La prensa

LPSD Sues SDSU Over Sports Arena Documents

SDSU lawsuit
Author: La Prensa
Created: 17 May, 2024
Updated: 18 May, 2024
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14 min read

By Alberto Garcia
Investigative Reporter

La Prensa San Diego has sued San Diego State University for failing to disclose public documents related to interactions with a Denver development company regarding a free-to-taxpayers sports arena in Mission Valley that has been kept secret for nearly two years. 

Arturo Castañares, La Prensa San Diego’s Publisher and Editor-at-Large, filed a lawsuit this week alleging the University failed to turn over public documents after SDSU officials and two local businessmen traveled to Texas in a private jet to meet with the company that built Austin’s Moody Center under a deal that used no taxpayer money. 

The San Diego delegation met with representatives from Oak View Group that had funded the $345 million indoor arena at the University of Texas at Austin under a 35-year agreement where OVG will operate the 16,000-seat facility and allow the UTA basketball teams to play without any cost, then split revenues with UTA to provide millions of dollars to the University over the term of the deal. 

Castañares requested documents about the arena in March under the California Public Records Act which requires government agencies to turn over documents it created or received. 

In response to his requests, SDSU provided 12 pages of documents related to the May 11, 2022, trip, including an itinerary, travel manifests, and one email between several people who traveled to Texas for the meeting. 

The documents confirm that participants in the trip included SDSU President Adela de la Torre; SDSU Athletic Director JD Wicker; Executive Associate Athletic Director Curt Apsey; SDSU Vice-President for University Relations and Development Adrienne Vargas; California State University (CSU) Trustees Jack McGrory and Adam Day; JMI Sports CEO Eric Judson; San Diego developer Tom Sudberry; and businessman David Malcolm, a representative for SDSU donor Dianne Bashor who provided the chartered jet. 

Bashor donated $15 million toward the building of Snapdragon Stadium and SDSU honored her family with the naming of Bashor Field.

“I file public records requests often but don’t usually find this much resistance from public agencies,” Castañares said after filing the lawsuit. “We have filed over a dozen lawsuits for public records when agencies deny requests or fail to disclose all of the records they have and it’s frustrating to have to sue to force them to comply with the law,” he added.

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Castañares also claims that sources familiar with the offer maintain that OVG sent an outline of potential deal points for further discussions, but SDSU denies such a document exists. 

SDSU responded to the request seeking documents related to the offer by saying there are no emails, text messages, memos, or other responsive records outlining a potential deal which triggered the high-level trip to Texas. 

Castañares remains skeptical that no documents exist which outlined the offer based on first-hand sources both in San Diego and in Texas.

HUSH HUSH DEAL

La Prensa San Diego first reported the existence of the trip in a March 23rd article even though the trip had taken place nearly two years earlier. No other media outlet had ever reported on the trip. 

The timing of the trip is significant because CSU Trustee Jack McGrory had been quoted in a February 2022 article as saying they had “looked at” locating an indoor arena within the SDSU West campus in Mission Valley, but that they “don’t think it can work,” McGrory said at the time.

In the same article, Adam Day, who also served as a CSU Trustee at the time, told the SDUT that he did not have details of any proposals for an arena in Mission Valley but would “love to hear more about it.”

SDSU currently operates the 12,200-seat, on-campus Viejas Arena where its basketball teams play, but the 27-year-old arena requires more than $120 million in upgrades to improve handicap access and better compete with newer arenas.

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Three months after the San Diego Union-Tribune article, both McGrory and Day were part of the trip to Texas to tour the Moody Center with representatives from OVG. 

Two sources who attended the meeting in Austin characterize the talks as positive and that OVG was “extremely interested” in pursuing an arena in Mission Valley because of its central location, superior access to a trolley stop, freeways, and shared parking with Snapdragon Stadium.

La Prensa San Diego confirmed that McGrory reviewed a document from OVG after the trip, and even discussed with OVG CEO Tim Leiweke whether CSU could invest into the arena to become equity partners and receive a greater share of profits sooner than if OVG funded the project entirely themselves.

McGrory admits that he had conversations with San Diego Mayor Todd Gloria and his staff after the trip and that the City officials expressed their preference to continue moving forward with their new plan to redevelop the site of the existing Sports Arena into a mixed-used project that would include a new indoor arena even though that project would require tens of millions of public financing to build.

Castañares also requested documents related to the Mission Valley arena from the CSU Chancellor’s office, but the response was that no records exist. It appears that neither McGrory nor Day provided any documents to the CSU Chancellor or their fellow Trustees.

MISSION VALLEY SITE

SDSU purchased the City-owned Mission Valley site for $86.2 million after San Diego voters approved Measure G in November 2018 to sell the QUALCOMM Stadium site to the public university. Measure G garnered more votes that the competing ballot Measure E which would have allowed private developers to lease the site and pursue their SoccerCity project to build a stadium and ancillary uses.

Measure G empowered the statewide CSU Board of Trustees to determine the use of the property in its sole discretion through a Campus Master Plan to develop the site for various educational, residential, commercial, and recreational uses. Experts agree that an indoor arena would be consistent with the voter-approved measure.

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The $315 million Snapdragon Stadium, which was funded through donations as well as system-wide CSU revenue bonds that will be paid back with revenues generated by the facility, was the first piece of the SDSU West campus that was built when it opened in June 2022.

The 132-acre SDSU West campus hosts a trolley station that connects to the main campus by the Green Line trolley line and has access to three freeways.

MIDWAY ARENA PROJECT

La Prensa San Diego has reported that the expressed interest from Oak View Group came at the same time the City of San Diego was already reviewing proposals from development groups to rebuild the existing Sports Arena site into a new mixed-use project with thousands of affordable housing units, commercial and retail spaces, and a new 16,000-seat indoor arena. 

OVG had initially been part of a development group to bid on the existing Sports Arena project but withdrew after determining that the site was too constrained to fit their model for operating arena facilities.

Development experts predict that the San Diego region would not support two new indoor arenas competing for similar events especially after the new 7,500-seat Frontwave Arena in Oceanside opens later this year to host a Clippers minor league basketball team and San Diego Sockers indoor soccer team. 

Just months after the Texas proposal was kept quiet by SDSU, Mayor Todd Gloria pushed the selection of the Midway Rising development group headed by Brad Termini. 

Termini and his family were the largest private donors to Gloria’s 2020 election with more than $100,000 given to fund his campaign.

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La Prensa has previously reported that City staff had complained during the run up to the section of a development team for the Sports Arena project that they were not allowed to properly review and vet proposals because Gloria’s office was pushing Termini’s group as their preferred developer. 

The City's own outside development consultant only issued a two-page "Cover Memorandum" that detailed the limitations of their review, and included a warning that many questions about the project "remain unanswered". 

On August 31, 2022, La Prensa San Diego was the first media outlet to report on Termini’s pending selection and detailing his campaign contributions, lack of experience, and several legal issues not disclosed by the City’s staff report sent to Councilmembers before the upcoming meeting to select a developer the following week.

Development experts also pointed out that Termini’s proposal was “unbuildable” because the amount of housing units, commercial space, hotel, and arena would not even fit within the parcels of land encompassing the Sports Arena site, and that Termini did not have any relevant experience building any project near the size and complexity of the Midway site and has never developed a sports facility.

During the City Council committee meeting on September 8, 2022, to select a developer, local union leader Brigette Browning spoke in favor of Termini’s group, saying it was “absolutely the best project to go forward” and highlighted that fact that it included a hotel that would leave permanent union jobs after construction even though she admitted that her Labor Council had voted to support all three of the final development groups under consideration, not Termini specifically.

Browning is also the President of the local hotel and restaurant workers’ union. 

A staff presentation made public for the Committee meeting lacked any specifics for financial viability or capacity, income analysis, and included language that the "early-stage" proposals could change based on market conditions.

Despite concerns raised by opponents of the proposal, including the Carpenters' union which raised concerns with Termini's team, the City Council committee selected the Midway Rising group to enter into exclusive negotiations with the City. 

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The following week, the full City Council took a final vote to select Termini’s group.

One month later, CSU Trustee Adam Day, who works as Chief Administrative Officer for Sycuan, resigned from his statewide university position as SDSU began negotiating a Snapdragon Stadium tenant deal with the new Major League Soccer (MLS) team which will begin playing next year. Sycuan is a major financial partner with Egyptian-born British billionaire Mohamad Mansour, and Termini is a minority partner in the team.

LABOR LEADER CONFLICT

But five months after the Council’s selection of Termini, new information about Termini’s group surfaced.

The City’s Ethics Commission fined Termini’s group $5,000 for failing to file their political lobbying disclosure forms on time, which Midway Rising turned in up to nine months late and only after the Council’s vote. 

The late disclosures revealed that Termini’s group had paid labor leader Browning’s husband, political consultant Dan Rottenstreich, over $200,000 for working to promote the project. 

Rottenstreich had also run the 2020 Gloria campaign committee where Termini gave his $100,000 contributions.

Browning did not disclose her conflict-of-interest related to her husband's income from Termini’s project when she testified before the City Council and she also failed to file a disclosure form with the US Department of Labor that is required when union leaders have a financial conflict of interest in issues that come before them.

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Then, one year after being selected to negotiate with the City, Termini’s team modified its proposal to eliminate the 200-room hotel and 250 middle-income affordable units after reportedly discovering a 8-foot-wide sewer line that runs under the existing Sports Arena site and would reduce the amount of usable land at the site.

But City staff and representatives from the other development bidders argue that they were already aware of the sewer line and that Termini’s group was using that as an excuse to dramatically alter their proposal.

Termini admitted that the decision to eliminate the 250 middle-income units was solely based on financial considerations, including the "interest rate environment” and the “vanishing” of funding for middle-income units.

Browning, as the leader of the hotel employee union, never commented publicly about the elimination of the hotel that was the stated basis for her outspoken support of the project. 

Although labor unions usually stage protests outside of hotels that refuse to allow employees to unionize, Browning’s union did not mobilize against Termini’s team after the elimination of the hotel which would have created jobs for her union members and millions of dollars in new tax revenues to the City.

For example, Browning’s union last year boycotted the US Grant hotel in downtown San Diego during Comic-Con asking visitors not to “eat, sleep, or meet at the hotel” and anyone hosting an event there “should move their business immediately” after the hotel’s  management ignored the union’s request for a “fair process for workers at the US Grant Hotel to organize a union.” 

Other local union leaders have expressed alarm that Browning has continued to support the project -or at least failed to speak out- after the proposed unionized hotel was eliminated, with some suggesting her husband's paid work on the project was at odds with her responsibilities as a union leader, but that Democratic elected officials and other unions are afraid to speak out against the most powerful union leader in San Diego.

In June 2023, Termini announced that he had transferred 95% of the Midway Rising ownership to Stan Kroenke, billionaire owner of the NFL’s LA Rams. 

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Termini’s group also includes Jerry Jones, the wealthy owner of the NFL’s Dallas Cowboys.

But even with the financial backing of two billionaires, the City Council unanimously passed a resolution in March to study creating an Enhanced Infrastructure Financing District, or EIFD, which would provide tens of millions of public bonds used to cover part of Midway Rising’s infrastructure construction costs.

Termini admitted to the San Diego Union-Tribune that his project is “not financially feasible without getting some of the infrastructure paid for.”

Although Council President Sean Elo-Rivera was briefed last December on the details of the possible free arena from OVG, he did not mention the alternative proposal before voting to move forward with a public financing mechanism for Termini’s project.

BROWNING REGRETS SDSU WEST

Sources familiar with the negotiations that took place during the development of SDSU West confirm that Browning feels that labor unions did not receive “enough” and that she regrets the outcome of her efforts.

CSU Trustee Jack McGrory led those discussions and union insiders consider his stance toward labor unions as “tough” although McGrory, a former City of San Diego City Manager, is a registered Democrat. 

Less than two months after the Council selected Termini’s group, Browning spoke at a local political confab and said she regretted having not opposed the SDSU West project because SDSU didn’t agree to project labor agreements for ancillary construction around the Mission Valley project and the assurances provided to labor unions were vague and unenforceable.

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Two SDSU insiders concede that Browning could be problematic if the University developed an arena at the Mission Valley campus, suggesting that she would rather support a project on City land where she has more influence with the Democratic Mayor and all Democratic Council.

Of the nine sitting Councilmembers, Browning’s Labor Council has endorsed and supported all of them, in addition to Gloria. 

Browning’s Labor Council is currently supporting the three incumbent Councilmembers facing tough re-elections: Council President Sean Elo-Rivera, Raul Campillo, and Stephen Whitburn.

The Labor Council has even endorsed the two incumbent Councilmembers who are running for re-election unopposed: Joe LaCava and Marni von Wilpert.

Rottenstreich, Browning's husband, ran the two political campaigns of San Diego City Attorney Mara Elliot in 2016 and 2020, and is currently running the campaign of Heather Ferbert, Elliott's Chief Deputy City Attorney running to replace Elliott who will be termed out of office this year.

The City Attorney’s office oversees contract negotiations with Termini’s group and any final development agreement they receive. 

The pending lawsuit will be heard in a downtown courtroom. The case has been assigned to Judge Michael T. Smyth.

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