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Whole Foods backs out of downtown hotel-office project

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Whole Foods had originally committed to being a tenant in a planned downtown hotel and office project but has since backed out because of delays related to pending litigation concerning the development’s approval.

Upscale grocer Whole Foods, long planned for a hotel and office development in downtown San Diego, has backed out amid continuing delays related to pending litigation.

Although approved two years ago, the $400 million 7th & Market development has been on hold since last year when labor union interests filed suit alleging that city approvals relied on an outdated 2006 environmental analysis for all of downtown instead of a specific impact report analyzing just the development.

San Diego-based Cisterra, which is developing the project, said Whole Foods had the right to terminate its participation as a tenant after a certain period of time elapsed and exercised that right earlier this year. The termination, said project principal Jason Wood, was related to the delays precipitated by the ongoing litigation.

The project, which would bring San Diego’s first Ritz Carlton to downtown, also calls for 156,000 square feet of office space, 59 Ritz-branded condos, 125 market-rate apartments and 39 affordable rental units.

Despite Whole Foods’ withdrawal, Wood said Monday that he has a “solution” and that the plan is still to incorporate a specialty gourmet grocer into the project.

Representatives of Whole Foods did not respond to emails seeking comment on Monday.

It appears that both Cisterra and Unite Here Local 30, which represents hospitality workers, are now talking in hopes of moving the project along, although both sides are being coy about what progress, if any, is being made toward reaching common ground.

“I’m working on solutions so that the project can move sooner vs. later,” Wood said. “I’m not waiting on a trial date, I’m working on a solution.”

Rick Bates, research analyst with Unite Here, said union representatives have been talking to Cisterra and hope to see the project moving along soon.

Last October, a Superior Court judge ruled in favor of the city of San Diego, concluding that it properly reviewed the project in advance of its approval. Unite Here union leader Sergio Gonzalez and San Diegans for Responsible Planning, a coalition of community and union members living and working in San Diego, subsequently appealed the ruling.

While the focus of the the lawsuit concerns environmental issues, Unite Here attorney Gideon Kracov told Civic San Diego board members during a 2016 hearing that the incomes for workers in service industries are “insufficient for them to be able to afford to live in San Diego,” forcing them into “long commutes or overcrowding to afford housing near their jobs.”

While Cisterra at the time already had consented to a labor agreement that would ensure the hiring of union workers for the construction of the project, it said it was unable to persuade Ritz Carlton and Whole Foods to commit to doing the same.

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lori.weisberg@sduniontribune.com

(619) 293-2251

Twitter: @loriweisberg