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Published June 20, 2022 at 2:18 PM PDT

Mayor Todd Gloria on Monday announced a possible settlement agreement with Cisterra Development and CGA lender on 101 Ash Street and the Civic Center Plaza housing agreement that will transfer ownership of the property to the city.

The problems – apart from the transfer of ownership of the former Sempra energy headquarters at 101 Ash Street and the Civic Center Plaza, home to more than 800 city employees – will return the city to $ 7.4 million in profits made by Cisterra in its lease agreement. owned over 101. Ash Assets, while allowing the company to continue to make a profit of $ 6.2 million from a similar agreement with Civic Center Plaza.

Under the agreement, the CGA will waive $ 11.7 million in “crop maintenance costs”. This is a form of prepayment that lenders make to lenders to offset the loss of interest earned from preying a mortgage or mortgage call.

San Diego City Council will discuss and vote on the settlement plan next Monday.

“Because there is no possibility of a positive outcome from this public aggression, our goal is to achieve a fair, just settlement that limits the liability of the city and is in the best interests of the taxpayers, which is the compromise that has been put forward. , “said Gloria. .

Gloria and Jay Goldstone, the city’s chief executive, said that while some would like to pursue the Cisterra and CGA case “to the end,” gambling would cost millions of dollars over the next 5 to 10 years. during the trial. lawsuits and lawsuits are on their way through the courts – with the potential for loss and being on the hook for millions more – not a pleasant one.

Mayor of Gloria, Full Council Members Next Steps on Ash 101 Street, Civic Plaza Center

“I continue to feel misinformed about the information provided for use at the time,” Gloria said, referring to her presence in parliament in 2016, when the deal was approved. “Ultimately, I do not believe [further Cisterra] is one of the best taxpayers.”

In addition, under the proposed plan, the city will bear all the cost of repairs to obtain accommodation.

When workers first entered Ash 101 building, it was discovered that the properties were not safe for human activity due to asbestos. Initially, city officials during the administration of Mayor Kevin Faulconer presented the building as a $ 5 million renovation and renovation requirement. The project is already worth more than $ 26 million by 2020, and an independent study conducted after the signing of the agreement estimated that there were $ 115 million more than $ 136 million more than the staff presented to the legislature.

The city will have access to any third-party insurance or payment related to the 101 Ash repairs and “will be able to determine the best operating system to get the most value out of the building,” the city said in a statement.

City Mayor Sean Elo-Rivera expressed his anger over the deal.

“Ash Saga 101 was a public disaster that should have angered every San Diegan,” he said. “The lies of the rich and the unemployed of the previous administration, have thrown our city into a vicious cycle that has cost San Diego millions and millions of dollars and ruined public order.”

City Councilor Chris Cate said “it’s time to close this chapter” and give taxpayers “the assurance of putting this bad deal behind.”

Steve Cisterra, president of Cisterra Development, said: “Cisterra and our lender have joined the city in private negotiations with the aim of resolving this complex issue without further uncertainty, expenditure and delays in litigation. ongoing, ”said Steve Black, president of Cisterra Development. “We are thrilled to have achieved a goal that has opened the door for the city to improve the lives of people in downtown San Diego.

“The city has been a good partner in the negotiations and the resolution announced today is the result of all parties working hard to ensure a level playing field, which we believe has been achieved,” he said.

Nothing in the settlement would prevent city and county attorneys from pursuing criminal charges against Jason Hughes – a charitable facilitator who facilitated his sale while accused of embezzling nearly $ 9.5 million – from his real estate agent Hughes Marino and other contractors.

The city attorney’s office alleges that Hughes represented himself as a “special assistant for housing projects” who negotiated the building contract on behalf of the city free of charge “for the public good.”

The city alleges that Cisterra paid $ 4.4 million to Hughes as part of its 101 Ash Street business deal through a lawsuit against a leaseholder that owned a high-rise downtown suburb, which was evacuated shortly after the asbestos breach. after the city staff. was moved into the building. The main building was empty, and questions and accusations abounded between elected officials and the general public over how the deal went through in some emerging issues.

Hughes is also alleged to have received an undisclosed $ 5 million from Cisterra to negotiate a deal for the Civic Center Plaza.

“The law can – and should – continue to investigate anyone who may take criminal responsibility as part of this trade and its aftermath,” Gloria said. “What this shelter has done is to put the needs of the city and its residents first.”

Faulconer, in response to a 2020 study that found San Diego failed to follow improved practices and exercise caution before buying and renting buildings since 2015, has backed down from claims.

“Protecting taxpayers’ dollars should always be a priority for city officials,” he told City News Service. “After the campaign to set up an audit office in the city, I was in favor of more oversight, and it is clear that these issues need to be further investigated as suggested by the auditor.

“All the housing deals in question have been reviewed by all city departments before they were set up, and the approval of these recommendations will further ensure transparency and accountability.”

Gloria said his office would take responsibility for the incident.

“The political problem is that it sends this to the next government,” he said. “We came here because people put their own interests ahead of the public. We will not do that.”

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