Midway’s Ambitious Redevelopment Plan Is Now a Massive Test of What State Housing Laws Allow
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Midway Rising is an ambitious plan to build 4,254 new apartments, 14 acres of public space and a new Sports Arena on 49 acres of city-owned land in the center of the Midway District. That won’t entirely transform the whole area overnight, or maybe ever, but it is currently the city’s only hope for bringing housing and vitality to one of San Diego’s most soul-crushing neighborhoods.
Recently, an appeals court seemed to deal a death blow to the project when it overturned a decision by city voters to remove Midway’s height limit of 30 feet. But surprisingly, the developers behind Midway Rising say that isn’t the case at all. They say state law provides all the legal ground they need to go forth with the massive multi-billion-dollar project.
Now that Midway’s 30-foot height limit is back on the table, Midway Rising promises to be – both literally and in principle – the largest test of the state’s density bonus laws in all of California.
“This recent court ruling does not affect mixed-use housing development projects, such as Midway Rising, which proceed under state density bonus law,” wrote Jeff Meyer, a spokesperson for the Midway Rising team. “State law controls local height restrictions, and applies to all aspects of Midway Rising, including the new arena.”
How we got here: The project’s biggest hangup is that many of its buildings, including the new arena, are set to be more than 30-feet tall. That conflicts with a voter-approved city law from 1972 that limits all new buildings west of Interstate 5 to a maximum of 30-feet tall. (This law is different than the state’s coastal zone rules.)
Twice now (in 2020 and 2022) city residents have voted to remove the height limit in Midway, so a redevelopment plan can go forward. Twice now (earlier this month being the most recent) judges have overturned the voter-approved carve-outs, saying the city didn’t do its due diligence studying the impacts of removing the height limit before putting a vote to the people.
A lot of time, effort and money went into those citywide votes. (Mayor Todd Gloria also wants to appeal the most recent court decision.) That’s why it was more than a little surprising when the Midway Rising team waved off the setback as not a big deal.
The legal interpretation: California’s density bonus laws allow developers to work around zoning regulations if they build certain percentages of rent-capped apartments for people who earn less than the median income.
The Midway Rising team plans to build more than 4,200 apartment units — 2,000 of which would be rent-capped for people who qualify. In theory, that qualifies it for density bonus waivers and incentives.
But is density bonus enough to waive the city’s west-of-I-5 height limit?
At least one project — of a vastly smaller scale — seems to indicate yes.
Rose Creek Village is a 60-foot-tall apartment building in Pacific Beach already under construction, as the Union-Tribune reported. The building will have roughly 60 units and be rent-capped for people with “low” and “very low” income.
The state’s housing department told city officials to green light the project in 2022.
“A city may not make or enforce a regulation that conflicts with state law,” wrote Shannan West, an official with the Department of Housing and Community Development. “It makes no difference that the local law was created by voter initiative.”
West added that she hoped the city would be able to approve more density-bonus projects west of I-5, now that state officials had weighed in, “especially insofar as the 30-foot height limit may have been a barrier.”
But Rose Creek Village is just one building on a small plot of land, designed for residential use. Midway Rising will be many buildings, spread over acres, designed for many uses, including an arena.
Here’s why it qualifies, argue the developers: because Midway Rising, though massive, is a mixed-use development, primarily for housing.
State law still applies they say and, in theory at least, they are right. State law does explicitly allow developments that include commercial use to utilize the density bonus law.
The developers say that roughly 90 percent of the built-out space will be for housing. They say there will be 4.5 million square feet of housing and only 510,000 square feet for commercial uses. (The arena will make up 380,000 square feet of the commercial space.)
The Midway Rising developers say they could build more than 20 times that amount of commercial space and still qualify for a density bonus.
But there’s another, perhaps bigger, hurdle, legally speaking. Can an arena qualify to breach the height limit, even though it doesn’t contain any housing?
Rose Creek Village shows that a building with homes inside it can qualify to exceed the city’s height limit. Let’s pretend that city zoning officials (and courts) will extend that same logic to all of the apartment buildings in Midway Rising.
That doesn’t necessarily mean they will extend it to the arena, which is central to the project — and tentatively scheduled to be built before any of the housing.
The Midway developers say case law and at least one recent example backs them up in their argument that the arena itself qualifies for exemptions.
They pointed to two towers built in Los Angeles at 3401 South La Cienega Blvd. that utilized density bonus. One tower was for residential use, the other for commercial only, developers say. That might mean that a stand-alone arena could qualify to receive waivers under density bonus, in the service of a larger housing project.
But for this to make sense, Midway Rising has to all be treated as one large, unified project — rather than several — which is what the Midway Rising team says it has always been.
City officials seem to agree with them.
Before the judge’s ruling earlier this month, Midway Rising went before the city’s Planning Commission. City staffers presented the project as a single plan that would be built out over a roughly 10-year period.
Members of the development team say that each part of the 49-acre development works together. In other words, the parks, public space, shops, homes and arena are all pieces in one big urban design puzzle. You can’t have any one of them without the others.
Each of the spaces “activates” the others, as planners might say.
The developers pointed, for instance, to the parking spaces for the arena, many of which are located in the residential towers.
The pushback: Everett DeLano is a lawyer, who brought the lawsuit that recently overturned the removal of the height limit in Midway. He represented a group called Save Our Access.
The group’s lawsuit challenged the removal of the west-of-I-5 height limit. It didn’t challenge Midway Rising specifically.
DeLano said he’s unsure if his clients, or others, will want to challenge Midway Rising.
“It’s possible,” DeLano said. “I know that many people are concerned.”
If a legal challenge goes forward, DeLano said, the Midway Rising team will have to show not just that they have a right to a density bonus – but that in fact the waivers they receive are “necessary” for the project to be financially feasible.
That’s the way the law is written, DeLano said. Projects aren’t simply entitled to density bonuses. The bonuses must be necessary for their project to pencil out.
Projects, generally speaking, have to show their math when challenged, DeLano said.
“Lift up the hood,” DeLano said. “Show us the costs. How much of an incentive do you really need? I don’t think you need to go down to the penny, but there needs to be some adequate showing why a waiver is required to build affordable housing.”
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