Construction of a 90 percent Chinese-owned hotel is proceeding at the corner of Broadway and Harbor Drive.
  • Construction of a 90 percent Chinese-owned hotel is proceeding at the corner of Broadway and Harbor Drive.
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Nowhere is America's face-off with mainland China in the dawning era of president-elect Donald Trump more materially mapped than the corner of Broadway and Harbor Drive in downtown San Diego.

Douglas Manchester

Douglas Manchester

There, ex–Union-Tribune publisher and Republican kingpin Douglas Manchester, one of the state's biggest donors to the Trump campaign, is readying plans to create his long-sought Navy Broadway Complex, a high-rise regional Navy headquarters adjacent to luxury hotels, offices, and retail.

Jerry Sanders

Jerry Sanders

Though critics have blasted the behemoth for its overwhelming size, architectural bloat, and absence of significant public access, the complex's long march has proceeded over all manner of objections, staunchly backed by the city's business establishment led by ex-GOP mayor and chamber of commerce honcho Jerry Sanders, a champion of free trade and outspoken Trump foe.

The last obvious impediment to what the ex-publisher calls Manchester Pacific Gateway evaporated this week when the U.S. Supreme Court declined to hear an appeal of a lawsuit against the project, charging that the Navy had not adequately addressed the environmental impacts of a terrorist attack on the cluster of towers.

Cory Briggs

Cory Briggs

Plaintiff’s lawyer Cory Briggs confirmed in an email that his client's legal battle against the 2.9-million-square-foot project — on 15 acres of Navy bay-front land leased to Manchester for 99 years — ended with the high court's decision not to consider its appeal.

But might there be other shoes to drop — in the form of Trump-administration blowback against the government of China, whose China Orient Asset Management International is 90 percent equity owner of the new 400-room Intercontinental Hotel now going up across the street from Navy Broadway?

The Chinese Intercontinental equity ownership was revealed well after the Navy and local regulators had signed off on the Manchester project and before November’s election.

In the free-trading age of Barack Obama, fellow Democrats, and allied Republicans — including Sanders and a coterie of San Diego’s downtown establishment — saw the China deal and others like it as a way of keeping the city's hotel building boom going with foreign capital as U.S. equity firms balked at such investments, fearing an overbuilding glut and ultimate mass bankruptcies.

Three years ago Manchester himself turned to China in an ultimately failed attempt to sell U.S. immigration visas to well-heeled Chinese investors to obtain capital for an Austin hotel he sought to build.

The money for that project was ultimately supplied by Santa Monica billionaire celebrity distress lender and vulture investor Thomas Barrack, Jr., a graduate of USD law school, and like Manchester a Trump backer.

Manchester now must come up with another hefty round of funding to build the Navy Broadway complex, estimated to ultimately cost $1.3 billion, and which in addition to the Navy headquarters, is set to feature two posh hotels requiring megamillion-dollar financings.

As in the case of his Texas project, Manchester is said to be casting his net far and wide, with results not yet disclosed to the public.

"Manchester said he hopes to finalize by Dec. 29 the addition of an unnamed joint venture partner to help redevelop the Navy Broadway Complex at the foot of Broadway," the Union-Tribune reported November 4.

"His development consultant, Perry Dealy, said demolition of the vacant Navy warehouse and other buildings will begin in February, followed by a construction start later in 2017 on a new Navy regional headquarters paid for by Manchester."

The idea of using the Chinese as partners of last resort for Manchester’s Navy project might or might not appeal to the new administration, with questions about the willingness of Trump-nominated secretary of defense James "Mad Dog" Mattis, a Marine ex-general, to sign off on a controversial foreign deal that would rekindle nagging issues of terrorism and espionage,

This October, the Obama administration’s Treasury-led Committee on Foreign Investment in the United States blocked a takeover of the Hotel del Coronado by mainland Chinese-owned Anbang Insurance Group, citing the luxury hotels’ proximity to a bastion of nearby military facilities, per a report by Bloomberg News.

"The base comprises eight installations that lie on either side of the hotel, including an air station, amphibious base, landing fields, radio receiving facility and warfare training center. It’s one of the main training grounds for the special-operations Navy SEALs."

Then, on December 8, Democratic House member Alan Lowenthal wrote U.S. Treasury secretary Jacob Lew requesting an investigation into the rumored sale to the Chinese of a Long Beach hotel adjacent to that city's Navy base.

"The sale of the Westin Long Beach raises national security questions because the hotel is next door to the U.S. Customs and Border Protection – Los Angeles/Long Beach Sea Port office, which handles sensitive information related to interstate commerce, and because the hotel’s clients have included the Department of Defense, Department of Justice, Department of Homeland Security and the Federal Energy Regulatory Commission, some of which hosted foreign diplomats."

Said Lowenthal of a recent trip to China, "We were constantly informed that you cannot say anything in your hotel room. Everything is wired.”

All of which may or may not leave Manchester’s hunt for a partner twisting in the wind, or at least costlier, as an incoming president Trump turns up the heat on the Chinese government, forcing the developer to call on more expensive domestic sources of capital, if available.

"The NSA or CIA might assess risks differently when it comes to China," Thilo Hanemann, a China specialist at Rhodium Group told L.A. Times columnist Michael Hiltzik in March about the use of Chinese equity to build U.S. hotels.

Anne W. Salladin, a lawyer at Stroock & Stroock & Lavan, added, "there is a history of espionage" by Chinese investment companies, "and the extent of state ownership is not always clear."

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Comments

Visduh Dec. 17, 2016 @ 9:22 a.m.

This is an excellent piece of reporting by Matt. The whole thing would likely have passed with no notice by the "usual suspects" in the local media or even national media. It was refreshing to see China referred to as "Red China" in the headline. That term or "Chinese Communist" (sometimes shortened to "Chicom") have been banished in recent times, probably due to misguided political correctness. Make no mistake that the current government of China is the same one responsible for turning the Korean War into a stalemate at the cost of thousands of American lives, the Cultural Revolution, and recent persecution of Falun Gong. That regime is not friendly to the US, despite all the trade that goes on between the two nations.

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dwbat Dec. 17, 2016 @ 9:39 a.m.

Will a Chinese business next try to build a new hotel close to San Diego's SPAWAR Systems Pacific headquarters, for spying purposes? Will we next allow a Russian oligarch to fund a new hotel across from MCAS Miramar?

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AlexClarke Dec. 19, 2016 @ 7:17 a.m.

While foreign investment is desirable we should be choosy about what foreign investments we embrace.

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