Photo by Amy Cantrell.

The emotional payoff from Domenic Drago’s work in real estate development law comes in its tangible results: watching projects for which he laid the legal groundwork actually get built.

And, in the case of the San Diego State University’s Mission Valley campus and stadium, knowing that he helped build a legacy with the power to transform its community.

“I’ve got two grandkids in town, and this is something they can look back on and say, ‘Pops worked on that,’” the partner at Sheppard Mullin’s San Diego office explained. “So it means a lot.”

Drago reflected on that future in August as he toured the site and its Qualcomm Stadium – where the San Diego Padres baseball team and the San Diego Chargers football team once played, along with the San Diego State Aztecs – as construction began on the new one.

“I wanted to see the stadium before they tore it down, and we walked out there,” he recalled. “It was amazing to see. We were up in the old stadium looking out over the site, and they had already started digging, working on the foundation for the new stadium. That’s what I love to see: There were bulldozers, trucks and they were building, really doing the work that lets you know this is the real deal.”

The new Aztec Stadium, designed to accommodate 35,000, is the first phase of a buildout vital to future growth at San Diego State. On a parcel comprising 166 total acres, it will offer not only classrooms and campus facilities but 80 acres of recreational space including a River Park; 4 miles of trails and pathways; 4,600 neighborhood residences; and 95,000 square feet of retail, including grocery stores and restaurants.

The majority of the land, 135 acres, was purchased in the 2020 transaction between the California State University System, which Drago represented, and the city of San Diego.

“San Diego State is basically out of land on what they call the Mesa, where the main campus is now,” Drago said. “There’s no room to grow, and yet the enrollment goes up every year, and the number of people who apply goes up every year.”

For Drago, negotiating a deal between two parties that each had a variety of stakeholders with sometimes competing interests required drawing on a lifetime of skills in real estate development law, a field he views as more nuanced and requiring a greater ability to see around corners than traditional real estate transaction law.

“You have to have an eye toward the future development and what issues you need to resolve to make sure that development can succeed,” he said. “It’s a lot more due diligence, and it’s more fun. This is the epitome of that because this deal had so many complexities and so many interesting components to it.”

While the city had let the SDCCU facility, where the Poinsettia Bowl was played for more than a decade, deteriorate since its 1967 opening, San Diego State wasn’t the only potential buyer. A group of developers wanted to build what they dubbed Soccer City, with a stadium for a professional soccer team and a mixed-use development that included commercial space and housing.

Both succeeded in putting a ballot initiative before voters, and the San Diego City Attorney attempted to block each of them in court, unsuccessfully. When the San Diego State initiative won voter approval, the same City Attorney led the team negotiating the sale of Qualcomm Stadium and the surrounding land, “so that was an interesting start,” Drago recalled. “I got involved after the initiative had passed and it was time to negotiate and get the deal done.”

Lawdragon: It sounds almost like you’re a field marshal laying out a battle plan for all the different types of work and stages of execution. Once you get hired, what’s the process?

Domenic Drago: It starts with understanding the stakeholders, really. The California State University system, which has 23 campuses, is the largest four-year university system in the country, basically an agency of the state of California, which was ultimately my client. So there was the Cal State system and its Office of General Counsel, out of the Chancellor’s office in Long Beach. And even within the Chancellor’s office, there were different departments for real estate, finance, etc. And there was the campus team, which had various groups involved in the planning and negotiations. So each draft of the purchase agreement – each draft of any document, really – went to over a dozen different people.

One of the challenging parts with that many stakeholders is making sure all of them are heard and their issues taken care of. And then you have the City of San Diego, which had its attorneys, its real estate department, and practically every agency in the city – public utilities, transportation, stormwater and traffic. They had as many or more stakeholders on that side.

The private developers are coming in next to do the public-private partnership deals for the residential construction, the office space, some of the retail and the hotel. Those will be long-term ground leases that will be negotiated and will be revenue sources for keeping the rest of the project going, so we’ll be turning to those deals next. A lot of universities are doing these nowadays, have been for quite a while.

LD: That sounds almost overwhelming, but you have so much energy in your voice when you talk about it. What makes this kind of work so professionally satisfying?

DD: Part of it is just being able to bring all of those different stakeholders and different people together and get them to agree so we can actually get the deal done. To me, being able to listen to and help resolve issues that are coming from all different angles, sometimes conflicting and totally contradicting, is rewarding.

LD: What have been some of the most complicated parts so far?

DD: To begin with, the site itself was very complicated because it’s 135 acres, part of which was controlled by the City’s Water Utility Fund, and there were different interests the city needed to protect with that. And then there are major public infrastructures – sewer lines, water lines, fuel lines – that run right through the property and rights that the city needs to retain. So it’s an interesting and complex site just in terms of all the different easement rights and the different property rights. And, again, this goes back to development law versus just buying and selling of property, being able to anticipate how your development needs to be built and making sure that all those rights, those competing rights, are accommodated without harming your development plan.

LD: You must have had a team of lawyers from the firm working on this with you.

DD: Absolutely. They included Jennifer Chavez, a partner in our downtown office, who’s a very good, very strong California Environmental Quality Act lawyer. Issues involving the California Environmental Quality Act, or CEQA, are pervasive in real estate development deals, and she also does transactional work, so I thought she had the perfect mix. Basically, she and I led the team together. We also had another partner in our Orange County office, Aaron Sobaski, who is a very strong development and public/private partnership attorney who also does a lot of work with the Cal State folks.

There came a point during the drafting where we needed to bulk up our team because we had a lot to do in a short period of time and, in terms of disciplines, I think we reached out to six different practice groups in five different offices. For instance, there was a question about what would happen if the deal got involved in a lawsuit in the middle of COVID, so we brought in some appellate folks to give some advice on how to draft that provision. We brought in tax folks because there would be possessory interest tax and environmental experts because this had been the site of a huge plume of pollution from a nearby site now owned by Kinder Morgan Energy. We had labor and employment lawyers to talk about prevailing wage, and I recently talked to an FCC [Federal Communication Commission] lawyer about telecom issues. It was a deal that allowed us to show the depth and breadth of our firm’s resources.

LD: That’s quite impressive. How many project phases will there be until you walk out and there are buildings and it feels like a completed development to you?

DD: The project is slated for a 15-year buildout, so it’s a long one, and it will be in phases. The first phase is the new stadium and the River Park, which is the 34 acres next to the river. Then, probably, the residential construction. And then the innovation district, the campus district and lots of classrooms and campus facilities. At the end, it should be providing capacity for another 15,000 students, which is just fantastic. It’s totally transforming this part of Mission Valley and creating an opportunity for so many kids who want to go to San Diego State, whose parents went there, but perhaps there’s no room for them now.

LD: Can you tell me a little about how you became interested in real estate law?

DD: When I was in law school at the University of California Hastings, I had clerked for some litigation firms and, to begin with, I thought I would like being a trial lawyer. I thought they would be really fun. And then I worked for some litigation lawyers and decided that trials may not occur as frequently as I hoped. I also was not enjoying the discovery process with interrogatories and depositions.

So I thought about how I’d always had an interest in doing something development-related, and I began to gravitate more toward corporate and real estate. The first firm I worked with, Hopkins & Carley, represented Mobil Land. A lot of the oil companies had land development companies back then, and Mobil Land owned Redwood Shores. The partner who was in charge of that project left to go to another firm, and – while I was just a first year – I hit it off with the in-house counsel who was fairly young but was a nice guy. And he let me have a chance. It was just a remarkable opportunity as a first-year. We ended up doing, I think, 10 deals in that year in just Redwood Shores.

Back then, Redwood City was not Silicon Valley like it is now, and a lot of the projects I worked on are still in Redwood Shores. It was just a great opportunity to cut my teeth on things, and at that point, I was hooked. It was pretty much real estate from then on.

LD: Are there other developments that you’ve worked on in the past that are special to you?

DD: Interestingly, my first deal at Sheppard in San Diego was in Mission Valley and it was for Hazard Center, which is west of this site and it’s still there. It’s a mixed-use development. It was a joint venture with Trammell Crow and the Hazard family, who’d owned that property for years and years; it used to have a brickyard on it.

And then I did a lot of work for the San Diego Catholic Diocese years ago, and I helped them buy the site that Cathedral Catholic High School is on, which was cool. I was actually on their founding board for that school for a while, so that one was meaningful as well.