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The City Council will hold a special meeting Wednesday afternoon to vote on a settlement requiring ex-city real estate adviser Jason Hughes to essentially pay back the $9.4 million he received from the city’s ex-landlord for his work on the 101 Ash St. and Civic Center Plaza leases.
If the settlement is approved, the city will drop its civil actions accusing Hughes of violating Government Code Section 1090, which bars government officials from having financial interests in contracts they broker in their official capacities.
The planned settlement vote follows a directive from Superior Court Judge Kenneth So, who is presiding over evidence issues associated with the District Attorney’s Office ongoing criminal investigation of the matter.
Superior Court Judge Timothy Taylor, who has overseen the civil cases, on March 14 ordered attorneys for the city and Hughes to attend a settlement conference with So.
Two days later, Judge So briefed City Attorney Mara Elliott on the proposed settlement offer and later called for a City Council vote on the settlement by 9 a.m. Thursday, according to a City Attorney’s Office report to the City Council.
A spokesman for District Attorney Summer Stephan’s office on Tuesday declined to comment on the status of that agency’s criminal conflict-of-interest probe and whether action on it could be imminent. The District Attorney’s Office and Hughes’ legal team have in recent weeks appeared before So to address disputes over the handling of privileged records unearthed during the criminal investigation and an October 2021 raid. Spokesman Steve Walker said the District Attorney’s Office will have more information to share after Wednesday’s City Council vote.
The debacle surrounding the city’s controversial 101 Ash St. acquisition reached new heights in 2021 with the revelation that Hughes – who was publicly considered a volunteer – received $9.4 million from the city’s now-former landlord for his work on the city’s 101 Ash and earlier Civic Center Plaza deals. Elliott’s office responded to that discovery by filing civil actions accusing Hughes of violating Government Code Section 1090, which bars government officials from having financial interests in contracts they broker in their official capacities.
Elliott’s office has described the situation as a textbook conflict-of-interest case and has argued that Hughes’ position, the payments he received and his less than full disclosure translated into clear violations of the state law. Elliott also pushed back last year as the City Council voted to settle with ex-landlord Cisterra Development and its lenders, citing the strength of the city’s legal case among other arguments.
Hughes and his attorney have argued otherwise.
Hughes’ attorney Michael Attanasio has also argued that his client, who did not have a formal contract with the city, is not covered by state conflict-of-interest law.
Hughes, who in 2013 volunteered to advise then-mayor Bob Filner on real estate issues, has also emphasized that he told multiple city officials he wanted to be paid by someone other than the city. Hughes has also produced a letter he says the city’s former real estate director signed giving him the go-ahead to seek compensation for complex city lease deals. Yet the former real estate official and other former city officials have said that they didn’t know the city’s landlord paid Hughes.
The city’s cases against Hughes had been set to go to trial in late April.
The proposed settlement deal with Hughes delivers a remedy commonly sought in 1090 challenges: disgorgement, a requirement that the party accused of the conflict-of-interest forks over any profits received as a result of those acts.
Elliott cheered the payout proposed in the settlement in a Tuesday statement.
“The settlement amount represents all of Jason Hughes’s ill-gotten gains from the city. It is the same amount the city was seeking in litigation under the state’s anti-corruption law, Section 1090, which requires disgorgement of every dollar that is obtained improperly,” Elliott wrote in a statement. “In addition, the city avoids trial costs estimated at upwards of $1 million. This is an excellent result and an indisputable victory for the city.”
Mayor Todd Gloria and Council President Sean Elo-Rivera struck a similar note in their Tuesday statement.
“The proposed settlement offers an opportunity to hold Jason Hughes accountable and reclaim every dollar he wrongfully took from San Diegans,” the two wrote in a joint statement. “We continue to believe he should be held accountable by the justice system for his actions, but we are glad to take this positive step forward as we continue to correct for the mistakes of the past.”
Attanasio declined to comment on the settlement.
The settlement with Hughes and his company Hughes Marino mirrors the structure of one the city agreed to last year with a real estate broker hired by the Housing Commission to help it purchase a hotel after he invested in the company that was selling the hotel. In both cases, the city dropped its 1090 case in exchange for the real estate professional returning payment received in the transaction.
By comparison, a settlement that the City Council last summer approved with Cisterra and its lenders called for Cisterra to pay the city the equivalent of the $7.45 million in net profits it received in the 2017 101 Ash transaction. It did not include an additional $6.4 million Cisterra received via the Civic Center deal. Investors who provided upfront cash to facilitate both leases, meanwhile, agreed to waive an estimated $11.7 million in penalties associated with paying off lenders’ debts before the planned 20-year leases conclude.
The arrangement helped facilitate the city’s controversial $132 million buyout of the two city leases and the end to its legal fight with the landlord and lender behind the 101 Ash and Civic Center Plaza deals.
At the time, Mayor Todd Gloria and other city leaders emphasized that the deal wouldn’t stop the city or criminal investigators from going after Hughes.
The city is now set to vote at 3:15 p.m. Wednesday on a settlement with Hughes.
Gloria and Elo-Rivera are a joke “…we are glad to take this positive step forward as we continue to correct for the mistakes of the past.”
A correction to them is taking a $67 million scam and creating a bond deal that will cost taxpayer nearly a quarter of a billion dollars over 30 years.
The people of San Diego deserve better than Kevin Faulconer, Gloria and Elo-Rivera.
Sweep it under the rug so we have time for the issues residents care about. I pushed my kid’s stroller past a meth head cutting himself on the sidewalk yesterday but I sure am glad Juneteenth is a holiday now.
I came here to say unbelievable l, but then knowing how corrupt the current mayor is, this should have been expected. Vote these people out!!
Why is the judge presiding over the criminal matter holding a Settlement Conference on the civil matter, and briefing the SD City Attorney on it??????
I submit the city will likely not receive the all promised 9.4M from Jason Hughes nor the the 7.4M from Cisterra/Stephen Black as they likely had to pay bribes to city employees like Cybele Thompson in order to get these scams approved.