PERSPECTIVE: Gloria's Deal to Buy 101 Ash is So Bad Even Mara Elliott is Against It
Photo: Todd Gloria; Photo credit: Adriana Heldiz, Voice of San Diego
San Diego Mayor Todd Gloria finally fessed up this week to having negotiated a backroom settlement deal to bail out his developer bros (and to end pesky legal cases that were uncovering all of the misdeeds of both his and his predecessor's administrations) by doubling down and paying over $84 million for a building that requires visitors to wear life-saving hazmat suits in order to enter.
But, that's not even the worst part.
The proposed deal unveiled by Gloria and Council President Sean Elo-Rivera on Monday is so bad -how bad is it?- that the 26-page settlement agreement includes a paragraph that declares that City Attorney Mara Elliott has given written and verbal advice to the Council to REJECT the agreement.
Yes, the City's chief legal advisor entrusted in the City Charter to represent the best interests of San Diego taxpayers has advised the Councilmembers to reject the Mayor's settlement deal.
And to bolster her position against the deal, Elliott released an 11-page legal memo outlining the many shortcomings of the settlement, including that the Mayor has not outlined any end-game for the toxic building that even the Council's Independent Budget Analyst (IBA) says still requires more than $80 million in repairs to make it usable.
The building's appraised value was around $67 million when the City first acquired it under a 20-year lease-to-own deal in 2016, and that was when the City thought the building was useable.
Now, after having to evacuate the building in January 2020 over exposed asbestos material and non-functional fire life safety systems, Gloria now wants the City to spend over $160 million on a building that the IBA says may be "worthless."
Gloria is a young and smart politician -and has ambitions for higher office- so why would he take such a risky gamble to negotiate the purchase of a toxic building that is in such bad physical and financial condition that the landlord didn't try to repossess it when the City stopped paying its $545,000 monthly lease payment almost two years ago?
And why would Gloria and Council President Elo-Rivera now go against the legal advice of the City Attorney?
During Monday's press conference, Elo-Rivera said everyone involved in the original transaction in 2016 should face criticism, including former Mayor Kevin Faulconer and former City Attorney Jan Goldsmith, and Elo-Rivera specifically mentioned that it is unfair that criticism has "only been reserved for the City's first Latina City Attorney" as if that was ever a reason to criticize Elliott.
We, at La Prensa, and I, personally, have been harsh -if not the harshest- critics of Elliott, not because she is a Latina, as Elo-Rivera suggested, but for failing to properly vet the 2016 lease deal that should have raised red flags to any competent lawyer when the first page included "AS-IS" language that completely protected Cisterra at the expense of taxpayers.
We have criticized Elliott for controlling the outside law firms' investigations into 101 Ash, including the Parker Report and Burke Memo, which have now been exposed as having been whitewashed and even kept from Councilmembers in hopes of covering up her own failures in approving the lease in the first place.
And we have criticized Elliott for denying the Mayor and the City Auditor their own lawyers to investigate the 101 Ash scandal by claiming only she, as the City Attorney, can hire and manage lawyers representing the City, even when she may have a conflict-of-interest for her role in the debacle.
Those were all fair criticisms and we stand by our reporting.
But, we must now admit that Elliott landed in the right place at the right time.
We don't know her motivations or why she decided to take such a strong stance against the deal, but some clues point to a break between Elliott and Gloria that will be on full display when the Council takes up the proposed purchase at Monday's public Council meeting.
First, sources have said for weeks that Gloria took charge of the negotiations through the City's Chief Operating Officer Jay Goldstone (who reports only to the Mayor) and that Elliott has not been part of the final deal.
Elliott seems to have been cut out of the process and could now find herself in the unenviable position of having to represent the City on the remaining lawsuits related to the toxic building, including asbestos exposure and employee retaliation claims, without the benefit of the bigger pieces to use as negotiating leverage; namely the building and the outstanding debt that both Cisterra and its financiers desperately want to recover so they're not left holding a worthless building that no other party would buy.
But, more importantly, Elliott has been at the center of the scandal longer than anyone else and has seen all of the evidence put together by the outside investigations, as well as all of the discovery in the pending lawsuits, and she knows how bad the City's position truly is.
Elliott would know better than Gloria (who is not a lawyer) and Elo-Rivera (who graduated from law school nearly ten years ago but hasn't yet passed the Bar) that cutting a deal to pay off Cisterra's remaining debt against the building will still expose the City to lawsuits over the constitutionality of the underlying lease, and arguments that taxpayer money was improperly used to overpay for an unusable building.
We have argued that the only outcome that makes sense is that Gloria may have a backend deal to unload the building to SANDAG and/or the State to be rolled into a larger development for a new City Hall and other government uses, but Gloria has yet to admit to any such deals.
With a $98 billion surplus this year and $40 billion set aside for infrastructure projects in his proposed budget, Governor Gavin Newsom could be contemplating throwing Gloria a lifeline in the form of a bailout, but that would still need to be approved by the Legislature by the end of the month next week and nothing in the Governor's current budget includes any language about 101 Ash St.
Having Senate President Pro Tem Toni Atkins as a staunch Gloria ally could help, but any such state bailout wouldn't solve the building's shortcomings; it would just spread the pain out to state taxpayers instead of only San Diegans.
Or, maybe Elliott knows more about the District Attorney and federal criminal investigations into the scandal and wants no part of deal to distance herself for if, and when, possible indictments and arrests start taking down those involved in San Diego's latest political scandal.
Either way, Elliott knows something Gloria doesn't and seems unwilling to go along with this scheme to raid the City's cash to buy the toxic building with no clear plan or exit strategy.
When Elliott was interviewed by the San Diego Union-Tribune's Editorial Board during her re-election campaign in August 2020, she said she "cannot be fired by the mayor or council for speaking out to protect the public interest or taxpayer dollars" and that she is "ultimately accountable to the people of San Diego."
She added that "City officials may not always like the answers I give them, but my job is to do what’s right for San Diego, not what’s politically convenient."
We criticized Elliott for not doing enough to stop the City from entering into this lopsided lease in the first place, for failing to require the disclosure of all interested parties which would have unmasked Jason Hughes' involvement, and for participating in a coverup for over two years that helped those who fleeced the City escape justice.
But Elliott is now the right person in the right place at the right time. She, as the City Attorney, has given her advice to reject the deal, but Gloria and at least five compliant Councilmembers still seem willing to go along with the plan just to make the political headache go away.
So Elliott can now do what she wasn't willing to do the first time: Withhold her consent for the deal by refusing to affix her signature to the agreement.
Under the City's Charter, any contract with the City only becomes binding by the signature of the City Attorney. Absent her signature, there is no deal.
Elliott has said she is accountable to the people of San Diego, not the politicians. Now is the time to prove it.
If Todd Gloria and Councilmembers are hellbent on doing the this deal, they should try getting it done without the consent of the City's duly elected independent City Attorney.
Mara Elliott -and she, alone- can save the City from committing another taxpayer-funded blunder that Mayor Gloria, Council President Sean Elo-Rivera, and four other Councilmembers are rushing to pass.
This is the time for courage and strength not usually shown by politicians. This is the time for Elliott to act like the lawyer she is, not the politician she has been.
We hope City Attorney Mara Elliott will stand up TO the Mayor and stand up FOR the taxpayers of San Diego as if hundred of million of dollars are at stake -because they are.
Castañares is the Publisher and Editor-at-Large of La Prensa San Diego. He is the 2021 winner of the prestigious Ruben Salazar National Award for Excellence in Journalism in Print presented by the California Chicano News Media Association, the oldest Hispanic journalism organization in the United States. He can be reached directly at firstname.lastname@example.org.