Upon the 20^th anniversary of the opening of the Meridian, the first classy residential tower to open in Downtown San Diego, the San Diego Metropolitan Magazine and sandiegometro.com are pleased to publish excerpts from Meridian developer Walt Smyk’s autobiography, “The Story Of An Ordinary Boy Who Go To Do Extraordinary Things.”

We begin with Chapter 13 and follow with portions most relevant to San Diegans prior to the opening of the Meridian in August 1985. For clarity, the editor has added some parenthetical notes. Be checking sandiegometro.com for additional chapters as we observe the Meridian’s 20^th anniversary in coming months as well.

CHAPTER THIRTEEN [MAY 1976] — A NEW DIRECTION

The Meridian under construction.

In 1976, we bought a small building of 7,500 square feet on 12,500 square feet of land in the center of the seamy area of downtown San Diego, south of Broadway. The building had been the home of the Daily Transcript newspaper and, until they left, they were printing in the old-fashioned way with hot lead type with loads of ink splashed on the floor and walls. We had a dickens of a time cleaning it up, and after we did, we had Tim Delise finish it off in order to lease it for offices. The building was a steal because the elderly couple that owned it were afraid of the problems involved in renovating for new tenants. We were able to buy the building for $200,000 with just five thousand in cash. Although the building looked great after it was finished, it was very difficult to find a tenant because of its immediate surroundings. After several months of trying to find a tenant, Tim Considine, who was (my wife) Mary’s and my as well as (my partner) Jim Hill’s accountant, offered to lease the entire building if we would include him as a partner. That was a good deal and we made it. Tim had been our accountant since shortly after coming to San Diego in 1970. In fact, he is still our accountant, and I can say that I count him as among the dearest of my friends to this day. That building became the key to the rest of my business career.

During the period 1975 to 1977 we had a lot of things happening all at just about the same time. Jim and I continued to make very lucrative deals in real estate and our income was piling up. Mary and I moved up from our twenty-seven foot Trojan at the marina and bought Ondine III, a forty-two foot Chris Craft, and joined the San Diego Yacht Club. Mary and I took a couple of trips to Europe and a cruise on the Mediterranean.

The cruise was nearly a disaster. On our way from Tunisia to Malaga, Spain, we hit one of the worst storms that the Mediterranean had ever seen. It was almost a replay of our trip in Ondine I back in Florida but of a significantly larger scale. We couldn’t go north or south to reach the shelter of land because the waves were so high that the captain was afraid that the ship would roll over while attempting to turn. Just about everyone, including the captain and the ship’s doctor, were seasick, except for Mary and me. I kept bringing coffee and food up to the crew who were steering the ship while Mary did yeoman’s work in helping out the sick. The situation was so bad that a destroyer from the Seventh Fleet in the Mediterranean was called out to follow us in order to take on survivors should the ship flounder. We finally made it to Malaga where, with another couple, we decided to skip Morocco and the next couple of ports. We spent three days enjoyably driving around the Gold Coast of Spain before flying on to the Canary Islands to join our shipmates for the flight back to the states. I have a great picture of the front of the ship showing how the force of the seas bent the bow ninety degrees upward. Life was good, we were having fun and we were rich. I felt like shouting it out, since I had come from a lower income, immigrant family and Mary was the product of a lower-middle income family from a small Midwestern town. We did it all by ourselves.

In mid-1977, Morris Shenker came into town and wanted to meet with us. He told us that, in 1963, his partner, Mr. Kahn, had developed the Charter Oil Building, a twenty-three story high-rise office building located just north of Broadway in downtown San Diego. When it was finished, the building was the tallest building in San Diego and had the Charter Oil Company as its anchor tenant. A few years earlier, Charter Oil went broke and moved out, leaving the building not much more than fifty percent occupied and a real cash drain. Shenker got the building when Mr. Kahn passed away, and he now wanted to get rid of it. In that meeting, he asked us to list the building and sell it for him. We told him that we were industrial real estate brokers and that he should list it with an agent that handled investment property. His reply was that he had a great deal of confidence in us and that, if anyone could handle such a sale, he felt that we could. We agreed to take the listing as a favor to him, but we felt that all we could do was to present it to the three or four big investors in town to see if we could find a buyer among them. We struck out with everyone we approached. One day, however, we were with Tim Considine, checking on the construction progress of the improvements underway for his new offices in the Daily Transcript building. While we were chatting, Jim and I filled him in on our lack of progress in selling the Charter Oil Building and asked Tim if he had any ideas. He said that he felt that we had covered all the bases, when all of a sudden I asked why the three of us couldn’t buy the building.

At first blush, the idea sounded a little nutty. Shenker wanted five million for the building, and being half-empty, it would be expensive to cover the negative cash flow out of our pockets until it was more fully leased. However, Tim is a brilliant fellow. I can’t imagine anyone who has a better grasp of money and how to use it. Over the years, he and his father, who founded the company, Considine and Considine, had developed an international clientele, and although they were a small accounting firm located in San Diego, they handled some pretty high level clients from around the world. In fact, Mary and I were always flattered to be counted among their clients.

Jim, Tim and I put our heads together, and mostly based on Tim’s input, we came up with an offer to make to Shenker. Tim would get six of his clients, a balance of doctors and other investors, to put up $500,000, which would be the down payment for an offered purchase price of $4,500,000 to Shenker. For that investment, the investors would get fifty percent interest in the building, with Jim, Tim and me acting as the general partners owning the other fifty percent. We would assume an existing Prudential mortgage of $2,500,000 that had only eight more years to run. The interest on the Prudential loan was at five percent, and since it had been in place since 1963, the majority of each payment went to principal. The balance of the purchase price would be handled by a note to Shenker for $1,500,000, all due and payable in ten years. The interest on Shenker’s note was an incredibly low four percent. The terms were hard to believe since this was taking place when Jimmy Carter was president and interest rates were running sixteen percent or more. With terms like these, we were just about able to cover our costs with the building only half-full. Shenker took the deal, and Jim, Tim and I found us half owners of a twenty-three story office building in downtown San Diego with no money of our own in the deal. On top of that, Jim and I got a commission of $270,000 for brokering the deal. In 2003, we sold the building for twenty million.

The building needed a bit of a facelift. We had good relations with Sumitomo Bank, and were able to get a loan for the million dollars necessary for the facelift and to offset any negative cash flow. The first thing we had to do was to come up with a new name for the building to give it a new identity. Emblazoned across the blank north exterior wall, high up near the top, was the name CHARTER OIL in eight-foot high letters. Since the building was next to the City Administration Building, the Law Library was on the same block, and the County Courts were on the next block over, we were going to go after the attorney office market and wanted a name reflecting legality. We thought and thought about it while the obvious was right under, or rather above, our noses. The word charter goes back to early English law, and by removing the OIL we had our building’s name. By one dictionary, the word “charter” is defined as, “a written instrument given as evidence of agreement, transfer or contract.” We had a helicopter come out to remove the O, I, and L with just about all of the TV stations and major press there, which gave us tons of publicity for the “new” CHARTER BUILDING.

Tim Delise became a great friend of both Jim and mine. He and I spent a lot of time together since we both had sports fishing boats which gave us a strong common interest. I would often walk from our office in Sullivan Square to his operations, a block away, where he sold office furniture, provided an interior design service for business and did the contracting for tenant improvements. There I would just hang around for a while and we would have typical buddy talk. One afternoon I found Tim back in his design center talking to a couple of attractive ladies. He introduced me to Joyce Solbue, who he had just hired as the head of his interior design department, and the other young lady, a new designer as well. I wouldn’t have known it at the time but Joyce would become a very important element in the rest of my business career. She was wearing that type of flamboyant outfit that designers often tended to wear to suggest an avant-garde style. I found it a turnoff that represented to me someone who might be lacking in the pragmatics of business.

Tim Delise introduced Joyce as the designer who would be in charge of the Charter Building facelift which would include designing a new lobby, elevator cab interiors, hallways and restrooms. Her role would be the interior architect of the building and from my first impression, I wasn’t very confident in Tim’s selection. It was most important that we complete the interior improvements under a very tight time schedule in order to make a marketing impact on the local business community and prospective tenants. Then I also wanted to strike the right cord in the design of these improvements to appeal to and reflect the types of tenants who we would be shooting for. She and I immediately started out by arguing for what seemed like hours about such details as the window drapes. All I could do was cross my fingers and hope that she could pull it off.

We closed escrow on the first of December 1977, and wanted to have all of the improvements completed in forty-five days, by January 15. That was really an impossible goal, but I insisted that Joyce only specify those items such as wall coverings, carpeting and furniture that would be in stock in San Diego or Los Angeles. She did a great job of design and seemed to know exactly what I wanted without my being able to express my thoughts as well as I might want. She was on site every day riding herd on the subcontractors, and we met our schedule right to the date. Jim and I, with a maximum effort, started filling up the empty space in the building with tenants. We both got involved and had a very aggressive leasing program and in about three months we were eighty percent full and climbing.

Jim and I moved into an office on the twentieth floor that looked to the south, toward that seamy area south of Broadway and the small building that we bought about a year and a half before. We were able to open up the entire south wall and create a shallow balcony of about three feet deep running the width of the building. Joyce designed a large beautiful office for the two of us in the turn of the century look with dark green leather upper walls over oak wainscoting. She also designed two oak, roll-top desks that a fine craftsman built, each desk facing an opposite wall with an oak table in the middle of the room for us to work on together. The reception area and conference room were both done in a contemporary style. The entire office was very elegant yet warm and inviting to our visitors.

Just before we moved from Sullivan Square, Bonnie McEntee left us to move to Los Angeles, but we were lucky and were able to find a terribly efficient replacement, Jane Hamilton. Jane was a very efficient assistant to us. She was very attractive in the “girl next door” look with a personality to match and our clients loved her. A lot of our work included putting together presentations with narrative, tables and graphs. The presentations were always done under a lot of pressure within short timeframes. This was in the days before word processors, and Jane was always able to get things done very effectively with her trusty Xerox Memory Writer. She was a very sweet, loyal person to work with.

A year or so after we bought the Charter Building, one of the floors became vacant, and because the space was designed for a single tenant, we had to try to find one. We heard that the executive director of the Chamber of Commerce, Lee Grissom, was looking for a new office for the Chamber and that he wanted to be in a prestigious new high-rise that had just been completed. I knew Lee quite well, and I knew that he had a real ego. When we approached Lee about going into our building, I could tell that he wanted the newer building even if its configuration was not as good as ours and it was significantly more expensive than ours. I finally told him, “Lee, if you take our building, we’ll name it the CHAMBER BUILDING.” That stroked his ego in the right direction. We literally shook hands and made the deal right then and there. Jim was concerned that it would be expensive to replace the sign, but I, knowingly, told him that all we were going to have to do was to take down the R and the T and replace them with an M and a B and we now had the CHAMBER BUILDING.

For the next two years, we continued our brokerage activities and made a lot of money through follow-on business. Let me talk about my partner, Jim, for a moment. When we met in 1972, he was divorced and the kind of really good-looking guy that women of all ages swooned over. I’m about twelve years older than Jim is, but we were equal partners and spent a great deal of our time together. Being more mature and with somewhat more business experience, I tended to take on the role of the more senior in our discussions even though we maintained an equality in the decision making process. Jim on the other hand had developed a real keen sense of the real estate business which he shared with me.

Under construction, the Meridian seen from the Marriott Marina.

At the time Jim was going with Margie, a very attractive airline flight attendant whose company both Mary and I enjoyed. Typically, I don’t think Jim wanted to marry again, at least not for a while, but Margie did, and after they were surprised with a pregnancy, they went ahead and got married. The marriage resulted in two strapping young sons and a very lovely daughter. The marriage didn’t affect our business, and the four of us got along very well. Since business was moving along so well, we had a little more free time and so I bought some cameras, set up an elaborate darkroom in an addition to our house, and got heavily into photography.

Although Jim loved family life and the kids as they came along, I could see that he was restless. I was enjoying my photography, and I suggested that he might consider getting a hobby or some other outside interest. When I asked him if he had any thoughts along this line, he said that as a kid he always enjoyed bass fishing. Since San Diego’s reservoir lakes were known to have some of the best smallmouth bass fishing in the country, I suggested that we take off the next day and try out one of the lakes. That afternoon, we drove over to a sporting goods store and equipped ourselves with rods and tackle, and the next day we rented a boat and spent an enjoyable morning out on the lake. Fishing was quite relaxing, and we went out one or two more times. On one Monday morning, Jim came into the office and asked me to go for a ride with him. We drove out east to El Cajon to a boat dealership. He walked me into the showroom and showed me the most elaborate bass boat I’d ever seen. Serious bass fishermen can invest a lot in their boats, and the one Jim had his eye on was no exception. It was finished in a red fiberglass that really sparkled and was equipped with every do-dad you could imagine: a huge motor, a trolling motor, radio, depth finders and so on.

About a week later, he took delivery of the boat on a very fancy trailer and was out fishing every day for the next week after that. Fishing actually became nearly a total obsession for him. Very often in the morning Jane would tell me that Jim called and said he wouldn’t be in. We knew where he was. Unfortunately, we didn’t have cell phones in those days, and so if he was out on a lake there was no way to stay in touch with him. To a degree, we seemed to grow apart, Jim with his fishing while I became so active in my photography that I even published a book of my photographs.

About that time, our black city councilman, Leon Williams, recommended to the mayor and the rest of the City Council that I be appointed president of the board of the newly established Southeast Economic Development Corporation, the SEDC, and I was so appointed. The southeast part of the city, the black and Hispanic area, needed help in the development of industry and commerce. In addition to being a prestigious position, it required my setting up a new board of directors and entailed a fair amount of work. However, even with this added workload, I was still able to carry on our work of industrial brokerage.

Business was going well. We had many new clients developing and the activity generated from our past work continued to pay us a high income. I didn’t mind the workload I was carrying, and even though I must have been a little disappointed by not having the camaraderie of working so closely with Jim, I was happy and always on the lookout for the next big deal to match or exceed the Chamber Building purchase. In the period of time since we purchased the Daily Transcript building four blocks south of the Chamber Building, the city declared the entire area south of Broadway, encompassing our little building, a redevelopment area and created the Centre City Development Corporation to handle the development of that area. This gave the city the right to use their power of eminent domain to acquire and amass properties for various projects. A large residential developer, Pardee Construction, using the CCDC’s powers, acquired a large area three blocks east of the Daily Transcript building and built a couple of hundred townhouse condominiums. Keeping tabs on what was going on, I became aware that CCDC was considering amassing six city blocks to allow the Hahn Company to build a large shopping center immediately across the street from our little building. The land immediately along the bay was controlled by the Unified Port District, and I was aware that they were planning to provide land just three blocks south of our little building for the construction of a two-tower high-rise Marriott Hotel. Talk about luck; we didn’t know it when we bought it, but the little Daily Transcript building was now smack dab in the middle of all of this new, major activity.

One day, I was out on our Chamber Building balcony looking four blocks south to the old Daily Transcript building and musing about what we might do to get a part of the action of all of this redevelopment activity. That twelve thousand, five hundred square-foot parcel represented about twenty-one percent of the full sixty thousand square feet of the entire block. Mr. Kazuo Inamori, the president and chairman of Kyocera, the company to whom we sold the Honeywell building (on Kearny Mesa), asked me on several occasions if we could put him into some downtown investment property for his personal portfolio. It just so happened that there was a fifteen thousand square-foot parking lot on the corner of our block next to our Daily Transcript building that we suggested he buy. He did, and with both parcels and his acquiescence, we now controlled 27,500 square feet, or forty-six percent of the entire block. Now the question was what to do with it. The area was not as well suited for office building use since most offices were located north of Broadway in the area of the Chamber Building. Hahn was planning to build a shopping center right across the street, so there was no reason to build a shopping center to compete with them. Marriott was planning a large hotel complex three blocks south, and so there was no sense competing with them by building a hotel. Pardee had built residential, middle income, condominiums to the east and had probably satisfied that immediate market.

The one thing lacking in the redevelopment plans of CCDC was a high-rise, luxury condominium. Now that was a really crazy idea. Regardless of future planning, the area was still a squalid, seamy collection of cheap bars, run down transient hotels and old warehouses. Jim and I had no experience at all in residential development, and here we were thinking about very expensive residences. We had never built a building over one story tall, and in essence, we had never built a building with a stairwell or an elevator except for our experience in revamping the Chamber Building, which was only cosmetic work. Our total net worth at the time was probably less then ten million dollars, even though our income reflected a high cash flow. In examining the possibility of such a project, I estimated that we would have to borrow as much as seventy-five million dollars. It would be analogous to a typical family earning a hundred and fifty thousand dollars a year with a net worth of five hundred thousand dollars going to a bank to get a loan to buy a house costing $3,750,000. Totally impossible.

At first, Jim was skeptical. He could easily see that the project that I had been studying was nearly impossible, but at the same time he was intrigued and wanted to be a part of it all. Jim has a good head, and we put both of ours together to figure out how to make it happen. To pique his interest, and since he hadn’t ever been in a building like the one we were discussing, I got him into the car and we drove up to Wilshire Boulevard where six luxury high-rises had recently been built. The brokers who were selling the condos there were willing to show us the buildings, and, after looking them over, Jim was ready to go ahead. However, we uncovered a very serious problem on that trip. The condominiums on Wilshire were not selling very well at all. To go ahead, we had to really convince ourselves that there could be a market for this product in San Diego and that we could build a superior product.

The next step was to determine if we could get the CCDC to support us by condemning the other properties on the block, since we needed the entire block to construct the type of building that we had in mind. I spent long hours doing various analyses to come up with a mathematical model of a building about twenty-five stories tall, with about two hundred units selling for an average of about $600,000 each. I assumed that the project construction cost would be about fifty million dollars, and we would need to borrow a total of about seventy million dollars to cover the soft costs of architecture and other design costs, marketing and the cost of interest to pay the loan until the units were sold. I honestly don’t know where I learned how to do these kinds of analyses, but it was something that seemed to come naturally to me. I wasn’t at all good in math in school, but maybe it was the two courses I took at the University of Minnesota in statistics and economics that gave me the knowledge I needed. This was all before personal computers came into vogue, but even ten years later, when Rosalyn Glassford, my administrator at that time, was able to do spread sheets on her computer, I still did sixty-month-long proformas by hand.

I set up a meeting for Jim and me to meet with Gerry Trimble, the executive director of CCDC, and Dean Dunphy, the president of the CCDC Board of Directors. My experience in chairing the SEDC board gave me a fairly good insight into what had to happen in order to create a project like this in a redevelopment area. The typical approach would be for the developer and CCDC to enter into a Redevelopment Agreement, whereby the CCDC would use eminent domain to buy up whatever remaining parcels might be needed and then sell that land to us based upon our agreement to build the project.

We figured that Gerry and Dean would meet us with open arms, since something like the project that we envisioned would be a perfect fit to the overall CCDC program. We also thought that the fact that since we had control of almost half of the land, their job would be a lot easier since they would have to acquire less land parcels. Further, they were having a difficult time getting any developers to do projects in the redevelopment area at that time since, by its nature, that part of town was not a very desirable area. Further, there was also a great deal of risk involved which had deterred a lot of developers. Because of this risk, in most cases, the CCDC subsidized projects by selling the land to the developer for less than what they paid for it.

We were shocked, however. Not only did they react negatively to our proposal, but they were downright hostile. We did not expect this by any stretch of the imagination. I didn’t know Trimble, who came to San Diego recently from the Pasadena redevelopment agency, but I did know Dean in passing. To put this into perspective, Jim and I had an impeccable reputation in town, and I was reasonably close to Mayor Pete Wilson, who went on to become Governor Wilson. I had also done a number of civic spirited projects for the city beyond my work on SEDC. We were instrumental in bringing some large corporations to San Diego as part of our business career. We were substantial contributors to local charities and, in general, considered to be of very high character. Considering all this, we were taken aback by their unreceptive attitude. We walked away from the meeting stunned. They gave no explanation for their response to us, but I could easily read that Trimble thought that we were small-town potatoes compared to many of the large development companies that he was accustomed to dealing with. He had a real haughty air about him and couldn’t imagine how we could pull something like this off. Dean, on the other hand was a large general contractor in the area, and I realized that he might have been unhappy that we had not chosen his company on several projects in the past, but rather had used Nielson Construction Company.

When we got back to our office, our first thoughts were that maybe they were right.

Coming Up Next: Walt Smyk Gets Feisty