City Attorney Torches Proposed Mega-Shelter Lease

City Attorney Mara Elliott’s Office issued a scathing review of the proposed mega-shelter lease Friday afternoon.

Among the laundry list of issues Assistant City Attorney Jean Jordan flagged in her memo:

• The Gloria administration’s move to quickly send the lease to the City Council meant city attorneys couldn’t offer a comprehensive legal analysis of the lease or the city’s due diligence work.
• City attorneys’ concerns raised early in talks with potential landlord Douglas Hamm “remain unaddressed” and between April and June, the city’s negotiating team didn’t involve city attorneys in ongoing talks with Hamm and attorney only received occasional updates.
• Potential landlord Douglas Hamm’s promise of $5 million that the city could use to help pay for upgrades to the building could be “illusory and unenforceable” given the lack of clarity and ambiguous language about it.
• Hamm’s attorney rejected language “to better protect the City’s interests with respect to environmental contamination” that Jordan argued could saddle the city with a significant risk of costs for future remediation. (Hamm has told the city and Voice of San Diego he’s committed to paying for remediation before and after the city moves in.)
• The possibility that the city could pay rent before it’s able to use the building and that Hamm could blame the city for any delays to building upgrades given current language in the lease.
• The lease doesn’t “provide the city with any guarantee or collateral ensuring landlord’s repayment” of the city’s tenant improvement spending if work is delayed.

Jordan’s bottom line: “As currently written, the proposed lease does not adequately protect the city’s legal or financial interests, and the city would benefit from further negotiation, legal analysis, and due diligence,” Jordan wrote.

A spokesperson for Hamm declined to comment early Friday evening.

Nick Serrano, Gloria’s deputy chief of staff, argued in a statement that city attorneys participated in lease negotiations for the campus they’re now dubbing Hope @ Vine and discussed risks with Gloria’s team.

“Let’s be clear: any big project carries risk and we have worked hard to have responsible protections for taxpayers in this agreement,” Serrano wrote. “The question before the City Attorney’s Office is: is this lease agreement legal? Based off the memo released from their office today and the fact that the City Attorney’s Office drafted the lease agreement, reviewed and signed-off on all of the documents for the City Council’s consideration, the answer is: yes.”

Serrano went on: “The real liability for the city and its taxpayers is continuing to leave thousands of people unsheltered on our streets – people who are hungry, sick, and even dying. Hope @ Vine is a way to address this liability and deserves the City Council’s support.”