In San Diego's Point Loma Peninsula, Growth Plans Collide With Aging Infrastructure

Written by:

Steve Marcinuk

Date:

04 May 2026

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Across California, state housing mandates and local planning priorities are increasingly at odds. Few places illustrate that tension as clearly as San Diego’s Point Loma Peninsula, where a 67,000-resident community is caught between developer ambitions, state density requirements, and infrastructure largely built during World War II. Two major projects could add tens of thousands of new residents to the area — raising questions about whether the peninsula’s roads, sewers, and utilities can keep up.

Eric Law, Chair of the Peninsula Community Planning Board and a retired Navy intelligence officer, leads one of 41 community planning groups chartered by the City of San Diego. His board advises on land use decisions ranging from coastal development permits to large-scale residential projects.

How the Process Works

Community planning boards in San Diego sit between developers and city decision-makers. They are independently elected by residents, property owners, and business operators within their designated areas, and they weigh in after the city completes its initial review of a project.

Law describes the board’s role as applying community plan standards to incoming proposals — balancing preservation with responsible development. For the vast majority of projects, the process moves quickly. Standard residential work, such as ADUs, kitchen additions, and routine permits, generally passes through without board involvement. Larger, more complex projects — those requiring coastal development permits, height variances, or density bonuses — come before the board for review.

Friction tends to arise in a narrow set of cases. “Developers who adhere to the guidelines sail through,” Law says. “It’s where they try to build super high-density things that violate codes or need exceptions, and they get pushed back.”

He estimates that genuinely problematic projects represent less than five percent of the total.

Density Bonuses and Their Unintended Consequences

California’s push to accelerate housing production through density bonus programs has created complications at the local level. On the peninsula, the board has seen developers use ADU provisions to build what are effectively small apartment buildings in single-family neighborhoods — structures that fall outside the multifamily code requirements that would otherwise apply.

The law says the ADU policy is intended to allow homeowners to house family members or generate modest rental income. Instead, some developers are using the law to bypass normal oversight for what amounts to apartment construction.

One project currently before the board illustrates the concern. A corner lot in a mixed-use commercial corridor, where standard zoning would support 14 units, has been proposed at 56 units using density bonuses. The affordable units in the plan range from 420 to 468 square feet, and the building would sit within five feet of an adjacent elementary school’s lot line while exceeding the coastal height limit.

“We gave the 14-unit project the big thumbs up,” Law notes. “It’s the 56-unit version that we’re pushing back on.”

The city has since revised its ADU density rules, capping the number of ADUs permitted on a single-family lot at four — still higher than the previous standard, but a reduction from what some developers had been attempting.

Two Projects Drawing the Closest Scrutiny

The density bonus debate is playing out in miniature compared to two large-scale developments that could reshape the peninsula over the next decade.

The first is Midway Rising, a proposed 4,500-unit mixed-use project tied to the revitalization of the aging sports arena site in the Midway District. The law says the board broadly supports redeveloping the area, which he describes as one of the most neglected parts of the peninsula. The concern is scale and sequencing.

The board estimates that Midway Rising could bring roughly 25,000 additional residents to an area already known for difficult traffic conditions. The peninsula’s road network funnels tens of thousands of daily commuters — including workers at a Navy base and a federal research facility — through surface streets to reach the interstate. No infrastructure investment has been announced alongside the project.

“Everyone on the peninsula supports fixing that district,” Law says. “We’re just opposed to building 150-foot skyscrapers among 30-foot buildings when the infrastructure doesn’t support it.”

The second development is potentially larger and more complex. The Navy is in negotiations for what could be a 10,000-unit residential development on federal land roughly half a mile from Midway Rising. Because it would be built on federal property, it would largely bypass local planning review.

Together, the two projects could add 50,000 or more residents to a peninsula where the sewer, water, and power infrastructure was largely installed in the 1940s, and where the central portion sits on a former riverbed that floods regularly.

A Market Showing Signs of Cooling

Beyond the planning dynamics, Law offers a candid read on San Diego’s broader real estate market — one that diverges from more optimistic narratives still circulating in parts of the industry.

San Diego’s population, which the state had projected to grow by 25 percent by 2035, has instead been declining since 2019. The city lost approximately 5,000 residents in the past year, and Law expects a similar or larger decline in 2026. Rents have dropped roughly five percent, and home prices, while not declining, have flattened. Inventory has risen.

“It looked like a market that has reached equilibrium,” Law says. “The needle is tipping back and forth between a seller’s market and a buyer’s market right now, which is unique for San Diego.”

The gap between incomes and prices remains significant. Law points to an 80 percent preference among millennial families for single-family homes. Yet the city’s development pipeline has been weighted heavily toward apartments — a mismatch, he says, that is showing up in rising vacancy rates.

A growing tax and fee burden is also complicating investment decisions. The city is considering a vacant-home tax, and state-level proposals could add costs of up to 30 percent to homes built outside city limits.

San Diego’s homeownership rate sits at roughly 48 percent — well below the national average of 65 percent. “We don’t have a housing crisis anymore,” Law says. “We have a housing affordability crisis.”

Where Opportunity Still Exists

Despite the headwinds, Law sees selective opportunities for investors and developers willing to navigate the current environment carefully. Greenfield development in the southern portions of the city, where land costs are lower, and population growth has continued, represents one area of relative activity. Infill development, by contrast, remains expensive and complex.

For those considering the peninsula specifically, his message is straightforward: come prepared, follow the code, and engage early.

“If someone’s got their act together, we’re the fastest part of the approval process,” he says. “Most people who develop and build know the government is the biggest obstacle. If we can get some of those limits reduced, and get back to developing smartly and consistently with the community — that’s the goal.”

The peninsula’s future will likely depend on whether infrastructure investment can keep pace with the housing commitments already in motion. Without it, the projects designed to address San Diego’s affordability gap risk straining the very systems that make the community livable.

About the Expert: Eric Law is Chair of the Peninsula Community Planning Board in San Diego, one of 41 community planning groups chartered by the City of San Diego. A retired Navy intelligence officer, he leads an independently elected board that advises on land use decisions across the Point Loma Peninsula.

This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.