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Manchester moving forward with Navy Broadway Complex despite legal obstacles

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Plans to redevelop the Navy Broadway Complex in downtown San Diego are moving forward, even while the project's start continues to be delayed by legal challenges.

Manchester Financial Group, which signed a 99-year lease for the rights to the 14.72-acre waterfront parcel, is currently courting potential hotel and retail companies to occupy a proposed 2.95 million square feet of mixed-use development.

"We're working hand-in-hand with hotel developers for joint venture opportunities, and we have a couple of key candidates that we're working directly with now," said Perry Dealy, former president of Manchester Development who continues to work on the project.

"It's the same thing on the office portion. We have a couple of national stature office developers hoping to do a joint venture, so we continue to position the project to go forward next year after we resolve all of the legal hurdles."

Manchester Financial Group signed a 99-year lease for the rights to a 14.72-acre water-front parcel that will potentially be used for hotel and retail space.

Dealy, now president and CEO of his own company, Dealy Development Inc., said the $1.3 billion project, called Pacific Gateway, will be highlighted during the International Council of Shopping Centers conference Sept. 9-12 in San Diego.

"We're very excited and optimistic in continuing to work toward the ability to start the development cycle," he said.

Manchester hopes to break ground in mid-2009, with the intention of having occupancy for the first phase by the opening quarter of 2012. No construction can begin, however, until the resolution of several lawsuits.

The Navy Broadway Coalition, a grassroots citizen organization, has filed three complaints, including a pair involving Pacific Gateway's environmental review. It wants Manchester and the Navy to update their environmental impact statement, originally issued in 1992, with a new analysis.

The group filed suit in federal and state court, claiming Pacific Gateway's plans violate the National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA), respectively.

A federal judge recently ruled the government didn't allow for adequate public participation in the review process under NEPA, forcing the Navy to address the issue before going forward.

"In a democratic society where the government is expected to do everything openly, this is a huge victory," said Cory Briggs, an attorney representing the Navy Broadway Coalition. "You can't make land-use decisions behind closed doors.

"The Navy will have to include the public in the process, and we'll see what it does with that input."

San Diego attorney Steve Strauss, who is representing Manchester in the state complaint, said he was disappointed in the judge's decision but downplayed its significance.

"It doesn't challenge the merits of the environmental analyst itself," he said.

The Navy Broadway Coalition's state lawsuit, meanwhile, is set to go to trial later this year.

The citizen group also has filed a federal claim based on the Freedom of Information Act as it seeks to get a complete copy of the Navy-Manchester lease. Briggs, of Briggs Law Corp. , said portions of the development provisions have been blacked out, and certain financial details are blocked as well.

"The Navy (has) to meet certain financial requirements," he said. "The Navy has to get a good deal. So how do we know as taxpayers that the Navy did what Congress wanted them to do?"

The California Coastal Commission is attempting to re-examine the environmental impacts as well.

But Strauss, a partner with Cooley Godward Kronish, said the project is not in the state agency's jurisdiction because the property is still owned by the federal government. Additionally, a previous court ruling determined the property is not in the tidelands.

Strauss is confident Manchester will overcome the myriad litigation, and he maintains Pacific Gateway's impacts have not changed since the original review.

"In '92, we estimated what the impacts would be, and the project being proposed today is exactly the same project," he said. "They (the Navy Broadway Coalition) haven't demonstrated anything that would cause a re-analyst.

"In my view, at no point has anyone determined that the environmental analyst was inadequate, and I'm confident it'll be upheld."

While frustrated by the legal delays, Dealy understands it's part of the process, and said ultimately it can be helpful.

"It clearly allows the public to have a good opportunity to have the appropriate dialogue and interface," he said. "One thing we did go through was a year and a half of extensive public outreach. Our master plan was approved after going to dozens of public meetings and organizations, so we engaged in a pretty extensive public process with CCDC (Centre City Development Corp.) And I think the project ended up being a much better project because of the process we went through."

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