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The Navy Accepts Hotel Developer Doug Manchester's Plan for an 800-room,
40-story Hotel at Broadway and Pacific Highway in San Diego

By Mike Freeman, The San Diego Union-Tribune
Knight Ridder/Tribune Business News

Apr. 4, 2006 - A 40-story hotel and a 24-story office tower will anchor Manchester Financial Group's proposal to redevelop the waterfront Navy Broadway Complex, a 14.7-acre parcel that's been called a signature project connecting downtown to the bay.

Doug Manchester, city officials and Navy commanders showed off conceptual plans yesterday for the $800 million to $1 billion project, a sweeping remake of the waterfront between Broadway and Seaport Village.

"It's going to shape a new skyline -- a front porch as it's being called -- for San Diego," said architect Gordon Carrier, whose firm Carrier Johnson designed the conceptual plan.

The Navy announced Friday that it has chosen Manchester, the builder of the Grand Hyatt and the Marriott Hotel & Marina downtown, from a field of five bidders.

The Navy now will enter into exclusive negotiations for Manchester to build a $100 million-plus office building for its Southwest Regional Command headquarters at no cost to the Navy.

In exchange, Manchester hopes to get a long-term ground lease to develop the rest of the site.

From the 32nd floor of the Grand Hyatt, which overlooks the gray, fortress-like Navy buildings, Rear Adm. Len Hering and San Diego Mayor Jerry Sanders joined others in speaking about the importance of the project, which has now been dubbed "Pacific Gateway."

The Navy has until January 2007 to sign a final agreement with Manchester, who likes to be called "Papa Doug." If it fails, the site reverts to base closure procedures outlined by the Base Realignment and Closure Commission. Under that scenario, local officials fear it would be claimed by another federal agency, hindering the city control over what's built.

"The alternative for San Diego (to the Navy/Manchester project) is not one we want to contemplate," Sanders said.

Centre City Development Corp., the city's redevelopment arm, will hold five public workshops to display Manchester's plan through the spring. The first will be at 5:30 p.m. Thursday at the Westgate Hotel, 1055 Second Ave.

The first of five public meetings, where official boards will consider the proposal, is slated before CCDC's Real Estate Committee at 2 p.m. April 12 at the agency's offices, 225 Broadway.

The Navy kept a tight lid on its bidding process, which was criticized by some community activists. The selection of Manchester also raised some eyebrows, in part because of high-profile battles he has waged with the San Diego Port District and the city of Oceanside over past projects.

But Manchester officials say each of his lawsuits involving government agencies was justified and his reputation as an aggressive, quick-to-sue developer is more myth than reality.

Navy officials said yesterday that Manchester rose to the top among bidders because he offered the best "value" for the headquarters building.

While commanders declined to give many details, they did say Manchester's proposal stood out because he offered to build a larger office building than the minimum called for in bid documents.

The proposed 19-story tower would total 373,000 square feet, compared with the minimum of 337,000-square feet. Manchester also has proposed a second, smaller building earmarked for the Navy for future expansion.

In addition, Manchester pledged money for operations and maintenance of the building, said Rene Trevino, executive director of the Navy Region Southwest Command. He declined to say how much, because the amount is subject to negotiations in coming months.

Moreover, Manchester stayed within the development guidelines attached to the site. Navy officials did not comment on what the other bidding companies proposed. But several development experts said the site is a difficult one financially because it calls for hotels, retail and office buildings but no residential towers.

"We just didn't see a scenario where conventional hotels would contribute very much to the bottom line," said Greg Shannon of Shea Properties, a bidder that proposed "condo hotels" -- hotel rooms sold as condos. "It's a very difficult development to do without residential."

The conceptual plan from Manchester calls for an 800-room, 40-story hotel at Broadway and Pacific Highway and a 24-story, 693,000-square-foot office tower directly south of the hotel.

The Navy offices would be just south of the new office building. A two-building, 480-room hotel would anchor the southern tip of the project.

Maritime and Navy museums, a park and a pedestrian promenade also are proposed.

"Of the 14-plus acres, 6 are open space or park," Manchester said.

As part of the plan, Manchester also proposed to upgrade the plans for the Navy Pier to include more public space. The pier, controlled by the Port District, is not part of the Pacific Gateway project.

Work on the Navy offices could begin as early as next year. While no timetable has been set for the other buildings, the 40-story hotel and 24-story office building are likely to proceed quickly because their revenue helps offset the cost of the Navy building, said Perry Dealy, president of Manchester's development arm.

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To see more of The San Diego Union-Tribune, or to subscribe to the newspaper, go to http://www.uniontrib.com.

Copyright (c) 2006, The San Diego Union-Tribune

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