How sports arenas became the poster child for California’s housing crisis
To help alleviate the state’s housing shortage, California recently began tracking publicly owned lots that could be turned into affordable homes. In its first year, the state housing agency has cited two major sports arenas — Angel Stadium in Anaheim and Pechanga Arena in San Diego — for cutting backroom development deals with developers that shortchanged the public on affordable units. The agency is now investigating Oakland Coliseum in Oakland.
Anaheim, San Diego and Oakland are all hoping to give their sports arenas a boost by giving the surrounding real estate a makeover. In high-gloss renderings, developers promise walkable, transit-friendly cityscapes featuring housing, hotels, shops and restaurants with plenty of inviting green space. To borrow from “Field of Dreams,” if you build it, they will come. And these cities are wagering the improvements will be enough to get professional sports teams to stay.
There’s just one problem on the road to revitalization: In the eyes of the state, these projects haven’t included enough affordable housing.
Anaheim and San Diego have been cited by California’s Department of Housing and Community Development for failing to comply with an affordable housing law as part of their multimillion-dollar stadium and arena plans. A third investigation into the Oakland Coliseum redevelopment project, which was triggered by a lawsuit, could result in a $25.5 million penalty against the taxpayers of Alameda County.
Housing advocates point to sports arenas as proof that market forces won’t deliver enough housing where at least 1.8 million units are needed by 2025. They contend the public is being shortchanged on affordable units in these deals. For parcels that have an opportunity to create housing, the projects should include at least 25% affordable housing. Even if negotiations fail, there’s still a minimum requirement for 15% affordable housing for projects. Local leaders, including former San Diego Mayor Kevin Faulconer, who is running for governor in the recall election, said it was the state that changed development rules in the middle of the game.
What happens next could give the state an advantage over local governments in California’s long-standing fight over land-use decisions amid the state’s housing crisis. For the first time, California is tracking publicly owned land that could be developed into more affordable housing and the state’s Department of Housing and Community Development is flexing its new enforcement authority. Supporters hope the change creates better local government accountability but the agency has yet to issue any fines and cities could resist.
“It’s become clear that there are literally thousands of acres of land being made available up and down the state that potentially could be used for affordable housing,” said Jeff Levin, policy director at East Bay Housing Organizations, one of the groups that pushed for state changes after the city of Oakland failed to prioritize affordable housing.
So far, the responses from local governments have ranged from compliance to defiance:
- After Faulconer finished his last term as San Diego mayor, his successor decided not to fight the state housing authority. The city restarted its process for Pechanga Arena, which is home to minor league hockey’s San Diego Gulls and indoor soccer’s San Diego Sockers. Faulconer’s spokesman blamed the state: “Mayor Faulconer supports affordable housing, which is why Sacramento should have made their intentions clear to local governments a long time ago before letting them move forward with plans for locally owned land and then pulling the rug out.”
- Anaheim is challenging the state’s findings in trying to close the sale of property surrounding Angel Stadium to Arte Moreno, the owner of the Los Angeles Angels baseball team. Anaheim officials even lobbied a state legislator for an exemption but no carve-out was issued. The city now argues the project is exempt because it entered into exclusive negotiations before the new version of the law took effect.
- Against the will of some residents, Alameda County sold its share of the Oakland Coliseum to the Oakland Athletics baseball team for $85 million as part of a larger effort to convert the existing stadium to a mixed-use development and construct a new waterfront ballpark. A lawsuit from a local housing advocate claims the county didn’t comply with the law, which triggered the state investigation. The county maintains that it complied with the law. If state housing officials determine the sale did not offer the land for affordable housing first, the county could be fined as much as $25.5 million.
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What is the Surplus Land Act?
The Surplus Land Act was passed 52 years ago and has been amended more than a dozen times since. With each amendment, the law became more specific in how local agencies are to dispose of surplus land—public properties that the agency wants to sell or lease. But the only way to enforce it was by taking local governments to court.
It wasn’t until San Francisco Democratic Assemblymember Phil Ting penned a bill in 2019 that the state won enforcement powers. For the first time, the Department of Housing and Community Development could track all public land deals and levy fines of as much as 30% of the real estate deal.
Housing advocates say it’s still too early to declare the law a success, but having these three high-profile cases in the first year should encourage local agencies to carefully consider how they move forward on public land.
“It’s also shifting the mindset of the public,” said Laura Nunn, policy director for the San Diego Housing Federation. “Public land, and the public good that it delivers, can and should include affordable housing.”
Push to increase housing production
Sports arenas are just the latest front in California’s push for more housing. Even before the pandemic exacerbated the state’s affordability crisis, Gov. Gavin Newsom and state lawmakers struggled to increase housing production.
Just a few years ago, local governments and neighborhood preservationists defeated SB 50, which would have forced cities to allow mid-rise apartment buildings around public transit. This year, the Senate’s leader has a bill allowing more duplexes in residential neighborhoods but it faces opposition from homeowners and local governments.
And as much as the state can build housing for people experiencing homelessness, Newsom’s top housing adviser has said the private market needs to build more to ease the housing shortage.
But some say that may take more state oversight.
“There’s no way out of the housing crisis that simply involves the private market handling the situation for us,” said San Diego City Councilmember Sean Elo-Rivera. “The public is going to have to be much more involved.”
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Disappointment and opportunity in San Diego
In San Diego, the city council chose to start over on the 48-acre Pechanga Arena project after the state declared the city failed to offer the site to affordable housing developers. The alternative would have been a penalty of 30% of the final sale or lease price of the land. Earlier this month, the council took its first step in the process by declaring the land surplus.
Jennifer Campbell, council president and representative for the district in which the arena is located, said she is “disappointed with the delay in development of the (sports arena) where investment and revitalization are sorely needed.”
Elo-Rivera said there’s now potential for more affordable housing.
“I want to make sure that we’re maximizing on that opportunity with a really, really clear intention of making sure that we’re providing the greatest number of affordable homes possible to San Diego,” he said.
In addition to the Gulls and Sockers, Pechanga Arena is home to the San Diego Seals professional lacrosse team and San Diego Strike Force indoor football team. None of the teams were involved with the negotiation of the arena.
Anaheim seeks to save Angel Stadium deal
Anaheim is trying to preserve a $320 million deal to sell 150 acres around Angel Stadium to SRB Management, a company affiliated with the Angels’ owner. The state issued a letter in April saying the city didn’t follow procedures and may have violated the law for failing to offer the site to affordable housing developers first.
The city responded by saying the new version of the law didn’t apply when the city entered into exclusive negotiations with SRB Management. But that response has only raised questions. Some council members point out the city technically only had a verbal negotiating agreement.
“Our city attorney’s office went from helping develop the legal framework to becoming a criminal defense attorney,” says Councilmember Jose Moreno.
In July, Voice of Orange County reported how city staff revealed they made a request to state Assemblymember Tom Daly seeking an exemption.
“If we broke the law, we broke the law,” Moreno said in an interview with CalMatters. “Don’t then go back and try to create trailer bills to give us innocence after the fact.”
Daly’s office declined to comment. Previously, the legislator had urged council not to rush approval of the deal.
Mayor Harry Sidhu, who received campaign donations from Angels executives as recently as June 2021, said in a statement that the city complied with the spirit of the Surplus Land Act by providing 15% affordable housing in the development plans.
“As a mayor I am committed to doing the right thing for our city,” he said in a recent council meeting. “That includes keeping the Angles right here in Anaheim.”
SRB Management did not respond to multiple requests for an interview. Currently, its 30-year plan will provide 777 affordable housing units. That’s 15% of the 5,175 planned units. If the state demands 25% affordable housing, that would add 517 more units.
If Anaheim refuses to comply with the state, it could face a penalty up to $96 million.
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Alameda County proceeded with Coliseum sale despite challenge
Alameda County is waiting for the state to make a determination on its $85 million Oakland Coliseum sale to the A’s. The state housing agency declined to comment, saying it’s in the early stages of its investigation. But even before the sale was approved by the county board, Alameda had been challenged for not following state law.
In late 2019, the city of Oakland, which co-owned the Coliseum, sued the county for failing to comply with the Surplus Land Act before entering an exclusive negotiation with the team. The lawsuit was dropped after weeks, allowing a deal with the A’s to go through. A second lawsuit was filed for the same reason, summoning state housing officials to begin an investigation. The transaction has left Oakland in a tricky spot as it tries to salvage a redevelopment plan for the stadium that will satisfy the baseball team to stay.
The county did not provide comment after multiple calls and emails from CalMatters. In a county supervisors meeting, board member Richard Valle said the December 2019 sale was a critical step for the county in leaving the sports business.
“The county complied with the law in effect at the time of the approval of the disposition agreement,” he said.
If the county is found in violation of state law, it could face a fine of as much as $25.5 million.
Nunn from the San Diego Housing Federation, along with other local housing advocates, are waiting to see how these cases play out—and if the state will need to issue heavy fines. “We’re just seeing the first test cases of how the law applies at the local level,” she said.
If local governments demonstrate they are adding adequate affordable housing, then there shouldn’t be a need for state intervention.
This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.