The City of San Diego has stopped making lease-to-own payments on the 101 Ash Street building, which is not occupied because of cancer-causing asbestos and other problems.
The 19-story building was intended to house over 1,000 city employees, but has been vacant most the past four years while the city pays $18,000 a day toward its purchase.
The city sent a letter to Cisterra Development, which negotiated the deal for the former Sempra headquarters, saying it is halting payments effective Sept. 1.
“The city has lost use of the building due, in part, to direct physical loss and damage to the premises, including widespread and negligent disturbance of asbestos,” the letter states.
Mayor Kevin Faulconer said in a statement that suspending payment gives the city “the ability to assess all financial and legal options to ensure taxpayers are protected.”
In August, the City Council voted 5-4 to request monthly updates on the status of the building and costs of possible next steps. Options could include expensive new repairs to the building, buying out the lease, or trying to renegotiate the lease.
The building has become a target in the race for Mayor, with City Councilwoman Barbara Bry accusing former Councilman Todd Gloria of making errors in negotiating the deal.
“It is now clear that this transaction, approved before I joined the City Council, was a product of mismanagement, incompetence, a lack of transparency, and perhaps worse,” she said last month, accusing Gloria of being “personally involved in orchestrating the 101 Ash Street purchase.”