Morning Report: Here's How Much the Landlord Made on Ash, Civic Center Deals

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Morning Report: Here's How Much the Landlord Made on Ash, Civic Center Deals

101 Ash St. and Civic Center Plaza / Photos by Adriana Heldiz

Last year, the city pressed its 101 Ash St. landlord to explain more about the roughly $14 million in costs associated with the years-old lease that it couldn’t fully account for.

We finally have a better sense of how the money was broken down. 

Lisa Halverstadt reports that Cisterra Development, the landlord at the center of two real estate deals that the city is seeking to void, has shared numbers. The company said it made millions of dollars in both deals after accounting for expenses — about $7.45 million in the 101 Ash St. deal and another $6.4 million in the Civic Center Plaza deal. 

But the company stopped short of clarifying the profits in either deal until the end of both 20-year leases.

Among its expenses were fees associated with upfront loans that the company received to facilitate the purchases of both downtown high rises and the lease agreements, bills for insurance and lawyers, and millions of dollars in previously unreported payments to the city’s volunteer real estate adviser. Checks to prominent real estate broker Jason Hughes’ company totaled more than $5 million in the Civic Center Plaza deal and $4.4 million for 101 Ash St.

A handful of real estate experts told VOSD the expected payoffs for Cisterra are defensible given the risk it took and the three separate agreements it had to broker with lenders, the former building owners and the city. One of those experts however, have questioned the large fees that Hughes received. Cisterra and Hughes’ attorney have argued those fees make sense in light of solutions he delivered that exceeded that of a traditional broker.

Elliott Wants More Power to Address Auditor’s Complaint

City Attorney Mara Elliott had a surprising response to a recent city audit that panned five city real estate transactions and that, among other things, faulted city lawyers for not consistently flagging legal risks tied to those acquisitions.

Elliott proposed that giving her office more power could help the city avoid future real estate debacles. But other city officials don’t seem inclined to give her that additional power, Halverstadt reports.

Elliott’s office argues that enacting the city auditor’s recommendations would require “a vastly expanded role” that includes the ability to direct city staff who report to the mayor to share their work and ensure they conduct proper due diligence and are transparent about what they find. The auditor’s blistering report found former city officials failed on all those fronts.

But others, including one City Council member, have concluded Elliott’s office already has the necessary authority and that other recommendations in the audit should give city attorneys and others at City Hall more tools to avoid future real estate disasters.

Chula Vista Bans Its Council From Campaigning on Taxpayer Dime

Earlier this summer, the Chula Vista City Council approved a new policy that prohibits its members from using public money to send unsolicited messages to people outside their respective districts. 

The move came after Councilman John McCann sent gift bags to a senior living complex that he doesn’t represent. It included facemasks and hand sanitizer as well as a letter from McCann and a photo, which caused other elected officials to complain publicly that he was campaigning with taxpayer dollars. 

McCann hasn’t denied rumors that he’s preparing to run for mayor in 2022 but said he was only trying to help seniors during the pandemic. 

But that’s not all, as VOSD contributor Gustavo Solis explains. The typically cordial tone of Chula Vista City Council meetings was also disrupted in June when Councilwoman Jill Galvez accused McCann of sending her family members who live outside California “happy birthday” emails signed “Your Councilman.”

Galvez accidentally leaked her email list in 2020 and she’s now convinced the two things are related. 

Politics Roundup

  • The city of San Diego plans to make the COVID-19 vaccine mandatory for employees, meaning it won’t allow people to opt out and instead be tested weekly, Andrew Keatts and Scott Lewis report in this week’s Politics Report.
  • In the Sacramento Report, Sara Libby writes that the recent arrest of a school employee and boy scout instructor for allegedly possessing child porn inadvertently put the spotlight on a bill by Assemblywoman Lorena Gonzalez. 
  • Over on the podcast, the crew talked to VOSD education reporter Will Huntsberry about a new way to evaluate school performance. The discussion also turned to San Diego’s never-ending real estate fiascos. 

In Other News

  • SDPD announced in a press release it has suspended one of its officers without pay after he was arrested outside a bar in Pacific Beach for threatening people with a gun.
  • San Diego’s Xander Schauffele won a golfing gold medal. (Union-Tribune)
  • A restaurant in Hillcrest says it will require proof of vaccination from customers for events it hosts. (10News)

The Morning Report was written by Jesse Marx, and edited by Sara Libby.

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