101 Ash St. / Photo by Adriana Heldiz
It’s pretty wild, which we would never have found out if it wasn’t for urban contractors destroying asbestos on 101 Ash Street.
The building, the former headquarters of Sempra, which the city hoped would permanently house hundreds of workers, has been a scandal for many years – mostly a scandal of incompetence. How could the city lease a lemon like that? Every building of that time has asbestos, why was the city so terrible when it was remodeled that it became uninhabitable? Why did they rent it to own rather than buy it outright?
It had clearly been a failure, an outrage for the former mayor’s claim to be a good public affairs manager, a legal swamp, a health hazard, an embarrassing waste. However, none of the revelations had confirmed that anyone was walking far richer than they had been.
Until now. On Monday we learned that Jason Hughes had actually deviated from the deal with more than $ 4.4 million.
Hughes has been a major figure in San Diego public affairs for nearly nine years. Previously, he had helped destroy a plan by former Mayor Jerry Sanders that he had worked out to get San Diego a new city hall. Sanders had hoped to save the city money on its many commercial leases and to redesign the C Street corridor.
But Hughes joined then councilor Carl DeMaio to argue that the city could simply use market knowledge and renegotiate its leases. Hughes would even do it for free, he said.
Sanders left, but the new Mayor Bob Filner didn’t and they got closer.
(It was around that time I also met Hughes. He became a major donor to the Voice of San Diego and my wife had a job graphic designer and marketing for his company. In 2016, he helped our employees get a new hire in downtown, right across from 101 Ash. His last donation was in 2019, although his company helped us extend our option in the current office.)
Filner and Hughes were a dynamic couple. They delivered new rental contracts and planned a complete redesign of the city center on the weekends. Over and over we heard how Hughes, who worked for free, brought so much value to the city.
“I see this not only as a civic duty, but also as a way to protect the rest of my customers in the city center …”, he told reporters when he and Filner started new business. When Filner dropped out, new mayor Kevin Faulconer picked up where they left off.
Hughes began wooing many politicians, including Senator Ben Hueso and MP Lorena Gonzalez, who helped him keep track of new bills, one of which was successful in forcing commercial agents to disclose when they were both the landlord and the renter represented in a lease negotiation.
That was his advantage, that was his declaration of separation: he would only represent the tenant and never the landlord. Too often other brokers represented landlords and tenants at the same time. He, on the other hand, was the champion of the small business seeking space. The new law helped him to emphasize the point: he would not have to fill out this information because he was only representing tenants.
Faulconer brought Hughes on to his task force to find a new stadium for the Chargers – another unpaid gig – and then, in 2014, Faulconer put Hughes in one of the toughest situations.
Hundreds of city workers worked on the Civic Center Plaza across from City Hall. It housed most of the city’s lawyers. But the owner of the building wanted out of town, and the purchase negotiations were a mess. Hughes had to work. He got a company, Cisterra, to buy the building and immediately negotiate a lease with the city. He told the city that this was a more complex deal and that he would like to be paid.
But as far as the public knew, he was still voluntary. There was no financial disclosure that he would get any money from this new landlord while he was representing the town for free. The deal was spot on for the city. It didn’t have to Borrow trouble with moneywhich is difficult sometimes. It would have a building in a prime location within a few decades.
We learned on Monday that Cisterra paid Hughes a $ 5 million commission for helping them make this deal a reality.
We never would have expected it if it hadn’t been for 101 Ash Street, a completely different building. Hughes, who was still working with the mayor and still the public assumed he was a volunteer, began helping with another problem. Hundreds of city workers, mostly from development services, needed offices quickly.
Sempra had also vacated its long-standing headquarters next to the town hall. While it wasn’t great for Sempra, it was a big improvement for the city’s staff. Hughes began speaking to its owners, Sandy Shapery and Doug Manchester. But Manchester is a very controversial figure and a major financial backer of Faulconer’s political campaigns and the Republican Party. Buying a huge piece of land from him would have been a big political problem. Whether it was that or the price, the city staff couldn’t make a deal.
Hughes called Cisterra again. They worked out a similar deal. The city would avoid having to shop at Manchester and Shapery. It would avoid borrowing money. Cisterra would buy the building and the city would immediately lease it from Cisterra.
But soon after, Hughes had an argument with Faulconer. The city’s real estate agency has published a tender for construction management services. Hughes’ company was seen as a successful bidder.
However, city officials were concerned about conflicts of interest and asked the city attorney if Hughes could get the contract given his volunteer service. In January 2017, the city made a deal to acquire 101 Ash – and in May 2017, the city appeared ready to continue that deal with Hughes Marino – except that it did not include any work on 101 Ash.
Hughes was furious when he learned that 101 Ash was not part of the contract. He was so angry that he never signed the contract to possibly manage projects in other city facilities.
Other workers got the 101 Ash job and they somehow destroyed asbestos in the building. The city could not draw workers in. Eventually, Jeff McDonald of the Union-Tribune began calculating how much this was costing the city, and his story sparked discussions about the building and the trash. Eventually, the city called in workers to evacuate them immediately after the county air pollution control authorities said it was unsafe.
The scandal broke out. It became a big part of the mayor’s race when one candidate angered the other for signing the deal and then the other candidate slammed the first for signing the renovation. But the question arose again and again: why had the city signed the lease? And where was the money?
Our Lisa Halverstadt has started to put together the offers. She discovered that Hughes had notified the city that he wanted to be paid for the deal with the Civic Center Plaza. But the city stood firm that he had never given up on being paid. When Halverstadt started to summarize his role as architect on both deals, she asked him directly if he had been paid.
“I have too much respect for the principals of the 101 Ash Street transaction to discuss their dealings in the press, especially if those principals are involved in legal disputes, but you can be absolutely certain that I would not be in any transaction without a information required to do so. Any claim to the contrary would be defamatory. “
That’s not a no.
The city called in Hughes and others seeking an answer to the same question Halverstadt had asked. And just when we wanted to hear the results of it, Cisterra and Hughes decided to get the facts out. Yes, they said Hughes got paid, nearly $ 10 million total for both deals.
Why would they be so ready to admit it? Why should they in one day level the facade that had lasted eight years on which Hughes was doing volunteer civic service? It’s because the city try to unravel now both deals stem from the allegation that Hughes had a serious conflict of interest that void both agreements. It’s because they decided on their best defense. The only way to save the deal and maybe $ 24 million in clawbacks is to argue that the city knew Hughes was getting paid all along. Faulconer knew and signed it is their claim.
If that’s true, then Faulconer has been lying for years that his close associate, donor, and volunteer real estate advisor actually received nearly $ 10 million over many years without disclosing it in any way. Faulconer’s team deny they knew this.
Here’s a disturbing reality: we wouldn’t know about it if Hughes had managed to get the construction contract and not done the efforts to keep asbestos out of the air as badly as the city or its contractors.
He would have remained known as a volunteer for the city that few knew made nearly $ 10 million in his service. What we need to know now is whether the former mayor was one of them.