Pacific Beach 239-Foot Tower Legal Battle: City Rejects Density Bonus Strategy in February 2026 Dispute

What Changed in February 2026: From Automatic Approval Claims to Formal Rejection

The Turquoise Tower dispute entered a new phase in February 2026 when the city moved from procedural delays to substantive legal rejection. In a December 23, 2025 letter (made public in February 2026), San Diego's Development Services Department stated it could not approve the fourth iteration of the project, citing "insufficient and conflicting information."

The Times of San Diego reported on February 10, 2026, that city officials specifically objected to "the developer's tactic of counting some of the tower's 213 units as hotel rooms—while leasing them as apartments." This represents the first time the city has publicly articulated the core legal problem: Kalonymus wants to classify units as "visitor accommodations" (commercial space) to qualify for certain density bonuses, while simultaneously planning to rent them as long-term residential units.

Matt Awbrey, spokesperson for Kalonymus, informed city planning officials that the developer planned to resubmit plans for the 23-story structure for a fifth time. However, the city's position appears firm: "The developer cannot have it both ways because the city needs to know which type of units they are in order to know which set of rules to apply—those that apply to commercial space or to residential space."

This marks a sharp contrast from earlier phases of the dispute, when the primary issue appeared to be procedural delays and incomplete applications. The city has now moved to substantive legal grounds for denial, creating a clear test case for density bonus law interpretation in coastal zones.

The Project: 22 Stories, 139 Hotel Rooms, 75 Apartments, and a Coastal Height Limit Problem

The proposed Vela project at 970 Turquoise Street would create a 22-story building with a rooftop deck, reaching 239 feet in height on a compact 0.67-acre site. The project proposes:

• 139 hotel units (classified as "visitor accommodations")
• 75 residential apartments (10 low-income units, 65 market-rate units)
• Ground-floor retail space
• Total: 213 units plus commercial space

The immediate problem: Pacific Beach sits within San Diego's Coastal Height Limit Overlay Zone, where Proposition D (approved by voters in 1972) established a 30-foot height cap. The proposed tower would exceed this limit by nearly 800%—a "pencil tower" that would become the tallest San Diego coastal building constructed since the 21-story building at 939 Coast Blvd. in La Jolla, built in 1964.

To breach this height limit, Kalonymus invoked California's Density Bonus Law, which has existed since 1979 as an incentive for developers to build affordable housing. The law requires cities to grant waivers and incentives for projects with units deed-restricted for low-income households.

However, the city argues that the project doesn't qualify for density bonus protections because of how it treats the 139 "visitor accommodation" units. While these units count toward commercial floor area calculations, the developer plans to rent them as long-term residences—creating what the city calls an impermissible dual classification.

The Legal Dispute: Five Critical Issues That Determine Project Viability

The Turquoise Tower dispute involves five interconnected legal questions that will shape density bonus law application in coastal San Diego:

1. Visitor Accommodations vs. Residential Classification

The city's primary objection centers on unit classification. City staff maintain that "the project is not legal in its current form, primarily because the developer plans to treat the visitor accommodation units as long-term rentals." The city wrote: "The applicant's strategy is to call the units commercial for some purposes and residential for other purposes, but the city needs clarity in order to perform its duties."

This matters because commercial space and residential space face different regulations regarding parking requirements, impact fees, coastal development permit requirements, density bonus eligibility calculations, and municipal code compliance standards.

2. AB 130 Deemed Approval Timeline

Kalonymus and its attorneys contend the Vela project should be considered "automatically approved" because the city did not greenlight it within a state deadline meant to expedite housing approvals. AB 130, a 2025 budget trailer bill, removed the condition that agencies must provide prior public notice for a project to be deemed approved due to the agency's failure to act within prescribed time limits.

The city counters that the deemed approval timeline never started because Kalonymus submitted multiple rounds of incomplete or incorrect plans. When an application lacks necessary information or contains code violations, the review clock doesn't begin.

3. Density Bonus Law in Coastal Zones

Can state density bonus law override voter-approved coastal height limits? In June 2022, California's Department of Housing and Community Development (HCD) issued a Letter of Technical Assistance advising that State Density Bonus Law supersedes the 30-foot height restriction in San Diego's Coastal Height Limit Overlay Zone.

However, HCD noted an important caveat: "Height limits adopted in a Coastal Zone pursuant to the Coastal Act might not be void where those height limits were adopted pursuant to state law." This creates legal ambiguity that the Turquoise Tower case may resolve.

4. Mixed-Use Commercial Density Calculations

The project's commercial floor area exceeds local zoning by more than 1,500%, according to state Senator Catherine Blakespear, who sponsored legislation (SB 92) specifically in response to the Turquoise Tower proposal. SB 92, which took effect January 1, 2026, requires mixed-use developments using density bonus law to devote two-thirds of floor space to residential housing to qualify.

Crucially, SB 92 also limits developers to increasing commercial floor space to no more than 2.5 times what local zoning allows. This reform was designed to prevent exactly the strategy Kalonymus employed: using residential density bonuses to create supersized commercial projects.

5. Municipal Code Interpretation

While the topic brief referenced a 2024 municipal code amendment prohibiting long-term rentals of visitor accommodations, the city's objection appears grounded in fundamental land use classification requirements rather than a specific recent amendment. The city needs to apply consistent rules—either commercial regulations for visitor accommodations or residential regulations for housing—and cannot approve a project that seeks advantages from both classifications simultaneously.

Precedent and Context: Rose Creek Village vs. Turquoise Tower

To understand why the city approved one coastal height limit exception but rejected another, consider the contrasting cases of Rose Creek Village and Turquoise Tower—both in Pacific Beach, both invoking density bonus law, both exceeding the 30-foot coastal height limit.

The key difference: Rose Creek Village is a legitimate affordable housing project that uses density bonus law for its intended purpose—creating deed-restricted affordable units. Turquoise Tower is primarily a commercial/market-rate project attempting to use density bonus law to bypass coastal height limits while providing minimal affordable housing (10 units out of 213).

As HCD's 2022 guidance suggested, density bonus law exists "as an incentive for developers to build on-site affordable units." Rose Creek fits this purpose; Turquoise Tower does not.

Implications for Pacific Beach and Coastal Zone Developers

The Turquoise Tower rejection establishes clear boundaries for density bonus strategies in San Diego's coastal zones. Here's what builders need to know:

Strategies That Still Work:

1. 100% Affordable Projects: Rose Creek Village demonstrates that projects with overwhelming affordable housing components can successfully breach the 30-foot coastal height limit using density bonus law.
2. Significant Affordable Housing Percentages: Projects with at least 15-24% units deed-restricted for low-income households, where the primary purpose is housing (not commercial development), remain viable.
3. Clear Unit Classification: Projects that maintain consistent classification—residential units are residential, commercial space is commercial—avoid the dual-classification trap that doomed Turquoise Tower.
4. Compliance with SB 92: Mixed-use projects that devote two-thirds of floor space to residential housing and limit commercial increases to 2.5 times local zoning can still use density bonus law (effective January 1, 2026).

Red Flags That Trigger City Rejection:

1. Dual Classification Gaming: Classifying units as visitor accommodations for density calculations while planning long-term residential rentals.
2. Minimal Affordable Housing: Projects with less than 5% affordable units attempting to use density bonus law to bypass major zoning restrictions.
3. Excessive Commercial Space: Commercial floor area exceeding local zoning by more than 250% (2.5x) under SB 92.
4. Incomplete or Conflicting Applications: Submitting plans that lack necessary information or contain internal contradictions about unit types and uses.

Other Projects Potentially Affected:

Builders with pending applications for mixed-use coastal projects should immediately review:

• Whether your project classifies any units differently for different regulatory purposes
• Whether commercial floor area exceeds 2.5 times local zoning (SB 92 compliance)
• Whether your affordable housing percentage justifies density bonus claims
• Whether your application provides complete, consistent information about all unit types

Timeline and Next Steps: What Happens Now?

As of February 2026, the Turquoise Tower dispute appears headed for extended legal proceedings:

Immediate Status:

• City has formally rejected the fourth iteration of plans (December 23, 2025 letter)
• Developer plans to resubmit for a fifth time, according to Matt Awbrey
• Developer maintains "automatic approval" claim under AB 130
• City maintains no approval timeline started due to incomplete applications

Likely Legal Pathway:

1. Administrative Appeals (Current Phase): Kalonymus will likely appeal the city's rejection through administrative channels, arguing that AB 130's deemed approval provision requires immediate permit issuance.
2. Superior Court Challenge (3-6 months): If administrative appeals fail, the developer will likely file a lawsuit in San Diego Superior Court seeking judicial review of the city's decision.
3. Preliminary Injunction Hearing (6-9 months): The developer may seek a court order requiring the city to issue permits while the case proceeds.
4. Trial or Summary Judgment (12-18 months): A judge will ultimately decide whether the city correctly interpreted density bonus law, AB 130, and municipal code requirements.
5. Appeals (24-36 months): The losing party will likely appeal to the California Court of Appeal, potentially reaching the California Supreme Court if the case raises significant legal questions about coastal height limits and density bonus law.

Financial Implications:

For developers with similar pending projects, the timeline uncertainty creates significant challenges: construction financing typically requires permit certainty within 6-12 months, investor confidence declines when projects face extended legal battles, carrying costs for land accumulate while projects remain stalled, and design and engineering costs for multiple resubmissions add up quickly.

The San Diego Union-Tribune reported that Kalonymus has made "little progress in convincing the city of San Diego that its unconventional application of local and state laws to breach the neighborhood's height limit is lawful," suggesting the parties "appear at an impasse."

Community Opposition and Political Context

The Turquoise Tower has become "a poster child for growing opposition to city policies meant to spur denser home building," according to the San Diego Union-Tribune. The project's location—a small 0.8-acre site surrounded by single-family residential neighborhoods—intensified local resistance.

Marcella Bothwell, who leads the opposition group Neighbors For a Better California, referred to the Turquoise tower as "a big middle finger to the neighborhood." Her group is actively raising money to fight the developer in court if the city approves the project. Over 500 neighbors gathered in Pacific Beach to protest, with signs saying "NO to out-of-scale towers" and "YES to protecting our neighborhoods."

This community opposition influenced state legislation. State Senator Catherine Blakespear (D-Encinitas) authored SB 92 specifically in response to the Turquoise Tower, with sponsorship from San Diego Mayor Todd Gloria. Senator Blakespear stated that the deficiency in density bonus law "has come to light with a mixed-use housing project proposed for the Pacific Beach neighborhood of San Diego in which the commercial space exceeded local zoning by more than 1,500%."

SB 92, which took effect January 1, 2026, represents a direct legislative response to the Turquoise Tower strategy. The law's two-thirds residential floor space requirement and 2.5x commercial space limitation were designed to prevent similar projects statewide.

Practical Guidance for Builders: Avoiding the Turquoise Tower Trap

Based on the city's rejection of Turquoise Tower, here's actionable guidance for Pacific Beach and coastal zone developers:

Pre-Application Checklist:

• Determine your project's primary purpose: Is it predominantly housing or predominantly commercial?
• Calculate your affordable housing percentage: Does it justify density bonus claims?
• Review SB 92 compliance: Is residential floor space ≥ 66.7% of total floor space?
• Check commercial space increase: Does it exceed 2.5 times local zoning?
• Verify unit classifications: Are all units classified consistently across all regulatory contexts?
• Assess coastal development permit requirements: Do you need California Coastal Commission approval?

Documentation Best Practices:

1. Clear Operating Plans: Document how each unit type will actually operate (hotel? short-term rental? long-term residential?)
2. Consistent Terminology: Use the same unit classifications in all documents—site plans, density bonus applications, parking calculations, and impact fee assessments.
3. Complete Applications: Include all required information in initial submissions to start the deemed approval timeline correctly.
4. Affordable Housing Agreements: For density bonus claims, provide detailed deed restriction agreements showing long-term affordable housing commitments.

When to Seek Legal Review:

Consult with a land use attorney specializing in density bonus law before submitting applications if:

• Your project is mixed-use (residential + commercial) in a coastal zone
• You plan to exceed the 30-foot coastal height limit
• Your affordable housing percentage is below 15% of total units
• You're classifying any units as visitor accommodations
• Your commercial space exceeds local zoning by more than 100%

Working with City Planners:

The city's rejection letter emphasized that it "needs to know which type of units they are in order to know which set of rules to apply." This suggests a path forward:

1. Pre-Application Meetings: Schedule meetings with Development Services Department staff before formal submission.
2. Clear Questions: Ask specifically: "If we classify these units as [visitor accommodations/residential], which regulations apply?"
3. Written Confirmations: Request written confirmation of regulatory interpretations before investing in full design and engineering.
4. Incremental Approvals: Consider phased approaches that secure approval for compliant portions first, then pursue density bonuses for additional phases.