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Facing a shrinking budget, San Diego Mayor Todd Gloria made few commitments during his annual address to the city in January.
One of them was to win approval for a controversial plan to build a billionaire-backed professional sports stadium and a housing project in a long-vacant arena parking lot.
“Let me be crystal clear,” Gloria, a Democrat, said. “The redevelopment of the sports arena will move forward. We will get this done.”
He may finally fulfill that promise for California’s second-largest city, despite the 165 foot-tall structure vastly exceeding the neighborhood’s 30-foot building height cap.
In the final days of the legislative session, lawmakers Sunday approved a last-minute deal to fast-track construction for Midway Rising, a project to construct a 25-story professional arena, 4,250 housing units and nearly 15 acres of public parks. If signed by Gov. Gavin Newsom, the new law would immediately shield the planned development from potential environmental lawsuits.
It’s a break for San Diego officials whose ambitions for the city’s Midway District have been fraught with legal challenges for years, namely because of the California Environmental Quality Act.
“San Diego in particular has had some bad experiences with CEQA litigation over efforts to rezone this very area,” UC Davis property law professor Chris Elmendorf said, referring to recent court rulings against the project.
“I think in light of that experience it’s totally understandable that the proponents of the project would be going to the Legislature and asking for help.”
Senate Bill 344, authored by Sen. Akilah Weber Pierson, a Democrat who represents the neighborhood where the arena would be built, would allow the developer to use an existing environmental review of the project to comply with CEQA.
The bill passed the Assembly with 61 votes out of a possible 80 Sunday afternoon. Two lawmakers voted against it, including San Diego Assemblymember Carl DeMaio, a Republican.
“To sit here and say a politically connected developer gets an exemption — that is an awful message to send,” he told colleagues.
Democratic Assemblymember Chris Ward, who presented the bill in the Assembly on behalf of Weber Pierson, defended the deal as a way to avoid costly delays on a project that has already been thoroughly vetted.
“We want to make sure that we have certainty, and that is exactly what SB 344 does, is to provide that certainty after almost a decade of exhausting environmental review.”
The eleventh-hour deal came together in closed-door negotiations just days before lawmakers gaveled out for session, sparking outrage among critics of the project who say city officials did not study the environmental impacts well enough.
Several neighborhood groups argue the arena will ensnare traffic and block coastal views. Other opponents such as Audubon Society worry the taller buildings could hurt or even kill migratory birds.
People opposed to new development often sue under CEQA stall construction projects throughout California, sometimes for years. That’s why developers and lawmakers frequently seek to shield their preferred projects from environmental rules, even after recent reforms intended to make CEQA compliance less onerous, Elmendorf said.
This two-year legislative session alone has seen its fair share of CEQA carveouts, including late-breaking negotiations over California Forever, a plan backed by tech entrepreneurs to build a manufacturing hub on the outskirts of the Bay Area. Another deal, Senate Bill 237, ended environmental lawsuits surrounding Kern County oil rigs to speed up production.
Democratic Assemblymember Tasha Boerner of Solana Beach, who also represents part of the Midway, did not vote on the project, which counts the same as voting no, and posted a statement on social media that said: “If we want to address California’s housing crisis, we need to allow for public scrutiny, and the public to sue when appropriate, to correct legitimate concerns and mistakes when assessing impacts.”
The pressure is on in San Diego.
The city and Midway Rising developers do not have a deal to build the project, but a deal to make a deal by Dec. 4. Missing that deadline could spell catastrophe for the project and Los Angeles Rams owner Stan Kroenke, whose company will have a 95% stake in the equity. Brad Termini, a political donor to Gloria’s 2020 campaign, is CEO of Zephyr, the housing developer chosen to lead the project.
Termini and his wife each gave $50,000 to an independent expenditure committee backing the mayor.
Gloria leaves office in 2028, and San Diego officials are pushing to break ground by next year.
Newsom has until Sept. 30 to sign or veto the bill.
Termini did not respond to multiple email requests seeking comment for this story. The Kroenke Group, Stan Kroenke’s real estate company, did not return a phone call and voicemail requesting comment.
Officials are confident criticism will abate once the Midway District, an overlooked historic neighborhood, is revitalized.
It’s expected to create at least 2,000 affordable apartment units and thousands of construction jobs, Gloria said in an interview. He said a small group of people “continually trip these projects from happening.”
“We have a project that’s been thoroughly vetted, that has been voted on by the public, that is going to receive public hearings in the city council,” he said. “When you’ve done that much process, that much review, that much transparency, the end result should be a firm answer.”
Contentious road for Midway Rising
Plans to revitalize the Midway District have been shrouded in controversy for years as city officials have worked to maneuver around local zoning laws.
The city failed twice — in 2020 and 2022 — to bypass the 30-foot neighborhood height cap with ballot measures that voters approved. Courts invalidated each, saying planners didn’t properly review how the much taller buildings would affect noise levels, air quality and nearby habitats .
Scrutiny from local activists and neighborhood groups picked up steam earlier this year once project leaders and labor unions began looking to Sacramento for help in earnest.
Senate Bill 958 was the first crack at the nut. That bill, also by Weber Pierson, would have given Midway broad CEQA exemptions. It was ultimately watered down to just negate the court rulings as negotiations rolled into summer.
When lawmakers returned from recess in August, Weber Pierson and other lawmakers began distancing Midway Rising from that legislation, saying it was entirely unrelated to the project despite its narrowly tailored language that only applied to Midway Rising’s financing and construction requirements.
Critics feared project leaders were sidestepping key processes and ignoring their grievances.
“The entire reasoning behind the gut-and-amend bill is to avoid having the project subject to the entire CEQA process,” said Eric Law, a longtime Point Loma resident and chairman of the neighborhood group leading the opposition. “What they’re trying to do is avoid informed decision-making.”
‘End-running’: A tried and true strategy
Her last-minute maneuvering reflects a common way lawmakers push through specific projects in their districts, although the practice is often criticized for not being transparent. Sometimes called “end-running,” bills introduced in the final hours of session don’t have to hold hearings before public policy or spending committees, giving opponents no opportunity to speak.
It makes sense if your primary goal is to just bring the deliverables back home, Elmendorf said.
“You’ve got an influential legislator who cares about a project in their district and, you know, other people aren’t too concerned about it, and they do a favor for their colleague,” in voting for it, Elmendorf said of the tactic.
Midway Rising is local enough that policy fights over it weren’t likely to “consume the Legislature,” he said. Making things even easier: it doesn’t call for any state spending or financial giveaways.
Lawmakers have a history of pushing through legislation shielding sports arenas from more rigorous environmental review, including in 2013, when the Legislature approved a deal to streamline the environmental permitting process for a Sacramento Kings stadium.
Gloria and other officials have said their approach is different because the San Diego development plan is only able to bypass zoning laws because it has a housing component.
But the deal-making opened fissures among lawmakers old and new. Former San Diego Assemblymember Lori Saldaña, who used to represent Midway and is a longtime critic of the project, says her criticism has alienated some former colleagues.
“If they cannot accomplish something at the local level, and they can’t accomplish it through a normal routine, then they go through these extraordinary end-of-session gymnastics,” said Saldaña, who believes nearby flooding could become an issue for any project on the site.
“I refer to it sometimes as, you know, a poker chip in a poker game, where you’re trading favors with your colleagues on these last-minute bills. And I’ve done it myself,” she said.
Some San Diego lawmakers don’t want to talk about it.
Democratic Chula Vista Sen. Steve Padilla, a co-author on the new bill, and Democratic Assemblymember Boerner, who also represents part of the Midway, could not be made available after multiple interview requests to discuss the project.
From Gloria’s perspective, drastic moves are needed to address the housing crisis.
“Coming to Sacramento and asking for clarification and certainty will make it more likely that it can actually happen,” he said. Otherwise, he fears an endless loop of litigation “ad nauseam.”
CalMatters’ Kate Wolffe contributed to this story.
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