San Diego City Council on Tuesday, Sept. 15, moved forward with a plan to convert its troubled office tower at 101 Ash Street into 249 affordable housing units.
The council approved the general concept for the housing conversion last year. This vote tweaked details of the deal with 101 Ash Venture LP now that financing mechanisms and building plans are nailed down.
Under the 65-year lease, the city retains ownership of the building and will receive 5% compound interest on its value from the developer. More importantly, Norm Miller, a real estate professor emeritus at the University of San Diego, told the San Diego Union-Tribune, “the city is getting rid of a lemon.”
The 249 income-restricted affordable housing units will range from studios to three bedrooms, with an additional three manager units. The building’s ground floor will offer 25,000 square feet of retail and a 4,000-square-foot childcare center. An underground garage has 138 parking spots.
The 21-story building will also shed an address burdened by years of controversy in favor of a new one: 107 Ash St. The change means future housing will not share the moniker of a city scandal that cost taxpayers over $200 million and became a glaring example of the city’s miscalculated real estate deals.
“We all know the history, and this is an opportunity to move past that,” said Councilmember Kent Lee.
The city council entered a $128 million lease‑to‑own agreement in 2017, relying on city staff reports that the building only needed $10,000 in maintenance and a bit of pressure-washing. After spending nearly $32 million on a remodel, city staff moved into the building in 2019 only to be evacuated after high levels of asbestos were found inside. The building has sat vacant since 2020, with taxpayers paying $5 million annually for upkeep.
In 2022, the city purchased 101 Ash St. for $86 million to end litigation and move forward.
In recent years, independent appraisals have valued the property at $3.9 million, only due to its location downtown.
To find a use for the 21-story tower, the city council voted in July 2025 to let a developer lease the building and convert it to affordable housing. The past year was spent finalizing the plan and securing funding for the $254.7 million project. The money comes from eight sources, including HUD. The San Diego Foundation filled a gap when affordable housing credits fell short. That complexity in funding is partially blamed on the high cost of the conversion, which comes out to $1 million per unit.
“This is what it takes to provide 100% affordable building. It is not cheap. It’s an absurd process that we make developers go through,” said Council President Joe LaCava. “But it’s the only process that we have.”
Another factor adding to the expense: The difficulty of adding housing to an office building, which is never cheap because it includes overhauling the plumbing system to add bathrooms and kitchens to every unit. This case is only more complex due to asbestos mitigation.
“Converting an office building is challenging to do physically,” said Councilmember Stephen Whitburn. “I appreciate the creativity of the developer and the Economic Development Department for working to ensure that this 100% affordable housing project actually comes to fruition.”
While the city council unanimously approved the updated ground lease, several public commenters shared concerns about the plan, from asbestos abatement to financing.
City staff offered assurances that the reconstruction would extend the building’s life, and months of preparation from the builder assured the city this is the best way for the city to offload the building.
“We kind of dealt with this building before, kind of had assurances before,” said Councilmember Henry Foster III. “Let’s just make sure we are holding the parties accountable… as they are doing the work that they’re doing.”
