101 Ash St. is under new management.
In a Monday memo to the City Council, city Chief Operating Officer Kris Michell wrote that oversight of the project would be led by Deputy Chief Operating Officer of General Services Alia Khouri with assistance from fellow Deputy Chief Operating Officer Johnnie Perkins, who has long helped oversee the project.
“On this project,” Michell wrote, “Alia will report directly to me.”
City employees moved into the downtown high-rise in December and were evacuated weeks later after county air pollution regulators declared the building a public nuisance because of asbestos-related problems that arose during renovations.
Michell told Voice of San Diego that the moves — which also include appointing different deputy chief operating officers to supervise the city’s real estate assets, purchasing and contracting and public works departments — are not directly tied to the debacle surrounding 101 Ash St.
“While the Ash Street building wasn’t the reason for the organizational changes, it will certainly be a beneficiary of them,” Michell said.
A mayor’s office spokeswoman also provided a December memo that Michell sent to the City Council describing a more overarching effort to try to improve stability and efficiency at the city. City officials said the so-called operational framework process has also inspired internal discussions about the duties of various deputy chief operating officers.
Michell’s announcement comes more than two weeks after Assistant Chief Operating Officer Ronald H. Villa announced his resignation and retirement, effective June 30. Villa had been closely involved in the city’s acquisition and renovation of the former Sempra Energy headquarters at 101 Ash St., which was pushed by the mayor and approved by the City Council in late 2016.
The city signed a lease-to-own agreement with Cisterra Development, which was in the process of purchasing the building from Sandy Shapery, a real estate investor and developer. The original plan was to renovate only five floors and get city employees moved into the building by summer 2017, but it didn’t work out that way.
By 2018, the building was slated to undergo renovations on all 19 floors. City Councilwoman Barbara Bry was the first to raise the alarm, questioning how and why the project had exploded in scope.
City officials reasoned that they could house more employees in the building with more work upfront. After some scolding of leadership and a bit of hand-wringing, the City Council agreed to set aside $30 million for a complete makeover of the property.
Construction crews got to work on the property but have yet to complete the job. Nearly every week between August 2019 and January 2020, the county Air Pollution Control District cited the city and the contractor for asbestos violations. The substance is common in older buildings, but turns harmful when it’s disturbed and becomes airborne.
Why the project went haywire is still a topic of debate and inquiry. City officials are investigating themselves with the help of an outside consultant. At the request of Bry, the Audit Committee will also take a closer look at what happened during construction and whether the disclosures provided by the sellers were adequate.
When the City Council approved the lease-to-own deal in October 2016, staff said the building would only need a $10,000 cleaning, caulking and pressure washing of the exterior. The city’s director of real estate assets, Cybele Thompson, characterized the building’s condition as excellent.
One engineer who worked on the project alleged in a legal filing in January that city officials, in their rush to complete the project, knowingly exposed workers to asbestos and fired an independent testing company so they could manipulate air samples. The fact the city was spending almost $18,000 a day to rent an empty building for years generated embarrassing headlines in the Union-Tribune and elsewhere.
Another engineer employed by the city also claimed last month that his supervisors ignored his warnings about asbestos contamination and fire dangers inside the building.
101 Ash St. has also spilled into the mayor’s race in recent weeks.
Bry, a mayoral candidate, has pointed a finger at her two main opponents, arguing that the deal was a bad one from the start because it freed the owners from liability and hazardous materials. Assemblyman Todd Gloria was on the City Council then. He and City Councilman Scott Sherman, who’s also running for mayor, helped push the deal along. Bry, however, voted to expand the scope of the renovations from five floors to 19.
On Monday, Michell also announced the creation of a new chief compliance officer to ensure the city is working within federal, state and local regulations and appointed Matt Helm, who previously worked in the city auditor’s office and the U.S. Government Accountability Office, to the role. Helm will also chair the newly created Risk Oversight Committee, which is tasked with identifying and managing risk throughout the city, according to Michell’s memo.
In the meantime, Jeff Sturak, a city official who has held multiple posts at City Hall, has been appointed to replace Villa and serve as the city’s new assistant chief operating officer.