Morning Report: City Landlord Planned to Hide Financial Details from City Officials | Voice of San Diego

Morning Report

Morning Report: City Landlord Planned to Hide Financial Details from City Officials

Civic Center Plaza / Photo by Adriana Heldiz

The city’s Civic Center Plaza landlord privately considered how to handle questions from a city finance official as it sought to finalize its first of two 20-year lease deals with the city.

January 2015 emails obtained by Voice of San Diego reveal that a Cisterra Development principal told his company’s chairman he feared the city’s debt management director might notice a “$1 million buffer” in the company’s deal calculations beyond an expected $10 million payoff he believed top city officials already knew about if she got a detailed briefing. Jason Wood of Cisterra also suggested he could “rig the formula” in his spreadsheet to hide the difference.

VOSD’s Lisa Halverstadt reports that in a separate email just moments earlier — and just a few weeks before the City Council approved the lease — Wood encouraged the city real estate adviser Jason Hughes to reach out to a top city manager to smooth things over.

We now know Hughes was essentially a business partner with Cisterra and had a written agreement to receive 45 percent of the profits from the deal

The City Council went on to approve 20-year lease-to-own agreements with Cisterra at Civic Center Plaza in early 2015 and 101 Ash St. in 2016. Attorneys for the city are now seeking to void them following the bombshell revelation  that Cisterra paid Hughes $9.4 million for his work on the deals. Hughes had long been understood publicly to simply be a volunteer advising the city.

The emails are the latest revelation following Halverstadt’s scoop last week revealing a previously undisclosed agreement between Hughes’ company and Cisterra pledging that Hughes Marino would not only receive 45 percent of the developer’s net profits if the Civic Center Plaza deal went through, he would pay 45 percent of Cisterra’s upfront deal costs if it didn’t.

Hughes’ agreed-upon stake essentially made his company a partner in the deal, though the agreement specifically stated otherwise and explained that he was providing consulting and advisory services.

Wood said during a deposition last week that Cisterra had planned that its chairman would also get a 45 percent share of the company’s Civic Center Plaza and 101 Ash St. profits while Wood expected a 10 percent share himself, according to a draft transcript obtained by VOSD.

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Politifest Is Back

It’s that time of year again. Politifest — VOSD’s annual public affairs summit — is back! This year, all of our debates, panels and one-on-one interviews will focus on law and justice in our region. We’ll have experts to discuss sentencing disparities, host a debate between the candidates for county sheriff, explore how local law enforcement uses surveillance technology and more in our week-long virtual summit the week of Oct. 18 – 22.

Get your tickets here.

We’re offering multiple ticket options this year, ranging from full admission to single sessions, depending on your interests.

Also: We have another event coming up on Sept. 28 that you shouldn’t miss. Our panel, moderated by journalist Jackie Bryant, will look at the challenges and pathways of operating a social equity program within the cannabis industry.

Learn more about that free panel here.

Gloria Joins Federal Homeless Initiative

Mayor Todd Gloria on Monday committed to house 2,065 homeless San Diegans and families by the end of 2022 with the help of housing assistance provided via the American Rescue Plan.

Gloria was one of several mayors who spoke during the launch of the Biden administration’s House America initiative aimed at using the unprecedented federal aid to re-house and build more housing for people now living on the street.

The city received 480 emergency housing vouchers and $21 million in HOME Investment Partnerships grants and Gloria announced the city expects to use that assistance to house hundreds and to fund 1,053 new affordable housing units by Dec. 31, 2022.

Gloria clarified that the targets reflect the minimum rather than a ceiling on the city’s work over the next year which will also be bolstered by a rush of new state money.

San Diego Housing Commission data shows homeless programs in the city helped move 2,645 households into permanent housing during the fiscal year that ended in June. The Union-Tribune reported this summer that construction began on more than 1,700 subsidized housing units last year, up from 940 in 2019.

Gloria acknowledged Monday that the city is spending more than ever on its homelessness crisis and that adjustments — and cuts — are needed.

“We’ve been spending more than we ever have on this problem and yet we’re not getting the results that San Diegans would expect,” Gloria said. “That really says to me that what we’re spending the funding on is not as effective as it needs to be and really need to take stock of what we’re doing on the programs that do work, eliminate those that do not and try and find new, nationally recognized best practices to invest in.”

Gloria said he believes American Rescue Plan funds will help the city “double down on proven strategies” to help more homeless San Diegans.

In Other News

  • The City Council will consider the city’s first sewage rate hike in more than 10 years Tuesday. The proposal would increase rates by nearly 17 percent next year and a total of 31 percent over the next four years. (Union-Tribune)
  • Vista is reaping millions in revenue from cannabis dispensaries after it approved recreational use. (Union-Tribune)
  • The county’s new rules about evaluating the potential traffic impacts from new developments may end up making it harder to build housing in unincorporated areas. (Union-Tribune)
  • The median sales price of a San Diego County home fell for the second consecutive month in August, but remained more than 13 percent above their level from last August, a sign that there’s no significant relief in sight for those feeling the effects of the county’s housing affordability crisis. (Union-Tribune)
  • A new San Diego Housing Commission study found fewer than 1 percent of local residential units remain vacant long-term. (City News Service)

This Morning Report was written by Lisa Halverstadt, Maya Srikrishnan and Andrew Keatts, and edited by Megan Wood.

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