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This post originally appeared in the Sept. 2 Morning Report. Get the Morning Report delivered to your inbox.
This story has been updated.
Facing the prospect of an eviction trial last week, the city cut a deal with lenders behind the city’s Civic Center Plaza lease to pay for its use of the downtown high-rise. Now those lenders are seeking to end their bid to force the city out.
An attorney representing the lenders on Wednesday filed a request to dismiss its eviction action without prejudice, which means lenders aren’t ruling out the possibility of future action.
The Union-Tribune reported Tuesday that the city made two $313,000 payments — the equivalent of its July and August rent payments — last Monday, the same day it appeared before a Superior Court judge who had been set to preside over the eviction case.
Judge Ronald F. Frazier decided last week that the eviction case should instead be heard by Judge Timothy Taylor, who was assigned to the city’s Civic Center Plaza conflict-of-interest case that inspired the city to stop making rent payments. The decision effectively postponed the eviction case lenders are now seeking to end.
Hilary Nemchik, a spokeswoman for City Attorney Mara Elliott, wrote in statements this week that the agreement will allow the city to pay for its use of the office building that houses more than a dozen city departments but will not halt its separate cases that the city’s Civic Center Plaza and 101 Ash St. leases were “infected” by landlord Cisterra Development’s $9.4 million in payments to former city real estate adviser Jason Hughes. The city has argued those payouts voided the two leases and has sought to recoup more than $44 million.
“The City’s determination to pay rent for use of the (Civic Center Plaza) building is wholly founded on the need to ensure continuity of City services sourced from the location,” Nemchik wrote. “With the distraction of a meritless unlawful detainer action set aside, the city may now focus more acutely on our work to hold Jason Hughes and Cisterra accountable for their violation of the law and breach of the public’s trust.”
A representative for lenders who provided upfront cash for the Civic Center Plaza lease and now receive rent payments in exchange for their investment declined to comment on the agreement with the city or the move to dismiss the eviction action. The lenders had previously argued that state law protects them from being punished for an alleged conflict of interest they didn’t know about.
This story was updated to reflect that the lenders behind the city’s Civic Center Plaza lease are seeking to end their attempt to evict the city.