With San Diego State University set to soon make a formal offer to buy 132 acres of city-owned land in Mission Valley, a new report suggests that the property’s present-day price tag might be substantially higher than its recently appraised value.

Friday, the city’s Office of the Independent Budget Analyst, which advises City Council on financial matters, concluded that the land’s, “actual fair market value could reasonably be determined to be as high as $104.5 million, assuming a 2020 closing date.”

The determination is a potential blow to the university, which has said since the release of a draft appraisal earlier this week that it is prepared to pay the assigned fair market value, in 2017 dollars, of $68.2 million. On Monday, SDSU leaders plan to present a formal offer to City Council that is expected to include the appraisal sum alongside additional infrastructure commitments such as a new roadway that extends Fenton Parkway over the San Diego River.

Meanwhile, the new report’s findings bolster the city’s position. City negotiators believe the site’s 2017 value is closer to $86.2 million, because it does not expect to discount the property for expenses associated with a planned river park or the cost associated with the existing stadium. The negotiating team has also said the value would be substantially higher in 2019 dollars.


The city’s independent budget analyst concurs, noting the ramifications of selling a taxpayer asset at a dated price.

“When considering an indexing factor, it is important to consider that approximately 37 percent of the property is owned by the Water Utility Fund, and thus by the ratepayers who pay for the city’s water and sewer system. Selling or discounting this property at 2017 prices in 2020 or thereafter could expose the city to a legal challenge since this would potentially be limiting the value that should be obtained for the ratepayers,” Andrea Tevlin, the independent budget analyst, wrote in her analysis. “Whether or not such an index is included, as well as the closing date and process for the transaction, should be subject to the negotiations between the city and SDSU.”

The new analysis gives council members more financial details and legal factors to consider as they wait for the purchase offer that’s been nearly a year in the making.

San Diego State, through a spokeswoman, declined to comment on the report. A spokeswoman for Mayor Kevin Faulconer said the city is looking forward to receiving the university’s offer.


In November, voters passed a citizens’ initiative, known as Measure G, that created a framework for SDSU to buy the property, where it is proposing to build a 35,000-capacity stadium and satellite campus in place of the existing SDCCU stadium and its parking lot. The university is simultaneously working to complete its environmental review of a campus master plan for the site in an effort to start building its football stadium early next year.

Negotiation talks between the city and the public institution have, until this week, been secret. However, the release of a number of documents, including the city’s 36 pages of comments responding to SDSU’s draft environmental report and the draft appraisal, have made more details public. In a surprise announcement on Thursday, SDSU President Adela de la Torre told reporters that the university was ending its confidentiality agreement with the city. It is also now prepared to build a long-planned Fenton Parkway bridge at a cost of $21 million, she said.

The university’s commitment to the roadway could be viewed by council members as a good-faith effort to close the gap between the land’s appraised value and the city’s perceived market value while simultaneously addressing traffic concerns associated with the campus project. At the same time, the independent budget analyst’s report highlights several complexities associated with the land sale that have yet to be resolved.

For starters, the city and the university differ in their interpretation of the ground rules as defined in the initiative. Costs associated with creating a proposed 34-acre river park and tearing down the existing stadium should be subtracted from the price of the property, the university maintains. That’s because SDSU will pay out of pocket to build the park and do the demolition park. The city’s position is that those discounts would be inconsistent with Measure G.


Tevlin, the independent budget analyst, agrees with the city.

“In order for the city to not incur the costs of the river park development and the stadium demolition, and to avoid a conflict with the municipal code, the City Council should not accept the fair market value as presented in the appraisal, and should instead remove the river park and stadium demolition cost deductions to arrive at an appropriate fair market value purchase price that implements the provisions of Measure G and related campaign promises,” she wrote.

The value of those expenses in 2017 dollars is $18 million, pegging the land value at $86.2 million as opposed to $68.2 million. The site’s 2020 market value climbs to $104.5 million when factoring in an annual appreciation of rate of 6.59 percent, the report said. The three-year discrepancy is the result of language in the measure that defines fair market value as assigned on, “a date of value that is the date of the ‘Initiative Notice Date.’” The notice date was Sept. 30, 2017.

The negotiating teams differ in the interpretation of the clause. The university is of the belief that their offer need only be consistent with the 2017 market value. The city’s position is that only the appraisal, and not the offer itself, is subject to the prior date.


Council members will have the final say. Monday, they’ll get to weigh in on sale terms for the first time with their feedback setting the tone for future negotiations.