OCEANSIDE — The city approved the sale of vacant commercial land at El Corazon Park to the new Frontwave Arena developer — free of charge.
The Oceanside City Council on Nov. 2 approved a purchase and sale agreement to Sudberry Development for 51.1 acres of vacant commercial land along Oceanside Boulevard for a mixed-use, industrial and retail project anchored by a pharmaceutical facility.
Sudberry submitted a request to purchase the commercial acreage from the city in August.
In May 2021, the developer purchased the land where Frontwave Arena is currently under construction and a portion of El Corazon’s Village Commercial for a 268-unit, mixed-use apartment complex with for-lease commercial space.
These land dispositions were free of charge, as outlined in a pair of Commercial Disposition and Development Agreements (DDA) between Sudberry and the city, approved in 2013. The developer will be responsible for development costs, which are estimated at $186 million.
The agreements allow Sudberry to develop the Village Commercial, Oceanside Boulevard and Hotel areas as designated by the El Corazon Specific Plan, which governs the overall development of El Corazon’s 465 acres.
According to the Commercial DDA, Sudberry can purchase land if it finds that a ground lease would be “economically disadvantageous.” Commercial real estate consulting firm JLL determined ground leases were unfavorable to Sudberry for the previously purchased arena and Village Commercial space.
The Commercial DDA uses a land valuation formula to determine the purchase price. If the return on cost is less than 10.5%, no rent or value is required of the developer. In this case, the return on expenditure was 7.5%, meaning Sudberry could once again purchase a chunk of commercial land to be developed at El Corazon for free.
The city will also have to spend up to $15,000 in closing costs for the purchase.
Despite the majority of the City Council’s lack of enthusiasm over giving away more land to Sudberry, Mayor Esther Sanchez was the only council member to vote against it.
“This was a really bad agreement,” Sanchez said.
Deputy Mayor Ryan Keim said denying the request could make the city legally liable by acting against its agreement with Sudberry, noting that Sanchez was one of the council members who approved the deal with Sudberry in 2013.
“That’s the deal you made, Mayor, and whether or not I like it, I have to support this motion,” Keim said.
Councilman Christopher Rodriguez called the agreement with Sudberry a “failure” and also blamed Sanchez for her part in approving the agreement years ago.
Sanchez defended the council’s decision, saying members relied on the work of city staff when making their decision.
“I voted for the funding (of the park),” Sanchez said. “It was brought to me by our experts, who were wrong.”
Despite not receiving any money for the purchase of the commercial land, the city can expect an estimated annual economic benefit of about $710,000 with the commercial project, which also anticipates creating 784 new jobs in the city. Approximately $395,000 of that estimated amount will be annual tax revenue for the city.
The project will construct a build-to-suit, 251,600-square-foot facility for Ionis Pharmaceuticals, plus two additional buildings for limited warehouse usage and a set of retail buildings whose tenants have yet to be determined. Plans suggest possible drive-thru restaurants and a gas station with a car wash.
Once Ionis begins operations, the company will generate about 200 new jobs, most of which hold six-figure incomes.
Joan Bockman, president of the Friends of El Corazon, said the group supports the pharmaceutical facility and feels confident that Sudberry will develop landscaping for the project as expected.
However, Bockman said the group has issues with the project, including fast food drive-thrus bringing more idling cars that could hurt the city’s environmental goals.
Councilman Peter Weiss said the council was only deciding on the disposition of the commercial land, and the makeup of the retail stores could be decided at another time.
Bockman also said the focus of the project is wrong.
“The city should be working on building a park rather than just the commercial area,” Bockman said. “Nothing has been built on the green part of our park on the map.”
The city just entered the design phase for El Corazon’s first park site earlier this year. At the request of Keim, City Manager Jonathan Borrego agreed to bring back options that could further the park’s development financially within three months.