The developer of Merge 56 is seeking financial assistance from local communities to help complete the extension of Camino Del Sur.
The $22 million road extension, considered a city capital improvement program project as part of the Merge 56 development in Torrey Highlands, was shovel-ready until COVID-19 hit.
In order to move the project forward, Developer Gary Levitt is requesting to borrow $5 million each from Carmel Valley, Del Mar Mesa and Pacific Highlands Ranch facilities benefit assessment funds, also known as developer impact fees. There is currently $50 million available in facilities benefit assessment (FBA) funds between the three communities. These amounts are proposed to be paid back in two to three years through the collection of developer impact fees from the Torrey Highlands community, with 4 percent interest.
Neighboring Rancho Penasquitos Planning Board has already committed $7 million of its FBA funds so the project could move forward.
Levitt said San Diego City Councilmembers Chris Cate and Mark Kersey have been supportive of his plan and Council President Pro Tea Barbara Bry asked that he take on the task of getting support from the affected planning groups. Congressman Scott Peters also wrote a letter to the mayor supporting the Penasquitos’ community transfer.
“The critical road extensions included in the project will provide a transportation link and potential lifeline to residents in a region with few options in the event of a wildfire evacuation,” Peters wrote.
Merge 56 will be a mixed-use town center on the extended Camino Del Sur that will include a cinema, retail, restaurants, office space, a hotel and 242 residential townhouse units, surrounded by public and green spaces.
When Levitt purchased the property in 2013, he took on the responsibility of building out major city infrastructure that was originally proposed to be built in 2006: the extensions of Camino Del Sur and Carmel Mountain Road that would provide connectivity for the Park Village neighborhood.
Back in 2006, a lawsuit challenging the roads’ impact on vernal pools delayed the project and by the time the lawsuit was resolved in the city’s favor during the 2008 recession, the city no longer had the money to build the streets and the permits had expired.
“The reality is today you have all of the southern edge of Rancho Penasquitos west of Black Mountain Road, something in the vicinity of 2,200 homes, that have one way in and one way out,” said Levitt of the Park Village community. “It’s a disaster waiting to happen.”
As part of Merge 56, Levitt updated and obtained the permit for the streets. They received approval for the project and it was supposed to be reimbursed through Torrey Highlands FBA funds. Levitt pre-sold a portion of the Merge 56 project to a homebuilder to finance the road, however, unfortunately when COVID-19 hit, that homebuilder abandoned the project and the funds dried up. They had been shovel-ready on March 1 and on March 15, it came to a halt.
The Torrey Highlands community currently has no money in the FBA—the money is tied up in development such as Merge-56, the Preserve at Torrey Highlands office complex, the Rhodes Crossing housing development and Kilroy’s Santa Fe Summit office project that will all be able to be developed once the streets get built.
“It’s a Catch-22 because there’s no money now so you can’t build the streets but at the same time you can’t collect from the development community because they don’t have the streets,” Levitt said.
As Torrey Highlands has no money available, Levitt is seeking to borrow from the neighboring communities that have funds available now. Pacific Highlands Ranch has $28 million available with $10 million set aside for a neighborhood park, trails and village green with an additional $46 million anticipated to be collected. Del Mar Mesa has $10 million available with money set aside for a fire station feasibility study and $11 million still to be collected.
Carmel Valley has $22 million in FBA funds and while Levitt said there “aren’t any projects of significance that are currently in process,” Carmel Valley Community Planning Board (CVCPB) Chair Frisco White pointed out that the number is not correct. Although not listed in the city’s public facility financing plan, White said they have set aside $1 million for a traffic study that they have been trying to get the city to move forward on for nearly five years.
“I’m frustrated that we can’t get our money to do our livability project but all of the elected’s and city staff will jump around and support a request for a private development project,” said CVCPB Vice Chair Barry Schultz.
White said before approving any loan they would want written assurances from the city that they would be paid back and they would also want to ensure that all of the projects they anticipated to be funded by FBA funds are accurately reflected in the city’s financing plan, such as parks improvement projects.
“I’m a little uneasy loaning money from Pacific Highlands Ranch, in particular, because the community is still developing,” said CVCPB member Danielle McCallion. She said she wouldn’t want to see a PHR project delayed because they weren’t reimbursed in a timely manner. As an example, Pardee Homes had also proposed using FBA funds to complete Village Center Loop Road.
During public comment, Pacific Highlands Ranch resident Karen Dubey said she did not think the board should be able to give out the community’s money as they have a super-minority on the board with only two representatives.
“I feel like the city has really wasted money over in Torrey Highlands building this weird overpass about one block from the exit,” Dubey said, referencing the Torrey Meadows Drive bridge over SR-56 that is currently under construction. “They should’ve used that money for this project.”
As the advisory chair of the PHR Recreation Community Group, Dubey said they are starting planning on the new park on Solterra Vista Parkway (next to the new PHR school) in September and she is against giving any money away that might be needed for parks. She said she has requested the item be placed on a future group agenda.
John Baker, chair of the Rancho Penasquitos Planning Board, agreed with Dubey that the Torrey Meadows bridge did use a lot of resources and left everything to the south “a little handicapped.”
“This mishap is something that we’re all exposed to but hopefully there is an opportunity here to go forward and start to fund these types of projects,” Baker said.
Baker said his planning board had the same reservations about loaning money toward the project but said the city has been working with the board to ensure that reimbursements will occur.
Levitt is expected to come back to the board in June or July for approval.