The Coast News Group

Developer aims to break ground on beach resort

OCEANSIDE — A two-block beachfront luxury resort is near groundbreaking after years of delays, officials say.

The beach resort will feature a 225-unit, six-story, full-service hotel on the south block of Pacific Street and Mission Avenue, and a 135-unit, eight-story, boutique hotel on the north block.

“It’s been a long, arduous process,” Councilman Jerry Kern said. “Whatever could go wrong, did go wrong — the recession, end of redevelopment, a lawsuit. Every little thing that could delay the project.”

After two other project proposals for the location failed, S.D. Malkin Properties reached a development agreement with the city in 2009, with the expectation that the now former city Redevelopment Agency would issue tax allocation bonds.

First there were delays due to the recession and difficulty financing the project.

Then redevelopment was eliminated and the Redevelopment Agency could not issue the bonds.

“The city, acting as the Successor Agency to the formal Redevelopment Agency, had to develop a long-range property management plan subject to the approval of the state Department of Finance,” John Mullen, city attorney, said.

The city negotiated a new agreement to sell the property to S.D. Malkin. An agreement was also made to share proceeds of the transient occupancy tax generated by the new hotels.

“The TOT share reduced the public subsidy by about half of the amount called for in the 2009 DDA (Disposition and Development Agreement),” Mullen said.

Despite its benefits, the tax sharing agreement was challenged by San Diegans for Open Government. The city prevailed in the trial court and court of appeal.

“Now that the legal challenge to the sales agreement has been resolved in favor of the city, Malkin has completed work necessary for the city to record a final subdivision map,” Mullen said.

The final map of the project was approved by City Council on Nov. 17.

The project is now on its home stretch to begin building. Final plans, issuance of grading and building permits still need to be OK’d by the city.

“We are hopeful that work will start in late spring 2018,” Mullen said. “We expect both hotels to be built concurrently, with an approximate 18-month construction schedule.”

An April 2018 start date for construction is proposed, which will keep the project within the requirement to start building within 18 months of its entitlement clearance, which it received in December 2016.

“The clock began ticking Jan. 1 (2017),” Councilman Jerry Kern said. “They need to break ground by June or lose rights to the land.”

The city is pulling for the planned 360 hotel units and 18,500 square feet of visitor serving commercial space to move forward.

“There’s been a big shift to be more tourist oriented,” Kern said. “More and more people visit Oceanside.”

The luxury resort includes a large ballroom, meeting space, commercial space, public open space and underground parking to serve the high-end tourist market.