San Diego exits operations building with move to Mission Valley and a downtown high-rise

The city of San Diego is vacating its dilapidated City Operations Buildings as hundreds of municipal workers in the Development Services Department move into recently leased and improved spaces in downtown and Mission Valley.

The relocation process, which has been years in the making, is underway and is set to be completed later this summer with the two-story office building at 7650 Mission Valley Road serving as the department’s new public-facing headquarters. The downtown space, which consists of two floors at the 550 W. C St. high-rise, will house department workers who still need to be near City Hall.

The official opening date for the Mission Valley property has yet to be announced, but the property will host its first San Diego Planning Commission meeting on July 31.

“The city’s Development Services Department as been in the process of a months-long phased move to a new, centrally located headquarters in Mission Valley. This has involved consolidating three office locations, including the City Operations Building, down to two,” said Richard Berg, a spokesperson for the city. “Throughout, a goal has been to complete this phased move with no disruption to available services, including, but not limited to permit processing, records review, cashiers, inspections and customer service.”

Once open, the Mission Valley headquarters will offer expanded in-person services by appointment and free parking, he said.

San Diego’s Development Services Department, or DSD, is a money-making department responsible for reviewing project plans, processing permits for public and private developments, performing building inspections, maintaining records, and enforcing building and land-use regulations. The department, which employs more than 700 people, is currently spread across three facilities: the City Operations Building at 1222 First Ave. and two, smaller field offices.

In late 2019, DSD was set to occupy the 101 Ash St. tower, but the relocation was aborted weeks into the move because of asbestos contamination in the building.

In the years since the bungled move, the city has sought an alternate solution to get the department out of the operations building.

Built in 1970, the City Operations Building, or COB, is on the western periphery of San Diego’s downtown Civic Center compound. COB is often described as having been badly neglected over the years with conditions — broken elevators, dysfunctional electrical systems, plumbing problems, HVAC issues — that make the five-story building not only bad for employee morale but unsafe to occupy. Past reports have identified $45.2 million in deferred maintenance needs.

Last year, the city executed two separate lease agreements to relocate its DSD workforce.

San Diego is subletting the entirety of the 73,970-square-foot building at 7650 Mission Valley Road from Wawanesa General Insurance Company Inc. for a term of four years and four months, ending September 2028. The contract will cost the city $10.2 million in rent and operating expenses. The city, which also last year allocated $2.8 million for building upgrades, plans to negotiate a direct lease with the landlord, H.G. Fenton, at the end of the sublease.

The Mission Valley office is slated to house around 500 DSD staffers. To date, nearly 300 employees have moved into the building, Berg said.

The rest of the department’s workforce is in the process of moving a few blocks west of COB to Five50West, where the city has leased 43,460 square feet of space — or two full floors. Five50West was owned by the Alaska Permanent Fund Corp. when the contract was signed, but the property was surrendered to its lender, asset management firm Barings, in April.

The lease will cost the city $10.6 million over a term of five years and seven months. The city negotiated $1.7 million worth of improvements to the floors at 550 W. C St., as paid for by the landlord. The downtown office space will house around 225 DSD staffers.

The lease agreements and the Mission Valley building upgrades are primarily being paid for using DSD’s enterprise fund, which collects fees charged for city services. The city is tapping the general fund to pay for 10% of rent and operating expenses at the Mission Valley building.

The downtown operations building is also home to a fire station, Fire Station 1, which will remain operational for the time being. However, the city-owned property is expected to be marketed for lease or sale and redevelopment, under the Surplus Land Act, later this year.