Guilty plea in San Diego real estate ‘debacle’

Adviser Jason Hughes admits working both sides of lease agreements between city, landlord

<p>101 Ash Street (Google Maps)</p>

101 Ash Street (Google Maps)

A San Diego real estate adviser who played either side of two large leases between a city and a landlord agreed last week to plead guilty to a misdemeanor conflict-of-interest charge and pay back the city $9.4 million for the troubled deals, the San Diego Union-Tribune reported.

The City Council agreed last week to the settlement with Jason Hughes, who worked on two city leases for the 101 Ash Street and Civic Center Plaza buildings, while a district attorney also announced the plea agreement with Hughes, effectively ending the civil and criminal cases against Hughes in a real estate deal that’s been described as a debacle.

With the guilty plea, Hughes, a longtime adviser and real estate expert in the area, admitted to working on either side of a $128 million lease-to-own agreement between the city and Cisterra Development for both properties, according to the outlet.

The city sued Cisterra Development back in 2020, after finding out during renovations that 101 Ash Street couldn’t be occupied because of significant issues, including asbestos. The city, according to the Times-Union, had signed an “as-is” lease and did not conduct its own property assessment of the building. At the time, then-Mayor Kevin Faulconer was told all that needed to be done to 101 sh Street was some power washing before workers could move in.

The city later added Hughes to the lawsuit when it was discovered — and he subsequently admitted — that he received payments from Cisterra for brokering the two leases. For years, Hughes held himself out as an unpaid real estate adviser to numerous San Diego mayors, including Faulconer, who recommended entering into the two leases for 101 Ash Street and the Civic Center Plaza. 

Even though the guilty plea resulted in one year of probation and a $400 fine, Hughes was not barred from working with the city in the future, nor was his standing with the California Department of Real Estate affected, according to the outlet.

The 7-2 vote to approve the settlement with Hughes reflected a split among the council in terms of how significant a punishment should have been meted out.

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“He stole taxpayer dollars,” Council member Vivian Moreno, who voted against the settlement, said, according to the Times-Union. “The only consequence Mr. Hughes faces is that the profit he made from this deal be given up. That is the bare minimum of what this city should demand.”

The city, meanwhile, has sunk about $200 million into the two properties — which have been assessed for a little more than half that — as part of an effort to revitalize San Diego’s downtown area and bring more affordable housing to the area. 

The city last year settled its portion of the litigation with Cisterra and CGA Capital, where the city will buy out the two leases for $132 million — $86 million for 101 Ash Street and $46 million for the Civic Center Plaza. Cistera agreed to return $7.5 million to the city, but was allowed to keep millions that San Diego paid in rent before the lawsuits were filed, the outlet reported.

The lawsuit still remains open against several other defendants. 

— Ted Glanzer

 

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Guilty plea in San Diego real estate ‘debacle’

Adviser Jason Hughes admits working both sides of lease agreements between city, landlord

<p>101 Ash Street (Google Maps)</p>

101 Ash Street (Google Maps)

A San Diego real estate adviser who played either side of two large leases between a city and a landlord agreed last week to plead guilty to a misdemeanor conflict-of-interest charge and pay back the city $9.4 million for the troubled deals, the San Diego Union-Tribune reported.

The City Council agreed last week to the settlement with Jason Hughes, who worked on two city leases for the 101 Ash Street and Civic Center Plaza buildings, while a district attorney also announced the plea agreement with Hughes, effectively ending the civil and criminal cases against Hughes in a real estate deal that’s been described as a debacle.

With the guilty plea, Hughes, a longtime adviser and real estate expert in the area, admitted to working on either side of a $128 million lease-to-own agreement between the city and Cisterra Development for both properties, according to the outlet.

The city sued Cisterra Development back in 2020, after finding out during renovations that 101 Ash Street couldn’t be occupied because of significant issues, including asbestos. The city, according to the Times-Union, had signed an “as-is” lease and did not conduct its own property assessment of the building. At the time, then-Mayor Kevin Faulconer was told all that needed to be done to 101 sh Street was some power washing before workers could move in.

The city later added Hughes to the lawsuit when it was discovered — and he subsequently admitted — that he received payments from Cisterra for brokering the two leases. For years, Hughes held himself out as an unpaid real estate adviser to numerous San Diego mayors, including Faulconer, who recommended entering into the two leases for 101 Ash Street and the Civic Center Plaza. 

Even though the guilty plea resulted in one year of probation and a $400 fine, Hughes was not barred from working with the city in the future, nor was his standing with the California Department of Real Estate affected, according to the outlet.

The 7-2 vote to approve the settlement with Hughes reflected a split among the council in terms of how significant a punishment should have been meted out.

Sign Up for the undefined Newsletter

By signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy.

“He stole taxpayer dollars,” Council member Vivian Moreno, who voted against the settlement, said, according to the Times-Union. “The only consequence Mr. Hughes faces is that the profit he made from this deal be given up. That is the bare minimum of what this city should demand.”

The city, meanwhile, has sunk about $200 million into the two properties — which have been assessed for a little more than half that — as part of an effort to revitalize San Diego’s downtown area and bring more affordable housing to the area. 

The city last year settled its portion of the litigation with Cisterra and CGA Capital, where the city will buy out the two leases for $132 million — $86 million for 101 Ash Street and $46 million for the Civic Center Plaza. Cistera agreed to return $7.5 million to the city, but was allowed to keep millions that San Diego paid in rent before the lawsuits were filed, the outlet reported.

The lawsuit still remains open against several other defendants. 

— Ted Glanzer

 

Read more