Photo by Matthew Bowler

Above: No trespassing sign on a temporary construction wall in front of the building at 101 Ash Street, June 29, 2021.

The city of San Diego on Tuesday announced that it is suing to cancel its capital leases at buildings at 101 Ash Street and Civic Center Plaza over an adviser who allegedly received millions of dollars in unsuccessful compensation. disclosed for negotiating transactions in violation of state law. .

The city attorney’s office alleges that commercial real estate broker Jason Hughes introduced himself as a “special real estate services volunteer” who negotiated the agreements on behalf of the city for free “out of a sense of civic duty.”

However, the city says it was actually paid $ 9.4 million in undeclared compensation from Cisterra Development. When negotiations between Hughes and the owners of the 101 Ash Street building were unsuccessful, the city says Hughes has entered into negotiations with Cisterra for a capital lease if Cisterra acquires the building.

“Hughes’ conflict of interest has prevented the city from receiving impartial advice regarding alternative locations and better rental conditions,” the city attorney’s office said in a statement. “If city council had known about the payment to Hughes, it would have behaved reasonably differently. “

RELATED: San Diego Stops Rent Payments on 101 Ash Street

Hughes’ attorney, Michael Attanasio, released a statement denying that Hughes ever concealed the fact that he was receiving payments.

“Jason has transparently disclosed to the city and several of its most senior elected and appointed officials his intention to seek compensation from the private sector for his role in these transactions,” the statement said. “While Jason has no legal obligation to make such disclosures in light of his unofficial role, he did so to ensure his intentions were transparent and known to senior city officials. been made orally and in writing, and the city has officially recognized, accepted and approved Jason’s entirely appropriate intention to seek compensation. “

City claims it learned that Hughes was paid $ 4.4 million in the 101 Ash Street transaction in its litigation over the city’s capital lease agreement for the downtown skyscraper city, which was evacuated due to asbestos violations shortly after city workers were moved into the building. The skyscraper remains vacant, and questions and accusations abound among elected officials and the general public about how the deal has played out amid apparent structural issues with the building.

RELATED: San Diego COO Resigns Amid 101 Ash Street Debacle

Hughes is also said to have received an undeclared sum of around $ 5 million from Cisterra for negotiating the Civic Center Plaza deal.

The city attorney’s office alleges that San Diego is entitled to more than $ 44 million in reimbursement for rent paid for the two buildings because they say the allegedly undeclared payments violate Section 1090 of the Government’s Code of California, which prohibits public officials from participating in contracts in which they have a financial interest and private parties from paying compensation to public officials that would create a financial interest.

“It is now clear why the 101 Ash Street deal has been shrouded in secrecy: at its heart lies a massive betrayal of public trust and a blatant violation of California’s anti-corruption laws,” the prosecutor said. of the city, Mara Elliott. “Questions remain as to who else knew about the secret payment to Jason Hughes and what other laws might have been broken. We will continue to seek answers and use every tool possible to return taxpayer funds to the treasury. from the city.”

Mayor Todd Gloria, who served on the city council that approved the deal in 2016, said the council and the general public “were cheated”.

Gloria said: “After months of reviewing this transaction with the city attorney, we believe we have uncovered wrongdoing.”

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