San Diego has yet to solve its real estate problem – Voice of San Diego
There wasn’t a political fanatic in San Diego who would argue to start the year that the city has an impressive real estate record.
Yet somehow the city has managed to find new and different ways to reveal the extent of its problems with buying, renting and developing real estate.
Just in 2021: The city’s ongoing attempt to redevelop the sports arena has encountered a significant hurdle – twice. Its capital lease agreement for a downtown skyscraper entered criminal territory. This devoted $ 15 million to renovating a building that does not belong to him so that he could repair fire trucks there, four years later the rental of the building For this purpose. Elected leaders learned that a hotel purchased by the low-income housing agency established by the city they oversee was made with the help of a broker who had an allegedly criminal conflict of interest – and the agency bought the hotel at the height of the pandemic, while fixing the price of the hotel as if the pandemic had never happened.
These revelations followed decisions made prior to the current municipal administration. Dealing with these failures, however, has been an important part of Mayor Todd Gloria’s first year in office.
The fallout from the city’s recurring mistakes has been happening throughout the year. The investigators of the public prosecutor raided the city’s former real estate advisor on the still ongoing 101 Ash St. scandal. Former mayor has been dropped for lawsuits related to the matter as well. A scathing report from the city’s auditor discovered that the city had ignored routine government procedures in its $ 230 million acquisition of real estate, resulting in rising costs and underutilized properties. The city attorney sued the broker who helped the San Diego Housing Commission buy a hotel from a company it has invested in, a case to go to trial in January.
The year, however, was marked by two different failures on a major city initiative that showed the city’s inability to manage the land it owns and the land it wishes to own or improve.
In March, the city’s effort to redevelop the Sports Arena suffered its first blow. California Department of Housing says the city ignored a state law in 2020, when he picked a developer to build thousands of homes and rebuild or renovate the arena without first offering the 50 acres of city-owned land to affordable housing developers. The metropolitan public transport network managed not to ignore this same law during its own redevelopment efforts. Gloria had to start the process over.
He did – and then the city learned this month – and the same day bids were due from this relaunched process – that he broke another state law when he put a measure on the 2020 poll to remove the height limit throughout the Midway area, according to a ruling by Superior Court Judge Katherine Bacal . The city is appealing the decision. Removing the height limit was seen as a key part of the joint efforts of the city’s planning and real estate departments. to relaunch Sports Arena since 2018. Gloria announced last week that the city will also be relaunching this process. Sports Arena bidders were waiting in the meantime.
Penny Maus, director of the city’s property and airport management department, said she took the job in March, leaving a similar position at the Port of San Diego with her eyes open.
“When I thought about looking for this job, people would say, ‘Are you crazy? Look at what’s going on there. Don’t you read the news? ‘ “She said in an interview. “I see it as an opportunity. I want to be part of the solution. This is where I come from.
The July auditor’s report said the city was struggling because its structure did not hint at the role that different staff members were supposed to play, which it routinely failed to do basic due diligence that entailed increased costs after acquiring the property and which decision makers did not or could not exercise sufficient oversight because the previous administration did not provide full or complete information on major transactions . According to the audit, the city lacked a coherent real estate strategy, leaving it to make dispersed decisions without clear priorities, and it often did so without full economic analyzes.
“Overall, we found that a serious lack of policies and oversight caused the city to miss or skip key steps in the procurement process, and allowed the previous city administration to omit or distort key information on building acquisitions when presented to city council. and the public, ”the audit said.
The audit pointed out that the errors it examined had occurred under the previous administration, but the new administration did not initially embrace all of the changes the city needed to make to prevent them from happening again. City staff resisted the implementation of a best practice checklist for each acquisition, advising the independent budget analyst in advance of any new acquisitions they were targeting before entering negotiations, confirming that contractors on whom he relied on had made the economic disclosures necessary to prevent potential conflicts and obtain an independent appraisal of properties before accepting a price.
In September, however, city staff changed course after the city council’s audit committee criticized its response to the report. Maus, in a note of September 7, told the auditor’s office the real estate department would fully implement the recommended changes. The city attorney’s office, which was also criticized in the audit, maintained its criticism that the audit was an “incomplete investigation”, although it also agreed to implement some changes.
Maus said his office is now completely rewriting the city’s real estate policies, including the auditor’s recommendations. This will include rewriting the council policy that covers the city’s real estate operations, but Maus said they also list each of the different real estate policies the department has relied on to rewrite and consolidate them as well.
She said the ministry had hoped to present its changes to go through the council committee process by the end of the summer.
Formalizing the procurement process, Maus said, will make it easier for the council to oversee city decisions.
“The changes recommended by the audit and which I think quite frankly are just good practice, will give the board the tools to be able to see, if we do or don’t do certain levels of assessment, they can say ‘you don’t. didn’t, “Don’t do that kind of study, why not?” she said.
The real estate department has also had some victories this year, Maus said. He completed a $ 10 million construction project at Montgomery Field, the city-owned airport of Kearny Mesa, and approved a $ 16 million redevelopment of the airport with a new 40-year lease, per example.
But the ministry will need to tackle its high-profile issues.
While the redevelopment of the sports arena is in limbo, the city will spend the next three months negotiating with the five teams that submitted bids on the property before the court ruling jeopardizes the concept. Maus said the city will go back to each project for additional data so they can compare each one on a level plot. The city’s appeal against the decision to remove the height limit will progress in the meantime, and Gloria has announced the city will conduct the environmental review it did not do in 2020, which the judge said. declared necessary before appearing before the voters.
“In our review, we said the outcome of Measure was still uncertain, so every response came with eyes wide open,” she said.
The lawsuits – and possible settlements – continue at 101 Ash Street, as does the criminal investigation and ensuing political consequences, and the need for city offices that led to the deal in the first place.
And construction companies have submitted bids to rebuild the Othello Avenue warehouse that the city wants to turn into a maintenance yard for the city’s fire trucks. Construction could start in early 2022 and is expected to last up to a year and a half.
“No matter what has happened in the past, we are moving forward,” Maus said.