S
an Diego's costly failure with the 101 Ash St. office tower, which has cost taxpayers over $200 million and counting, can be attributed in part to the city's reliance on an appraisal paid for by the company marketing the property. Former Mayor Kevin Faulconer and the San Diego City Council leased the high-rise eight years ago without verifying the $67 million valuation prepared by Cisterra Development. The council is now considering new policies that would require independent appraisals before major real estate transactions.

    The proposed changes, which include measures to promote transparency and accountability, are a culmination of four separate reports issued by the city auditor since 2012. These recommendations aim to prevent future real estate failures like the Ash Street deal. The updated policies also call for clearer guidelines on acquisitions, stricter eligibility rules for nonprofits leasing public space, and economic disclosures from contractors or advisers who provide significant input.

    The changes were prompted in part by the scandal surrounding Jason Hughes, a former advisor to Faulconer who pleaded guilty to a misdemeanor conflict of interest charge after collecting $9.4 million in fees for his work on the Ash Street deal. The updated policies also require more complete staff reports and due-diligence checklists for notable leases and purchases.

    The city's independent auditor has issued several reports highlighting weaknesses in the real estate division, including a 2021 report that examined problem deals under the Faulconer administration. Despite these findings, many of the recommended policy changes have yet to be implemented. The San Diego City Council is expected to consider the updates this year, which could bring about much-needed reforms to the city's real estate practices.