Sports Arena Developer Changes Deal After Controversial Selection
By Arturo Castañares
The development team selected by Mayor Todd Gloria to rebuild the Sports Arena site has now modified its original plan by eliminating a 200-room hotel and replacing 250 middle-income level units with market rate units, sparking claims of a bait-and-switch after originally having been criticized as not having enough experience to carry out their ambitious proposal.
Midway Rising, a team led by local businessman Brad Termini of Zephyr, was selected in September 2022 to enter into a two-year exclusive negotiating agreement to redevelop the site of the current Sports Arena in the Midway area even after it was revealed that Termini and his family had donated over $100,000 to fund Todd Gloria’s 2020 campaign for Mayor of San Diego.
The plan proposed to the City Council in August 2022 featured 4,250 residential units, including 2,000 affordable units and 250 middle-income units for working families that do not qualify for the low income-restricted units.
The proposal also included a 200-room hotel, a 16,000 seat arena, 250,000 sq. ft. of commercial space, and 20 acres of plaza and park space.
But this week, the City’s Director of real estate assets informed the City Council during its Monday meeting that the Midway Rising team had modified its proposal to eliminate the 200-room hotel and change the 250 middle-income units back to market rate units.
Middle-income units are defined as those for renters making between 80% and 120% of the area median income (AMI) which is a range of $110,250 to $140,150 per year for a family of four. Low income units are designated for renters making less than the 80% AMI figure.
One of the criticisms of last year’s selection process was that the City staff did not perform or have any outside firms perform financial analysis of the three proposals to determine or test their ability to perform.
Several sources inside the City complained that Mayor Gloria’s office was pushing for the Midway Rising team to be selected and that the staff did not perform -and were kept from performing- enough due diligence review to properly vet the proposals.
The update report this week explained that a 8-foot sewer line running through the property may limit the size of the land available for the project. The development teams had not been made aware of the line during their proposals, and this week the Midway Rising team said they had to move their proposed arena to the area where they had planned to build the hotel after losing about an acre of developable land at the site.
But the development team’s decision to eliminate the 250 middle-income units was solely based on financial considerations, including interest rates which they say have caused significant financial complications.
“At this point in time, given the interest rate environment, given the vanishing of that [middle-income housing] funding source, we thought it was appropriate to take the 250 units off the table," Termini told the Council during the meeting.
Several Councilmembers expressed concerns with the proposed changes.
“This is an extremely important project to ensure that we are building housing that people in the middle-income categories — teachers, firefighters, police officers and others — can realistically have access to,” Councilwoman Vivian Moreno said during the Council meeting. “The loss of these units is obviously not a good sign,” she added.
Another Councilmember reminded the team that the Council believed the team’s proposal last year and she expected the plan to include more affordable units.
“We have a homelessness crisis. We have an affordability crisis. We picked your team because we believed you. You have billionaires at the helm, please figure this out and put the 250 units back in and help us get what we deserve for our property,” Councilwoman Marni von Wilpert said after Termini's presentation.
Councilwoman von Wilbert read into the record previous public announcements highlighting the involvement of two billionaires in the Midway Rising proposal: NFL's Rams team owner Stan Kroenke and NFL's Dallas Cowboys owner Jerry Jones.
The elimination of the hotel is especially troubling since one of the project’s supporters during the Council’s selection process was Brigette Browning, the current leader of the San Diego-Imperial Counties Labor Council, who also serves as the President of HERE Local 30, the union of hotel workers.
Browning spoke during the City Council’s Land Use Committee meeting on September 8, 2022, to express her support for the Midway Rising team over the two other competing development teams even though all three had agreed to build their plans under project labor agreements, known as PLAs.
"I would really like to acknowledge that all of the projects have signed agreements with organized labor," Browning said while testifying before the Land Use Committee, "and they're all good projects, but we believe that because Midway Rising has the highest number of affordable housing units and it will create the most number of permanent union jobs, it is absolutely the best project to go forward," Browning added.
Browning, who is considered the most powerful union leader in San Diego, was referring to permanent hotel jobs which will now be eliminated by the change.
But Browning did not disclose at the time of her public comments in support of the Midway Rising team over the other two bidders that her husband, political consultant Daniel Rottenstreich, was being paid over $200,000 to promote the Midway Rising project.
A La Prensa San Diego article on February 21, 2023 outlined that Rottenstreich’s involvement on the Midway Rising team was not disclosed until months after the team had been selected by the City Council because lobbying disclosure forms were filed months late and did not name Rottenstreich.
It wasn’t until a San Diego Ethics Commission investigation concluded that the team had failed to properly file lobbying disclosures that the name of their consultant was revealed as Daniel Rottenstreich.
Browning also did not disclose her financial connection to the Midway Rising project when her Labor Council board took a position to support all three projects, or when the HERE Local 30 board voted to support the project.
As the head of a labor union, Browning also has an obligation to file financial conflict of interest reports with the US Department of Labor. The report, known as an LM30 form, must disclose financial conflicts. An online database of LM-30 forms does not show any recent filing by Browning.
Browning did not recuse herself for the decision to support the project or from lobbying City officials and making a presentation at the City Council in favor of the project.
Rottenstreich’s involvement with the principal of the Midway Rising team extends beyond the $205,000 in consulting fees received for helping to promote the proposal.
During the 2020 election cycle, Rottenstreich led the independent expenditure campaign committee called "San Diegans from Every Community in Support of Todd Gloria" created by the Laborers' International Union, Local 89, solely to support Todd Gloria's mayoral election.
The largest personal contributions received by the Laborers' Union committee were two $50,000 checks from Brad Termini and his wife, with the next largest personal contribution being only $15,000.
Termini's contributions to the Laborers' Union not only raised concerns of a "pay-to-play" arrangement where his contributions seem to have bought him preferential consideration for the Sports Arena deal, but also exposed Termini's family history of involvement with the same controversial union.
Brad Termini's grandfather, John Termini, was the leader of the Laborers' International Union, Local 210, in Buffalo, New York, in the 1950s. Several online references to John Termini describe him as "Mafia controlled", "Organized Crime Figure", "Mafia soldier", and "Labor Racketeer in [Laborers' International Union] Local 210".
The Buffalo-area Laborers' Union Local 210, which represents contractors in construction, demolition, and asbestos work throughout much of Western New York, had a long history of mafia connections dating back to the early 1900s.
In 1995, federal prosecutors and the International agreed to clean out mafia members from the union to settle a civil racketeering lawsuit the Justice Department and the International filed against Local 210. The Buffalo local became only one of three Laborers' Unions locals under the International's control, including a district council in Chicago and local in New York City.
The racketeering lawsuit named 16 members as mobsters and mob associates. As part of the settlement agreement, the International removed more than two dozen Local 210 members that union officials described as members of the mob, or mob associates.
Rocco Termini, Brad's father, became a local developer in Buffalo, and Brad Termini followed in the family business of development before moving to San Diego.
Brad Termini is also the developer of a growing network of cannabis campuses that combine the production, cultivation, and processing of marijuana products, including six in California, and a new $200 million campus approved in his native Buffalo in late 2021.
The Midway Rising team will submit a detailed project update to the City before the end of the month, and the City Council will review their financial plan and feasibility study in closed session.