The parlor guessing game of who may emerge as the hero among City elected officials reveals a short list of potential suspects who could seize the opportunity to step forward and offer bold leadership that has been sorely lacking so far in the nearly three-year struggle to figure out what to do with the white elephant in the room: the empty 19-story office tower that’s too dangerous to occupy and too expense to fix.
As we all now know, the City clearly failed to perform proper due diligence before agreeing to a $128 million, 20-year lease-to-own deal for a building that later turned out to be functionally obsolete and require more money to fix than it’s actually worth. Some blame City staff for relying too much on the representations made by the sellers, and others blame City officials for relying too much on their staff.
In the end, the City was saddled with an expensive building so riddled with asbestos that the County condemned it as a public nuisance. Ironically, the deadly asbestos exposure may have actually saved lives because the fire systems in the building don’t work and could have killed hundreds of people if the building had caught on fire.
But now, after lawsuits from all sides have frozen everyone from acting, something still has to be done to unclog the drain and get the process moving again because the City remains on the hook for $18,000 per day in lease payments that it’s currently withholding, but still legally owes the lenders. Until and unless a court decides who wins in court, taxpayers are still losing money every day.
Someone has to demand truthful answers and offer a clear path forward that protects taxpayers from losing money on a flawed real estate deal with a dubious history and uncertain future.
So who could step forward to help drive a solution? Well, let’s start with who, for sure, cannot.
Our Intrepid City Attorney, Mara Elliott: Not.
Although Elliott often repeats the tired line that the agreement was “approved” before she was in office, the plain truth is that she signed off on it.
The City Council voted to pass an ordinance that authorized the funding for the agreement on October 17, 2016, but it wasn’t until December 19th that Elliott signed off on the actual written lease agreement that made the deal official. That’s 63 days after the Council vote, 41 days after Elliott won the election, and 11 days after she was sworn into office.
Now she may be technically correct in arguing that the deal was negotiated while her predecessor Jan Goldsmith was in office, but the deal wasn’t signed before Goldsmith left. The deal, as with every contract executed by the City, must be approved and signed by the City Attorney or her designee. In this case, Chief Deputy City Attorney Debra Bevier actually signed the agreement on Elliott’s behalf, but no one has ever claimed that Bevier acted without Elliott’s permission and authority to do so.
The City Attorney and her office could have, and should have, advised the City Council that the language of the agreement was extremely onerous and would leave the City holding the bag – even against state law – for all costs associated with known and unknown detects because the lease accepted the building “AS-IS WHERE-IS” and relieved the sellers and the landlord, Cisterra Development, from all liabilities. She also could have refused to sign it at all.
The lack of due diligence on the part of City real estate and professional staff may have been careless, but the lack of prudent legal advice is malpractice. The City Attorney is clearly conflicted by supervising and participating in the investigations into her own actions, and her credibility is worthless in offering a solution now after having been caught self-servingly manipulating the previous report to keep crucial information about the transaction – and embarrassing information about what she and her staff did not catch – from the public.
Councilman Chris Cate Who Voted for the Deal: Not.
As the only remaining Councilmember who was there in 2016, Cate voted for the ill-fated deal that has now turned into a smoldering political mess.
Cate and his then-fellow Councilmembers voted unanimously and enthusiastically for the deal that no one at the time seemed to question because a trifecta of downtown interests was pushing for it: the Municipal Employees Association union; the Firefighters Local 145 union; and “Papa” Doug Manchester, one of Mayor Kevin Faulconer’s biggest campaign donors and also one of the sellers of the building.
Cate was also on the Council in 2018 when they voted to approve an additional $30 million to continue improvements to the building to house more employees and, even then, failed to ask questions about the true condition of the building and the political process that led to its purchase. Cate remains on the Council today but would have no credibility in suddenly questioning his own votes during the building’s tortured past.
Although Cate said during a recent Council meeting about the building deal that “this whole thing friggin’ sucks,” he hasn’t done a friggin’ thing to upset the status quo by demanding a real investigation.
New Councilmembers Elected in 2018 After Building Deal: Not Likely.
Three members who joined the Council after the deal was in place – Council President Jen Campbell, Monica Montgomery Steppe, and Vivian Moreno – have been vocal in airing their concerns with the building and the lack of answers as to what went wrong.
Unfortunately, they were also involved in helping to hide the fact that a forensic report promoted as an independent assessment of the deal was actually edited by the City Attorney and misrepresented to the public as an exhaustive report.
The report, written by lawyer James Parker, was released in August 2020 and lauded as an independent forensic analysis of the deal. Last week, however, La Prensa San Diego revealed that an earlier version containing more-damaging assessments of the actions and inactions of City staff and officials was watered down before being released to the public.
The full Council were informed in July at a closed-session meeting with the City Attorney and Parker that more information existed but would be withheld from the public.
Even though the water-down report was the subject of a public meeting the following week, none of the three, nor Chris Cate, nor anyone else for that matter, spoke up to warn the public that more information was available but was being withheld. At that moment all of them became complicit in the cover-up.
Although they most likely kept the information hidden because they thought it would improve the City’s chances in court, their withholding of important facts kept the public in the dark as to the root causes of the financial debacle. Speaking up now that the existence of the real Parker report has been revealed would be viewed with suspicion at best, with contempt at worst.
Of the three, Campbell, now the Council President and facing a possible recall election over her support for short-term property rentals, could step up and show she cares more for the taxpayers than she does for protecting her political allies and downtown insiders and give voters a reason to oppose the recall effort.
Our Energetic New Mayor, Todd Gloria: Maybe.
Gloria was overwhelmingly elected as the first person of color and the first openly-gay Mayor in San Diego history, and he has an impressive record of political victories. First elected to the City Council in 2008 and re-elected in 2012, he was later elected to the California State Assembly in 2016 and 2018 before winning last year’s election for Mayor.
But Gloria’s long track record as a politician also creates one of his biggest liabilities.
In 2016, before leaving for the Assembly, Gloria not only voted for the building lease agreement but was the most enthusiastic supporter of the deal when it came up for votes.
Speaking very favorably of the deal both in committee and on the Council floor when he made the motion to approve the deal, Gloria said the deal was “a very smart financial transaction“; declared that “for those of us that have been in it, it’s extremely well maintained”; and added that “it’s something I want to be a part of today.” Those comments have not aged well.
Since being elected in November and taking office in December, Gloria has not mentioned the building deal or offered any suggestions on how to resolve the quagmire. He completely ignored the issue in his State of the City address and in his recent press conference touting his accomplishments during his first 100 days in office.
In a recent comment, his Deputy Chief of Staff said that Gloria has “committed to being open and transparent with the public once a solution is reached.” Open and transparent AFTER a solution is reached? Well that sounds like the boss wants to keep the public in the dark until after an insider deal is done.
Gloria is clearly walking a tightrope between his 2016-self who cheered for the deal and voted for it, and his 2021-self who has to preside over the eventual resolution of the deal, whether arranged or forced by a court decision.
He’s also remains politically close to Elliott. He not only endorsed her re-election campaign last year, but he even hosted a fundraiser for her this week to help retire her campaign debt. Just as he can’t politically blame himself for voting for the disastrous deal, he also can’t easily turn on Elliott and blame her. And because he was elected with the support of both the employee and firefighter unions who wanted the building for new office spaces for their members, he can’t blame them either.
Gloria will most likely say that he relied too much on – and trusted too much in – City staff in 2016, and he could say he worked with the best information he was given at the time. It may be a tough sell, but Gloria has the credibility of years of political experience and an easy smile that could win the public over so they trust his leadership. But he must act fast before he’s beaten to the punch by the new kids on the block.
New Member Elected Last Year: Most Likely.
Five new members of the City Council were elected last fall and have no connection to the regrettable building deal.
Although two of them are former Assistant City Attorneys that worked under Mara Elliott, three others clearly had nothing to do with or any reason to cover up for misdeeds of former staff and officials involved in the deal.
Joe LaCava is a former civil engineer with years of experience serving on local community planning boards.
Stephen Whitburn is a former non-profit organization leader and past planning committee member.
Sean Elo-Rivera is a lawyer and former community college school board member.
Any of the three could credibly demand an independent investigation and push for full transparency to help move the City forward without any prior entanglements with the building.
Marni von Wilpert and Raul Campillo both served as Assistant City Attorneys but began working for Elliott in 2018, two years after the building deal was signed.
Although neither one worked on the 101 Ash deal, both could be perceived as loyal to their former boss. Yet that may also be a good thing for them. Either one of them, as lawyers, could be very credible in outlining the legal jeopardy the lease creates for the City and taxpayers, and either or both could help drive a move to invalidate or cancel the agreement.
They could appear to criticize Elliott and argue that a pending lawsuit she filed to avoid lease payments while the building has been empty doesn’t go far enough to protect taxpayers because the City would still be on the hook for expensive repairs and upgrades that were not known when the deal was signed, and thus could be reason enough to rescind the lease.
And a last option is to argue that the deal was a fraud perpetrated upon the City and taxpayers by greedy developers and their consultants who knew, or should have known, that a building being sold as a Class-A property was really in desperate need of repairs. Such profiteering on the backs of taxpayers opens up several legal arguments that the deal is illegal, unconstitutional, and invalid.
Maybe in the private real estate world the old adage of caveat emptor (buyer beware) can protect unscrupulous sellers, but government agencies (aka the taxpayers) are protected from unfair deals, conflicts of interests, and self-dealing by judicial invalidation of illegal contracts.
But someone in the City has to step up and argue strongly that the taxpayers were wronged, and fight to get back every dollar from this very bad deal.
If no one does, every one of them will be tainted by a deal that will rank alongside the stadium ticket guarantee and the pension-underfunding plan as one of the worst political decisions in the City’s history.
The crowd awaits a hero who will step forward before it’s too late. The clock is ticking.
