Illustration by Adriana Heldiz

In a letter to agency board members and the Union-Tribune’s publisher, the San Diego Housing Commission earlier this year defended itself from the paper’s scrutiny over the price it paid for a Mission Valley hotel now the subject of a criminal investigation by arguing the paper failed to properly analyze the transaction.

But the appraisal the agency relied on to justify the price it paid for the property did not do what the agency said the paper should have done.

In fact, the agency’s letter fundamentally contradicted the methodology and conclusions included in its own appraisal, conducted by commercial real estate firm CBRE, Andrew Keatts breaks down in a new story.

Rick Gentry, the Housing Commission’s president, argued in his letter to board members and the Union-Tribune that the “highest and best use” – real estate jargon for the way to maximize a property’s value within its legal and practical constraints – was as an apartment complex, which gave it a higher value than as a hotel.

But the appraisal explicitly concludes that the property’s highest and best use is as a hotel.

And Gentry argued the paper should have compared the deal to other recent apartment sales, which would justify the purchase price. But that’s not what the appraisal did. The appraisal relied on recent hotel transactions, just like the paper.

What We Know About 101 Ash St.

There were big developments in the 101 Ash St. saga this week.

We learned that “volunteer” real estate expert Jason Hughes, who helped the city secure two city building deals, including the controversial 101 Ash St. property, actually walked away from the deals with $9.4 million. 

At some point, Hughes had stopped being a volunteer and had instead gotten one of the most lucrative commercial real estate gigs in the city: representing the city itself.

As the city now tries to back out of the property deals and recoup more than $44 million in rent payments and force Hughes to fork over damages, the question on the table is whether former Mayor Kevin Faulconer knew about the payments.

Naturally, our editors hopped on the podcast to break it all down. They go through the history of the deals and explain why it all matters.

In Other News

  • We’re hosting a virtual town hall next week to discuss the Tijuana River pollution crisis with Rep. Scott Peters, COLEF professor Gabriela Munoz and WILDCOAST communications and policy director Fay Crevoshay. Get more details and register for free here.
  • After another study showed SDPD disproportionately pulls over Black drivers – even after weighing other factors – members of the City Council and criminal justice reform advocates Tuesday called on the city to reform police practices to address the inequity. Namely, advocates are pushing the city to ban so-called pretext stops, when officers pull residents over for minor violations as an opportunity to investigate other potential crimes. (Union-Tribune)
  • The city of San Diego is paying a whistleblower $200,000 after it fired her in 2019 when she alleged the city was illegally diverting nearly $1 million in water and sewage funds through accounting tricks. (Union-Tribune)
  • Hotels and restaurants across the county have had to reduce capacity as they struggle to find workers. (KPBS)
  • In a press release, SDPD said it’s seen an increase in violent crime and that it believes much of it is gang-related
  • UCSD Health is now offering a digital vaccination card. (10News)
  • COVID-19 death rate data show San Diego fared much better than neighboring counties. NBC 7 spoke with officials from Riverside and Imperial who cited more agricultural jobs, lack of access to health care and high poverty rates as contributing factors. 
  • The CIF has stripped Coronado High School of its championship title and placed the team on probation through the 2023-2024 school year after supporters threw tortillas at the visiting team from Orange Glen High School. The school’s superintendent said they are considering a possible appeal and has retained an outside investigator to review the incident. (10News)

The Morning Report was written by Andrew Keatts and Megan Wood, and edited by Sara Libby.

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