The October 27 notice demands $942,753.44 in alleged unpaid rent or surrender of the Santa Clara Point property by Friday, October 30. A separate default notice places the city's broader claim at approximately $4.2 million, including disputed event revenue, interest, penalties, water charges and other assessments dating back to 2022.
In response to SanDiegoVille's investigation, city officials have accused Mission Bay Sports Center of repeatedly failing to pay rent and taking advantage of the city's willingness to negotiate. Yet the city's only response to nine detailed questions offered no explanation for its unfinished lease approvals, no itemized accounting of the multimillion-dollar demand and no identification of the contractual provision allegedly entitling it to 100% of revenue from unauthorized events.
What initially appears to be another case of a tenant failing to meet its financial obligations becomes considerably more complicated when examining the city's own conduct. San Diego spent years processing sublease paperwork, negotiating amendments and considering ways to authorize activities it now characterizes as violations, only to leave the matter unresolved while its financial demands continued growing.
The result is an extraordinary confrontation between City Hall and a local business that has operated at 1010 Santa Clara Place since 1980, with a lease that otherwise runs through July 2031.
Mission Bay Sports Center offers boat rentals, jet skis, sailing, paddleboarding and youth camps, while the property also accommodates Tower Paddle Boards and waterfront event venues Tower Beach Club and The Point. The dispute largely concerns weddings, concerts, corporate gatherings and other private events that the city contends were never properly authorized.
The businesses maintain that city officials knew about the activities, participated in efforts to approve them and failed to complete necessary administrative steps. City officials insist the required approvals were never finalized and that the tenant has failed to satisfy multiple lease obligations.
The city's own records establish that this was hardly a situation in which an unfamiliar business appeared on public property without the city's knowledge.
On May 23, 2019, San Diego's Planning Department issued a formal environmental determination for a proposed five-year consent to sublease the Mission Bay Sports Center property to Tower Paddle Boards LLC. The document identified the exact property, described the proposed arrangement and named an employee in the city's Real Estate Assets Department responsible for the matter.
Importantly, the 2019 document concerned a retail shop selling paddleboards, kayaks and accessories, not weddings or private events. It also does not establish that final sublease approval was granted.
Nevertheless, it demonstrates that the city was formally processing an arrangement involving Tower Paddle Boards years before threatening to terminate the master lease over allegedly unauthorized operations.
According to reporting by The San Diego Union-Tribune, city officials later maintained that the consent agreement was never finalized, and Tower Paddle founder Stephan Aarstol said the city could not locate an executed consent document in its own files. Aarstol contends that the missing signatures were the city's responsibility.
He also told the Union-Tribune that his company invested hundreds of thousands of dollars improving the property and paid rent, including percentage rent associated with events. Those payment claims have not yet been independently reconciled with city financial records.
And if the missing paperwork is concerning, what happened in 2024 raises even more questions.
On March 20, 2024, the City Council's Land Use and Housing Committee considered an amendment to the Mission Bay Sports Center lease that would have expressly authorized the disputed event operations. Listed as Item 8 on the committee's agenda, the proposal represented a potential path toward resolving a disagreement that had already persisted for years.
According to the Union-Tribune, the committee recommended approval. Yet the amendment was never presented to the full City Council and never became effective.
The city has offered a justification. Economic Development Director Christina Bibler told the Union-Tribune that advancing the amendment depended on Mission Bay Sports Center becoming a tenant in good standing, which she said never occurred.
That explanation does not eliminate the need to examine what happened next. Who decided not to advance the amendment, what efforts were made to resolve the remaining disagreements, and why was the matter allowed to drag on while the city's financial demands continued escalating?
When the amendment was considered in 2024, the city claimed approximately $1.2 million in outstanding rent, including $820,000 associated with unauthorized uses. By October 2026, its broader claim had ballooned to $4.2 million.
Even more remarkable is the way San Diego reportedly calculated a substantial portion of the money it wants.
According to the Union-Tribune, the city's $942,753.44 three-day demand includes ordinary percentage rent plus 100% of revenue attributed to allegedly unauthorized private events. Not a conventional percentage of the event revenue, but the entire amount attributed to those activities.
Whether the city's executed lease actually authorizes that calculation remains an unanswered question. The underlying agreement and detailed audit records have not yet been obtained or independently reviewed by SanDiegoVille, and the city has not established its contractual basis for the assessment in the materials available for this report.
The $4.2 million figure also covers a longer period and includes additional charges. It is not a second amount being demanded on top of the $942,753.44 notice, and neither figure represents a court determination that the business owes the money.
The public deserves to know exactly how the city arrived at these numbers, particularly when the disputed revenue was generated through activities openly marketed and conducted at the property for years. If the city accepted rent attributable to those activities while simultaneously treating them as unauthorized, that history deserves scrutiny, as does the possibility that administrative delays contributed to the accumulation of disputed charges.
The city is not without arguments of its own. Officials have identified alleged failures involving financial documentation, insurance coverage, unauthorized subletting and facility improvements, and those issues could have significance independent of the event-revenue dispute.
On October 29, SanDiegoVille sent a detailed inquiry to Mayor Todd Gloria, Councilmember Jennifer Campbell and numerous other city officials, seeking explanations of the lease approvals, financial calculations and enforcement decisions. The publication also asked what steps the city had taken to resolve the dispute without eviction and what involvement elected officials or their staff had in the decisions.
The only response received came from Tara Lewis, a supervising public information officer with the city's Communications Department. Lewis issued a statement defending the city's actions and accusing Mission Bay Sports Center of repeatedly violating its lease.
"The City made numerous attempts to work collaboratively with the tenant and provided multiple opportunities to get back into compliance," Lewis wrote. "Unfortunately, these efforts were not met in good faith, and the tenant ultimately took advantage of the City's willingness to work toward a resolution."
Lewis also stated that the city had "initiated eviction proceedings" because of the tenant's continued violations, describing the action as necessary to protect the public's interests and ensure consistency across municipal lease agreements. The statement did not provide a court case number or clarify whether an unlawful detainer lawsuit had actually been filed, rather than referring to the three-day notice and related enforcement steps.
But despite receiving nine specific questions, the city offered no explanation for why the 2019 Tower Paddle Boards consent process was never completed or why the 2024 lease amendment never reached the full City Council. Nor did it identify the contractual language supporting its demand for 100% of allegedly unauthorized event revenue.
The response also omitted an accounting of the $4.2 million claim, including how much represented ordinary unpaid rent versus disputed event revenue, interest and other charges. It did not address whether the city accepted payments associated with the disputed activities, how long officials knew those activities were occurring or what role municipal administrative decisions played in prolonging the disagreement.
Nor did Lewis explain what objective criteria distinguish the city's treatment of Mission Bay Sports Center from its handling of other tenants occupying valuable public property. No separate substantive response was received from Campbell or the other elected officials contacted by SanDiegoVille before this update.
Instead, Lewis emphasized the city's broader commitment to enforcing leases and acknowledged problems within its own real estate portfolio.
"As part of this effort, the City has identified gaps within portions of the portfolio and has taken clear steps to correct them," Lewis wrote, adding that officials would continue strengthening their management practices and holding tenants accountable.
That acknowledgment comes against a particularly embarrassing backdrop for San Diego's management of publicly owned property.
A recent City Auditor investigation examined the Barnes Tennis Center, where more than 12 acres of valuable public land in Ocean Beach have been leased for just $50 per month, or $600 annually. The nonprofit operator reported more than $20 million in revenue over five years, while auditors identified lease and compliance problems that had not resulted in formal violation notices.
The findings exposed broader weaknesses in the city's oversight of publicly owned property and its enforcement of lease obligations.
Consider the contrast: One recreational facility has occupied more than 12 acres under an extraordinarily inexpensive agreement while significant oversight problems went unaddressed. Another longtime recreational business, occupying a far smaller Mission Bay property, is being threatened with forfeiture over a disputed demand approaching $1 million, payable within three days.
The two leases are different, and the Barnes Tennis Center findings do not excuse any violations that may have occurred at Mission Bay Sports Center. But they make the city's insistence on consistent accountability an obvious subject for public scrutiny.
Why is San Diego taking such a severe approach toward this particular business? What objective standards determine when a tenant receives years of opportunities to address problems and when a tenant faces a three-day notice threatening its lease?
The city's latest statement does not answer those questions. Its acknowledgment of gaps in lease oversight makes the need for an explanation more pressing, not less.
For the businesses operating at Santa Clara Point, the stakes are substantial.
Tower Paddle Boards founder Stephan Aarstol gained national attention after appearing on ABC's Shark Tank in 2012, securing a $150,000 investment deal with Mark Cuban for a 30% stake. His company later earned recognition for its growth, while its Tower Beach Club venture helped establish the property as a destination for waterfront weddings and private gatherings.
Those events were publicly advertised for years. Public visibility does not substitute for formal lease authorization, but it makes the city's awareness, response and handling of the approval process central to understanding the dispute.
Mission Bay Sports Center itself predates those ventures by decades. Since 1980, it has provided access to Mission Bay for residents, tourists, families and children attending water sports camps.
Now the city is threatening the business's future nearly five years before the scheduled expiration of its lease.
Mission Bay Sports Center representative Zachary Funston has accused the city of acting in bad faith and failing to honor commitments made during years of negotiations. Attorney Robin Madaffer similarly disputed the city's allegations in June, attributing the conflict in part to differing lease interpretations and unresolved administrative processes within the city's control.
Those accusations remain contested, just as the city's latest accusation that the tenant acted in bad faith remains its position rather than an adjudicated finding. The existence of unresolved approval processes does not establish that the tenant complied with its lease, but it does warrant examining the city's own role in the dispute.
The city has indicated that, if the dispute remains unresolved, it intends to secure the site and solicit proposals for a replacement tenant. However, the expiration of Friday's notice would not itself authorize an immediate physical eviction; if possession is contested, the city would generally need to pursue the appropriate court process.
There is also a broader issue that San Diegans should consider: Public waterfront property belongs to the public, not to City Hall or any individual business. The city has an obligation to protect that property, collect legitimate revenue and enforce lawful agreements fairly.
That obligation runs in both directions. City officials cannot expect the public to accept their characterization of a multimillion-dollar dispute without explaining how the claimed debt was calculated and how the city handled the administrative processes at the center of the disagreement.
SanDiegoVille filed California Public Records Act Request 26-11515 on October 29, seeking the executed lease, financial audits, payment records, sublease agreements, correspondence among city officials and documents explaining the decisions that brought this dispute to the brink of eviction. The request also seeks records concerning the city's enforcement practices and its treatment of other municipal tenants.
Those records could establish that the city is entitled to the amounts it seeks, reveal significant administrative failures, or demonstrate a combination of shortcomings on both sides. Until the underlying documents are examined, neither the city's financial claims nor the tenant's accusations should be treated as conclusively established.
The city has now had an opportunity to explain its position, and its response will remain part of the public record. What remains missing is an explanation of the decisions, calculations and unfinished approvals that prompted SanDiegoVille's questions in the first place.
SanDiegoVille intends to continue examining what happens after the October 30 deadline, whether the city pursues a court-ordered eviction, how Mission Bay Sports Center responds and what the requested public records reveal about years of negotiations preceding this confrontation.
For a business that has spent 46 years serving Mission Bay, the outcome could determine whether it remains part of San Diego's waterfront future. For a city whose handling of public property has already come under serious scrutiny, the question is equally consequential: How can San Diego demand accountability from its tenants without fully accounting for its own actions?
Originally published on October 29, 2026.
