When a construction project gets past 1.7 million man hours worked, as Petco did in mid-December, a lot of contractors and others have contributed, some (like lead builders Clark, Roel and douglas e.barnhart) more than others. Key players assembled on the field Dec. 16 included, from left, Alan Petrasek, senior vice president of Clark Construction; Andy Stallings, vice president of Hines, project manager; Kevin Elliot, president of Roel Construction; Richard Heim, president of West Coast operations for Clark Construction; Doug Barnhart, CEO of douglas e. barnhart inc.; Don Adair, vice president and division manager of Swinerton Builders which built the Omni Hotel; Kirk Jackson, president of Jackson Blanc that built the East Village District Plant that cools the ballpark, hotel and other structures; Tom Sullivan, senior vice president of construction for JMI Realty; Greg Clay, senior vice president and hospitality director for JMI Realty; and Jim Chatfield, vice president of construction, JMI Realty. (photo/alandeckerphoto.com)

On a cold and windy mid-December night, John Moores stands with key executives on the outfield grass at Petco Park and points to the suites in the light tower along the third base line. The San Diego Padres’ owner is worried a lack of front-facing windows or doors will insulate the occupants from the noise of the game, the crowd roar. He is skeptical when told side doors will allow in the sounds. The group moves on, but the discussion clearly isn’t over.

Barely begun, really, is the public discussion on the ballpark and how it will integrate with the region as professional baseball returns to 92101 since the then minor-league Padres left Lane Field in 1957. But when the smoke from celebratory fireworks clears and the last game of 2004 is played, in September or October, the verdict is likely to be clear locally and nationally: a home run.

Boosterish? Probably. But consider: A 26-block area that seven years ago was among San Diego’s most inhospitable places now bristles with construction, all of it essentially driven by the $450 million ballpark project. Horton Plaza and the San Diego Convention Center were seminal moments in Downtown’s renewal, but neither spawned so quickly more than $1 billion in related development.

Ballpark-influenced development sprawls far from the East Village field where the Padres will play games. Housing is the project du jour.

To illustrate, president of the Centre City Development Corp. Peter Hall offers a folded, 11-by-17 site map that shows 2,600 housing units under development in a three-block radius of Market Street and Park Boulevard.

“Most of the units are considered in the moderate price range,” Hall says. “About half are for sale. Of those, 658 are restricted, long-term as affordable. The group includes senior, workforce and family housing. That is a huge social benefit in this difficult time in the supply and affordability of housing. This is not about group destinations and hotel rooms. This is about housing. The ballpark seed has germinated into a new community that will be even more cool than Little Italy. It is going to have thousands of feet on the street. In redevelopment, that is the ultimate success, not buildings in the sky.

“If you have people on the street you have businesses that are flourishing,” Hall continues. “Some of the other social problems in the area are then addressed too. You have pride of ownership, care taking and responsibility. These are the things that help older tougher urban areas.”

Of course under the memorandum of understanding approved by San Diego voters in 1998, the $450 million ballpark project was supposed to be a stimulus in exchange for taxpayer investment. Its funding consists of $76.5 million of redevelopment money, $206 million of mostly city hotel tax money, $21 million from the Port of San Diego and $146 million from the Padres. Carved from that amount, the 42,000-seat ballpark itself cost $294.1 million, up $26.1 million from original projections, primarily due to 16 months of litigation-caused delays. The additional expense was borne primarily by the Padres.

The city not only wanted the ballpark to stimulate development, it wanted that amount of development to ensure tax receipts cover the city’s investment. Originally set at $289 million, the value of non-ballpark construction the team had to guarantee was bumped up to $311 million.

Yet by year’s end the Padres will have completed $360 million in non-ballpark projects. When their efforts wrap up in 2006, the team’s total non-ballpark development in 11 separate projects will hit $593 million, nearly twice the original commitment. Other developers by 2006 will have completed an additional $1 billion worth of projects.

“This is the largest redevelopment project in the country and it is the first time one has been done like this,” says John Kratzer, president and 50 percent owner of JMI Realty, which is overseeing all Ballpark District development. “You kind of get numb to it, even on a national stage.”

The ballpark also is bringing to fruition the city’s 1908 dream of a link between Balboa Park and San Diego Bay. New trolley stops for the project will handle four-car trains and meet all Americans With Disability Act requirements. The 2.7-acre Park at the Park will be a showcase.

“When you peel the onion back it keeps getting sweeter,” Hall says. “The meat of it will be really great. This is really one of the better redevelopment efforts done in this country. We have taken an old, abandoned industrial area and, respecting its history, revamped it as smart growth.”

Living And Paying For Delays

That $311 million commitment and unexpected delay caused by 20 failed lawsuits kept Padres executives up at night.

“It was horrible,” Moores says of the delay that started when construction shut down in October 2000 because the pending lawsuits prevented the city from issuing project bonds. “The worst experience of my life.

The frustration was especially acute because projects in other cities were moving forward. For example, the same year San Diego voters approved Proposition C, a public funding measure in Pittsburgh failed. Politicians there found a different pot of dollars and a $262 million ballpark for the Pirates opened in 2001.

San Diego’s effort got back on track following a key court ruling in February 2002 that went against ballpark opponents. The city sold $169 million in bonds in February 2002 and work resumed. But not without costs.

The Padres estimate that along with the $26 million in extra construction costs, the team lost out on $45 million in revenue it would have earned by playing the 2002 and 2003 seasons at Petco Park. The adjacent hotel missed $7.4 million in projected revenue and JMI Realty, the master developer of the project, absorbed $4 million of overhead.

In hindsight, Moores says the deal made bad business sense, a sentiment echoed around the table during a lunch with ballpark executives.

“My observation is that this was not business,” Moores says. “This has nothing to do with business. This was all about trying to do the right thing for the city of San Diego and for the ballpark. Everybody here knows how to make money in business. This is not a way to make money. We have never worked so hard and so long to get any economic return. If I owned the ballpark another 20 years, it is highly unlikely we would get back to zero.”

But isn’t the team worth more money with a ballpark attached?

“Yes, but we have a lot more debt too,” Moores says. “If I get hit by a truck walking out of this restaurant, it is probably not worth any more than I paid for it, net/net. But that has not ever been the point. If this was just about making money I had a chance to buy a couple of sports franchises over the years and passed on them. They were more attractive in some cases than a baseball club in San Diego. There are lots of issues here. I love the Padres. It is such a basic part of our lives. My wife is so engaged with the Padres. And my daughter. And my sister.”

Will he be tempted to sell once the project is complete?

“No. Nor the year after that, or the year after that or the year after that,” he says. “We anticipate we are going to take our grandkids to spring training for the first time this year. That is important stuff.”

Important stuff, indeed.

When the ballpark opens, it also will mark the 20th anniversary of Doug Wilson’s first investment in Downtown San Diego. Over those years Wilson has been involved with a half billion dollars of projects. Nothing, he insists, compares to the ballpark when it comes to stimulating surrounding development.

“Anyone who thinks that development would have happened (without the ballpark) is dabbling in fantasy,” he says. “It was the master plan that was developed around the ballpark that attracted me to the neighborhood. It represented cohesive development, not a hodgepodge effort. I had the luxury of experiencing a parallel event in Denver. I have an office there and know well what happened there with Coors Field.”

Wilson also oversaw an 800,000-square-foot development effort in China Basin adjacent to SBC Park in San Francisco.

“It was those two experiences I was witnessing that made me early on say, ‘I’ve got to understand where they are going to site it and how it will work.’”

Once he understood the plan, “that was when I said, ‘I’ve got to tie up all this land adjacent to center field.’” Wilson launched ahead with his ParkLoft at Eighth and Island avenues. When the ballpark work ground to a halt, his project looked lonely as the area’s only active construction. Today, it stands surrounded by other projects in various stages of development, including a site across the street where Wilson’s second East Village project, a $120 million tower called The Mark, breaks ground in May. The bustle of activity, he notes, “makes my property look like it is at the corner of Main and Main, not on the outskirts.”

Retail Change Is In The Air

Developers are not the only ones to benefit as the ballpark changes the Downtown business mix to one that will surprise both new and returning visitors.

“I will bet you a dollar that the vast majority of San Diegans have no idea what is going on Downtown because of the ballpark,” says Bill Shrader, a Downtown retail brokerage specialist with Burnham Real Estate. Shrader notes that every block between the Gaslamp Quarter and Park Boulevard is tied up for a housing, office or retail development. As these new projects open, he foresees a change in the distribution of business, with Fifth Avenue becoming heavily retail and an acceleration of restaurants moving into the Ballpark District or over onto Fourth Avenue.

Indeed, The Palm restaurant, an upscale Italian steakhouse chain with a celebrity and athlete clientele, has leased space at Sixth Avenue and J Street with plans for a March 2005 opening. “I’ve been looking in the San Diego market for more than four years,” says David Middleton, vice president of development for family-owned Palm Management Corp. “We have had a few fits and starts. You often don’t land the first deal you get across your bow. We were looking at Gaslamp because we like the area around the convention center. I was looking before the ballpark was a firm fixture on the horizon. It is an added bonus for us. We are a block and a half away from the ballpark. When we found this location, the ballpark was well on its way.”

If the traffic management plan works as promised, Gaslamp Quarter merchants like Catherine Wall are looking forward to the prospects of 3 million prospective new customers. (photo/lambertphoto.com)

Some existing businesses are nervously anticipating the opening, worried about game-day parking but excited about a new customer base. The Padres expect 3 million fans this year.

“The parking and traffic is one of the biggest concerns for everyone,” says Catherine Wall, co-owner of Golden Pacific Arts and a member of the Gaslamp Quarter Association board. “We are concerned about our parking being used on those days. The neighborhood restaurants are working to get specials together so people will arrive earlier (and leave later). I expect to see some people from the East County or North County who have not come to the Gaslamp Quarter before. I have already met some people who are season ticket holders who have come down to get the lay of the land. We all are trying to make that first experience for people really smooth so it will be a positive.”

A 30-page parking management plan calls for routing game traffic around Gaslamp. But one upside for merchants is the nearly 3,500 new spaces being created in an area where parking is at a premium even without a baseball game going on.

“We are increasing our parking on non-game days,” Wall says. “That is very exciting.”

For 20 years, the last 13 on Eighth Avenue just outside the ballpark’s outfield gates, Jeff Schwimmer has owned Old World Restaurant & Deli. He’s nervous about business when the Padres are not in town, but has one word to describe his game-day expectations: “Chaos.”

Schwimmer, who is anxious for the residential projects that surround him to fill with tenants, expects Padres fans to have a pleasantly surprising urban experience as they fan out through Downtown. “The color and the types of businesses, cultures and landscape” will surprise them, he says. “I don’t think they will expect the kind of variety.”

Old World Deli owner Jeff Schwimmer has one word for his game-day expectations: Chaos. (photo/lambertphoto.com)

While Moores may not admit it was all worth it, he clearly is looking forward to Petco’s opening.

“The upside is I am going to be happy as a clam because we are going to be playing baseball in the ballpark,” Moores says. “I am going be living Downtown and I am going to be walking to the ballpark each day because that is where our offices are going to be. We will get a passable return, but we are not going to get in the Guinness Book of World Records.”

Hall dismisses arguments that without the city’s investment in the ballpark the area would have naturally developed as quickly.

“Was it 10 years away? Was it 20 years away?” he asks. “Opportunity delayed is opportunity denied. If you wait 10 or 20 years, what is the lost opportunity? The revenue from sales tax, property tax, new jobs; would you rather have them today or have them come over the next 20 years? Most people say recycle stuff. Encourage public transit. Provide a substantial amount of market-rate and affordable housing. Why would somebody say it would be better to let this thing evolve over a long process? In other places where that happens it often is one step forward, two back.

“The naysayers can always try to rationalize things to support their positions,” Hall says. “We are saying, facts are facts. You go down and look at what has happened and say ‘how can people say we would be better off to not have that happen?’”