While the uninhabitable 101 Ash St. office tower continues to cost San Diego taxpayers more than $6,000 a day, the only person held criminally responsible for the deal is now facing a possible civil penalty: the loss of his California broker’s license.
According to a document issued by the Department of Real Estate, broker Jason Hughes is being accused of violating state business practices due to his conflicting roles as an adviser to the city and a partner in the original transaction.
“The underlying facts include but are not limited to respondent, an appointed city adviser, participating in the making of a contract with the city of San Diego in which he personally profited,” states the filing, which is formally called an accusation.
“This crime is substantially related to the qualifications, functions or duties of a real estate licensee,” it adds.
The formal accusation, which is dated June 7 and was first reported by the Voice of San Diego, is the initial step in a civil process that could result in Hughes losing his state real estate broker’s license.
The regulatory proceeding, which is likely to take months to complete, could also result in lesser civil penalties. It is not yet clear how a license revocation would affect the Hughes Marino company.
Hughes, founder of the Hughes Marino real estate firm, pleaded guilty to a single misdemeanor conflict-of-interest charge related to his work advising the city on the 101 Ash St. transaction.
The city’s former real estate adviser has never spoken publicly about his crime. He did not appear in court when he formally entered his guilty plea to a misdemeanor charge in March.
Instead, a private defense attorney appeared on Hughes’ behalf, as is standard in misdemeanor cases.
Michael Attanasio, the attorney who represented Hughes through most of the criminal investigation, said he and his client look forward to the anticipated hearing before the Department of Real Estate.
“As was true in other forums, Mr. Hughes has nothing to hide and has cooperated fully with this istrative process,” Attanasio wrote in a statement.
“We do not believe there is any basis for revocation of Mr. Hughes’s license, nor does the DRE’s notice seek such relief,” he added.
Hughes collected more than $9 million in payments from landlord Cisterra Development for his work on leases the city approved in 2015 for the Civic Center Plaza and in 2016 for the Ash Street property.
After itting his guilt on the conflict-of-interest charge, Hughes was fined $400 and placed on one year of unsupervised probation. He also had to return $9.4 million to the city.
District Attorney Summer Stephan said the sole misdemeanor charge was the most severe case she could bring against Hughes, largely because Mayor Todd Gloria and the City Council agreed to buy out the leases for $132 million last year.
Gloria recommended the lease buyouts for both buildings even though the District Attorney’s Office was conducting an active criminal investigation into the relationship between Hughes and Cisterra principals Steven Black and Jason Wood.
Hughes signed a secret agreement with Cisterra in 2014 to work on real estate deals to their mutual benefit, court records show. At the same time, Hughes was acting as a volunteer real estate adviser to then-Mayor Kevin Faulconer.
With help from Hughes, the city agreed in 2015 to lease the Civic Center Plaza at a cost higher than the building’s value. The next year, also under Hughes’ guidance, the city agreed to the 101 Ash St. lease.
He collected $5 million and $4.4 million, respectively, from the two contracts — payments San Diego officials said they did not learn about until the city sued Cisterra over the Ash Street property, which could not be safely occupied due to asbestos and other issues.
Under his plea deal, Hughes had to return the commissions he was paid by Cisterra. No one else was charged criminally in the long-running investigation.
The city agreed to pay $6.4 million a year under the original 20-year lease-to-own agreement for the 19-story Ash Street office tower.
The city’s new budget calls for $2.4 million a year in ongoing maintenance costs, an amount that comes to approximately $6,500 a day for a building that cannot be safely occupied.
Gloria and the City Council also agreed to issue $126 million in new bonds — about $7.4 million every year over the next 30 years — to pay for the lease buyouts.
