San Diego’s proposed settlement would divert funds from capital projects to pay for 101 Ash St. – NBC 7 San Diego

San Diego Mayor Todd Gloria’s proposed settlement agreement for the building at 101 Ash St. would allow the city to purchase it and the Civic Center Plaza.

Cisterra Development would reimburse the city for $7.4 million in profits made on the Ash Street transaction, but it would keep the $6.2 million made on the Civic Center Plaza.

After the San Diego City Council approved the original lease-to-own agreement in 2016, the Ash Street building was discovered to be uninhabitable. Repair costs were estimated at $115 million. In the proposed settlement, the city would have to pay the restoration costs to repair the building.

The proposed settlement asks the city to pay $86 million to buy 101 Ash Street, even though it was valued at around $67 million. City Chief Operating Officer Jay Goldstone said the city would pay for the building by diverting money from infrastructure projects such as road improvement projects and stormwater initiatives.

“What we’re recommending is taking the money that was allocated for capital projects, freeing up that money and using it for the acquisition of 101 Ash, and then going out and funding bonds, which what the city could have done initially for these other capital projects, at a lower tax-exempt interest rate, so, net, it will save taxpayer money,” Goldstone said.

Goldstone said infrastructure projects would not be delayed or affected by the change in the financing system and ultimately the rate of interest the city would get by financing capital projects through a bond relative to the interest rate it would get for borrowing money to pay for the building is lower.

“Instead of paying for these projects in cash, we will fund these projects with bonds,” Goldstone said. “It won’t slow down a project, it won’t negatively impact any of those projects, it will still be on schedule. It’s just that the funding source will change.”

Goldstone said the city could save between $3 million and $25 million by financing the acquisition of 101 Ash this way, but many people are still opposed to this proposed settlement because they think the city shouldn’t spend $86 million. dollars for a building that has been valued at $67 million and may need to be demolished.

Goldstone said he hopes the city council will vote on the settlement on July 26. Last month, the mayor asked the city council to postpone the vote scheduled for June 27 because, he said, people inside and outside city hall asked him for more. time to consider the proposal.

In a statement to NBC 7, the San Diego City Attorney’s Office – which recommended the City Council reject the settlement – said it had no legal issues with the proposal’s funding structure. .

Councilwoman Vivian Moreno has already publicly stated that she does not support the settlement. City Council members Sean Elo-Rivera and Chris Cate said they support her.

Go here to read the proposed settlement.

Comments are closed.