The City Decided It Wanted Those Two Buildings and Now It’s Got Them and a Historic Challenge

On June 20, Mayor Todd Gloria announced he wanted to settle the city’s lawsuit against the company and investors that had sold it two buildings downtown – deals that had gone so sour getting just a few million back was a win worth taking.  

He said he wanted certainty and the settlement would provide it.  

At the same presentation, Council President Sean Elo-Rivera said he wanted to settle the lawsuits because he wanted to level with voters about how much was at stake and being honest about that would build trust with the community.  

Councilman Chris Cate said the city needed to move on and eliminate a distraction from more pressing problems in the city.  

Only one of the officials present made mention of what ended up becoming the main reason for the settlement: They want the city to own those two large downtown buildings and the land underneath them. COO Jay Goldstone mentioned it once, that day, just briefly and in a sentence so loaded with acronyms for the various buildings involved that only a true City Hall insider could appreciate and understand.  

By Tuesday, though, Elo-Rivera, the mayor and others were clearer about how much they wanted the buildings. And they got what they wanted. The city will now send Cisterra Development and CGA Capital $132 million so it can take full ownership of Civic Center Plaza, the tower across the plaza from City Hall itself. And 101 Ash St., just across the street from Civic Center Plaza.   

With it, they have committed the city to take on one of the most difficult infrastructure and land-use challenges it has ever undertaken. The city didn’t just settle a lawsuit Tuesday. It committed to a complete overhaul of one of the bleakest parts of the city itself – the civic core in and around City Hall.  

The City Council even gave the mayor’s staff an Oct. 31 deadline to come back with a plan for what could happen to it. The leader of the department that manages real estate for the city cited what was happening at Sports Arena as the model they planned to use. She even discussed how 25 percent of the housing that would be built on the land would need to be reserved for families with lower incomes.  

The development would include a new City Hall, a new Civic Theater and a new fire station replacing the dour City Operations Building (or, as Goldstone would say, COB). 

People hit the city for buying a building that is uninhabitable. Well, they don’t want to inhabit it.  

“Some have said this settlement will reward bad actors by purchasing a what is currently an uninhabitable building” Elo-Rivera said. (By “some,” he means City Attorney Mara Elliott, who spoke before him and very much did not want the settlement to go through.) 

He said he understood the hesitation, but he asked people not to ignore how transformative he thought this could be. 

“Full control of the property is a goal of ours because it will aid the city in solving for multiple problems such as office space and housing needs. Thus, by refusing this deal because we don’t like the characters on the other side of the negotiating table, we would essentially be punishing ourselves to prove a point,” he said.  

The project would be part of the solution to the cost of housing and homelessness in San Diego, he asserted.  

I’m telling you, they really want the buildings. But not because they like the buildings. They are mobilizing for a giant redevelopment project that may be bigger and more complicated than either the Mission Valley or Sports Arena projects.  

Even Councilwoman Marni Von Wilpert, one of the three votes against the settlement, said she looked forward to redeveloping the whole area. They should just wait a few more months.  

“I think the city should settle this case. But I think we are in a strong position and could be in a stronger position to negotiate after the district attorney does her work and I just wish we could wait a little longer,” she said at the meeting.  

Von Wilpert’s former boss, Mara Elliott drew cheers from some of her harshest critics for how eloquently and methodically she deconstructed and attacked the settlement. Winning the case was very likely, she said, and if they did win, the ownership of 101 Ash would go back to Cisterra.  

“The city will no longer own a building it never should have bought,” she said. If she was trying to persuade City Councilmembers, she didn’t know her audience.  

They wanted the buildings.  

Because the core of downtown really is dreadful. The Union-Tribune recently described the plight of the old California Theater and how bad its squalor and impact on surrounding pursuits has gotten. Golden Hall remains a shelter for the unsheltered. The parking garage would not need much to morph into a great Halloween season haunted house.  

The whole thing has come full circle. Twelve years ago, the city began conversations about a new City Hall. It could be paid for, in part, by letting developers build other things on the city’s land. But Jason Hughes, a commercial real estate broker, argued vociferously against it saying he could help the city renegotiate its leases and obviate the need for a new city hall. He advised the city for free for years and helped city officials do many deals. He helped them lease to own 101 Ash St. and Civic Center Plaza. 

He told them he wanted to get money from these deals but he never told them that he had a contract with the owners of 101 Ash St. and Civic Center Plaza to share in their profits if the city did the deal. Now, the city accuses him of having an illegal conflict of interest and it’s that lawsuit the city is settling, at least the part of it that involves Cisterra and their investors. By settling it, they have committed the city to redeveloping the core of downtown and, yes, building a new City Hall.  

One of the best arguments against them is that they can’t do it – that there’s nothing the city does worse than large real estate development projects and, put simply, it can’t do it.  

Well, it’s doing it. The mayor and City Council just decided to put the first installment of $132 million into it.