It was touted as an urban village, akin to a combination of Horton Plaza and Point Loma's Liberty Station, at the doorstep of San Diego State University. One hundred fifty-three thousand square feet of retail, including an Urban Outfitters and a 7-Eleven; a 14-theater multiplex cinema; housing for 1300 students; and 110,000 square feet of university offices, all designed, built, and financed by the San Diego State University Foundation — a nonprofit university auxiliary — at no cost to taxpayers. Estimated price tag: $350 million.
Christened the Paseo, the elaborate development proposal, 18 years in the planning, had the blessing of everyone from neighborhood community groups to the San Diego City Council to San Diego State University president Stephen Weber, who was also president of the SDSU Foundation (renamed the San Diego State University Research Foundation early last year). Because it was part of the City's College Community Redevelopment Project — part of Mayor Dick Murphy's City of Villages — the commercial portion of the Paseo's real estate, which would be subject to property taxes, would provide the neighborhood with new revenue for improvements. It sounded too good to be true, and it was.
Until the spring of last year, only a few insiders knew that the Paseo was in trouble, beset by internal criticism and bureaucratic bickering. Records recently disclosed by the university after a request under the state's Public Records Act reveal that as early as mid-2003, Weber's bosses in the California State University's chancellor's office in Long Beach had voiced serious doubt about the project.
In a June 30, 2003, letter to Richard West, CSU's executive vice chancellor and chief financial officer, Weber wrote, "We now understand that your key concern is the level of risk engendered by the retail component of the project. As we discussed, we continue to review the retail component of the project and its associated risk, and we will pursue an updated housing demand study. We have also determined to undertake a risk mitigation assessment and develop an exit strategy.
"We support your approach of retaining a consultant to advise you and Chancellor Reed as to the viability of the retail component," Weber continued. "We ask that this process be initiated as soon as possible. The cliché that 'time is money' is probably more true in property development than in most endeavors. It is also difficult to be 'on hold' with interest rates at a fifty-year low. Thank you for your reasoned approach to this issue, which is so important to our campus.Clearly, the project was endangered, if not facing outright demise. Later West and others would make clear that the chancellor's office would never approve the project if the foundation financed it, claiming that the foundation's debt, though off university books, would become a de facto obligation of the state.
The foundation had already completed two smaller projects in the redevelopment area, a 66-unit apartment complex costing $8.5 million and the $16 million Fraternity Row. Incorporated in 1943, the foundation has an annual budget of $200 million and over 5800 employees who administer research grants and other funds and manage a large real estate portfolio that includes parking lots, apartment buildings, and a medical facility near Alvarado Hospital.
Neither Weber nor his bosses at CSU went public about their ongoing dispute, even though the foundation had spent millions of dollars on land and architectural designs for Paseo, and City redevelopment officials were spending taxpayer dollars in planning for the project.
The documents reveal that as project delays mounted, Weber lost confidence in his staff and that of the foundation. On July 25, 2003, he fired off a memo regarding development of the school's master plan to provost Nancy Marlin, Student Affairs vice president James Kitchen, and Sally Roush, his top deputy and the university's vice president of Business and Financial Affairs.
"You are each superb in your own area of responsibility, but lately I have observed a diminution of collegiality and a loss of focus. Simply put, we can afford neither as we move into the challenging years ahead.
"I recognize the increasing pressures that the budget imposes on us all, but you need each other, and I need you all working together as a team if we are to lead San Diego State through these difficult waters."
On September 8, Weber sent a memorandum marked "Confidential" to SDSU Foundation chief executive officer Frea Sladek complaining about the foundation's plans to include a sports bar and a 7-Eleven as part of the Paseo.
"To be perfectly candid, what is bothering me is that this seems to be driven completely by staff rather than having your endorsement after coordinated conversations with the campus.
"For example, at our last presentation we found the Gerdi [Jerde, the foundation's architectural firm] folks redesigning the campanile. I am not clear why the Foundation is spending its money on redesigns of the campanile, but I am clear that it is completely inappropriate.
"Now I am told that Gerdi folks have been asked to design the interface between the Paseo and the campus. I want to be very clear that this is going to be the campus's call rather than the Foundation's.
"If the Foundation would like to look at the interface between the campus and the Paseo, it should do it in rigorous conversations with Sally.
"Do not misunderstand me, we are not unwilling to look at the interface -- in fact, I do not think the interface has had as much thought directed to it as it should have. It is just that the project has to be a collaborative project between the university and the Foundation."
Six months later, on March 30, 2004, Weber dispatched a memo to Roush requesting that she assemble his executive staff. "I want to convene a summit with regard to the outstanding issues on the Paseo Project. By 'outstanding issues' I mean those aspects of the project with regard to which you have not been able to reach agreement."