The City of San Diego has stopped making rent payments on its highly controversial lease of a downtown property, in a move meant to address what's seen as a huge real estate blunder by the city.
The city signed a lease-to-own agreement to move employees into the former Sempra Energy office building at 101 Ash St. But the discovery of asbestos contamination rendered the building virtually useless. And the city is still on the hook for $535,000 in monthly rent payments.
San Diego's Chief Financial Officer Rolando Charvel sent a letter Tuesday to Cisterra Development, the company that brokered the deal.
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“The city is suspending its lease payments because the city cannot use the building for the intended purposes of its leasing and possibly for additional reasons,” Charvel said in the letter.
The letter also made mention the "negligent disturbance of asbestos," and it said the city was reviewing the lease agreement for its compliance with state law.
In a recent opinion article in The San Diego Union-Tribune, Sandy Shapery, the former owner of the building, argued the problem was not with the building itself or the asbestos. The problem, he said, was the city's remodeling of the property, which disturbed the encapsulated asbestos.
Mayor Kevin Faulconer issued a statement on the city's action.
"By suspending (rent) payment," he said, "the city will also have the ability to assess all financial and legal options to ensure taxpayers are protected and hold all parties accountable for their roles in this agreement.”
