A report released by the Office of the City Auditor (OCA) says the Faulconer administration didn’t follow best practices and failed to conduct significant due diligence before buying several properties, including the former Sempra building at 101 Ash Street.
The 117-page report also says the Faulconer administration “diminished” the city council’s oversite capabilities by failing to provide complete and accurate information about the Ash Street purchase as well as three other pieces of real estate, including Civic Center Plaza.
"Overall, we found that a serious lack of policies and oversight caused the City to miss or skip key steps in the acquisition process, and allowed the prior City Administration to leave out or misrepresent key information about building acquisitions when presenting them to the City Council and the public," the OCA said, summarizing its findings.
The audit was brought on by questions surrounding building purchases since 2015 and whether they were in the city's best interest. The OCA said it wanted to find out if city administration followed protocol when making major purchases, and if sufficient building acquisition oversight mechanisms were in place.
“They knew, clearly, a lot more than they were sharing with us,” said former city councilmember David Alvarez, who did not support the Ash Street purchase. “This was clear lying to the council and to the taxpayers to the tune of millions of dollars."
Alvarez believes some of the Faulconer administration’s actions were criminal and told NBC7 he hopes there is a criminal investigation.
NBC 7 reached out to the Faulconer for Governor campaign for a comment on the audit and specifically on the Ash Street purchase.
NBC 7 received the following written statement:
"The City of San Diego had a long-term need for additional office space and while the intention of purchasing a building was sound, the execution of this deal was flawed. We’ve recently found out a major reason why: the city’s outside real-estate expert was playing both sides of the transaction, he did not disclose this relationship or the millions he made on the transaction. Mayor Faulconer started a forensic audit to get to the bottom of this and stopped all payments to the seller. He continues to fully support the City’s sustained efforts to hold accountable anyone who wrongfully profited off of taxpayers." - John Burke, Communications Director
To view the full report, click here.