Can San Diego Really Build a World-Class Satellite Campus?

Can San Diego Really Build a World-Class Satellite Campus?

They’re giddy with optimism at San Diego State University. But can the school deliver on its without-a doubt promise to create a world-class satellite campus in Mission Valley?

Everyone’s about to find out. On Tuesday, voters decided to let SDSU negotiate to buy the SDCCU Stadium property from the city and turn it into an eco-edu-entertainment wonderland that would include a stadium, a research park, classrooms, a river park, hotels and housing.

“We want to put a shovel in the ground by 2020,” said Adela de la Torre, who became SDSU’s president less than six months ago. The undertaking is fraught with challenges, starting with the purchase of a city-owned asset (and the public input and environmental review that goes along with that) and ending with the development of a promised economic powerhouse.

MONEY MATTERS

Assuming SDSU can buy the land, the university will solicit $300 million in lease-revenue bonds from the California State University system to prepare for construction of a 35,000-seat stadium in 2020, which would require an additional $250 million in funds. And, if all goes as planned, the school’s football team would begin playing there two years later.

“There would be a whole series of revenue streams to pay off the bond,” said Tom McCarron, SDSU’s chief financial officer. “There would be donor-raised funds, revenue from the venue, naming rights, sponsorship's, premiere experiences, concessions — anything that makes sense to the city.

“CSU will put us through a process that makes sure that the revenue is in excess of the debt. The CSU has never defaulted on a bond payment.”

The financial team is likely to take an especially close look at gate revenue from football. Last year, the Aztecs drew an average of 32,568 fans during their first five home games. This year, the team has drawn an average of 22,686 over five games. That’s a drop of 30 percent. The reasons for the drop aren’t clear. While the university believes that a new stadium would attract a larger audience, current attendance figures shine a light on a potential kink in the financing plan as any loans will be secured, and paid back, by stadium revenue.

The stadium, however, looks of minimal consequence when measured against the more substantial task — research.

Three years ago, San Diego State University said it hoped to become one of the nation’s top 50 public research universities. It currently raises about $130 million a year for research, the highest amount in the CSU system.

But that’s modest compared to the picture nationally. SDSU would have to increase its research funding to the $300 million to $350 million level to crack the top 50.
For a variety of reasons, that won’t be easy.

Unlike UC San Diego, SDSU does not have a medical school and it doesn’t operate hospitals. More than half of the $1.2 billion UC San Diego raised for research last year came in the health sciences, with a lot it going to clinical trials.

Over the years, SDSU has partnered with major defense contractors, such as Northrop Grumman and Boeing. But the university doesn’t have highly ranked programs in engineering or computer science, fields that are essential to defense research. SDSU’s engineering program was ranked 116th nationally by US News and World Report.

The school also is in a difficult position because its graduate student enrollment has been falling. In just the past decade, it’s declined by 1,000. Companies typically look to partner with universities that have strong graduate programs.

SDSU also badly needs something that UC San Diego has long enjoyed — a rich, entrepreneurial benefactor who is willing to invest tremendous amounts of money in a school over the long-term.

Engineer Irwin Jacobs made a fortune co-founding and running companies like Qualcomm, the San Diego chipmaker. He’s given much of that money to UC San Diego. Campus officials say Jacobs and his wife Joan have donated at least $286 million to the school since the early 1980s. When that money is combined with grants and gifts from Qualcomm, the figure approaches $400 million. Several top Qualcomm executives also have made major donations.

SDSU has shown that it can raise money; its last capital campaign produced $800 million in gifts — $300 million more than the original goal.

The campaign formally ended in 2017. De la Torre began a new campaign shortly after she took office in late June.

“We’ve said that we’re going for $1 billion,” de la Torre told the Union-Tribune. “We hope to have some good news real soon.” It’s unclear whether the news will involve the kind of person whose wealth and influence represents that sort of transformation that Jacobs made possible at UC San Diego.

INNOVATION PARK

Raising money is a daunting challenge in itself. But the largest hurdle might have more to do with the site in Mission Valley.

Setting aside the real possibilities of underground pollution or site flooding, the 166-acre parcel’s Mission Valley location will prove either to be the project planners’ greatest asset or worst nightmare.

That’s because at the core of SDSU Mission Valley is a proposed 1.6 million square feet of office space. It’s meant to be a major research and technology park modeled after the Georgia Institute of Technology’s Technology Square, where a congregation of university and industry labs, startups and innovation centers have helped to revitalize the historic Midtown area of Atlanta and create 15,000 jobs.

San Diego State’s version, a so-called “innovation district,” would also be developed through partnerships with private industry, meaning it hinges on the university’s ability to find a whale of a benefactor or corporation who dreams in red and black, and has the green to invest in the $3 billion project. Put more simply, a corporate magnate of the Jacobs variety would need to believe in Mission Valley as the future center of gravity for his or her business, which in this case is likely technology, biotechnology or science.

Mission Valley is not that region today, said Mark Cafferty, who runs the San Diego Regional Economic Development Corporation and has held meetings with university staff. Instead, those industries are clustered in and around Sorrento Valley, the Torrey Pines Mesa and downtown. In fact, billions are being pumped into a number of downtown developments to lure companies of Facebook’s caliber to town.

Real estate investment firm Stockdale Capital Partners, for instance, spent $175 million to acquire Horton Plaza with the aim of converting the 900,000 square-foot retail center into an ultra-modern office campus for top tier tech firms. And the proposed redevelopment of Seaport Village calls for a “blue campus” — with a 150,000 square-foot blue tech incubator — built in partnership with UCSD’s Scripps Institute of Oceanography.

“A lot is happening in downtown, from Seaport San Diego, Manchester Pacific Gateway, The Campus at Horton and everywhere in between,” Cafferty said. “Everyone is looking for a big company to be a part of their developments. But that’s a challenging thing (to accomplish) in San Diego … or anywhere, let alone in a state that offers little in the way of incentives.”

But, he added, Mission Valley has the basic elements — as in the right mix of location, infrastructure and transportation options — required to birth a big economic center. In a report prepared last year, the EDC estimated that the rival SoccerCity development plan for the Mission Valley site would deliver an annual $2.8 billion economic boost for the city. The organization has not analyzed the economic impact for what the university has proposed.

“There’s a lot left to be determined,” Cafferty said. “What we've had to date is dueling ballot measures. With a clear winner, we have to think critically about what happens on that site.”

Plans will be dictated by economic conditions, which are currently ripe for investment but could change dramatically by the time the university is able to secure corporate partners, he said.

At the moment, President de la Torre is brimming with confidence, telling the Union-Tribune: “This is one of those rare spaces where industry could work closely with a university … I think we could have the first research building in place within five years.”

Article by: The San Diego Union-Tribune

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