Economic Development Committee Meeting: Navy Revitalization and Cannabis Update - June 11, 2021
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Economic Development and Intergovernmental Relations Committee Meeting - June 11, 2021
The Economic Development and Intergovernmental Relations Committee of the San Diego City Council met virtually on Friday, June 11, 2021, to receive updates on two major economic drivers: the Naval Information Warfare Systems Command (NAVWAR) site revitalization and the city's cannabis industry. The meeting included presentations from Navy officials and city staff, public testimony, and council member discussion. No formal votes were taken as both items were informational.
Consent Calendar
- Unanimously approved the committee actions from the meeting of May 26, 2021 (4-0).
Public Comments & Testimony
- Non-agenda public comment: No speakers.
- Item 1 – NAVWAR Revitalization: No public comment.
- Item 2 – Cannabis Business in San Diego: Eight speakers testified, all expressing support for the industry and calling for specific policy changes. Key speakers and positions:
- Tim Penwell (Columbia Care): Expressed strong support for social equity programs; urged reducing barriers such as high application fees, taxes, and fingerprinting requirements; supported creating new permit categories (delivery, consumption lounges) and lowering taxes on production facilities.
- Alex (industry representative): Emphasized that the 8% tax on production facilities is too high, making them uncompetitive; noted that Long Beach and Costa Mesa have 1% rates, and urged reduction to allow local businesses to thrive and generate jobs.
- Sabrina Alvarado (High Key Cannabis Outlet, District 9): Supported reducing the 8% tax on production facilities, enforcing existing permits or reallocating unused permits, extending hours of operation (7am-9pm to 6am-10pm), and amending zoning to allow the remaining outlets to open.
- Phil Rath (UMMC Inc., trade association): Representing most retail cannabis stores; requested the city advance a Business Improvement District (BID) to pool resources for marketing and moving consumers away from the illicit market (noted unanimous committee support in November 2020 but no action); supported lower taxes on production facilities; raised concerns about redistricting potentially forcing store closures and suggested proactive measures.
- Gina Austin (Lee Austin Legal Group): Representing licensed operators; echoed calls for lower production taxes, noting that at 8% San Diego is out of line with jurisdictions like Oceanside (0.5-2.5%) and Vista (2%); requested a mechanism for retail facilities to relocate without losing their entitlement; supported redistricting protections as done in Chula Vista.
- Jessica McElfresh (attorney): Supported lower taxes for production facilities; encouraged using Measure N tax revenue for social equity purposes, such as loan funds for equity applicants (citing Fresno as an example); proposed new zoning, reduced distance buffers, and new uses (delivery, lounges); stressed economic benefits beyond tax revenue, including jobs and foot traffic.
- Will Sen (Urban Leaf, founder/president): Stated that production facilities contributed only about 10% of Measure N tax revenue; cited examples of San Jose, Costa Mesa, and California City lowering tax rates to 1-2% and seeing increased investment and tax revenue; urged the committee to set competitive rates to attract investment and create thousands of jobs.
- Chris Horsley (NineCloud Cannabis, co-founder): Echoed tax concerns; noted excessive security requirements (guards, no signage) for locked facilities; requested review of security measures.
Discussion Items
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Item 1 – NAVWAR Revitalization Project Update:
- Presented by Captain Ken Franklin (Commanding Officer, Naval Base Point Loma) and Greg Geyson (Revitalization Project Manager, NAVWAR).
- Objectives: Modernize NAVWAR facilities on the Old Town Campus (70.5 acres, two miles from downtown); replace aging World War II-era buildings; meet national security needs.
- Alternatives analyzed in the Draft Environmental Impact Statement (EIS):
- Alternative 1: Military construction only (no commercial development, Navy retains all property).
- Alternatives 2 & 3: Public-private partnership (P3) with residential development (4,000-6,000 units) and limited commercial; no transit center.
- Alternatives 4 & 5: P3 including a transit center (preferred).
- Alternative 4 (preferred): Up to 10,000 housing units, 2 million sq ft commercial, 400+ hotel rooms, 400,000+ sq ft retail; best flexibility; tallest building modeled at 350 feet (32 stories).
- Economic impact: NAVWAR supports 5,200 jobs, $3.2 billion impact; military overall $33.6 billion direct spending, 300,000+ jobs.
- Environmental review: 730-page EIS; 60-day public comment period ends July 13, 2021; public meeting June 23.
- Council members expressed strong support (Moreno, Ilo Rivera, Campillo) and asked about housing mix, military housing, ownership (rental vs. for-sale), childcare, parks, and the decision authority (Assistant Secretary of the Navy for Installations and Energy).
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Item 2 – Cannabis Business in San Diego:
- Presented by Sammy Ma (Development Project Manager, Cannabis Business Division, DSD) and Elise Lowe (Development Services Director).
- Current statistics: 36 cannabis outlets allowed citywide (4 per district); Districts 2, 6, 8 at capacity; none in District 5; 40 production facility permits all issued, operating at 30% capacity.
- Cannabis tax: 8% of gross receipts, generating ~$2 million/month for the general fund.
- Cannabis Business Division launched November 2020; goals: regulate, enforce, support, and develop equity program.
- Equity program: Partnering with Office of Race and Equity; hiring consultant; targeting winter 2021 to present a program to council. Eligible for up to $5 million in state grant funding (first awarded to San Diego in 2021).
- Planned regulatory changes: Consider reducing sensitive use buffers, adding new zones, permitting consumption lounges, delivery-only licenses, and special events.
- Operational fee: Proposing an annual operating fee on cannabis businesses to cover division costs (modeled after other cities up to $25,000); to be brought to council within 90 days.
- Council discussion: Vice Chair Kate noted a previously approved BID (November 2020) had not been implemented; requested staff and mayor's office coordinate. Councilmembers debated tax rates on production facilities: several speakers argued 8% is too high and uncompetitive; Councilmember Ilo Rivera emphasized equity concerns and the need to make licensing accessible to historically impacted communities; suggested exploring employee-owned business models. Councilmember Campillo asked about collaboration with the county (ongoing enforcement with Sheriff's Office, equity program coordination).
Key Outcomes
- No formal votes or motions on either agenda item; both were informational.
- NAVWAR: Council members expressed support for the project, especially the preferred alternative (Alternative 4) including transit-oriented development. They encouraged continued collaboration and urged public participation in the EIS comment period (deadline July 13, 2021).
- Cannabis: The committee directed staff to: (1) advance the equity assessment and program development by winter 2021; (2) bring forward proposed annual operating fee within 90 days; (3) provide GIS mapping of potential zoning changes; (4) coordinate with the Mayor’s Office on the previously approved Business Improvement District; (5) consider reducing the 8% tax rate on production facilities as part of policy changes to support equity and competitiveness.
- Next committee meeting scheduled for Wednesday, June 23, 2021, at 2 p.m. (third industry review meeting).
Meeting Transcript
Good afternoon. Good morning. For executive order 2920, which suspends certain requirements of the Brown Act, some of the council members will be participating via Zoom, and no members of the public will be in attendance at the meeting in the interest of public health and safety. In addition, this meeting is being televised and live streamed on the city's website, and the committee liaison has made arrangements for the public to comment using the Zoom webinar platform. We appreciate the public's cooperation. I will go over the specifics of how to join the webinar and will give details on how the public can offer their public testimony. I will now call the meeting of the Economic Development and Intergovernmental Relations Committee of Friday, June 11th, 2021 to order. I'll now call the rule. Vice Chair Chris Kate. Here. Councilmember Vivian Moreno. Present. Councilmember Shawnee Lo Rivera. Present. And I am also present. Each committee member is attending virtually. Also on the virtual meeting is Jordan Moore, fiscal and policy analyst in the Office of the Independent Budget Analyst, Brittany, Senior Policy Advisor from the Office of the Mayor, and Deputy City Attorney Kate Malcolm from the Office of the City Attorney. The public may view the meetings on public television on City TV Channel 24 for Cox Communications and Time Warner Cable or Channel 99 for ATT or view the meeting online by going to the City Council Committee's homepage at San Diego.gov and selecting the City TV Live Webcast Blue button on the right hand of the page. The committee meetings will be held virtually using the Zoom webinar platform. Members of the public can offer public comment on items by accessing the Zoom webinar online using a desktop computer, laptop, tablet, or smartphone, or by calling into the meeting using a smartphone, cellular phone, or landline. The link to join the committee meeting webinar by computer, tablet, or smartphone is listed on the agenda on the how to join by iPhone one tap. To join the Zoom webinar by telephone, you may dial 1 669 254 5252. And when prompted, the webinar ID is 161-735-9340 pound. When I introduce the item you would like to comment on, you will raise your hand by either tapping the raise your hand button on your computer, tablet, or smartphone, or by pressing star nine on your phone. You'll be taking in the order in which you raise your hand. You may only speak once on a particular item. When our committee consultant, Sophie Barnhorst indicates it is your turn to speak. She will call you by your name as it appears on the Zoom webinar attendee list, or she will read the last four digits of your phone of your phone number if you have called into the meeting. This is how you will know it is your turn to speak. If you have joined the webinar by computer, tablet, or smartphone, you will receive a pop-up notice to select to unmute your device. If you have called into the meeting by cell phone or landline, press star six on your phone to unmute yourself. I'll review the instructions briefly again when public comment opens. Please wait until the item you wish to speak to has been called before raising your hand to speak. And if you raise your hand during a non-agenda period, your hand will be lowered. When you are announced as the next speaker, please unmute yourself and offer comments. Also, please mute the volume on your TV or computer before you begin to speak. A quorum is now present, so we will now dispense with the approval of the committee actions. The actions before you for approval are for the meeting of May 26th, 2021. Do I have a motion? So moved. I have a motion by Councilmember Ilo Rivera. Second. I have a second by Vice Chair Kate. We will now take uh council member questions and comments and have each council member register their vote. Please mute yourself once you've completed your comments. Vice Chair Kate. Yes. Councilmember Moreno. Moreno, yes. Councilmember Ilo Rivera.
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