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San Diego real estate deals raise questions about property values, disclosures

Jeff McDonald, The San Diego Union-Tribune on

Published in Home and Consumer News

SAN DIEGO -- In the early days of 2017, as a new president was set to take office and the U.S. stock market began a historic rise that would only be felled years later by a deadly virus, San Diego Mayor Kevin Faulconer went real estate shopping.

He and his staff reached a 20-year lease-to-own deal for the longtime headquarters of Sempra Energy, one of the region's two Fortune 500 companies.

Two months later, at Faulconer's request, the City Council agreed to lease property in Kearny Mesa, where officials planned to open a second maintenance yard strictly for the city's fleet of firetrucks.

By mid-2017, the mayor and his Real Estate Assets Department director were backing the purchase of a low-rent motel in Nestor. The idea there was to move in scores of petty criminals with a history of drug use to keep them off the street.

And in early 2018, the city paid $7 million for a shuttered indoor skydiving center to help steer homeless people into housing and other public services.

Despite lofty ambitions, none of the projects came off as planned.


Instead, they were delayed by planning missteps, cost overruns, asbestos violations, litigation or assorted other setbacks.

The complications added tens of millions of dollars to the project costs and sparked several lawsuits. They also raised questions about the city's ability to manage the real estate assets it already owned -- and new investments the mayor is now considering.

"For as long as I can remember, the city's Real Estate Assets Department has had its share of problems," said Donna Frye, an activist-turned-politician who served nine years on the City Council.

"Whether it is hubris and their belief that they are the smartest folks in the room or simply because they don't want to be inconvenienced by following a public process is hard to know," Frye said.


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