San Diego’s plan to maintain long-term control of the expansive Liberty Station complex has encountered a significant obstacle, potentially forcing the city to sell the property. The issue centers around securing agreements with local agencies regarding payouts stemming from the dissolution of former redevelopment agencies.

Payout Agreements Required for Control

To retain control of Liberty Station – a vibrant hub of shops, restaurants, parks, and artist studios located east of Point Loma – the city must reach agreements with fourteen local school districts, community college districts, and health districts. These agreements involve payouts designed to compensate for lost tax revenues.

San Diego Unified's Indefinite Delay

While eight of the fourteen agencies have already agreed to the city’s payout offers, the San Diego Unified School District board voted unanimously last Tuesday to indefinitely delay a decision. This delay follows lobbying efforts by Seligman Properties, the company managing much of Liberty Station, who argue the city’s $1.4 million offer is far too low.

Dispute Over Valuation and Seligman Properties

Seligman Properties contends the payout should be closer to $10 million. City officials accuse the company of attempting to undermine the deals to force a sale at a reduced price. They point out that Seligman already holds no-rent leases for 330 acres of Liberty Station’s commercial areas extending through 2070, potentially limiting competition in a sale.

Trust Concerns and Legal Counsel

Some San Diego Unified school board members voiced skepticism regarding the city’s offer. Trustee Sharon Whitehurst-Payne stated, “It’s not that I don’t trust the city, but I don’t trust the city,” expressing a desire for more information. Board member Cody Petterson suggested consulting legal counsel before making a decision.

Financial Implications for San Diego Unified

San Diego Unified would receive the largest share of the city’s total Liberty Station payout – nearly 44% of the funds, almost triple the amount allocated to the county (15.7%). The core of the disagreement lies in the city’s use of a 2011 valuation of Liberty Station, standard practice following the dissolution of redevelopment agencies in 2012.

Seligman's Argument for Current Market Value

Seligman officials argue the school district should reject the payout, triggering a sale based on a 2026 valuation, potentially yielding around $10 million instead of $1.4 million. Joe Haeussler, representing Pendulum Property Partners, Seligman’s partner, emphasized the need for compensation based on “current market value.” Bill Ihrke, an attorney for Seligman, asserted the school district has no obligation to approve the proposed agreement.

City's Position and Ongoing Legal Battles

The city argues that prioritizing Seligman’s financial gain over the public benefit of continued community use of Liberty Station would be detrimental. Seligman counters that maintaining city ownership will result in lost tax revenue and eventual deterioration of the site. The dispute stems from a 2022 lawsuit where Seligman challenged the city’s designation of Liberty Station as a “future development” site, arguing redevelopment was already complete.

A 2023 court ruling required San Diego to continue pursuing compensation agreements and develop plans for future development. Agencies that have already approved agreements include San Diego County, Lemon Grove School District, and several community and healthcare districts. Remaining agencies include Sweetwater Union High School District and Southwestern College.