The controversial Cottages at the Cays project has been officially discontinued. Instead, the 7.3-acre parcel of land will one day become a park.
The Port of San Diego Board of Port Commissioners voted to buy out the remaining lease on the land, which sits on North Grand Caribe Island in Coronado, for $3 million.
The port will continue to operate the land in a revenue-generating capacity until it has recouped that cost, and then it will turn the land into a park.
“It’s a public asset that we are prepared, in the future, to offer back to the public to come and enjoy,” said Commission Chair Frank Urtasun, who also is Coronado’s representative. “That’s my vision for it.”
Residents and city leaders were vehemently opposed to the project, which began as a proposed 114-room hotel, but was later scaled back to a project of 41 moveable, two-bedroom cottages.
The parcel of land is under a public trust overseen by the Port of San Diego, but was leased to Cays Resort, LLC, until 2034. Under the Port Master Plan Update (PMPU) passed this year, the area is set aside as recreational open space, though the portion under commercial lease is noted as an exception.
The challenge, therefore, was two parties’ conflicting needs: On the one hand, the port hoped to protect public access to the coast and to consider the fervent opposition to another hotel in Coronado.
However, the port did lease the land to Cays Resort, LLC, who said it was unfair to have to pay for land that could not be developed to generate revenue. The lease is set to expire in 2034.
The Board of Port Commissioners approved the project in early 2023, to much chagrin from the Coronado community. In late 2023, Cays Resort suggested a lease buy-out due to the strong public opposition to the development.
Under the lease termination agreement both parties accepted, escrow will close on March 11 of next year. The land currently hosts boat storage, and the port will continue to operate it in this (and potentially other) revenue-generating capacities until it has recouped its expenses, which could take up to a decade, though Urtasun predicted it would be quicker. Port staff predicted the investment would yield and internal rate of return of greater than 10%.
Then, the port will maintain control over transitioning the space into a park.
The decision came during a brief, 15-minute agenda item at the Dec. 10 meeting of the Board of Port Commissioners – a stark contrast to the hours of discourse expended on the project over recent years.
Commissioners congratulated Urtasun for his advocacy and work to find a mutually beneficial solution for the future of a controversial plot of land. Coronado Mayor Richard Bailey during public thanked the board, Cays Resort, LLC, and port staff for their work in reaching a compromise.
“This item has the city of Coronado’s full support,” Bailey said.
The board voted unanimously to buy out the lease, with Commissioner Danielle Moore excused. Due diligence must still be completed.
