San Diego stands to benefit substantially should it vacate City Hall and make its central downtown real estate available for redevelopment, according to a new report financed by a philanthropic organization with a vested interest in the area’s renaissance. Tuesday, San Diego’s Prebys Foundation and the Downtown San Diego Partnership released a report that identifies the long-term, regional economic impact associated with a Civic Center that is remade with 4 million square feet of new development. The study also estimates the cost savings associated with the city’s lease or purchase of a new City Hall. The report — prepared by urban planning firm U3 Advisors and titled, “San Diego Civic Center Revitalization: Quantifying Transformative Economic Impact” — determined that the annual impact of a fully redeveloped Civic Center to the local economy would be $428 million. The sum reflects direct spending at the site alongside money that ripples through the community because of the creation of 941 permanent jobs and the addition of 4,500 new downtown residents. The economic impact was calculated using the U.S. Department of Commerce, Bureau of Economic Analysis’ regional input-output model, and is based on a development program that calls for 2.1 million square feet for residential use (or 2,375 apartments), 252,000 square feet for hotel use (or 400 rooms), 186,500 square feet for retail use, 140,000 square feet for educational use, 200,000 square feet for theater use and 1 million square feet for parking. The report evaluated separately how to handle City Hall, finding that the city would save more than $325 million over two decades if it were to secure a replacement facility in lieu of substantially refurbishing the 1960s-era building it has now. “The important takeaway is that (the report) doesn’t just look at a theoretical perfect development. It looks at what we’re actually looking to do, and what it finds is that (the Civic Center redevelopment) could have a really significant impact on downtown,” Prebys Foundation CEO Grant Oliphant told the Union-Tribune. “The idea of having thousands of more residents downtown could be absolutely transformational. Not only do we need the housing, but when you think about it, we always talk about housing as though it’s disembodied from people. And here, we would have thousands of downtown residents who would animate the streets and change the behavior and what gets utilized.” The report is nearly two years in the making, building on the Prebys Foundation’s initial commitment in April 2024 to fund a big-picture vision for the city’s Civic Center real estate. At the time, the well-heeled organization teamed with the Downtown Partnership to supply a compelling conceptual plan that the city could use when putting the blocks on the market for a second time. San Diego’s Civic Center is the four-block, municipal compound bounded by A Street and C Street to the north and south, and First Avenue and Third Avenue to the east and west. The quad includes the City Administration Building (aka City Hall), the Civic Center Plaza office tower, Golden Hall, the Evan V. Jones Parkade parking garage and the Civic Theatre. In May 2023, San Diego put its municipal complex on the market as part of Mayor Todd Gloria’s plan to lease or sell the real estate to fund the construction or purchase of a new City Hall. The solicitation failed to attract developer interest, and Gloria intended to put the assets back on the market. In December 2024, he tabled the two-part plan, called the Civic Center Revitalization plan, because of a substantial structural budget deficit. Prebys Foundation, in concert with the Downtown Partnership, continued with the visioning work. In May, the nonprofit’s consultant, U3 Advisors, put forward a mixed-use plan that is dominated by housing but themed around arts, education and open space as attractions. The philanthropic organization then agreed to underwrite an analysis of the vision’s impacts following a July request from four City Council members. As such, the just-released report attempts to ground the lofty vision in economic reality, attaching real value to assumptions that may otherwise appear far-fetched. The report assigns a value of $428 million in net annual growth to the local economy as a result of the new jobs and spending created by a fully remade Civic Center, or what’s referred to as economic impact. What’s more, the development of the site will produce $5.3 billion in one-time construction-related impacts, according to the report. The city stands to collect $7.2 million in revenue each year from property taxes, transient occupancy tax and sales tax, the report states. The new revenue, however, does not reflect moving expenses, such as the construction of a new fire station or the relocation of city office space. U3 also looked at how the remade Civic Center blocks could catalyze the redevelopment of vacant and underdeveloped parcels within a quarter-mile radius of the site. This analysis estimates that 6.9 million square feet of additional development is possible, with a one-time construction impact of roughly $9.1 billion. “For far too long, San Diego’s Civic Center has not lived up to its potential as a dynamic public space,” Betsy Brennan, president and CEO of the Downtown Partnership, said in a statement. “It should be a place San Diegans are proud of, a vibrant hub that showcases why we are America’s best outdoor downtown. This report brings into focus what we have long believed, which is that every investment we make into this crucial district strengthens downtown today and benefits the entire region for years to come.” The report also veers from the overall economic impact analysis to focus more narrowly on the likely first piece of the Civic Center redevelopment puzzle: What to do about City Hall. U3 looked at the cost to rehabilitate San Diego’s existing City Administration Building alongside the cost to lease or buy 250,000 square feet of replacement office space for city workers, with both scenarios modeled over a 20-year period. The stay-in-place scenario would cost the city $487 million over 20 years, in today’s dollars, the report states. The calculation estimates that the city will need $104.4 million to address deferred maintenance at City Hall, $73.9 million for a full-scale renovation of the building, $141.5 million to fix up the Parkade to current standards and $28.2 million for other needs. In this scenario, the city would also spend $138.5 million on continued rent and operating costs for 100,000 square feet of off-site leased space. The deferred maintenance estimates are based on amounts identified in a 2014 facilities condition index report. They have been adjusted to reflect estimated increases in costs. Conversely, the relocation scenario would cost the city $162 million to lease or $156 million to buy 250,000 square feet of space, over 20 years, in today’s dollars, according to the report. The lease-or-buy calculation includes costs to tear down City Hall and Golden Hall, assumes that current off-site leases are consolidated in the new facility, and estimates ongoing operations and maintenance costs. The report does not identify a specific downtown property to buy, but estimates a $35.1 million purchase price. The relocation scenario equates to savings of at least $325 million, the report states. The city’s other office tower, Civic Center Plaza, was not considered in either calculation. The building, which is in better condition, is expected to remain in use for the time being. “U3 has weighed the requirements of that building — for upgrades and safety and the need to do that in a timely fashion — against the alternatives,” Oliphant said. “Of course, everybody would like to kick that can down the proverbial road. No one knows how long you can do that. At some point, that’s going to have a much higher consequential cost for the city than making a move now.” The report’s findings make the case for the city to not only move forward with redevelopment of the Civic Center blocks, but also to vacate City Hall. The conclusions align nicely with Prebys’ vision for the site and a broader arts-driven renaissance of downtown, although they were not predetermined, Oliphant said. “The report was commissioned because City Council asked for a better understanding of what some sort of significant development like we were proposing could do for the site. And they wanted to understand what it meant for City Hall,” he said. “We did not commission the survey to prove that we are right. We commissioned a survey to (show) the likely economic impact. … It is not a marketing report. It is a genuine economic analysis that was requested by the city.” Prebys Foundation was established in 2016 after the death of local developer Conrad Prebys and is the philanthropic outgrowth of the Prebys estate. In 2021, the organization sold Prebys’ portfolio of 66 residential complexes to Blackstone Group for more than $1 billion, in a move said to help fuel its charitable giving. In April, the deep-pocketed foundation purchased the Wells Fargo Plaza office building at 401 B St., near the Civic Center, as an investment in the city’s struggling central business district. Prebys has since boosted occupancy at the property to 60%. The foundation’s persistence in revitalizing the Civic Center appears to be paying off. Gloria recently committed to bringing forward to the City Council a proposal to enter into an exclusive negotiating agreement with the San Diego Community College District, which is seeking to raze Golden Hall and replace it with a museum building and student housing. The Prebys Foundation will next fund, at an anticipated cost of $150,000, an implementation plan and road map for the Civic Center vision, using U3 Advisors once again to provide additional details on phasing, potential financing options and an assessment of the site’s current infrastructure. ...read more read less