A new revenue-sharing agreement links the Zoo’s long-term occupancy of 124 acres in Balboa Park to the City’s paid parking program, generating guaranteed annual payments and a split of gross parking income through 2078.
The San Diego City Council on March 9 approved a second amendment to the San Diego Zoo’s lease in Balboa Park, extending the agreement by 44 years through 2078 in exchange for a share of revenue from the Zoo’s paid parking program. The deal establishes a new financial framework between the city and its most prominent cultural institution, which has occupied the park since 1916 without paying rent. The city’s Office of the Independent Budget Analyst (IBA) conservatively estimates the lease could generate $347.6 million in nominal value over the 52-year remaining term — equivalent to $98.5 million in net present value at a 4.5 percent discount rate — according to IBA Report 26-07, issued March 6.
The Zoological Society of San Diego has maintained a presence in Balboa Park since the 1915 Panama-California Exposition. In 1934, voters approved a charter amendment to levy a property tax to support the zoological exhibits, which today stands at $0.005 per $100 of assessed value after changes to state tax law in 1981. The city formalized a 55-year leasehold agreement with the Zoo in July 1979, set to expire in 2034. The proposed second amendment pushes the total lease term to 99 years, the maximum allowable under state law, according to the IBA report.
The lease amendment was prompted by the city’s broader implementation of paid parking across Balboa Park, which launched in January 2026 as part of a budget mitigation strategy. The FY 2026 Adopted Budget assumed $3 million in revenue from Zoo parking, part of a larger paid parking package the IBA previously analyzed in Report 25-30. After budget adoption, city staff entered negotiations with the Zoo to develop the revenue-sharing agreement that would allow those revenues to actually be collected, the IBA report noted.
Under the financial terms, the Zoo will make a minimum annual payment of $3 million to the city, with a 50-50 split of gross parking-related revenue above that floor. The minimum payment increases by 3 percent annually beginning in 2030. For the purpose of calculating net revenue above the minimum, both parties share parking lot operations and administration expenses equally, though the city’s cost exposure is capped at $700,000 per year — a ceiling that will not increase over time. The city bears no responsibility for capital expenses, according to the IBA analysis. All revenue collected from the lease will be deposited into the Balboa Park Paid Parking Program Fund to support city operations inside the park.
The payment structure, however, is directly tied to the fate of the city’s paid parking policies. If the City Council reduces the number of paid parking days in Balboa Park by five or more days in a year, the $3 million minimum payment shrinks proportionally. The IBA illustrated the impact: eliminating parking fees on Sundays, for example, would reduce the minimum payment by approximately 14.2 percent, or $427,000. If the city were to eliminate paid parking entirely, the guaranteed revenue stream would disappear. At five paid days per week, the lease’s projected nominal value drops from $347.6 million to $249.2 million and its net present value falls from $98.5 million to $71.2 million. At just one paid day per week, total nominal value over the term drops to $52.4 million, according to the IBA’s projections.
These estimates are conservative by design. The IBA assumed the city receives only the minimum payment with no additional revenue from the gross payment split, that any reductions to paid parking days occur in calendar year 2027, and applied a 4.5 percent discount rate roughly tied to the city’s cost of borrowing. The IBA did not have access to data from the Zoo on parking lot utilization over time, revenue collected to date, or the proportion of complimentary parking provided to Zoo members — all variables that could push actual collections higher than the floor.
Beyond fiscal terms, the lease amendment includes provisions requiring compliance with the city’s Zero Emissions Municipal Buildings and Operations Policy, prevailing wage requirements on future capital projects, 10 reserved parking spaces for city operations near the War Memorial Building, and $250,000 worth of free daily admission tickets annually for nonprofits, schools, and children.
The IBA flagged six areas of concern for the Council. Chief among them is the nature of the payments themselves. Because Council Policy 700-04 prohibits charging rent to nonprofit institutions in Balboa Park, the parking-related payments are not classified as rent, and no appraisal or market-rate analysis was applied. The IBA suggested that payments tied to a fixed percentage or dollar amount for tickets, membership, concession sales, or a combination of those revenue streams could prove more stable or generate more revenue over a 52-year horizon than payments structured solely around parking activity. The proposed lease does not provide for any of those alternatives, according to the report.
The IBA also raised concerns about the lease’s 10-year periodic payment reviews, which are required by state law but lack specificity. The agreement does not define which terms may be adjusted — whether minimum payments, annual escalators, administrative expense caps, or revenue splits — nor does it establish a mediation process with an independent third party if the city and Zoo cannot agree on modifications.
Longer-term questions involve the future of the Zoo’s parking infrastructure itself. The Balboa Park Master Plan and Central Mesa Precise Plan envision expanding Zoo exhibits into space currently occupied by the surface parking lot, with parking moved underground. The IBA questioned how a reduction or increase in parking spaces would affect gross revenue calculations, and whether the lease terms would apply to any temporary or permanent off-site parking the Zoo might operate in the future, inside or outside Balboa Park.
Additionally, the IBA noted that the Zoo’s Balboa Park lease and its separate lease for the Safari Park property in San Pasqual Valley share a concurrent expiration date, suggesting the Council may wish to weigh the benefits of negotiating both as a package rather than separately. The Zoo property is a Parks and Recreation department asset of the General Fund, while the Safari Park is a Public Utilities Department asset of the Water Fund, according to the report.
The budget implications of rejecting or delaying the deal are significant. The FY 2026 budget and the FY 2027-2031 Five Year Outlook both assume $3 million in annual Zoo parking revenue. Sending the proposal back to staff or waiting until closer to the 2034 expiration date would add to the current fiscal year’s projected shortfall — potentially requiring use of General Fund reserves — and compound projected deficits in future years, the IBA warned.
The IBA concluded that the proposed terms deliver a net positive fiscal impact over the next 52 years, while acknowledging that the Council may wish to request additional assurances and clearly defined processes to address the considerations raised in the report. Given the long-term nature of the commitment, the analyst’s office also suggested the Council consider whether more substantive changes to the lease or to Council Policy 700-04 could capture additional revenue over time.
