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City leaders vote for updates on 101 Ash Street as costs mount

Posted at 4:58 PM, Aug 06, 2020
and last updated 2020-08-07 01:17:35-04

SAN DIEGO — SAN DIEGO (KGTV) — The downtown building at 101 Ash Street has been sitting vacant for most of the last four years and as it continues to sit empty, taxpayers are footing the $18,000 per day bill.

City Council leaders voted 5-4 — with Council members Vivian Moreno, Monica Montgomery, Barbara Bry, and Georgette Gómezto voting in opposition — to request monthly updates on the building's status and costs for several options presented by Mayor Kevin Faulconer's office.

The mayor's options included putting millions of dollars more into the building for the needed repairs, buying out the lease, pursue a new landlord, trying to renegotiate its lease, or walking away entirely, the last of which could risk litigation and credit damage.

The coronavirus pandemic has cleared out office buildings across downtown San Diego. But emptiness is business as usual for the old Sempra building at 101 Ash.

In 2016, the city approved a lease-to-own agreement for the building, valued at $72 million. The idea was to move upwards of 1,100 city employees into the facility.

But officials quickly discovered a series of problems requiring major renovations to the site's 19 floors.

In December 2019, the city finally began moving workers into the building, only to vacate them a month later when the county found traces of asbestos.

So how did the city get into this mess? A new investigation shows it really never did its homework for such a big purchase from the start.

The law firm Hugo Parker found that, "at no time, however, did the city formally inspect 101 Ash before closing escrow."

In January, councilmember Barbara Bry showed ABC 10News a document that the city accepted the property as is.

"That is stupid to do when you are doing a long-term lease purchase on a building that was built in the 1960s," Bry said.

An additional new report from Kitchell says the building needs $115 million of repairs, which is well more than what the city paid for it.