VOTE ON SETTLEMENT IS GROSSLY PREMATURE
San Diego City Hall has had a disgraceful record for more than a quarter-century on huge issues — ranging from purposefully underfunding city pensions to illegally limiting such pensions and from having taxpayers pay for tickets to games of the since-departed San Diego Chargers to secretly installing streetlight surveillance cameras, not to mention a series of botched real-estate deals. On Monday, the City Council could add a new chapter to this long history of incompetent stewardship.
Mayor Todd Gloria — with the support of City Council President Sean Elo-Rivera and Councilmember Chris Cate — wants the council to quickly approve a newly unveiled settlement in key parts of two lawsuits filed by the City Attorney’s Office related to the city’s latest real-estate fiascoes involving lease-to-own deals for an empty office building at 101 Ash St. and the Civic Center Plaza. Shockingly, Gloria wants the rapid OK despite opposition from City Attorney Mara Elliott.
The settlement — which applies only to landlord Cisterra Development and its lender, CGA Capital — would require the city to pay $86 million to buy out the first property’s lease and $46 million for the second. Gloria said the city would get $19.1 million in concessions, meaning it would spend $112.9 million.
Most concern rightly focuses on a $128 million lease-to-own deal for the 19-story Ash Street building that was approved by the City Council in 2016 at the behest of Mayor Kevin Faulconer, who depicted the office tower as needing only a $10,000 power wash for occupancy. Instead, it eventually emerged that the building needed at least $115 million in repairs, meaning its long-term cost to taxpayers could be more than $240 million. The revelation that real estate broker Jason Hughes, who worked with the city on the two leases, had collected $9.4 million in fees from the seller for his work came as a shock to many. These developments and others triggered litigation on many fronts and a pending investigation by the District Attorney’s Office, though
Hughes is adamant that he did nothing wrong and that city officials knew he wanted to be paid.
In a Zoom meeting with some members of The San Diego Union-Tribune Editorial Board on Wednesday, Gloria, Elo-Rivera and Cate disputed the idea that having the settlement approved by the council just a week after it had been detailed to the public was precipitous. The mayor said it was a carefully considered proposal that minimized the city’s “massive” legal exposure, that recognized its need for more office space and that allowed the city to move beyond one of the many messes left behind by Faulconer. “There is not a Cinderalla option in this situation,” Gloria emphasized. “There’s no beautiful scenario here,” Elo-Rivera said. But, Cate said, acting now limits the “incredible uncertainty” hanging over the city. But what is the rush here?
There is no question that city leaders face a difficult situation. As both Gloria and Elo-Rivera said, there’s no political upside to pushing for the settlement in an atmosphere full of cynicism about City Hall and city politics. But even with that point conceded, the criticism of the settlement offered by Elliott — that it “does not adequately protect the city’s legal and financial interests” — should have carried far more weight before the mayor’s move to place the deal before the City Council. The city attorney’s assertion that the city hadn’t done its due diligence on potential repair costs, on the long-term need for office space and on other issues is jaw-dropping. It is just such a lack of diligence that has haunted city government for decades.
Gloria’s dismissive response to this critique — boiled down, it’s that the city attorney has been wrong about other big issues as well — is wholly inadequate. He also doesn’t make a persuasive case that that such immediate action is essential. Until he’s responded adequately to Elliott’s legitimate concerns, any settlement talk is premature. San Diegans should hope a City Council majority figures this out while representing their best interests.