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We got several requests to break down into plain English what happened this week with, let’s call it, Alleged Footnote 15.
To understand Alleged Footnote 15, you have to understand a lot of things. You may want to skip this if you’re up to our level of City Hall nonsense expertise or above. If you’re not, it may at least be good review.
The building: 101 Ash St. is the former headquarters of Sempra. It’s an uninspiring high rise with no historical value. It’s nicer than a lot of city buildings, though, and the city has had to rent offices for a long time for some of its workers so, about seven years ago, after it failed in an effort to build a new, grander City Hall, city leaders began to think about how other buildings may handle their long-term office needs.
The deal: City officials decided they wanted to purchase this building from its owner, Sandy Shapery, after Sempra moved out. That way they could eventually stop paying rent and just maintain the building. After all, the city will be here a long time, hopefully.
But for some reason the city didn’t buy it from Shaperty, it ended up leasing to own it from another company, Cisterra.
Eventually officials decided it needed a lot more work than they thought it would and when they did that work, they let asbestos loose and now the building is a mess and it could cost city taxpayers a lot of money.
Now, how that all happened is the source of pretty great mystery. And because this is campaign season, it carries heavy implications for the race for mayor (or at least one candidate would really like it to).
The mysteries are actually many: Why did they lease to own it and not buy it? Why did Cisterra need to be in on the deal? How did they decide on the price? Who knew what about the asbestos situation? How did the city so badly underestimate the costs of making the building work for its employees?
Then, of course, the question that really matters: What are they going to do now?
The news and new bizarre mystery: NBC 7 San Diego reported Thursday that it had obtained an investigative report and related documents that may help us understand some of these questions better.
We have previously, for example, written about why the city may have done lease-to-own deals for this building and a previous, eerily similar one, Civic Center Plaza, which is right across the courtyard from City Hall.
The NBC story posits a different theory, or supplemental one, backed up by the emails it published, that city officials discovered that the building’s appraisal had come in too low and thus it wouldn’t be politically possible to buy the building for the price they had negotiated.
There’s no actual direct evidence that appraisal stopped the city from borrowing money but it was an interesting story of how they dealt with that and backed off the purchase agreement.
But there was another part of the story.
Alleged Footnote 15: The other part of the story was about Assemblyman Todd Gloria, who’s running for mayor.
According to the NBC story, investigators from the firm Burke, Williams and Sorensen had written an investigative report, commissioned by the mayor. It had one footnote in it, No. 15, that implied that Gloria may have been part of the reason the city moved forward with the deal even though the appraisal had come in low. And investigators had wanted to talk to him about that, but City Attorney Mara Elliott would not let them.
Why that matters: The story happened to fit exactly the narrative City Councilwoman Barbara Bry has been laying out about Gloria’s role in the real estate deal and the blunder of it should disqualify him from being mayor. And for people who are suspicious about Elliott, it was just gravy.
There’s a problem, though: The city attorney immediately denied all of this. And then, Thursday afternoon, we were all shocked to see Burke, Williams and Sorensen come out with a letter that said the whole thing – all of Footnote 15 – was a complete fabrication.
And just to be clear, they did not leave room for it to have been an errant draft they regretted for some reason. The firm disavowed all knowledge of what was in Footnote 15.
“Further, we have no knowledge of any of the information included in Fabricated Footnote 15,” it read. And just to drive it home more, the firm went line by line and said it did not know those things.
That’s a new one. That’s officially a new one for us.
There are two possibilities then: 1) Someone fabricated Footnote 15 and passed it along to a reporter who went with it. Or …
2) The city attorney and this law firm are engaged in a very specific but elaborate and strange cover-up. It would mean they did draft it but had it removed and are now claiming that it was made up – like when Anthony Weiner tweeted a very bad photo of himself and at first claimed he’d been hacked.
There’s an easy first step to solving this mystery: The city could and should release the full report. And if NBC has the full report, it should also be released. And then we can look at them. We do not know why this hasn’t happened yet.
NBC is standing by the story.
“NBC 7 has requested that the City make the Memorandum public or share it with NBC 7, to no avail. We will continue to investigate this story and are working on identifying the Memorandum the City claims is different from the documents we’ve obtained,” the station wrote.
We wondered if the City Council had gotten copies, and asked Councilman Chris Cate.
“I never saw it that I recall. We didn’t get to keep a copy of any of the confidential reports,” he said.
Councilwoman Barbara Bry has not hesitated during the mayoral campaign to allege that her opponent, Assemblyman Todd Gloria, and his so-called YIMBY supporters are in the pockets of real estate speculators and developers.
And Gloria, in turn, has happily referred to Bry’s as an anti-housing stance. Before 101 Ash St. came around, the race was shaping up into a straight-up YIMBY vs.NIMBY standoff.
Yet San Diego’s largest organization for real estate developers says both candidates would make great mayors, as far as they’re concerned.
The San Diego Building Industry Association has issued a rare dual endorsement in the race. While it means the organization likely won’t play a major role in the campaign – launching an independent committee for both candidates would be pretty odd – it does at the very least complicate the tidy narrative about the two candidates’ views on housing. (Yes, we wrote late last year that the narrative already left a lot to be desired, if you looked at the candidates’ voting records and supporters.)
“We can and will work just fine with either victorious candidate, having worked well with both offices,” wrote Borre Winckel, president and CEO of the BIA, in an email. “They both recognize that we are in a raging, ever worsening housing crisis and that the status quo is unacceptable.”
Progressives have taken issue with much of Bry’s development rhetoric as exclusionary, or playing on discriminatory dog whistles – statements like “There goes the neighborhood?” and “They’re coming for our homes.”
But we were interested in whether the developers at the BIA would be rubbed the wrong way about comments that treated them as bad guys in the region’s dire housing situation. She has often charged that efforts to abolish single-family neighborhoods or allow increased development in certain areas would only benefit “real estate speculators and developers” at the expense of our neighborhoods.
Winckel did not respond to an email asking whether those comments gave anyone pause in endorsing.
Given Bry’s established role as neighborhood protector, it was perhaps not surprising when she announced this week that she opposes the mayor’s selected plan to redevelop the Sports Arena, arguing it is another rushed deal like 101 Ash St. and there’s no reason to make a decision before voters weigh in on whether to waive the coastal height limit for the Midway area (she has already announced she opposes that decision, on the ballot as Measure E).
Cathy Kenton, the chair of the Midway Planning Group, fired off a searing letter in response, calling Bry’s position against the plan a “blatant attack on the community.”
The group unanimously supported putting the measure on the ballot, “Yet, your position clearly states we’re not good enough or important enough for you and your District 1 constituency,” Kenton wrote.
But Bry’s position on the selected team to redevelop Sports Arena underscores an overlooked fact about the city’s attempt to get a deal locked in place: It’s the next mayor, not the current mayor, who will finalize a lease agreement with a developer, and bring it to the Council for approval. The whole thing could very easily come apart in the coming months.
In an email, Gloria spokesman Nick Serrano said Gloria supports Measure E.
“He, like most others, recognizes that the Sports Arena property needs work and he acknowledges that the Midway community is supportive of the measure,” Serrano wrote. “Rather than close the door to any potential improvements on the site like our opponent is doing, Assemblymember Gloria would prefer the City have options.”
But Gloria is also not at all ready to commit to consummating a deal with the development team Faulconer selected.
“I think a primary objective will be to ensure the project contains a sufficient amount of housing affordable to working people,” Serrano wrote. “If that’s not possible to do with Faulconer’s choice, then we’ll find someone else who can.”
SANDAG leadership and the agency’s new auditor are heading for a knock-down, drag-out fight next week, and it doesn’t look like either side has any plans to stand down.
The auditor, Mary Khoshmashrab, has released her first look into the agency’s performance and operations, and found – among other things – management has for years taken control of hiring, firing and promoting staff, all of which should be subject to board approval, and that it used that authority to give large severance packages to staffers it pushed out last summer.
In response, SANDAG Executive Director Hasan Ikhrata isn’t giving an inch, arguing the agency’s personnel practices are perfectly legal, with management’s authority properly delegated by the board years ago, and charging there are “flawed assumptions and incomplete information in the (audit), which have in turn led to flawed conclusions.” He’s buttressed his response with a legal opinion from an outside firm.
It was clear the story would become yet another divisive battle at SANDAG when the Union-Tribune reported on a leaked copy of the investigation Wednesday, and chronicled the procedural and substantive disputes that were already arising between board members, Ikhrata and the auditor. KPBS added another wrinkle Thursday when it reported that redactions in the audit could be easily removed by copying and pasting the text into another document. One of the redacted sections described an allegation of harassment of staff, and a cross-allegation of harassment by management against staffers for the auditor.
Then a letter posted on the website for talk radio host Mark Larson raised the stakes again. In it, Khoshmashrab alleges that the final report that she wrote is not the report that SANDAG has posted on its website as part of the background materials for Friday’s hearing. Management, she writes, “has manipulated, deleted and redacted information that in parts are (auditor’s) work product, but no longer stand alone or is structurally within the guidelines of (best auditing practices).”
It is a remarkable letter, in the world of how independent auditors and public agency management typically interact.
She says the audit that’s posted publicly has been manipulated, and redacts information that is not confidential, and that she was never given Ikhrata’s response that is posted publicly. She says the outside legal counsel’s opinion “provides after-the-fact attorney opinions that lack any basis or evidence and are conflicting to the evidence that was previously provided by SANDAG.”
She concludes by saying she has no choice, after failing to work with management, she’s taking liberty to release what she considers the real report.
Gear up for next Friday’s hearing.
The Politics Report is a product of Voice of San Diego. Another product of Voice of San Diego is Voice of San Diego at Home. This week Scott talked to a special education advocate and, on Friday, went through the Friday Five, top stories from the week including this Alleged Footnote 15. If you have any feedback for this product send it to firstname.lastname@example.org or email@example.com.