Mayor Todd Gloria and members of the City Council announced Monday a proposed legal settlement with the owners of the 101 Ash Street and Civic Center Plaza buildings after years of controversy.
The two downtown office buildings were acquired by the city through lease-to-own transactions during Mayor Kevin Faulconer’s administration.
The settlement would transfer ownership of the properties to the city and reimburse the city for $7.4 million in profit that Cisterra Development made selling 101 Ash, while allowing Cisterra to keep its $6.2 million in profits from the sale of Civic Center Plaza. In addition, lender CGA Capital would waive a fee of $11.7 million.
Both transactions were tainted by the involvement of real estate broker Jason Hughes, and nothing in the settlement will preclude the city or district attorney from pursuing possible legal action against him.
Gloria said the settlement will save taxpayers $15 million and avoid costly litigation.
“Because there was no possibility of an ideal outcome from this civic debacle, our aim was to reach a lawful, fair settlement that limits the city’s liability and is in the best interests of taxpayers, which is what this proposed settlement is,” Gloria said.
“Nothing in the proposed settlement absolves anyone of any criminal wrongdoing,” he said. “Law enforcement can — and should — continue investigations into anyone who may hold criminal liability as part of this transaction and its aftermath. What this settlement does is put the needs of the city and its residents first.”
“It is time to close this chapter,” said Councilmember Chris Cate, the one Republican member of the council. “As we look to the future, the taxpayers deserve the certainty of putting this bad deal behind us.”
“The 101 Ash saga has been a civic tragedy that should infuriate every San Diegan. Lying millionaires and an incompetent previous administration put our city in a terrible position that has cost San Diego years of progress, millions of dollars, and eroded public trust,” said City Council President Sean Elo-Rivera. “The proposed settlement, while not ideal, is the best business option available to the city.”
The deal ensures the 800 city workers can remain in Civic Center Plaza without disruption and provides maximum flexibility as to what to do with the five city blocks that comprise the Civic Center and the Ash Street building.
The settlement discussions took place over 18 months with the guidance of retired Federal Magistrate Judge Jan Adler. The City was represented by outside legal counsel Dick Semerdjian of the Schwartz Semerdjian law firm.
The settlement will be discussed with the San Diego City Council next Monday.