/Morning Report: The Other Big Player in the City’s Disastrous 101 Ash Deal

Morning Report: The Other Big Player in the City’s Disastrous 101 Ash Deal

101 Ash St. / Photo by Adriana Heldiz

Reporters and officials have tried for months going on years to answer the many outstanding questions surrounding the city’s disastrous acquisition of 101 Ash St., a downtown high-rise that was supposed to house city workers but still sits empty after millions in public spending paid out since 2017.

But one person’s involvement has gone largely un-examined: Jason Hughes, the real estate pro who volunteered his services to the city years earlier.

In a sprawling investigation, Lisa Halverstadt dives into Hughes’ role, establishing through emails and documents that he was one of the architects of the lease-to-own structure of a deal now seen as one of the most disastrous real estate transactions in city history.

Read the whole yarn, especially if you watched as the scandal took center stage in last year’s mayoral race, but there are a number of big takeaways from Halverstadt’s report.

  • Doug Manchester, a former minority owner of 101 Ash St., said Hughes suggested Manchester pay him for an introduction to a would-be investor on another project, which Manchester said he interpreted as an implication that paying Hughes would help him out in trying to ink a deal on the high-rise with the city.
  • After saving the city money on a handful of lease renegotiations (and getting a lot of positive press for it), Hughes in 2014 proposed the city consider a lease-to-own deal, much like the one it later pursued at 101 Ash, at a different downtown building. “This route is really like an investment banking type transaction, so I would seek compensation for this role (obviously not from the City) – but regardless, I have some good ideas that I began working on,” Hughes wrote in an email to a city official.
  • Also in 2014, the owner of 101 Ash St. reached out to Hughes to sell him on the idea of turning the building into a new City Hall. Hughes was skeptical, but conversations continued. The city’s real estate chief turned down an offer in March 2015, and Hughes soon got to work on a counter-offer. Those negotiations led to another rejection. “It was always in the back of my mind why it was so difficult to try and negotiate a deal with the city with (Hughes),” said Sandy Shapery, the building’s owner.
  • Months later, in 2016, Cisterra got involved, and emails show Hughes thought the lease-to-own structure they proposed sounded pretty good. “It still is $25 million cheaper to do the 101 Ash deal over the next 20 years – and the city would own it,” Hughes wrote. “Seems like a no brainer.”
  • That’s the deal that went forward. Former Mayor Kevin Faulconer told us in December that he couldn’t recall his discussions with Hughes about the deal. Three former city officials, though, told us Faulconer wanted to pursue the lease-to-own deal with Cisterra because he was wary of the optics of striking a deal that involved Manchester, who had been a minority owner with Shapery.

In Other News

  • Federal agents arrested Coronado resident Jeffrey Alexander Smith Wednesday for taking part in the U.S. Capitol riot on Jan. 6. According to the complaint, a text message from Smith said he intended “To send a message that Americans are(n)’t going to take a fraudulent election.” (Union-Tribune) 
  • Prosecutors found another San Diegan who was wrongfully committed to a state mental hospital for more than two decades after NBC San Diego initially identified another man wrongfully held. (NBC San Diego)
  • Sen. Nancy Skinner has re-introduced a bill that would increase the amount of police records that are required to be made public and allow for fines to be imposed on departments that do not release records quickly enough. (KPBS)
  • Chula Vista City Councilman and California Coastal Commission Chairman Steve Padilla announced Thursday he will run for the state Senate seat currently held by Sen. Ben Hueso. He has Hueso’s endorsement as well as Chula Vista Mayor Mary Salas and Assemblywoman Lorena Gonzalez. (Times of San Diego)
  • Lawmakers have confirmed Assemblywoman Shirley Weber as our next secretary of state. She’ll make history as the first Black elections chief in California’s history. (Politico)
  • inewsource uncovered reporting mistakes and delays across the state in tracking prison and jail inmate deaths from the virus.
  • Be careful where you park. The city is restarting parking enforcement for meters and street sweeping effective Friday. Citations will be issued starting Feb. 8.
  • MTS wants you to “skip the traffic lines at vaccine super stations” and take public transit to your appointment for free.
  • Join us at 5 p.m. for our weekly livestream series, the Friday Five. Editor in Chief Scott Lewis will round up the week’s top stories and take your questions. Find it on our website, Facebook or YouTube.

The Morning Report was written by Andrew Keatts and Megan Wood, and edited by Sara Libby.