Mercado on the move

Tony Salazar, a principal partner of the McCormack Baron Salazar development team, seemed a little nervous facing down the crowd of Barrio Loganistas at Perkins Elementary School on Jan. 8. His job was to sell the community on why his firm should be selected to develop a long-delayed project—known as the Mercado—on a vacant 6.8-acre strip of land along Cesar Chavez Parkway.

The project has become exactly the sort of blight it was intended to eliminate 15 years ago, when it was conceived. The people in the audience had been here before. They remember Sam Marasco and others making pitches. They remember having their neighborhood designated a redevelopment zone. And they feel keenly the frustration of losing 15 of their 40 years of additional property-tax revenue—known in redevelopment lingo as “tax increment”—as the brown dirt in the shadow of the Coronado Bridge on-ramp has grown a dense crop of weeds. They know they’ve been stiffed by the city for years, even as they watched Downtown, just a mile away, grow into a forest of hotels and condos. They’ve been promised by their newish City Council representative, Ben Hueso, that this time will be different, that he’ll make sure the Mercado becomes a reality.

The meeting itself was a rarity: Not often do cities ask developers to present ideas to the public before they’ve even been selected. But, redevelopment project chief Robert Chavez said, the city “really wanted to open up the process” in an attempt to placate a frustrated community. The two short-listed developers had to make their pitches to anyone who wandered in that damp night.

Salazar lost the coin toss to Shea Properties, and Shea had opted to kick away—er, go second. The eyes of old-timers, yuppies and blue-, white- and pink-collar workers stared at Salazar expectantly as he gripped the podium and began his presentation. The low murmur of translation headphones was the only other sound once he began.
“We’re looking to create a Latino urban district,” he said. “Why shouldn’t this be one of the main introductions to the downtown of San Diego? We can provide a concept: How does Latino retail make an important contribution to the city.”

The proposal from his company would, in steps, build the project up to four stories tall. It includes some 75,000 square feet of retail space and 296 units of housing, with everything from for-sale condos to rental units, at least half of which would be designated “affordable.” He offered senior housing and artist live-work spaces. A Latino-oriented grocery store would take up more than half the retail square footage, meeting one of the city’s primary suggestions. Underground parking would be mostly concealed in the middle of the block, while National Avenue, Main Street and Newton Avenue would be decorated with columns and trees. There would be a great deal of public art—McCormack Baron Salazar was praised in Pittsburgh for its use of local artists in a development there—and some streets would be closed to become pedestrian walkways. He would attempt diagonal street parking to slow traffic and make streets more pedestrian friendly.

Bottom line: The project would cost $119 million to complete, the company estimates, nearly all of which can be funded via grants and debt. The company expects to need $14.2 million in funding from the city Redevelopment Agency.

Salazar acknowledges that the project is big, but it’s modeled after the company’s experiences in Los Angles, Atlanta and St. Louis, among others.

“We think that’s the right product, from a forward-looking position,” he told CityBeat. “It’s where cities are going.”
Kevin McCook for Shea Properties took the podium next. His project would stay within the neighborhood profile of mostly residential houses and warehouses. It places far more emphasis on the Mercado as a commercial space, with some 85,000 square feet of retail and a smattering of residential units. Some 16,000 square feet would create a true Mercado, a series of stalls for startup businesses. Homeowners would have the option of purchasing one of 12 townhouses on Main Street or renting one of 60 apartments. The project also includes diagonal parking and tree-lined streets. Architecturally, the network of public spaces guides a pedestrian from Chicano Park through the development down to Crosby Street Park, the lone Barrio Logan access point to the sea. In his presentation, McCook said the simplicity of the project was a deliberate choice, an attempt to stay true to Barrio Logan’s character and to ensure speedy construction.

It would cost about $55 million, roughly half as much as Salazar’s proposal—largely thanks to the absence of an underground garage. Shea’s presentation didn’t break down how it would be funded, but the slogan on the last slide made clear the intent: A project that can be built.

Shea’s project might also be informed by a difficult experience building a mixed-use development at Cedros Crossing in Solana Beach, a project that’s made little progress in 10 years. Greg Shannon, a Shea vice president, blames the tangle in North County on a turnover on the City Council and the difficulties of dealing with property owned by the North County Transit District.

“The lesson from that project is timing is everything,” he said. “The longer a project is around, the less chance it has for success. In our business, in California, there’s no such thing as an easy development project.”

Both proposals are still extremely tentative—McCook said repeatedly that Shea believes the presentation is only the beginning of the conversation—but they represent substantial differences of philosophy: Grand or modest? For the neighborhood or for the region?

Rachel Ortiz runs Barrio Station, a local nonprofit, and is also the chairperson of Barrio Logan’s local redevelopment advisory committee. She prefers the Shea project.

“It’s only serving our neighborhood; it’s not a regional project,” she said. “[City officials] have these meetings, people come from all over—they’re looking to develop here. It’s not for them; it’s for the people here.”

Ortiz captured the biggest fear of many Barrio Logan residents: That a major regional project would lead to the dreaded G-word: gentrification. If the Mercado project is too good, it will drive up the cost of residency beyond what current residents can afford.

“We want simple. Not simple-minded—basic, the opposite of ambitious,” Ortiz said. “It’s not going to chop up the neighborhood. It’s going to complement what’s already here.”

But that kind of thinking contrasts the pressing need for generating higher taxes to reinvest in the area. The Mercado Selection Committee, a group of residents selected by Hueso and city development officials, wouldn’t let either developer forget that for a second. At the meeting, attorney Carlos Castaneda, who works with Ortiz’s organization, pressed both developers to reduce the amount of square footage dedicated to nonprofit organizations, and even to eliminate the proposed community center.

“We have enough nonprofits. We need to get the most tax increment,” he said at the meeting.

Castaneda could not be reached for additional comment, but he isn’t alone in wishing to find high-revenue ways to use the site. The people of Barrio Logan are eager for an economic engine to finally start pumping money into the neighborhood. No one wants a Gaslamp Quarter-like development, but they’d like to get the profits to fund other capital improvements.

Certainly John Alvarado, a member of yet another citizen’s advisory group, the mayor’s Stakeholders Committee for Barrio Logan, supports the idea of maximizing the tax revenue, but he seems to think Castaneda is being pennywise and dollar-foolish in his distaste for new nonprofits.

“I think McCormack, hands down, offered the best proposal in terms of true revitalization of the community,” he said. “It’s a cornerstone project that will bring in additional revenues as a whole, give the community a real jump start.”
Regardless of what firm gets picked, locals will need patience. The Selection Committee interviewed both developers on Monday, and it plans to select a single developer by the end of the month. But that’s just the middle of the beginning. Ortiz’s advisory committee will then weigh in, followed by the City Council. Also, the Mercado land is under the auspices of several other agencies, particularly the state Coastal Commission. The developer will need to apply for a stack of permits, not to mention grants to get the project funded. Add in the necessary environmental reviews, and neither proposal sees shovels in the ground before 2010.

And shovels are the whole point. Pretty much everyone interviewed for this story agreed on that one thing: Get something built.