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Hardage back in

Port decides to split cruise terminal, Lane Field hotel developments

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The redevelopment of a portion of downtown San Diego's North Embarcadero has been split by the San Diego Unified Port District into two projects: the B Street cruise ship terminal and a pair of hotels on neighboring Lane Field.

At one point, local developer Manchester Financial had exclusive negotiating agreements with the port on the cruise ship terminal and Lane Field hotels (with the Viejas Indian tribe), and with the Navy at the Broadway Complex.

Manchester is still negotiating on the Broadway Complex, but with the split of the cruise ship terminal and Lane Field hotels into separate projects, the port has let a former bidder back into the process for the Lane Field hotels.

The cruise ship terminal, which could be as large as 200,000 square feet on the B Street pier, will now be bid separately.

The Lane Field hotels include a 500-room and a 347-room hotel, 90,000 square feet of retail space and 2,518 parking spaces. Another 500 or so parking spaces would be at the cruise ship terminal, but that will likely be part of the package when the terminal is considered at some future date.

The split in the terminal and hotel projects came about because a 90-day exclusive negotiating period Manchester had with the port expired last month. The port then was free to allow a consortium of Hardage Suite Hotels, Lankford & Associates and Hensel Phelps Construction to step back into the competition. "We have the resources to do this project," said Sam Hardage, Hardage Suite Hotels principal.

For a time, it even appeared that Manchester might be dropped since its 90-day exclusive negotiating period had expired.

"We've had a pretty good run with Manchester Financial Group and they were unsuccessful at closing the deal," said Commissioner Rocky Spane.

But a move that would have excluded the Manchester team failed on a tie vote. Therefore, the Manchester team is still alive.

Calls to Hardage, Lankford and Hensel Phelps were not returned by press time.

Hensel Phelps is building the 1,200-room Hilton Hotel on the old Campbell Shipyard site next to the Convention Center. Lankford, which developed the Nokia facility in the Scripps Ranch area, is the developer of the 410,000-square-foot Broadway 655 project downtown. That project, the first downtown office development since 1991, has a 356,000-square-foot office component along with retail and residential uses.

Manchester is teamed with Viejas Enterprises, which had originally been teamed with Federal Development of Washington, D.C., before that firm took itself off the team earlier this year. When that happened, Viejas brought Manchester on board.

Perry Dealy, Manchester president, said his firm could start construction on the cruise ship immediately if given that chance.

By having both Manchester and Hardage in the contest, the port lengthened the processing time to six months from a projected four months.

While this isn't much of a difference, port staff concedes that Manchester may be in the best position to acquire the property at 1220 Pacific Highway from the U.S. Navy. That parcel is necessary to complete the Lane Field project.

On Tuesday, the port commissioners very briefly discussed what would happen if the entire process were opened up again. The conclusion is it would add another year to what has already been a lengthy process.

Dealy said he has received numerous letters of interest from top hotel operators such as Westin and Fairmont Hotels. "Quality hotels such as these can generate a significant rent," he said. "And with us, you don't have to worry about a learning curve ... Nobody can move faster."

While Manchester, which developed the two Marriott and the two Hyatt towers next to the Convention Center, clearly has the most large hotel experience, it wasn't able to close the deal to the port's satisfaction during the 90-day period. Perhaps further complicating matters is the fact that Manchester submitted a revised proposal in recent days. Dealy declined to reveal the nature of those changes saying that he didn't want his competitors to know what they were.

Manchester doesn't only have to worry about the Lane Field hotels. The company is developing the nearby Broadway Complex on Navy property in the North Embarcadero.

Manchester has revised that plan several times, and each time Centre City Development Corp. officials expressed concerns about the massiveness of that development.

"We took 300,000 square feet of the development and we continue to address the concerns," Dealy said.

The roughly 15-acre site is bounded by Broadway, Harbor Drive and Pacific Highway, and could have as many as 1,475 guest rooms in four buildings, 1.65 million square feet of office space, including 365,000 square feet for the Navy and commercial tenants, 25,000 square feet of retail and perhaps 3,000 subterranean parking spaces.

The proposed $1.3 billion, 2.94 million-square-foot project that has been dubbed Manchester Gateway is scheduled to be discussed at a CCDC hearing on Sept. 27.

CCDC won't be the only entity weighing in on the Broadway Complex plan. The California Coastal Commission, which killed a Manchester resort project in Oceanside, will also have its say on the project.

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