A number of concerns recently identified by top San Diego officials could act as speed bumps in San Diego State University’s quest to buy the city’s stadium property in Mission Valley early next year.

Wednesday evening, the City Attorney’s Office and the Office of the Independent Budget Analyst released separate reports analyzing the university’s offer to purchase 135 acres of land for a new football stadium and satellite campus. The proposed deal terms, which will be contemplated in public by the City Council next week, are lacking in much-needed specificity, expose the city to legal risk and may still be inconsistent with a voter-approved ballot measure, the reports conclude.

Moreover, both offices question whether SDSU’s desired timetable — to close escrow no later than March 27 — is doable. The schedule, which depends on approval by the California State University Board of Trustees in late January, is seemingly dictated by the university’s desire to finish a 35,000-person stadium to replace SDCCU Stadium in time for the 2022 college football season.

“Numerous significant issues must be resolved before the parties can finalize a (purchase and sale agreement) on mutually agreeable terms,” City Attorney Mara Elliott wrote in her report, which was delivered to City Council members and the mayor’s negotiating team. Elliott also noted that’s SDSU’s target close date is “highly optimistic and may not be feasible.”


In her report, Andrea Tevlin, who is the city’s independent budget analyst, advised council members to push back on a number items, including the escrow timeline and SDSU’s offer to cover the land appreciation costs only associated with the portion of the property owned by the city’s water utility fund.

“Our office thinks that the council may wish to seek clarity or provide input on several deal terms which are too vague for formal consideration,” Tevlin wrote.

The reports constitute a potential blow to San Diego State; they create renewed uncertainty around deal terms that the public institution had hoped resolved city leaders’ earlier concerns.


In late October, the university offered to pay roughly $87.7 million for the city’s Mission Valley property, representing a $19.5 million premium over a previous bid. The latest offer also presented two dozen additional deal terms, some of which were designed to expedite the transaction or allow for a contingency plan in case of delays.

For instance, SDSU said it would take over the city’s problematic Murphy Canyon Creek as is and would build a long-desired bridge to connect Fenton Parkway with Camino del Rio North. It also proposed leasing the property for $1 per month and handling existing stadium operations should the closing date get pushed to after June 30, 2020.

“We have presented an offer that is fair and equitable and consistent with Measure G and are encouraged by the amount of cooperation and work that has gone into it by both city staff and the team at SDSU,” the university said in a statement. “We are reviewing the IBA’s and city attorney’s memos on our revised offer. This is part of the process and we are not discouraged by any of the comments shared, as several of the points raised have already been discussed and negotiated with city staff as part of the near year-long negotiations.”

Still, the City Attorney’s Office, which evaluated in detail each of the deal terms, called attention to several potential problem areas, starting with the lump-sum purchase price. The proposed price — $86.2 million plus an estimated $1.5 million time-value adjustment for the 37 percent portion owned by the water utility — is “generally consistent with Measure G,” the report says. However, the document simultaneously cautions council members to heed all of the financial terms of the deal, including whether the city should apply a 2.15 percent index factor to the entire site because the price is based on a 2017 appraisal date.


“Absent this factor being applied, the general fund (unlike the water utility fund) will not be made whole financially on the time-value of money in the transaction,” the report states. “In that scenario, a prohibited gift of public funds could result.”

Beyond the appreciation issue, Elliott’s office identified two provisions that could cost the city $10 million. SDSU is, for instance, asking that $8.5 million of the purchase price be set aside to fund construction of the Fenton Parkway Bridge. It is also requesting that the city reserve $1.5 million of sale proceeds for yet-to-be-defined project improvements. The concern is that the city’s charter requires that proceeds go to public capital improvement projects.

The same unease is echoed by Tevlin, the independent budget analyst.

“By agreeing to these deal points, the council would be committing $10 million of general fund proceeds to public projects providing benefit to the contemplated SDSU development area as opposed to those proceeds being available for council to discretionarily allocate to other priory capital needs within the city,” Tevlin’s report says.


The offices identified a number of other complications created by the proposed offer.

For example, the city attorney believes council members should weigh whether the city would be better served if the university, and not the city, was the lead agency on the bridge project. Currently, the SDSU deal requires the city to design and permit the bridge, and conduct the environmental review. But state environmental law dictates that the environmental review must be completed before an agreement on the bridge can be finalized.

In addition, Elliott’s and Tevlin’s offices agree that a March closing is ambitious, at best, and an indefinite escrow process should be avoided.

“Our office understands that negotiating/developing final (purchase and sale agreements) for transactions of this nature can take several months and even years in some instances. It should also be noted that we are entering the upcoming holiday season where key staff may be away or otherwise unavailable. Finally, we understand that final documents may need to be submitted to the California State University Board of Trustees weeks before the targeted January 28 meeting,” Tevlin’s report states. “While it is certainly possible (to make the) targeted close deadline of March 27, it is our understanding that it will be very challenging.”


And, because litigation could delay a closing date for years, the city offices are advocating that council members stipulate an end date, such as Dec. 31, 2020, as suggested by Tevlin. There’s also the matter of the $1-per-month lease that, as proposed, may not adequately protect the city from expenses or legal risk, the two reports state.

Deal terms will be evaluated by the City Council in a public forum on Monday. Council members are being asked to provide direction to city staff, who must draft a final purchase and sale agreement that will later need to be approved by the local legislative body.