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revitalization of downtown San Diego (compare: ULI, 1986). For analyzing public-private
partnerships in urban development it is a perfect example of a public-private joint venture.
The Ballpark project, is a current public-private joint venture. But due to its ongoing
development process and litigation problems it is difficult to analyze. Therefore, I focus more
on the Horton Plaza project.
Like other major urban downtown in the United States in the 1960s and 1970s , downtown
San Diego suffered from disinvestment, a deteriorating tax base and a decline in population.
The city attempted to stop the exodus of residents, investments and businesses to the suburbs
and strengthen downtown by working together with the public sector in a joint venture.
Pamela Hamilton stated:
“The purpose was to bring major retail back to downtown that had once moved to Mission Valley. From this
perspective is was a risky monetary investment. It is critical that the project was so large and required the
developer to think creatively because there is not so much space in downtown like in suburban areas. Horton
Plaza represented an experiment by all means.”16
The City of San Diego was deeply involved in the Horton Plaza project through CCDC. In
essence, CCDC was established for carrying out this huge redevelopment project and acted as
the sole negotiator between the city and the developer. The City Council approved a
redevelopment plan for the Horton Plaza, a fifteen-block area in downtown, in 1972 in order
to revitalize San Diego’s downtown. In 1974 the city selected the Ernest Hahn corporation as
developer to built a retail center including a downtown mall. Horton Plaza took a decade of
deal making. CCDC was empowered to represent the city in negotiating with the Hahn
Corporation as well as taking responsibility for planning and managing the Horton Plaza
redevelopment project. CCDC was set up to deal with developers in a businesslike way, with
an independent board of directors recruited from the business community. (Frieden; Sagalyn,
1989:129). CCDC was bargaining for a city share of the revenues from the Horton Plaza
project. In this context, the DDA set the rules for the partnership between the city and the
developer while CCDC acts as a middleman. As important feature of the deal, CCDC wrote
down the land but in exchange has received 10 percent of gross rental income in excess of
base rents from shopping mall tenants (annual payment of participation in gross rental
income), 10 percent of net cash flow from office space (annual payment of participation in
office building available cash flow), and 31 percent of gross parking revenues beyond the
amount needed to amortize the developer’s cost of building the parking structures (annual
payment of participation in parking revenue surplus).17
Conversely, since Hahn could not get department stores for its downtown mall, the
corporation wanted a commitment from the city to build a convention center and downtown
housing as well as improve conditions for retailers and residents in town. Brought forward by
the San Diegans, Inc., a downtown-based organization of business owners, developers and
property owners, the “city council approved plans in 1976 for 4,000 houses, a marina, and a
convention center in two newly created redevelopment projects south and west of the retail
site” (Frieden; Sagalyn, 1989:139). These undertakings brought a firm deal between the City
of San Diego and the Hahn company forward.
The Horton Plaza project was considered as very risky for both the city and the developer due
to unfinished agreements and the uncertainty of proposed commitments. “The first
development agreement committed the city to finance and build a 2,000-car parking garage
but left wide open the terms on which Hahn would lease it” (Frieden; Sagalyn, 1989:142).
16 Phone Interview with Pamela Hamilton, Executive Vice President of CCDC, on the 17th of December 2000
17 Payment Agreement by and between the Redevelopment Agency of the City of San Diego and Ernest W.
Hahn 1979 Development Company, L.P., October 18 1982, attached to the Disposition and Development
Agreement by and beetween the Redevelopment Agency of the City of San Diego and Ernest W. Hahn, Inc.,
March 16 1979