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San Diego’s real estate assets director is resigning less than a week after the release of a devastating review of the city’s acquisition of a downtown high-rise that the county declared a public nuisance following a series of asbestos violations.
Cybele Thompson, who has served as the city’s real estate chief since 2014, submitted a brief resignation letter to Chief Operating Officer Kris Michell on Monday. Thompson’s resignation will be effective Wednesday.
Late last week, a preliminary report by a law firm investigating the debacle surrounding the 101 Ash St. acquisition indirectly implicated Thompson by emphasizing the city’s failure to seek an independent appraisal and assessment of the building’s true condition before the City Council voted to move forward with a 20-year lease-to-own deal totaling more than $127 million.
Doing so would have likely shown that the HVAC, plumbing, electrical, lighting and ceiling systems at the former Sempra Energy headquarters were all in need of major repair. The city’s remodel would later explode in scope and helped shake loose the asbestos that triggered the attention of the San Diego County Air Pollution Control District — and led the city to rush to evacuate its own employees in January.
Thompson’s resignation comes ahead of a Thursday meeting where Mayor Kevin Faulconer has promised to offer the City Council options on how to proceed following a series of missteps and disappointments. The now-vacant building was supposed to accommodate hundreds of city employees.
Faulconer has also committed to revamp the city’s approach to real estate, an endeavor that will now continue without the city’s six-year real estate chief.
“I have directed a complete overhaul of how city departments handle property because while the city does many things very well it’s clear that complicated real estate management is not always one of them,” Faulconer wrote in a statement last week. “We cannot stay the current course on this project, and now that we know how we got here we can create a new path forward.”
He also promised to “pursue all legal and financial options to recoup costs.”
The preliminary report released last week strongly hints at the possibility of suing some of the city’s environmental contractors. The law firm that produced the report, Hugo Parker, is already advising the city on asbestos-related litigation.
The 101 Ash St. disaster is just one of the city real estate transactions to flounder on Thompson’s watch.
In 2018, Thompson briefed the City Council as officials rushed to purchase of a shuttered indoor skydiving center to convert into a homeless housing navigation center. It didn’t open until almost two years later, and the project is now getting scrutiny from federal and state officials.
A separate site in Kearny Mesa, which the city began leasing in 2017 as a fire truck maintenance yard, has yet to service any actual fire trucks. Since acquiring the property, officials discovered the cost of needed renovations was nearly three times what they told the City Council. The city has since brought in a new architect and envisions using the facility for its originally planned purchase by early 2022.
The city’s independent budget analyst has also raised concerns about the city’s acquisition of the Civic Center Plaza downtown, a building that could need up to $21 million in tenant improvements that the city has no immediate plans to fix.
Real estate woes are not new to the city.
Faulconer hired Thompson in 2014, months after an outside consultant criticized the city’s real estate operations and called for more effective management of the city’s vast portfolio of properties.
Among the findings at the time: The city’s real estate team failed to effectively collaborate and coordinate with other city departments and customers had “a general lack of confidence” in data the department tracked on real estate.
City insiders hoped Thompson, who had spent more than two decades in the commercial real estate business, could address some of the department’s long-running challenges.
“Her clients have reinforced her reputation for maximizing asset value and minimizing risk for property owners and lenders,” then-Deputy Chief Operating Officer Ron Villa told The Daily Transcript after Thompson was hired that September.
Villa, who served as Thompson’s supervisor, was forced to resign over 101 Ash St. in February, weeks after managers evacuated the building. Since then, more than 20 construction workers have filed legal claims alleging, among other things, the city put them in harm’s way. Between August 2019 and January 2020, the San Diego County Air Control Pollution District documented 16 asbestos-related violations in the building, even after officials began moving employees into the building.
Both Villa and Thompson pitched the initial proposal to buy the building to the City Council. Thompson said the high-rise would only need a $10,000 power wash, a claim that came from a mere visual inspection of the site and offered by one of the sellers.
After the city evacuated the building, Faulconer initiated a forensic review and tapped three outside law firms to address different aspects of the overall project. As NBC 7 reported last week, one of those firms has also taken issue with the way the city brokered the deal. The lease agreement shielded the developers from long-term liability should environmental and other problems arise.