San Diego preparing to put downtown’s old Central Library on the market

After more than two years exploring its options, San Diego is now preparing to market the empty old Central Library at Eighth Avenue and E Street for sale or lease to maximize redevelopment of the half-block, downtown property where height limits are not a constraining factor.

On Thursday, San Diego’s Land Use and Housing Committee voted 3-0 in favor of declaring the old Central Library at 820 E St. as surplus land.

The surplus designation means the city no longer needs the facility and has ruled out other options, such as redeveloping the property entirely for low-income housing. With the designation, the city can sell or lease the site for redevelopment — but it must follow the noticing and negotiating requirements of California’s Surplus Land Act.

Under the law, bidders need to set aside at least 25% of proposed residential units for affordable housing, meaning deed-restricted units rented to low- and very-low-income families making 80% or less of the area median income.

Although committee members agreed at a high level with Mayor Todd Gloria’s decision to offload the asset, they weren’t ready to give him the authority to seek bids for redevelopment without a broader policy conversation.

“I certainly believe that we should declare this property surplus. What I’m less comfortable with is giving carte blanche to the mayor and city staff to issue the notice availability without the City Council providing some more guidance,” Councilmember Sean Elo-Rivera said.

Elo-Rivera said he first wanted to the see the notice of availability, which is typically a short, stock document that alerts affordable housing developers registered with the state that the city intends to sell or lease its property.

“This is an incredibly important property. It’s an important action,” he said. “It seems appropriate for the council to provide some clear direction, if we choose to do so as a body, in terms of what is included in that notice of availability and what isn’t.”

The committee’s action tees up consideration by the full council at a later date. The future discussion will likely center around how council members can add development obligations to the noticing document without curtailing market demand.

Opened in 1954 and closed in 2013, the old Central Library is a locally designated historic resource that sat empty for nearly a decade before being used intermittently as a temporary homeless shelter, starting in 2023.

Over the years, developers have contemplated various alternative uses, including a 42-story apartment tower proposed by Bosa Development. The tower proposal was eventually scraped by the prolific builder in 2018.

More recently, the facility has been roped into the city’s ongoing conversation about homelessness.

The old Central Library was analyzed as an alternative to the failed Kettner and Vine shelter proposal. However, the estimated cost to renovate the 150,000-square-foot facility’s three floors and two basement levels was recently pegged at $86.8 million. The venue was ruled out as a viable homeless shelter option in February.

The mayor’s request to offload the city-owned asset dates to March 2023, when San Diego was preparing to put its Civic Center real estate on the market.

At the time, a few council members expressed interest in lumping the property in with the Civic Center blocks and other city-owned land to solicit developer interest for everything at the same time. The idea was to make excess city land available to quickly boost the production of homes for people of varying income levels. City staff recommended instead that the old Central Library be evaluated independently from the other sites.

The Civic Center blocks, which went on to be advertised for lease or sale per the Surplus Land Act a few months later, attracted no interest.

San Diego, pending approval by the full council, will also solicit interest in the old Central Library under the Surplus Land Act. The law was amended in 2019 to prioritize affordable housing when government-owned land is sold or leased.

The process begins with the notice of availability, which starts the clock on a 60-day window for interested bidders to respond with redevelopment plans. After the window, the law requires the city to engage in a 90-day negotiation period with respondents and give priority to the entity proposing the highest number of affordable housing units.

The city expects to publish the notice of availability for the old Central Library in the summer, Christina Bibler, director of the city’s Economic Development Department, told the Union-Tribune.

The timeline could get tripped up if council members take issue with the noticing document, which was not included in the agenda materials for Thursday’s meetings.

The current iteration of the document was described by Lucy Contreras, the city’s deputy director of real estate, as consistent with the Surplus Land Act noticing requirements. Interested parties will need to meet the affordable housing requirement, as well as comply with guidelines pertaining to the redevelopment of historic properties. The old Central Library’s historic elements include the building’s exterior, the csidewalk with the city seal, and two, city-owned sculptures on the facade.

“The intent is for us to put forward (a notice of availability) that either puts the property out for purchase or for lease, with the intent of maximizing the redevelopment potential of the site,” Contreras said. “If there were specific conditions that were going to be proposed in the (notice of availability), this would be the time, as well as with council, to have a conversation about (that).”

Elo-Rivera said he wanted to see the document before recommending additions.

“Pardon me for not just trusting the process here, but there’s nothing for us to read,” he said. “The council may decide that before we just open it up to the market and see what capitalism does for us, we instead draw some parameters and see if we can get a little bit closer to our goals on our first attempt.”

Councilmember Raul Campillo said his priorities for the property are on-site child care and residential units large enough for families.

Real estate analyst Gary London, a principal of local firm London Moeder Advisors, cautioned against the city adding more conditions in a weak real estate market challenged with limited access to capital and economic uncertainty.

The Surplus Land Act requirement to reserve 25% of residential units as affordable already challenges the feasibility of any project, he said.

“Whenever the city interferes with the marketplace, things go wrong,” London said. “While I agree with (Campillo) in terms of the kind of concept that ought to come out of (the solicitation), the idea of shoving that down a developer’s throat is basically inviting lower bids or a lack of bids.”

Councilmembers Kent Lee, Elo-Rivera and Campillo voted to pass on their recommendation for approval of the surplus designation to the full council. Councilmember Vivian Moreno was absent.