Sempra Energy to Sell Key Downtown Property to Ballpark District Developers

Business Wire, March 11, 1999

SAN DIEGO--(BUSINESS WIRE)--March 11, 1999--The public-private partnership to redevelop a 26-block Ballpark District in downtown San Diego took a giant step forward with the signing of a letter of intent by Sempra Energy to sell approximately 11.5 acres of real estate to the ballpark project developers for $24 million.

The 12 parcels included in the sale, encompassing nearly 500,000 square feet, account for about one-third of the total land needed for construction of the ballpark and the surrounding private development, as required by the voter-approved Memorandum of Understanding between the San Diego Padres and the City of San Diego. The site includes the future right-field area of the ballpark, plus the planned "technology campus" with mid-rise and high-rise offices and other facilities.

The Ballpark District redevelopment project, approved by 60 percent of San Diego voters in the November 1998 general election, is being undertaken by the City of San Diego, the Centre City Development Corp. (CCDC), the Padres, JMI Realty Inc., and Burnham Development Group, the project developer. The private acquisition of the key parcels owned by Sempra Energy was accomplished at no cost to the City or CCDC in an effort to expedite the private development that is critical to the ballpark project.

The property included in the sale has been owned by Sempra Energy's San Diego Gas & Electric (SDG&E) subsidiary for more than a century. Therefore, proceeds from the land sale will go directly toward helping lower rates for SDG&E's customers. SDG&E filed last month with the California Public Utilities Commission to eliminate the majority of the "Competition Transition Charge" (CTC) from customer bills by July 1, 1999, which will result in a drop in customer electric rates of an additional 10 percent or more from current levels and contribute an estimated $400 million in benefits to the San Diego regional economy. The proceeds from the sale of the Ballpark District property will contribute to the reduction of the CTC.

"Baseball season may still be a few weeks away, but we've already hit a home run for San Diego," said Donald E. Felsinger, group president, unregulated affiliates for Sempra Energy. "It's a win for Sempra Energy, it's a win for the San Diego community and it's a win for the Padres. It is appropriate that the property that once played such a significant role in bringing energy to San Diegans will play a key role in re-energizing the future of downtown San Diego."

"Including the Sempra Energy transaction, JMI Realty has arranged to acquire approximately 80 percent of the land needed for the Phase I private development required by the agreement between the Padres and the City," said John C. Kratzer, president and chief executive officer of JMI Realty Inc., San Diego Padres owner John Moores' real estate investment firm. "Significantly, by acquiring this land at no cost to the City or CCDC, we have eliminated the need for CCDC to borrow funds to finance acquisition of the property."

"The sale of the Sempra Energy property is a giant step in keeping the Ballpark and the redevelopment on schedule to open for the 2002 Baseball season," said Larry Lucchino, Padres president and chief executive officer. "The progress that has been made in planning and designing the Ballpark District and moving ahead toward construction of a vibrant new downtown neighborhood is remarkable. The Sempra Energy transaction keeps us on track to implement the vision for the future that was decisively approved by San Diego voters."

To help meet the private development obligation on which the ballpark is based, Moores made an investment to acquire one-half of John Burnham & Co., San Diego's premier real estate company, in January. Burnham Development Group, the project developer, is comprised of well-known real estate and construction professionals who have more than 100 years of combined experience and have developed some of San Diego's most notable real estate projects.

"The purchase of this property also removes a significant amount of uncertainty and risk related to the costs of acquiring land for the project," said Dennis Cruzan, president and chief executive officer of John Burnham. "This is another step in the movement toward breaking ground."

The property included in the sale is spread across 12 parcels located downtown from 9th Avenue to 12th Avenue between L Street and Imperial Avenue, plus two blocks south of Imperial Avenue between 9th Avenue and 11th Avenue. The ballpark is the anchor and catalyst for redevelopment that will include three new hotels, the technology campus, retail and residential developments and public parks and amenities.

From the late 1800s through 1996, the SDG&E property was the site of gas manufacturing facilities, an electric generating station and other energy services buildings. Today, five empty SDG&E buildings remain on the site, including structures that once served as carpenter shop, gas service training school, a research and development lab, an auto and a truck fleet building and a general services building. The future of these buildings will be determined by the new owners.