San Diego housing officials to relaunch assessment of hotels they suspended last year

The San Diego Housing Commission will initiate an appraisal for a hotel the city purchased in 2020, it told Mayor Todd Gloria and city council members on Tuesday, saying a settlement brokered by the district attorney city, Mara Elliott, left key questions unanswered.

According to a letter from the two commissioners to San Diego’s elected officials, the review of the sale price of the Hotel Circle property began last year, after the San Diego Union-Tribune revealed that the valuation on which the commission s supported for the $67 million purchase was based on a pre-pandemic assessment.

Hotel values ​​plummeted in early 2020 as COVID-19 spread around the world and forced people to stay home. An expert told the newspaper that the city may have overpaid for the property by up to 40%.

The letter was sent a day after the city council ratified a settlement negotiated by Elliott for the past year and more.

The correspondence said it was important for an independent appraiser to complete the appraisal, because the settlement reached by the city attorney’s office was only for the excessive fees paid to the broker – not the purchase price of the property. ‘hotel.

“These units will remain permanent affordable rental housing for at least 55 years,” states the letter signed by commission chair Eugene “Mitch” Mitchell and vice chair Ryan Clumpner. “In addition, they support the Community Homelessness Action Plan for the City of San Diego by providing additional permanent solutions to address housing needs identified by the plan.”

But commission officials also noted that the review by the city attorney’s office did not address key aspects of the purchases.

“However, questions remain about the valuation and purchase price of the Hotel Circle property,” Mitchell and Clumpner wrote. “Therefore, a new valuation and a valuation of the previous valuation of this property will help address these issues and support SDHC’s core value of transparency and being good financial stewards.”

Neither the mayor’s office nor council chairman Sean Elo-Rivera’s office responded to a request for comment on the commission’s letter.

When Elliott announced the lawsuit 13 months ago, she didn’t focus on allegations that the city overpaid for the Hotel Circle property. Instead, she accused the defendants of violating state anti-corruption rules, though the settlement does not address those charges.

This week, the city attorney’s office said it encourages the commission to pursue any review it deems necessary to protect the public interest.

A spokeswoman for Elliott said all council members and housing commissioners were aware of the scope of her lawsuit. She also said commissioners should take responsibility for their own decisions.

“Nothing that our office has assumed responsibility for the operations of SDHC or relieved the SDHC Board of Commissioners of its fiduciary duty to do whatever it deemed necessary to remedy alleged deficiencies in its review or procedures,” said spokeswoman Leslie Wolf Branscomb via email.

Elliott announced last month that it had reached an agreement with realtor Kidder Mathews and agent Jim Neil regarding the city’s 2020 acquisition of the 192-room Residence Inn on Hotel Circle in Mission Valley.

The city attorney’s office says Neil improperly purchased 40,000 shares of the company that owned the hotel he recommended the city acquire, an investment that wrongfully earned him $350,000 or more.

He also received $502,000 in commission from the sale of the hotel and nearly $600,000 in fees for his work on the city’s purchase of another Residence Inn in Kearny Mesa for $39.5 million. , Elliott announced in its press release.

The agent and brokerage said they had done nothing wrong and agreed to the settlement because it would have been more expensive to litigate the claim.

The settlement, which Elliott announced without first notifying the city council, required Neil and Kidder Mathews to repay $1 million – $845,000 to the housing commission and $155,000 to the city.

The city attorney’s Aug. 4 press release announcing the settlement drew heated comments at Monday’s council meeting, when council members formally approved the deal.

Some board members said they would have appreciated hearing about the deal before it was announced publicly. Elliott said she did the right thing and the board treated her differently than her male predecessors.

“The rules that have been applied to me are very different from those of my predecessors,” she said at Monday’s meeting. “And I note for the record that I am the first woman to hold this position.”

According to Mitchell and Clumpner’s letter, the commission ended its external assessment of the Hotel Circle property only after the commissioners escalated the issue to the City Housing Authority, which oversees the commission as a city council.

Council members then ordered the city attorney’s office to take legal action against Neil and Kidder Mathews.

“At that time, SDHC no longer had the authority to obtain an assessment of the previous assessment and ceased obtaining the new assessment,” the two commissioners wrote in their letter.

“Out of respect for legal process and to avoid interfering with ongoing litigation related to this property, SDHC has not pursued the re-appraisal and previous appraisal at this time.”

Mitchell and Clumpner said they expected the legal review to include an analysis of the commission’s valuation and agreed-upon purchase price, and that they only recently learned of the legal strategy of the city ​​attorney.

“The SDHC Board of Commissioners recently learned that the actual scope of the investigation that the City Attorney’s Office determined was necessary for purposes of litigation focused solely on the broker’s contribution or lack of contribution to the ‘assessment,’ they wrote.

Additionally, “the city attorney’s office determined that the broker’s actions did not affect the assessment or value of the property,” they said. “SDHC will now proceed with its original intention to obtain a new valuation and assess the previous valuation.”

Elliott’s office said housing officials could have done their assessment last year.

“We disagree that ‘SDHC no longer had the authority to obtain a rating from the previous rating’ and we don’t know where they got that impression from,” the door said. -word Wolf Branscomb.

“The questions they raise could have been asked before they voted,” she added. Nevertheless, “we look forward to seeing the results of their review.”

The valuation of the property is expected to be completed later this year.

Comments are closed.