Tough Love

San Diego — Bay-front developer Doug Manchester, who has taken to calling himself "Papa Doug," has made a big chunk of his multimillion-dollar fortune doing deals with the Port of San Diego. The onetime life-insurance salesman found his lifetime holy grail when he got the lease on the site that became the downtown Marriott Hotel on the bay. Then he backed Roger Hedgecock for mayor and was rewarded with Hedgecock's support for a new convention center next door to the Marriott. Manchester also put up the nearby Hyatt Regency and later expanded it, thanks to yet more leases provided by the port. Now, the developer has wrangled negotiating rights for two other prime waterfront parcels. One is the big piece of Navy-owned property at the corner of Broadway and Harbor Drive, presently the subject of a raging controversy about how much park space the developer might be willing to provide as part of a new office project proposed for the location. The other is the old Lane Field site -- currently a parking lot -- on the north side of Broadway at the same intersection. That land is owned by the port, and Manchester has gotten together with the Viejas Indian tribe in an attempt to cut a deal with port commissioners to develop yet another hotel and a new cruise-ship terminal there. And judging from a letter by Karen Jane Weymann, the port's assistant real estate director, Manchester is up to his usual game of hardball.

"At its May 6 meeting, the Board of Port Commissioners authorized District staff to enter into an Exclusive Negotiating Agreement (ENA) with the Manchester-Viejas team for ninety days," Weymann wrote Manchester Financial Group's Perry Dealy on June 7. "Although you agreed to the terms of the ENA at our May 22 meeting, we still have not received the executed documents. Further, the response you sent on June 5 to our draft Term Sheet is inconsistent with the ENA and proposes to substantially change the Board's direction.

"You proposed to reduce the option consideration from a non-refundable $4.5 million to a refundable $800,000; remove the requirement to acquire the 1220 Pacific Highway leasehold from the U.S. Navy; and, delay negotiations of the economic terms of each of the development transactions to a later date. Manchester's obligation to advance predevelopment costs for the Cruise Ship Terminal and work proactively with the Port to obtain financing has also been revised." With the fate of the project seemingly hanging in the balance, Weymann is tight-lipped, saying only that negotiations will continue until early August, when they may or may not produce an agreement. Her letter chastising Manchester, she says, was inadvertently included in a packet of project updates provided to port commissioners.

Meanwhile, a threat by Princess Cruises to discontinue calling on San Diego next year because of inadequate terminal facilities has been rescinded. In a June 6 e-mail to port marketing director Rita Vandergaw, Princess's "Director of Shore Operations-Europe and Exotics" Bruce Krumrine wrote, "I'm afraid I have some disappointing news for you. Our plans to homeport a ship in San Diego for the 2007/2008 season have now changed and we will not be going forward with this deployment." The dispute, says Vandergaw, arose because two of Princess's 23 scheduled calls conflict with visits by other cruise ships, a situation that will force Princess to process their passengers in a temporary tent on the B Street pier rather than inside the permanent terminal building. But two weeks later, Vandergaw says, the company changed its mind and agreed to use the tent in one case and the Broadway Pier in another.