A new chapter for the City of San Diego’s real estate dealings has begun after the San Diego City Council unanimously approved much-needed updates to three policies related to the administration, sale and leasing of property. These updated policies will increase customer service, streamline processes, provide better transparency to the public and City Council, give clear guidance to employees and increase disclosures. 

The City’s real estate portfolio includes a diverse variety of assets, from large tracts of open space to small parcels, and facilities necessary to provide core government services, such as parks, police stations, fire stations, libraries, maintenance yards and administrative space. Additionally, the City manages two municipal airports, a major league baseball stadium, a sports arena, an 8,000-acre agricultural preserve and nearly 60,000 acres of open space. Staff currently manage about 900 leases.  

“This modernization effort for how we conduct real estate transactions will not only give the Council the information they need to make educated decisions but allow the City to be more transparent and open with the public,” said Economic Development Director Christina Bibler. “We are proud of the hard work and persistence put into the drafting and approvals of these updates that will strengthen the City’s diverse portfolio and ensure the City is being fiscally responsible. Our team is passionate about the work they do, and we are excited to set the standard for best real estate management practices.” 

Council Policy 700-32, which hasn’t been updated since 1975, details how the City can acquire property whenever Council approval is required, with a few exceptions. The updates establish a clear set of guidelines for acquisitions, which will result in better disclosure and transparency. The updated policy ensures the City must retain its own appraiser as part of the acquisition process and is responsible for the oversight of that appraisal process. All contractors and advisors with significant input on real estate transactions must have a signed contract with the City and file a public statement of financial interest. 

A key component of this updated policy is a new due diligence checklist that has been in practice for at least a year even though the policies were not yet adopted. This checklist guides staff’s due diligence and investigation of a property before making a recommendation to the Council. The checklist reflects best practices and requires the City obtain preliminary title reports, legal matters filed, conduct environmental assessments, site investigations and building condition assessments, as needed, and requires that all pertinent departments have signed off on the acquisition process. It will also include what was not conducted and why it was not required. The checklist will be included with the staff report for the City Council presentation and will be reviewed by the Independent Budget Analyst. Also, in the staff report, if acquiring a property to improve an existing building, staff must disclose proposed uses, tenant improvements and costs, consideration of available alternatives and confirmation with the City’s Department of Finance that adequate funds are available for the proposed acquisition.  

Council Policy 700-10, which lays out the rules for leasing and selling City-owned property, was last updated in 2012. The newly updated policy establishes much more specific criteria and outlines the approval process for the sale of City-owned property, as well as for new leases and lease renewals of City-owned property. 

The policy now requires staff to review, update and present the Real Property Management Plan to City Council every two years. The purpose of this plan is to ensure City leadership, policymakers and the public have a better understanding of the City’s real estate portfolio needs and how City properties can be best utilized to benefit long-term City operations and the residents and businesses of San Diego. The policy specifically identifies expectations and guidelines for the plan's contents.  

Finally, Council Policy 700-12, which went into effect in 1985 and hasn’t been updated since then, establishes guidelines for the leasing of City property to nonprofit organizations. Policy updates address administrative cost recovery for these leases and establish eligibility criteria and specific guidelines for recipients of nonprofit leases.  

The City Council’s approval of these three policy updates comes after a multi-year process involving Real Estate Division staff, the City Attorney’s Office, Independent Budget Analyst, Council District 1 and the Mayor’s Office. These changes fulfill more than a dozen recommended updates from performance audits conducted by the City Auditor’s Office over the past 13 years. 

In addition to the policy updates, the Economic Development Department has begun implementing more than a dozen process improvements aimed at providing more transparency to City leaders and the public.