The Port of San Diego and the U.S. Navy (USN) have reached a deal that will result in the early relinquishment of the USN’s lease at 1220 Pacific Highway.
The 3.4-acre site just east of the B Street Pier between North Harbor Drive and Pacific Highway has been leased by the Navy since 1949, primarily for office uses.
The port inherited the lease, which was set to expire in 2049, from the City of San Diego in 1962 when the port was formed. The acquisition of the site unlocks new public access, recreational, and commercial development opportunities in a prime area of the San Diego Bay waterfront.
“This is historic. We are thrilled we have a deal with the Navy that means there will soon be more for visitors and our communities to enjoy and experience along our San Diego Bay waterfront,” said Chairman Rafael Castellanos, Port of San Diego Board of Port Commissioners.
This transaction represents a continuation of the longstanding positive collaboration between the two agencies.
In 2022, the port and Navy signed a first-of-its kind agreement that gives the Navy access to California’s Low Carbon Fuel Standard (LCFS) market to help provide millions of dollars for electrification projects around San Diego Bay.
The parties also work together on natural resources management in the bay and coordinate on initiatives related to sea level rise.
“The Navy will relinquish its lease of the 1220 Pacific Highway property to the Port of San Diego although 27 years remained on the lease,” said Brad Rosen, Commander, Navy Region Southwest.
“The Navy negotiated with the port on an agreement that meets our requirements while accommodating the port’s interest for redevelopment with their Central Embarcadero redevelopment plan.
“This agreement affirms the Navy’s strong relationship with the port and our shared commitment to cooperation and partnership.”
“This agreement creates the opportunity to continue the reimagination of our Downtown waterfront and transform this portion of San Diego’s ‘front porch’ into open space and amenities for San Diegans and visitors to enjoy,” said San Diego Mayor, Todd Gloria.
“I’m grateful for the partnership of the Navy, which is demonstrating its continued commitment to the San Diego region and the mutually beneficial relationship that has served our city and our nation so well for over a century.”
Under an executed Lease Termination Agreement, the port will provide $5.75 million in improvements to the Navy for facility or support services.
The port will also advance land use planning goals to deliver new public access and recreation spaces, including adding more park space and pedestrian promenades by extending Lane Field Park northward along Harbor Drive, extending B Street to San Diego Bay, adding more visitor-serving amenities and parking, and enhancing mobility connections.
Following relinquishment of the leasehold, the port plans to begin exploring development opportunities. This is anticipated to take two to four years, and therefore, the Lease Termination Agreement allows continued use of the property by the Navy during that period, which will also give the Navy time to transition operations still on site.
The port is a non-taxing public agency. Redeveloping part of the site is set to increase revenues that can be reinvested back into the waterfront for various public amenities and services, environmental protection and conservation, public safety, and more.
This latest agreement comes a year after the Port of San Diego accepted an approximately $2.7 million grant from the San Diego County Air Pollution Control District (SDAPCD) to support clean technology investments.