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San Diego Approves $350 Million Condo-Hotel Project To Replace Aging Theater

Opponents Contend Development Does Not Help Address Region’s Affordable Housing Shortage

By Lou Hirsh CoStar News April 28, 2021 | 4:07 P.M.

San Diego City Council approved permits for a planned $350 million redevelopment of a decaying former downtown theater building into a high-rise condo tower with an attached hotel, though opponents criticized the project for failing to help the city deal with a chronic shortage of affordable housing.

Representatives of Melbourne, Australia-based Caydon Property Group told officials the developer intends to seek to finalize financing after receiving approval for its plans to replace the long-vacant and decaying California Theatre building with a 41-story tower containing 336 for-sale condominiums on top of a 190-room hotel. The project was originally put forward in 2019 and revised last year from its original plans for 444 condos and no hotel. It is still expected to be downtown San Diego’s largest condo project by unit count once completed over the next three years.

The development initially drew concerns from local preservationists looking to maintain historical elements from the 94-year-old building at 1122 Fourth Ave., sitting vacant since 1990 in downtown’s central office district. Its core element is the 2,200-seat California Theatre, opened in 1927 and once known as San Diego’s largest movie theater.

The developer made revisions to the proposal, but the project picked up additional opposition last year from local labor unions and housing advocates who said it would not help efforts to boost local affordable housing.

“This project merely continues existing development patterns that provide market-rate housing for those with means to the exclusion of those without,” said a letter submitted to city council before Tuesday’s meeting by almost a dozen groups opposing the project in its current form, including labor groups, housing advocates and downtown residents.

The project was approved in February by the city’s Planning Commission, and the decision was appealed by Unite Here Local 30, a union representing local hospitality workers. City council this week signed off on all elements approved by planners, including the developer’s plan to make 2% of units, or seven condos, affordable to those making the average median household income in San Diego.

Opponents said the affordable housing requirement should be 10% of units, similar to the requirement for rental apartments elsewhere in the city. However, city officials said this week that under current rules, San Diego is not authorized to demand the 10% figure for new mixed-use, non-rental projects until 2025, under a phased-in schedule approved by a prior city council. The schedule kicked in last year starting at 2% for affordable units.

Council members, along with community members and construction trade associations, supported the project on grounds that such developments have long been sought to help cure blight in a declining section of downtown San Diego. Supporters said it would also create hundreds of good-paying jobs during and after construction.

The nine-story Fourth Avenue building was constructed in 1927 with offices on its upper floors and the California Theatre as its central showpiece on the ground floor. It was billed at the time of its opening as a “cathedral of the motion picture” and for several years was San Diego’s largest movie theater, later converted for live music shows before being shuttered completely in 1990.

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