The developer behind The Campus at Horton project is teasing a forthcoming resolution with its lender and a flashy new plan for the shuttered Horton Plaza Park — even as it stares down a forced sale of the property more commonly known as Horton Plaza, is in breach of contractual obligations with the city of San Diego, and faces lawsuits from contractors and at least one retail tenant.
The rosy assertions, made by developer Stockdale Capital Partners to city staff and council in letters and meetings, appear aimed at defusing tensions with the city that could escalate into legal action.
In a series of letters starting on March 4, Christina Bibler, the director of San Diego’s Economic Development department, has sought to compel the Los Angeles-based real estate investment firm to protect the city’s nearly finished $13.5 million renovation of Horton Plaza’s Lyceum Theatre. The Lyceum is part of The Campus at Horton property owned by Stockdale, but the venue is leased to the city-d nonprofit Horton Plaza Theatres Foundation. It cannot resume operation until Stockdale builds stairs and installs an elevator.
In the letters, obtained by the Union-Tribune, Bibler also pressed Stockdale to make good on its promise to redevelop the city-owned Horton Plaza Park, which the developer leases from the city. Stockdale is contractually obligated to spend at least $5 million on improvements and reopen the public park by Dec. 26 or risk lease termination and other financial consequences. The deadline is an impossibility acknowledged by both parties.
On April 22, the city formally provided Stockdale with written notice that the developer is in violation of several contracts related to the theater and park.
“The city hereby notifies Stockdale of its required obligations to complete the improvements affecting the Lyceum Theater. Fulfillment of these obligations is crucial for the city to open the Lyceum Theater to the public and properly operate the theater,” Bibler wrote in a letter addressed to Christie Kong, who is the general manager of Stockdale’s management company. “Additionally, this letter provides notice to Stockdale regarding Stockdale’s responsibilities and obligation for the redevelopment, operations and maintenance of the Horton Plaza Urban Park.”
The Lyceum and park matters are complicated by the ongoing foreclosure process hanging over The Campus at Horton. AllianceBernstein, Stockdale’s lender, is seeking to recover $367.7 million in unpaid debt and interest. The property is scheduled for a trustee sale on July 7. The auction date was originally scheduled for June 2, but has been pushed back three times without explanation. Trustee sale dates can be extended weeks at a time for up to one year.
Stockdale has downplayed the severity of the situation, preferring instead to talk up the prospects of a potential new park tenant that will be a boon to the city and downtown.
“We have been working diligently with our lender over the past few months. As it relates to the trustee sale, we do not anticipate any impact to the city of San Diego. Recently, we have come to an agreement with our lender to potentially release some funding in the near term, which will allow us to remobilize in the next 30-60 days,” Kong wrote in a May 28 letter. “We have also been in active negotiations with a potential new for a portion of the park space, which we believe will enhance not only the project, but that of the downtown community.”
The potential new alluded to is likely Cosm, a technology company that operates two entertainment venues, one in Hollywood Park near SoFi Stadium. The Inglewood location is a three-story, 65,000-square-foot theater and bar-restaurant with an 87-foot diameter LED dome. Cosm promises a “Shared Reality” experience where patrons are taken inside the action of live sports broadcasts or movies, no virtual reality headset needed.
Bibler confirmed that Stockdale mentioned Cosm as a prospective park tenant during a February meeting.
When reached for comment, Stockdale Managing Partner Dan Michaels did not address the situation with the city or provide details on the company’s talks with Cosm.
The Campus at Horton is the reincarnation of Horton Plaza, the 1980s-era, post-modern mall famous for helping to revitalize downtown. The 10-acre property consists of seven blocks between First and Fourth avenues, starting with Horton Plaza Park along Broadway to the north and cascading south to G Street.
In August 2018, Stockdale purchased the retail center for $175 million. The following year, the developer was granted approval to convert the mall into a mixed-use campus with 772,000 square feet of office space and 300,000 square feet of retail. The developer has said that it also intends to construct, in a future second phase, more than 800 apartments in two new skyscrapers.
In December 2022, Stockdale signed a 25-year lease for the adjacent 37,000-square-foot Horton Plaza Park property at 900 Fourth Ave. The firm is required, per the of the agreement with the city, to spend a minimum of $5 million on improvements during the redevelopment period.
Stockdale said previously that it would add trees and umbrellas to create shade, install a large lawn, update the amphitheater seating, and construct a wrap-around dining deck on the developer-owned Bradley Building.
To fund development of The Campus at Horton, Stockdale took out a $330 million construction loan from AllianceBernstein in March 2020. The loan amount was later increased to $398.5 million with a balance due date of July 10, 2024, according to a February notice of default recorded against the property.
As it stands, the majority of the mall-to-office conversion project is complete. However, remaining work, which includes the entirety of the park development and the required Lyceum access points, has stalled amid the foreclosure process and money problems. Project contractors and subcontractors have recorded mechanics liens against the property seeking millions for unpaid construction work. Lead contractors Turner Construction Company and JB Pacific Inc., as well as several subcontractors, have filed lawsuits in recent months to recoup the money owed.
The show can’t go on
In a Thursday letter to the city, Kong, the general manager of Stockdale’s management company, reiterated that the firm is in talks with its lender “to resume funding for construction on the Lyceum Theatre.”
Opened in 1986, the Lyceum Theatre takes up around 40,000 square feet of space in Horton Plaza’s basement. It consists of a large lobby and two distinct theaters, the Main Stage theater and the Black Box theater, which are 35 feet below street level.
The Lyceum is leased to the city through June 2034. The city, acting as the successor agency to San Diego’s since-dissolved redevelopment agency, inherited a $1-per-year agreement made between the original mall owner, Ernest W. Hahn Inc., and the redevelopment agency. The theater is subleased to Horton Plaza Theatres Foundation, which was set up by the city ahead of the opening of Horton Plaza mall. The foundation rented out the facility to the San Diego Repertory Theatre until 2022, when the organization folded.
Since 2023, the city has used $13.5 million in redevelopment money to upgrade the Lyceum, with funds going toward a complete overall of the two theaters, dressing rooms, all new audio-visual equipment and other back-of-house systems. The Main Stage theater and Black Box theater are expected to seat around 470 people and 190 people, respectively, should they ever reopen.
San Diego also funds the Lyceum’s ongoing operations, and just allocated a reduced sum of $225,000 for the foundation in the fiscal year.
Currently, though, the Lyceum’s main entrance is just a hole in the ground. Stockdale’s contractor JB Pacific removed the stairs to the subterranean theater in April 2024 in order to install an elevator and create a new entrance. But work stopped in July when the contractor walked off the job for lack of payment. The contractor communicated the work stoppage to Sandra Simmons, who is the executive director of the Horton Plaza Theatres Foundation.
Stockdale, as the landlord, is subject to the of the 1985 lease with the redevelopment agency, and is required to install the stairs and the elevator.
The city is also concerned about continued damage to its recently made investments. Stockdale’s work on its campus project has left the Lyceum, at times, open to the elements, with storms in prior years damaging the theater, according to the city.
“To date, approximately $813,000 of unanticipated cost has been incurred by Civic and its contractors,” Bibler wrote in the initial, March 4 letter.
Civic San Diego is a consultant overseeing the city’s obligations under laws associated with the dissolution of redevelopment agencies. Bibler said the unanticipated expenses include replacing equipment that wasn’t slated for replacement, repairs in areas outside the scope of the renovation, addressing mold damage and costs associated with construction delays because of Stockdale’s incomplete work.
Stockdale, Kong wrote in the Thursday letter, plans to rehire its contractor, and the developer could complete the required work by April, assuming funds are made available by the lender.
Chasm or Cosm
The timeline for the redevelopment of Horton Plaza Park is even harder to pin down. Two and a half years after securing the park lease, the developer has yet to submit a formal park redevelopment plan for staff approval. Now it’s asking for an extension and may be proposing something entirely different.
“I will be sending you under separate correspondence, our formal request to the city for an extension of our park renovation deadline,” Kong told Bibler in the most recent letter.
It’s unclear if the request for an extension will also include the Cosm proposal, as suggested by Kong’s May 28 letter. But Stockdale has informally presented the idea to council .
Councilmember Kent Lee, who toured The Campus at Horton property in late April, confirmed that the developer floated the high-tech entertainment venue as a potential of the urban park space, but said that Stockdale did not provide specifics. On the tour, Stockdale also suggested they were open to renewing talks with the city to occupy the office space, he said.
The city of San Diego was, until late last year, advancing a deal to buy the office portion of the Campus at Horton as part of a plan to replace its aging City Hall complex. In December, San Diego Mayor Todd Gloria shelved the plan for a new City Hall in light of the city’s substantial structural budget deficit and a failed sales tax measure. The city, he said at the time, would stay put at its Civic Center complex.
“I’m open to discussions about the park redevelopment,” Lee told the Union-Tribune. “Bigger picture, if there’s ever any actual potential discussion about the city occupying the office space, I am open to it.”
Councilmember Sean Elo-Rivera, who separately toured the property on April 24, said he is also open to the discussion.
“It’s obviously really nice. They’ve done a really good job in of making it look and feel like a new property,” Elo-Rivera told the Union-Tribune.
“I wanted to get a general understanding of what is going on,” he said. “One of the things that I found most interesting was that they offered to do demolition of our current City Hall if we moved. … That can really help move forward other things that could happen (at the Civic Center complex). So there are multiple ways that I am thinking about the broader conversation. It’s not just about knowing that City Hall is on its last legs and that there are costs associated with staying there. There’s uncertainty about how long any investment that we make today will actually be of value to us. We’ve been evacuated from that building, I think, three times this year. So there’s that piece, but there’s also what (the Civic Center) property could become.”
For now, though, the only conversation based in reality is whether or not Stockdale will be able to hold on to the property and make peace with its contractors. There are also problems with signed retail tenants to navigate.
In May, Studio Three Fitness sued the developer in San Diego Superior Court for breach of contract. The fitness company is seeking to recoup $1.9 million worth of interior improvement costs spent to date on its storefront. Studio Three is entitled to $3.9 million in reimbursements for tenant improvements, per the of its lease agreement, according to the lawsuit.
