DeMaio Report: Barbara Bry Fights to Save Taxpayers Millions in Bad Deal

San Diego taxpayers face millions in losses under bad deal devised by Kevin Faulconer and Todd Gloria.

Was it incompetence or corruption or a mix of both? That’s what city observers are asking in the wake of the truth emerging over a bad real estate deal concocted by Mayor Kevin Faulconer and former city councilman Todd Gloria.

It all started in 2009 when then-City Councilmen Kevin Faulconer and Todd Gloria both backed a controversial plan to have taxpayers fund the construction of a new $200 million City Hall complex in the middle of a recession. “Let’s spend $200 million on a new City Hall while we cut basic city services,” they said! Due to public outcry in 2010 the new City Hall project was eventually scuttled. 

Not to be deterred, by 2016 Faulconer and Gloria hatched a new plan: “If the voters won’t let us build a new City Hall for $200 million, let’s purchase a 55-year-old obsolete one for $250 million!” 

Faulconer arranged and Gloria motioned-to-approve a complicated “Lease-to-Buy” deal to take over the old Sempra Building downtown that was built in 1965 - even though Sempra and their landlords had disclosed publicly that the building was “functionally obsolete” and “an earthquake hazard” and required “aggressive asbestos management.”

Despite those damning disclosures, Faulconer and Gloria forced city taxpayers to agree to a one-sided deal that put all the liability on city taxpayers and no liability on the previous owners of the obsolete building. 

Worse, at the only city council hearing on the matter, Faulconer and Gloria represented to the public that the building only needed a simple $10,000 power-wash and would be move-in-ready! Also conveniently left out of the hearing record were required disclosures of the real owners-in-interest in the building (which were major campaign contributors to Faulconer and Gloria, of course.)

No sooner was the ink dry on the contract things went south.

After spending $6.5 million on move-in expenses and only spending a few weeks in the building, city staff had to abandon the building after they were “inadvertently” exposed to asbestos. But for this brief period the building has sat empty for almost FOUR YEARS! 

Instead of a simple $10,000 power-wash of the building that Faulconer and Gloria promised, city taxpayers have already shelled out more than $32 million in repair costs so far - and that’s not counting the lawsuits some city employees are pursuing because they were exposed to the asbestos. 

Bottomline: here’s what taxpayers are now on the hook for:

--Lease Payments: $127 million

--Repairs: $145 million

--Lawsuits: Unknown liability due to asbestos contamination

City Councilwoman Barbara Bry, who is now running for Mayor against Todd Gloria, was not only an early critic of the deal but is now proposing that the city renegotiate the deal to more favorable terms.

Bry may be on to something. In concocting the one-sided deal, Faulconer and Gloria chose to buy a building owned by some of their biggest campaign contributors. 

City Councilwoman Vivian Moreno invoked the word “fraud” in a hearing last week. Developers don’t like the idea of an investigation hanging over them. 

More importantly the developers at the heart of the deal - Cisterra Partners - have ongoing business and projects pending before the City. Confronted with a one-sided deal and few options within that day, Bry (a former businesswoman) may be thinking of a larger settlement that could benefit all parties.

Whatever the outcome this failed real estate boondoggle should make Kevin Faulconer and Todd Gloria non-starters for any political race they enter in the future. 

The best spin both can put on the deal is that it was just “incompetence” when it was more-likely good old-fashioned “corruption.”

Councilmember Barbara Bry appeared on the DeMaio Report to discuss the bad deal. You can listen to the full interview below:

DeMaio Report_Barbara Bry Interview

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