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Four San Diego-based homebuilders envision filling the city’s 48-acre sports arena site with as many as 5,400 apartments, bumping up against — and potentially exceeding — zoning restrictions in a parking lot- and warehouse-centric commercial district where homes are mostly nonexistent.

The city-within-a-city plan, called Neighborhood Next, hails from real estate developers the ConAm Group and Malick Infill Development, and affordable-housing partners Community Housing Works and Wakeland Housing & Development Corp.

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The group is one of five teams competing to win a long-term ground lease and development rights for San Diego’s real estate holdings at 3500, 3250, 3220 and 3240 Sports Arena Blvd. in the Midway District. The property includes the city-owned sports arena, which was built in 1966 and has served as the long-time home of the San Diego Gulls professional hockey team.

San Diego is currently negotiating with bidders who were instructed to submit site redevelopment plans with at least 25 percent of proposed housing units set aside for lower-income families. Teams were also told to include a new or greatly enhanced sports arena.

“The heart and soul of (Neighborhood Next) is the housing and the opportunity it offers,” said Zachary Adams, who is senior vice president of development with The ConAm Group.

In other words, the concept is fluid when it comes to a sports venue.

Neighborhood Next proposes to remake the parcels in the style of San Diego’s Little Italy, where a plethora of apartment buildings in a variety of heights and designs give life to a wealth of street-level activity, replete with dining and shopping options, where pedestrians and bicyclists have the right of way.

A central path, called the GreenLine Promenade, would extend the length of the project, weaving together a broader network of open spaces and transporting people from the property’s eastern edge to the San Diego River.

Altogether, the group is designing a site with 4,800 to 5,400 apartments, up to 300,000 feet square feet of commercial retail and office space, a dedicated community building that could house a school or library, and one or two hotels.

Everything comes together, with or without an arena, in a neighborhood where at least 25 percent of apartments — or 1,200 to 1,350 units — are reserved for low-income families. Middle-income and market-rate apartment homes are also part of the mix, although the exact breakdown of units was not provided.

Neighborhood Next is tackling the arena requirement in the form of a multiple-choice question for city officials. Does San Diego want a new, 16,000-seat arena opposite the water at the northwest corner of the site? Or would the city prefer a recycled sports arena, beautified to match the neighborhood? Alternatively, what if there was no arena at all, and it was contemplated for some other yet-to-be-determined location?

“We at least wanted to paint a vision for what this site could look like if the community and the city thought that the arena was better situated elsewhere,” Adams said.

The offsite-arena gamble, hedged by the team’s two other arena options, leans heavily on land-use restrictions imposed by the state of California. The city’s land, which was earlier this year formally designated as “surplus,” must be disposed of in a fashion that favors affordable housing builders, per the new rules associated with the Surplus Land Act. The law dates to the 1980s but was amended in 2019 to ensure that local agency land offered for sale or lease is made available for affordable housing, meaning units that are subsidized and reserved for families making 80 percent or less of the area median income.

Although the exact rubric is unknown, development proposals will be graded on the percentage of affordable homes they offer, the total number of affordable units included and their level of affordability.

“The other teams are trying to shoehorn an arena development in what is supposed to be a housing-first (project). We wanted to be in alignment with what (housing-first) truly means,” said Sean Spear, who is president and CEO of Community Housing Works. “The housing is the priority, but there is room for an arena. From our perspective, we wanted to approach the arena question with the city as a partner.”

That’s why the Neighborhood Next development team is conspicuously lacking an arena builder. Instead, the group has engaged Crossroads Consulting to help facilitate the arena conservation. The St. Petersburg, Florida-based firm has worked alongside numerous municipalities to study the feasibility of arena and stadium projects. The firm is, for instance, a frequent economic advisor to the Maryland Stadium Authority and studied in 2018 the viability of a new sports arena in downtown Baltimore. Instead, the existing Royal Farms Arena will undergo a $150 million renovation paid for by Oak View Group and Kevin Durant’s Thirty Five Ventures.

Pushing the arena elsewhere presumably frees up space for more homes. The team’s housing component considers more units than the city has previously said is allowed on site. The solicitation noted that the sports arena parcels are zoned for a total of 2,112 units. Developers can double the amount and build up to 4,224 units if their plans include affordable units between 600 square feet and 800 square feet.

The proposed density is substantial and uncommon outside of downtown San Diego.

Today, the entirety of the Midway District has less than 2,000 housing units and is home to around 4,600 people. A 2018 update to the region’s community plan allows for a potential population boom of 23,660 people. Still, most San Diego projects promising large multifamily developments are spread across properties with a lot more acreage. The Riverwalk project in Mission Valley, for instance, will introduce up to 4,300 apartments and condos, at build out, on a 195-acre site. And San Diego State’s Mission Valley campus, which includes the newly named Snapdragon Stadium, calls for 4,600 residential units on the old 135-acre, Qualcomm stadium site.

Neighborhood Next is working with Denmark-based design studio Gehl for a European approach to density.

“We hired ... the most sophisticated urban design firm that’s working in the world today and they design healthy, efficient urban environments,” said Andrew Malick, who is founder and CEO of Malick Infill Development. “So when you say, ‘Oh my gosh, how are you fitting all of these homes here?’ They do it all over the world, we just aren’t used to seeing what a healthy density looks like.”

The vision also banks on the developers being able to erect towers that exceed the Midway District’s 30-foot height limit. San Diego voters last year struck down the restriction, but a legal challenge recently voided the ballot-box victory, presenting an obstacle for Neighborhood Next and other sports arena site bidders.

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