said she also is concerned about a possible “domino effect. … There are different parcels here. Once that goes, then the other ones go.”

The next step is for the City Council to schedule the item for consideration. A date for that wasn’t immediately clear. ◆