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Council approves lease to move Development Services downtown to 550 West C Street
Summary
The San Diego City Council voted unanimously Sept. 9 to authorize a downtown lease for the Development Services Department that will consolidate offices into roughly 43,460 sq ft at 550 West C Street; the deal includes seven months free rent and $40/sq ft in tenant improvements and will be paid from the DSD Enterprise Fund.
The San Diego City Council on Sept. 9 authorized a lease to relocate the Development Services Department (DSD) into about 43,460 square feet at 550 West C Street, approving the agreement unanimously, 8–0 (Councilmember Campbell absent). Staff said the move will replace a deteriorating City Operations Building and consolidate DSD operations into two facilities.
Karen Johnson, program manager with the real estate division, told the council the initial term is five years and seven months with two five‑year renewal options and a starting rent of $3.65 per square foot. The lease includes a 3.5% annual escalator, seven months of free rent taken in months two through eight, and a tenant‑improvement allowance of $40 per square foot (about $1.7 million). Johnson said the rent and operating costs will be paid from DSD’s Enterprise Fund, not the General Fund.
The Independent Budget Analyst told the council a market review found the transaction consistent with downtown comparables and noted the concessions (tenant allowance and free rent) are common incentives. "The lease that's before you, as is represented by staff, is consistent with market rates, and it has some decent concessions for the city," the analyst said.
Members of the public and employee representatives spoke in support. Kathleen Higgins of MEA said the move was “not just office move, it's a life change for your well‑deserved employees,” noting longstanding deferred maintenance at the current building. A public commenter urged caution about waiving CEQA for older buildings, asking whether environmental and climate‑related standards had been fully considered.
Council discussion emphasized staff work to identify suitable locations and the benefits to employee safety and customer service. Council moved and seconded the resolution to authorize the mayor or designee to execute the lease and to authorize the Chief Financial Officer to expend funds for the lease and operating expenses. The council then voted to adopt the resolution and a finding that the lease is exempt from CEQA.
The lease is expected to move to full execution and for tenant improvements to begin; staff said improvements would be minimal and include painting, carpeting and installation of a security door to separate public and staff areas. The city indicated those improvements and the rent obligations will be handled through DSD’s enterprise budget and that the agreement is structured to allow the city to exercise renewal options or otherwise adjust if a future consolidated city hall is identified.
