Council votes Monday on $4.2B Midway Rising arena and housing deal; budget analyst calls it fair

The San Diego City Council is scheduled to vote Monday, Nov. 9, on Midway Rising, the $4.2 billion plan to replace the city-owned Pechanga Arena site with a new 16,000-seat arena, 2,000 affordable apartments and about 2,250 market-rate units on 48.5 acres along Sports Arena Boulevard.

Council President Joe LaCava canceled the regular Nov. 9 meeting and called a special meeting instead. The council meets at 10 a.m. for public comment on closed-session items, goes into closed session and returns at 1 p.m. for three Midway Rising items.

Item 600 would adopt a resolution of intention to form an Enhanced Infrastructure Financing District and create its governing board. Item 601 covers land use approvals, including a general and community plan amendment, a specific plan, a rezone, a development agreement and a site development permit. Item 602 would approve the Disposition and Development Agreement with Midway Rising LLC and certify the project's environmental impact report.

Under the agreement, the city keeps ownership of the land and leases it to the developer, which pays for and builds the project in phases over about 20 years. Plans call for at least 2,000 affordable units, including 200 permanent supportive housing units, at rents for households earning 30% to 80% of area median income, averaging 60%. The arena could shrink to no fewer than 15,200 seats, with higher per-ticket fees to the city if it does. The plan also includes up to 130,000 square feet of retail and 14.5 acres of parks and open space.

The city's Independent Budget Analyst estimated the city could collect $884 million to $1.23 billion in ticket fees and rent over the roughly 105-year life of the agreements. In today's dollars, that is $38.1 million to $68.5 million at a 4.5% discount rate. Arena ticket fees would be waived for the first 10 years, then start at $1.50 a ticket with 3% annual increases. Three-quarters of those fees would be paid only after investors reach a 16.5% return.

The analyst's office concluded that the deal is "a fair and reasonable transaction for the City" and offers "a reasonable balance of risk, financial returns, and public benefits." It also listed costs. The city would commit nearly 50 acres of public land for about a century. The financing district would send future property tax growth on the site to repay infrastructure rather than to the city's and county's general budgets. Of $460.3 million in upfront infrastructure costs, $370 million would be eligible for reimbursement from that district, with the city and the county each contributing 100% of their share of the tax growth. The county Board of Supervisors must still vote to join.

The analyst said the affordable housing is feasible but depends on tax-credit pricing and securing "substantial gap financing." On Oct. 16 the Land Use and Housing Committee voted 4-0 to send the deal forward. It asked staff to bar the 2,000 affordable units from being used as off-site credit for other developers' affordable housing obligations unless all other gap financing options are exhausted.

Building heights remain a legal issue. Voters lifted the 30-foot coastal height limit in the Midway area with Measure C in 2022, but an appeals court invalidated that measure. The city now says state density bonus law lets the project exceed the limit, with buildings generally up to 105 feet, a 165-foot arena and towers up to 250 feet on as much as 10% of the site. The project would build 4,254 homes where current zoning allows 3,545.

The Planning Commission recommended approval 6-0, with one abstention, in September 2025, and the Midway-Pacific Highway Community Planning Group voted 7-0-1 in favor. The city's exclusive negotiating agreement with Midway Rising expires Dec. 4 unless the council approves the development agreement first.