By Lisa Mortensen
After reading the article about a ‘rehashed’ real estate deal on 101 Ash Street, I had concerns. Having been a San Diego Realtor for close to 50 years, from a real estate professional’s point of view, here are my list of red flags.
A 4% interest rate on a 55-year loan term without receiving payments on the loan for 15 years? While current residential home interest rates for a 30-year mortgage with 20% down are hovering around high 6% low 7% range, this 4% rate appears extremely low based on ‘risk assessment’ of a 55-year loan.
The developer will once again ‘pocket’ $24.5 million in developer fees. This is a similar situation to the $24 million credit arrangement on developer fees that Todd Gloria gave Bosa Development for a ½ acre open space parcel. A spit of land that, let’s be clear, should have been donated. So, if the city approves this deal, then basically close to $50 million dollars of developer fees are being waived which will greatly benefit these developers. $50 million that could be used toward much needed infrastructure maintenance and upgrades for our city.
The developer is estimating it will cost $1 million per unit to convert the building to affordable housing. What for-profit developer would pay this inflated value to construct affordable units? This does not add up and may very well give the buyer a way out of the deal after the city has once again committed the taxpayers to this financially disastrous transaction when the buyer backs out because “market conditions are such that this project is unfeasible.” Wow, who could see this coming?
The developer is seeking $82 million in low-income housing tax credits which are “highly competitive and doled out on a rolling basis by the California Tax Credit Allocation Committee”. So, again, the odds of the developer obtaining the full credits desired is speculative unless one of the partners on the development team has connections to the committee members.
The group is also banking on receiving $32.2 million in tax credits associated with historic properties even though 101 Ash Street is not a historic property. I also believe that if Todd Gloria gets his way, the current makeup of the city council would pass the Preservation and Progress program that attempts to eliminate historical designations for individual properties or districts. Maybe Todd will give this property the designation it needs before he implements the P & P program?
The city has spent $7.2 million between fiscal years 2023 and 2025 on maintenance of the unusable building. In the recent budget, the city has allotted $2.5 million for property management costs in the fiscal year that commenced July 1st, 2025. But here’s the rub, the city would need to continue paying maintenance and operating costs until escrow closes which could take up to two years. Two years?
I have handled several land deals during my career, some raw land, some finished lots in blanket subdivisions. I realize these transactions are complicated, but I have never represented a seller in a land deal that required a two-year escrow. I would not obligate my principal to a 24-month transaction because it would violate my fiduciary relationship with them. First off, how can anyone predict the real estate market conditions two years out? Secondly, and most importantly, if a buyer requires this timeframe for escrow to close, it is obvious to me that they may be a willing buyer (what do they have to lose?) but not one who is ready to perform or able to perform on their contract. Before I would bind my seller to a contract like this, the buyer must provide much more ability to perform in the near term and be able to close escrow under comparable market conditions.
Did the city ever ask for Requests for Proposals in a public offering? There are some very experienced and competent developers that exclusively specialize in affordable housing that could advise on the feasibility of providing affordable housing and a sound transaction. So, let’s slow things down and not rush to the signing table just yet
And finally, what doesn’t get enough attention is the fact, the buyer on this real estate debacle also happens to be the San Diego City Planning Commissioner. As a real estate licensee, I would be subject to discipline and possible loss of license if I didn’t disclose my relationship with my principals (both seller and buyer); especially if I was one of the principals in the transaction. But in a city that is long on policy advisors and obviously short on real estate licensees, this lack of open disclosure of a conflict to a fiduciary relationship seems to be just a side show in this charade.
When will Todd Gloria stop tinkering with these real estate disasters and start to cut city staffing to close or eliminate our budget deficit. Or will he continue to tout how these deals are greater than the last while only providing developer fee credits and ‘no-fault’ deals to his donor friends. But we taxpayers are wise to these shenanigans and know once again we’ll be left holding the bag
Lisa Mortensen is a realtor and resident of Mission Hills.
Excellent playing the cards face up Lisa. Thank you. why the voters re-elected known shady dealers, is beyond my level of common sense.
I call this the “Wimpy Deal”….on steroids too! The developer get the building (the hamburger) now but doesn’t have to pay till year 15 (the next Tuesday). The LU&H Committee is guilty of malfeasance! How can one recommend a transaction w/o having ALL the pertinent documents – that’s what we have here. Could there be other shenanigans at play here too, like the fact that this deal was brought to the developer as I understand it by Jennifer Le Sar, the spouse of out of office politician Toni Atkins. Let’s see a projected cash flow Which now is lacking. What financial industry lender would even consider this w/o ALL the facts? Only government bureaucrats with NO accountability are today’s patsies at taxpayer expense!
How’s that city pension doing? We can beat Ash St to death, Toad is a lame duck, what’s the solution moving forward?
Kelly Moden and Todd Gloria need to take a class at UCSD on Section 1090. They are either corrupt or just plain dumb.