San Diego business stories to watch in 2024 – San Diego Union-Tribune

These are some of the key business stories to watch in San Diego County in 2024 as selected by U-T business reporters.

SDG&E’s request for a rate increase

Every four years, utilities in California file a general rate case with the California Public Utilities Commission. Essentially a budget request, the power companies estimate how much it will cost to maintain and make upgrades to the power system while earning a rate of return, or profit.

In its proposal for the years 2024 through 2027, San Diego Gas & Electric is looking for a rate increase of 5.3 percent for electricity bills. For a typical residential customer using 400 kilowatt-hours, that translates to $8.45 more per month.

SDG&E wants to raise natural gas rates 17.5 percent, which converts to $9.16 more per month for residential customers using 24 therms in a given month. (A therm refers to one unit of natural gas.)

The CPUC makes the final decision on whether to accept, reject or modify SDG&E’s request.

At public meetings to discuss the general rate case proceeding, many SDG&E customers have angrily told CPUC officials they don’t want their bills to go any higher. Counter-proposals have also been offered by consumer advocates and other groups.

A proposed decision is expected to be released in the second quarter of 2024, with a vote by the CPUC’s five commissioners likely coming shortly thereafter.

Will home prices keep rising?

San Diego County’s home prices defied expectations in 2023 by rising even as mortgage rates continued to increase. The region’s median home price was $825,000 in October, up 6.5 percent in a year. Almost all of this year’s growth, said analysts and real estate agents, was due to the lack of homes for sale driving up competition.

Mortgage rates are dropping again, which could begin to spur a pick up in inventory numbers. Many homeowners see little need to move when they have much lower rates locked in, but that might change if mortgage rates keep dropping, especially since the Federal Reserve has said it plans to cut key interest rates in 2024. More homes on the market could reduce competition and finally pick up dreadful sales numbers. In theory, less competition for homes should soften prices.

The court battle over SeaWorld San Diego’s rent

The theme park company remains insistent that it will not pay the more than $12 million in back rent and fees the city of San Diego says it is owed for the months during the height of the pandemic when amusement parks were shut down. The litigation, which has been moved to federal court, could be decided as early as January when a mandated mediation session will be held.

While the city maintains there are no exceptions for SeaWorld regarding pandemic-era rent payments required of all San Diego tenants, SeaWorld counters that the city’s forced closure of the park was a violation of its lease and it, therefore, owes nothing. Given the firm stance by both sides in the long-running dispute, the court case could drag on throughout 2024 if no progress is made in the January talks. Although SeaWorld Entertainment has reported revenue gains since the pandemic, attendance is still lagging.

New ADU law just dropped. Will San Diego go for it?

A new law taking effect in January will allow Californians to buy and sell ADUs as a separate entity. The thinking is that this could open up some low-cost options for homeownership, especially in popular areas. However, the law is optional and it’s up to cities to enact it.

San Diego Mayor Todd Gloria and progressive elected officials lost a battle in 2023 to change single-family zoning in much of the city by using another optional statewide law, Senate Bill 10. It is likely the ADU law, AB 1033, will face similar opposition over increased traffic, change to community character and infrastructure arguments. It remains to be seen if this law is worth another big fight.

Midway Rising sports arena project

The Midway Rising development team selected to remake San Diego’s 52-acre sports arena property in the Midway District is halfway through a two-year exclusive negotiation period with the city.

As it stands, the project includes as many as 4,627 residential units, a new 16,000-seat arena, 130,000 square feet of commercial space, and up to 20 acres of plaza and park space.

The city officially started its environmental review process for the project on Dec. 18, as required by the California Environmental Quality Act. Public comments on the notice of preparation are due by Jan. 17. The city is piggybacking off of work already done for the Midway-Pacific Highway Community Plan.

The analysis is a precursor to agreeing on lease terms for the site and entering into a development deal with Midway Rising. The team is hoping to finalize everything before the end of 2024.

Impact of rising wages for some workers

In the fall, Gov. Gain Newsom signed two laws that boost the wages of workers in two industries. Starting in April, fast food workers will earn a minimum of $20 an hour, and that rate will increase annually, with adjustments for inflation, until 2029. A similar law: California health care workers will see their minimum wages rise to $25 an hour.

Now it remains to be seen how these sector-specific policies will play out. For example, will that drive wages up in other sectors with low wages — such as early childhood education? Will employers find ways to work around these wages by turning to automation, downsizing staff or cutting hours?

Navy’s pick to remake NAVWAR property

The United States Navy is wrapping up its largest-ever real estate competition for the 70.3-acre NAVWAR military campus that straddles Pacific Highway in San Diego’s Midway District.

Development teams are competing for a 99-year ground lease with mixed-use visions that must include replacement facilities for the federal agency’s cybersecurity personnel.

The Navy, which put the property on the market in November 2022, expects to announce the selection of a potential master developer in early 2024. The parties would then enter into an exclusive negotiation period.

The convention center expansion

More than three years after a hotel tax hike measure went to voters to finance an expanded convention center, plus homeless services and street repairs, the outcome of that election remains unresolved. While an appellate court decision concluded that Measure C passed in 2020 with a simple majority vote, the three-judge panel said it was unable to decide the crucial question of whether the ballot proposition qualified as a citizens’ initiative.

The answer to that question, which is pivotal to determining whether the initiative was approved, has been returned to the Superior Court, which is expected to take up the matter in 2024.

Attorneys for the measure’s backers are hopeful a ruling will come within the first half of the year. No matter what the ruling is, however, expect appeals that could delay a final resolution well into 2025 and beyond.

The proposed airport people mover

San Diego County seemed to inch closer to bringing mass transit to the airport this year when regional planners presented a plan for a more affordable people-mover route that would connect travelers to the airport via the Santa Fe Depot. The proposed aerial, automated people mover system would cost between $1 billion and $2 billion, compared to an earlier, more elaborate route that carried a potential price tag of $4 billion or more.

Elected leaders on the San Diego Association of Governments board were supposed to take a vote on a favored route this year, but that timeline has now changed slightly. SANDAG officials say that sometime in early 2024, their planning team will present to the board a proposed project and alternatives that would undergo a comprehensive environmental review. No date has yet been firmed up.

Not everyone on the SANDAG board is of a like mind about the people mover and where it should go, and one of SANDAG’s most ardent proponents — former executive director Hasan Ikhrata — is leaving the agency at the end of 2023.

A drive to put a municipal utility on the ballot

A recently formed political action committee has launched a signature drive to get a proposal on the November 2024 ballot that would ask voters to replace San Diego Gas & Electric with a publicly owned municipal utility that would serve customers within the city limits of San Diego.

The Power San Diego Campaign needs to collect a little more than 80,000 signatures from registered San Diego voters by May in order to place its petition on the ballot.

The group estimates it would cost San Diego taxpayers roughly $3.5 billion to buy out SDG&E’s electricity distribution assets but predicts creating a non-profit municipal electric utility would reduce rates by about 20 percent.

Reports compiled by the U.S. Bureau of Labor Statistics consistently show the average electricity price per kilowatt-hour in the greater San Diego region is the highest in the country.

Reporters Phillip Molnar, Rob Nikolewski, Roxana Popescu, Natallie Rocha, Jennifer Van Grove and Lori Weisberg contributed to this report.

Originally Published: December 27, 2023 at 7:45 AM PST