City Council unanimously approves $4.2B Midway Rising redevelopment after seven-hour hearing

The San Diego City Council voted 8-0 Monday night to approve the Midway Rising project, authorizing the largest affordable housing development in California history and clearing the way for a 16,000-seat entertainment venue to replace the aging Pechanga Arena.

The vote came after more than seven hours of proceedings, including roughly four hours of public testimony from about 100 speakers, according to the San Diego Union-Tribune.

The project, estimated at $4.2 billion in total construction investment, will bring 4,254 residential units to the 48.5-acre site — including 2,000 income-restricted units for households earning 80% or less of the area median income, with at least 200 set aside as permanent supportive housing, the city said. The development plan also includes 130,000 square feet of shops and restaurants, 8.1 acres of parks and 6.4 acres of plazas.

"Today's vote marks a major milestone in our work to transform the Sports Arena site and deliver thousands of new homes for San Diegans," Mayor Todd Gloria said in a city statement.

The deal

The council approved a 105-year lease and redevelopment agreement, project land-use documents including the Midway Rising Specific Plan, and a resolution of intention to form an enhanced infrastructure financing district (EIFD) to redirect future property tax growth toward an estimated $462 million in infrastructure work.

The city expects to collect $896.3 million in rent over the life of the deal, charging rent as a percentage of revenue from market-rate housing and retail, and eventually a per-ticket fee at the arena starting in year 11. The net present value of those payments is $23.2 million, according to the Union-Tribune.

The city's total contribution is pegged at $605.2 million, with total project revenue estimated at $1.2 billion.

Councilmember Jennifer Campbell, whose district includes the Midway area, made the motion to approve.

"This is our first step to building this new center of commerce and entertainment, new housing, parks, open space for all San Diegans," Campbell said.

Council additions

Before voting, the council added two provisions: the city will now receive 5% to 10% of proceeds above a threshold rate of return if the developer refinances — not just on a sale — and the developer agreed to contribute an additional $2 million toward traffic signal improvements near Interstates 5 and 8.

The Independent Budget Analyst had previously reviewed the deal and concluded the financial terms were fair.

Timeline

The project is structured around a 2029 construction start date. The first vertical phase — the arena — is slated for 2032. Market-rate housing construction would begin in 2033, affordable housing in 2034, with full buildout expected by 2050. The developer has said it expects to move faster.

The existing Pechanga Arena will remain open until the replacement venue is complete.

The development team includes Chelsea Investment Corporation (affordable housing), Legends (venue operator), Zephyr (market-rate housing), and The Kroenke Group as lead investor.