City Cuts Deal On Civic Center Rent

By Lisa Halverstadt, the Voice of San Diego

September 2, 2021

This post originally appeared in the Sept. 2 Morning Report. Get the Morning Report delivered to your inbox.

Facing the prospect of an eviction trial last week, the city cut a deal with lenders behind the city’s Civic Center Plaza lease to pay for its use of the downtown high-rise.

The Union-Tribune reported that the city made two $313,000 payments — the equivalent of its July and August rent payments — last Monday, the same day it appeared before a Superior Court judge who had been set to preside over the eviction case.

Judge Ronald F. Frazier decided last week that the eviction case should instead be heard by Judge Timothy Taylor, who was assigned to the city’s Civic Center Plaza conflict-of-interest case that inspired the city to stop making rent payments. The decision effectively postponed the eviction case.

Hilary Nemchik, a spokeswoman for City Attorney Mara Elliott, wrote in a statement that the agreement will allow the city to pay for its use of the office building that houses more than a dozen city departments but will not halt its separate cases that the city’s Civic Center Plaza and 101 Ash St. leases were “infected” by landlord Cisterra Development’s $9.4 million in payments to former city real estate adviser Jason Hughes. The city has argued those payouts voided the two leases and has sought to recoup more than $44 million.

“Regardless of lease status, the city recognizes it cannot continue to occupy the (Civic Center Plaza) building free of cost in perpetuity,” Nemchik wrote. “While the city cannot make payments on an illegal lease, it can reach a separate agreement.”

A representative for lenders who provided upfront cash for the Civic Center Plaza lease and now receive rent payments in exchange for their investment last week declined to comment on the agreement with the city. The lenders had previously argued that state law protects them from being punished for an alleged conflict of interest they didn’t know about.

Voice of San Diego is a nonprofit news organization supported by our members. We reveal why things are the way they are and expose facts that people in power might not want out there and explain complex local public policy issues so you can be engaged and make good decisions. Sign up for our newsletters at voiceofsandiego.org/newsletters/.