San Diego could be just weeks away from turning over its vacant and asbestos-ridden office tower at 101 Ash St. \u2014 a drain on city coffers for years \u2014 to the developer promising to transform the property into hundreds of apartments for low-income households.<\/p>\n
Tuesday, San Diego City Council members voted unanimously to approve the first amendment to the ground lease disposition agreement with developer 101 Ash Venture LP, meaning the city and developer can take the steps necessary to close on the high-stakes real estate transaction approved last year.<\/p>\n
The $254.7 million office-to-residential conversion project, recently rebranded as 107 Ash St., includes 252 apartments, with 249 units deed-restricted for families earning 30% to 80% of the area median income, or what\u2019s considered affordable housing. It also features 25,000 square feet of retail space and a 4,000-square-foot childcare center.<\/p>\n
The city is leasing the property to the 101 Ash group for 65 years at rate of $15,000 per year. It is also loaning the value of the building, or $45.6 million, to the developer. In total, San Diego will receive $145.1 million in compensation, although the net present value of the deal, which looks at the current value of future dollars, is $3.5 million.<\/p>\n
The approved contract changes<\/a> allow for the longer, 65-year lease term. The city is also now charging a higher, 5% compound interest rate on the city note and is requiring the developer to deed-restrict the apartments as affordable for the entire term.<\/p>\n \u201cThis project is taking a vacant office building downtown and converting it to much-needed, truly affordable housing in our urban core. And that isn\u2019t an easy task,\u201d Councilmember Stephen Whitburn, who represents downtown, said at the meeting. \u201cI appreciate the creativity of the developer and the Economic Development Department for working to ensure that this 100% affordable housing project actually comes to fruition.\u201d<\/p>\n 101 Ash Venture LP consists of three general partners: MRK Partners, Create Dev LLC and Pacific Southwest Community Development Corporation. Create Dev president Kelly Moden is the chair of San Diego\u2019s Planning Commission. The team is collecting $3 million in cash upfront and will pocket another $27.4 million over a 15-year period once the project is in operation.<\/p>\n With the council\u2019s action, the city will finalize the transaction documents as the developer readies its financing commitments for closing, city executive and deal negotiator Christina Bibler told the Union-Tribune. Bibler, who heads San Diego\u2019s Economic Development Department, previously said the deal could close by the end of the month<\/a>.<\/p>\n \u201cI\u2019m thrilled to have city council\u2019s approval to move this forward to closing and construction,\u201d Bibler said.<\/p>\n The developer, through spokesperson Margie Newman Tsay, expressed a similar sentiment.<\/p>\n \u201cWe are appreciative of the council\u2019s trust and confidence through this process. We are looking forward to getting started,\u201d she said.<\/p>\n Opened in 1968, the 21-story office tower at 101 Ash St. takes up a full city block in downtown San Diego and was the longtime home of Sempra Energy until 2015. After a 2017 lease-to-own deal went awry, San Diego bought the building, which had become plagued by asbestos contamination. The city paid $86 million in 2022 to acquire the Ash Street property as part of a controversial settlement agreement. The following year, the city offered the vacant tower for sale or lease alongside its other Civic Center real estate assets, but the solicitation process did not yield a deal.<\/p>\n