San Diego, California City Council Approves $4.2 Billion Midway Rising Project in Unanimous Vote

The San Diego City Council voted unanimously on Monday night to approve Midway Rising, the $4.2 billion redevelopment of the city-owned Sports Arena site in the Midway District. The vote closed a meeting that ran more than seven hours and ended years of failed attempts to remake the land around Pechanga Arena.

What was approved

Council members approved a 105-year lease and redevelopment deal for the 48.5-acre property with master developer Midway Rising, LLC, along with the project land use documents, including the Midway Rising Specific Plan. The city keeps ownership of the land.

The plan calls for 4,250 homes: 2,000 affordable homes and 2,250 market-rate homes. The City of San Diego says the project is expected to become the largest affordable housing development in California history. It also includes a new 16,000-seat entertainment center, 130,000 square feet of retail space and 14.5 acres of parks, plus transportation and infrastructure work around the site.

The money

The council also approved a resolution of intention to form an Enhanced Infrastructure Financing District. The district would redirect the city's share of future tax revenue from the project toward infrastructure costs, and the county must also approve it. The San Diego Union-Tribune reported the district would subsidize an estimated $462 million of infrastructure work.

A report by the city's independent budget analyst estimates the developer will spend roughly $460 million upfront on roads, sidewalks, lighting, parks and bike lanes, and could recoup about $378 million of that through the district. The analyst also estimates the city could receive about $884 million to $1.23 billion in ticket fees and rental revenue over the life of the agreements.

Council members added a provision that lets the city share in a refinancing of the project, taking 5% to 10% of proceeds above a threshold rate of return. The developer also agreed to contribute another $2 million toward traffic signal work meant to improve traffic entering the neighborhood from Interstate 5 and Interstate 8.

The affordable housing fight

The council approved the project with added protections to make sure the affordable homes are net new. An earlier version of the deal would have allowed the site to absorb affordable units owed by other projects instead of building new ones, a practice known as off-siting. Councilmember Kent Lee brought forward the amendment that requires Midway Rising to build net-new affordable units.

"I believe that the package that we have before us today combines substantial public benefits with meaningful developer obligations," Lee said during the meeting. "It preserves the city's ownership of the land. It now includes stronger protections to deliver new affordable housing and to ensure that the city benefits in the act of a refinance."

A long road to Monday night

The city stopped signing new long-term leases around the arena more than eight years ago, under former Mayor Kevin Faulconer, and began updating the zoning plan for the neighborhood. Courts threw out two ballot measures tied to the site. The city selected the Midway Rising team in 2022 and negotiated the agreement over four years. State lawmakers and the governor gave the project special protection from lawsuits, and the council's Land Use and Housing Committee advanced the deal unanimously on October 16.

The development team includes Chelsea Investment Corporation, Legends, Zephyr and equity investor The Kroenke Group. Under the plan, the current arena stays in use until the new entertainment center is built and ready to open.

What happens next

The city will now work with the County of San Diego to set up the infrastructure financing district. The deal documents set a December 9 deadline to complete the transaction.