Not ‘done deal,’ but council approves lease of 101 Ash Street for mixed-use project

Ash St in downtown San Diego has been a source of debate for San Diego city leaders and candidates File photo by Chris Stone Times of San Diego The San Diego City Council Tuesday approved a -year lease with a developer to renovate the long-empty Ash Street building into hundreds of affordable housing units The mixed-use project by MRK Partners and cREate Growth will convert the existing -story office building into income- and rent- restricted units with three unrestricted manager s units In addition there will be square feet of retail space and square feet of commercial space intended for a childcare center The units will consist of studios and apartments of up to three bedrooms for families earning between and of the Area Median Income Rents would be capped at of income I am determined that we make smart decisions going forward reported Councilmember Stephen Whitburn The worst thing we could do is let this building sit there costing the taxpayers million a year A total of on-site parking spaces are part of the project proposal The proposed childcare center will be charged no rent so it can offer below-market rates according to the developers We saw not just vacancy we saw expected declared Kelly Mod n president and CEO of cREate We re ready to move promptly This is a moment to move forward not only to restore a building but to restore inhabitants trust When city employees began moving into the Ash building following a lease-to-own deal it was discovered that the property was unsafe for occupation due to asbestos The building was constructed in and served as the headquarters of San Diego Gas Electric from to and then by SDG E parent Sempra Resource from to The ground lease disposition agreement approved Tuesday provides for the construction of the project and includes low-income affordability covenants in compliance with the Surplus Land Act s affordable housing requirements according to city documents The project now enters a -month escrow period to ensure the developer meets all conditions such as financing design and permits Ash as it exists nowadays does not serve the general interest I do believe that this project is an opportunity to turn this site into affordable housing declared City Council President Pro Tempore Kent Lee I don t think this is a done deal we will see if they can get the funding San Diego is still responsible for million a year in maintenance on the building during escrow but will still own the property at the end of the lease term The developers are responsible for prevention maintenance and operations after escrow closes The cost of leasing and retrofitting the building is estimated at million including million to acquire the building million for asbestos abatement and demolition and million for rehabilitation The city stands to gain million from the developers over the program of the lease while not using any city funds for the project functionaries stated The prospective developer here is attempting to go above and beyond making this place a great place to live and these people won t have to sacrifice dignity disclosed Councilman Sean Elo-Rivera But like a moth to a flame people are opposed to any change hoping to see the city fail That s certainly not a reason not to build more housing Several speakers during the population comment period Tuesday urged the council to demolish the building The office of the Independent Budget Analyst announced the costs would be about equal around million to demolish or to retrofit MRK Partners and MKAFF Housing will begin filing for competitive tax credits and grants in September to cover much of the funding If prosperous the developers anticipate beginning construction in spring A total of million is estimated to be received from federal low income housing tax credits from a supportable permanent loan and million from federal historic tax credits The office of the Independent Budget Analyst described the financing assumptions as reasonable to conservative Council members Raul Campillo and Marni von Wilpert were concerned about the city s hazard if the developers cannot secure funding According to Director of the Economic Advancement Department Christina Bibler the developers take on preponderance of the peril but if the funding does not materialize the city continues to be responsible for the building s maintenance Von Wilpert was once adamantly opposed to purchasing the building but mentioned she just demanded to get the property off our books while tentatively supporting the developers proposal Initially city staff during Mayor Kevin Faulconer s administration described the building as needing million worth of repairs and retrofitting The bill already exceeded million by when it was evacuated and an independent review conducted after the deal was inked estimates million more would have been necessary The council in accepted a much-debated -million settlement with Cisterra Advance and lender CGA over Ash Street Gensler will be the architect for the project and Swinerton the general contractor