But the “topping out” celebration of what will soon be a looming, mostly glass tower on the 60,000-square-foot parcel bounded by Market, Union and Front streets and Island Avenue, may be tempered by the uncertainty that continues to surround the south end of the block.

The south end is the tentative site of the San Diego Children’s Museum.

The museum, which owns the property and for the last 11 years has intended to make its permanent home there by early 2006, may have to wait longer than it had anticipated.

“About $11 million is in the ground, and the museum structure is half-built,” according to Gary Shay, the president of the museum’s board. The future of the Children’s Museum, however, is still uncertain.

What was once a $100 million proposed project to redevelop the Children’s Museum on that site, replacing the 50-year-old, two-story warehouse that had previously housed it, has become a “complicated situation,” according to Pamela Hamilton, a senior vice president at the Centre City Development Corp., San Diego’s Downtown redevelopment agency, and the point person on the Children’s Museum project.

If the museum fails to deposit approximately $8.5 million into a joint escrow account for construction by May 12, in accordance with an agreement it signed with the redevelopment agency in 2003, the project will be placed on hold, perhaps indefinitely. The museum would forfeit its investment to the agency, which would then have the option to purchase the property for a mere $10.

If that happened, the two-level underground parking structure and basement floor of the museum, already completed in November, will remain unfinished. And the museum, which is temporarily leasing space in Ohr Shalom Synagogue in Mission Hills for its 80-student charter school, will remain without a permanent home.

Such a scenario — a site with underground parking and a basement but with no museum building — is not in the interest of the museum or the future condominium owners scheduled to move into the residential tower this summer, according to Apriano Meola, the vice president of construction at Pinnacle International, and the project manager.

This is also exactly the outcome the city’s redevelopment agency had hoped to avoid, according to Hamilton, who said that it is important to complete the construction of the museum.

More Complications

“The reason is that we now have a basement that is below grade, and if you don’t begin construction on the building, things can get more complicated and difficult … building codes change and the structural support could be found insufficient for the new building,” said Hamilton.

She said the CCDC still wants a children’s museum Downtown.

The complicated situation arose out of an agreement struck between the redevelopment agency and the Children’s Museum in 2003. Nine years earlier, the agency had purchased the parcel of land on Island Avenue for $5 million with the intention of developing a children’s museum there. The agency rented the space to the already-established San Diego Children’s Museum for an interim period, but when the museum was unable to raise funds to develop the property on its own, it requested the agency’s permission to solicit proposals from private developers. This transpired during a period when the frenzy of construction activity near the Marina District, where the property is located, led to an increase in property values there.

According to the agency, the museum, with the agency’s approval, entered into a purchase agreement with Pinnacle, the residential developer, for the redevelopment of the parcel in 2001. The northern two-thirds of the Island Avenue block would house the 35-story condominium tower with approximately 10,000 square feet of commercial space on the first floor. The south end of the block would consist of a new Children’s Museum of a minimum of 40,000 square feet.

The developer acquired two-thirds of the block for $11 million, providing the museum with enough money to purchase the land back from the agency for $5 million and cover its initial investment.

The remaining $6 million was invested in the early construction, according to Kay Wagner, the executive director of the museum. “Instead of the developer giving us the money, he held a letter of credit for building the basement and the parking structure. When the construction is finished, the developer will pay us back what is left of that credit,” she said.

According to the agency’s Summary of the Project, the conveyance of a portion of the block for private development “provided more than enough funds for the museum to purchase the block and construct the basement level of the museum, but not enough funds to continue its interim operations and complete the new museum.”

The CCDC, however, was cautious, said Hamilton, because the mission of the agency is to purchase land for redevelopment. “When the deal was approved, we allowed the museum to parlay what they gained from the purchase. The stipulation was the museum had to be built,” added Hamilton.

The 2003 agreement, therefore, stated that once the basement level of the museum was completed “to grade,” any sustained suspension of construction would become a problem for the development of the above-grade building.
This is where the parties stand now.

The 3-year-old agreement requires that the museum deposit all of the funds necessary to complete the construction of the entire museum and to purchase the parking lot by May 12.

If the deadline is not met, the agency may purchase the property for a mere $10 and redevelop the parcel on its own. Hamilton said the likelihood of an extension from the agency is not known at this time.

The reason for the agreement, Hamilton said, is that just like every other Centre City Development Corp.-related project Downtown, the agency requires “evidence of financing, including where the financing of the project will come from.” Another reason, said Hamilton, is that “we have to be very careful we do not let private entities take advantage of public funds.”

Wagner said that there are some possible sources of funding pending, including requests for grants from the federal government. “We have not been sitting still on the capital campaign,” she said.

In the event the capital is not secured in time, Wagner said “the CCDC would make us forfeit the land and what we already have in it.”

“We will be forced to go somewhere else and find another location,” she said. “But we will still be the Children’s Museum and the city of San Diego will lose a valuable asset if we have to relocate.”

Shay, the president of the museum’s board, said he would not be surprised if the museum does garner funds by May 12, but either way, he is adamant that “the museum will not sit there for years, unfinished.”

The working drawings of the future three-story museum, replete with details of the multilevel atrium and six indoor and two outdoor interactive galleries, have been submitted to the city’s Planning Department. According to the lead architect on the project, Rob Quigley, the plans have been reviewed and the permits have been granted. He is also one of the lead architects designing the forthcoming San Diego main library Downtown.

“We are just waiting for the go-ahead from the museum,” said Quigley, who designed the structure with tilt-up concrete walls to save on material costs, and donated a portion of his salary on the project to the museum, according to Wagner. She said that, although the budget for the museum has been changing, Quigley and his team of three architects designed it to cost approximately $15 million.

Two features of the building stand out: The building itself is intended to be used as an educational tool, and this will be Downtown’s first major public “green,” building, fully equipped with environmentally friendly architecture and infrastructure.

Meola, of Pinnacle, said that he is pleased with the design of the museum, which, when completed, will sit a few feet away from the condominium towers. He said the roof will have glass windows — called clerestory windows — that expose the museum to indirect natural light, on the north side facing the tower, enabling the tower’s upper floor residents to peer inside the museum.

As for the likelihood that the museum will be completed on the site during the residents’ lifetimes, the success of the capital campaign the museum recently pushed into full gear is uncertain. Wagner said she is “very worried.”

Meola sounded confident.