San Diego rejects local businessman’s $10M offer to buy 101 Ash, convert it to homeless housing

San Diego Mayor Todd Gloria and other city officials rejected an offer to sell the troubled 101 Ash St. building for $10 million to a local businessman who planned to spend tens of millions more to transform the property into 800 units for homeless people.

The project, one of three that officials had under consideration for the long-vacant former Sempra Energy headquarters, would have opened by early 2026, according to project bidder Leonard Bloom.

He said it also would have relieved the city of millions of dollars a year in maintenance and security costs as well as future liabilities related to the asbestos-ridden office tower.

But after months of negotiations with the mayor’s office and a closed-session discussion with the City Council, the supportive housing project that Bloom called Homelessness No More was passed over for two competing plans for rent-restricted housing.

“I approached the mayor seven months ago, but he won’t put the project out there,” said Bloom, a longtime sports mogul, developer and entrepreneur. “He tells the public that his first priority is the homeless, but that is not true.”

The project’s demise came as San Diego continues to face a crisis in homelessness. Records show the population of unhoused people is climbing by the month, and hundreds of existing shelter beds are due to close in coming months.

It also coincided with Gloria’s proposal to spend $1 billion or more on a massive shelter near Little Italy that has generated sharp criticism from city officials, nearby residents and some council members.

Aides to the mayor said they could not comment in detail on the Bloom proposal because it was part of closed-session discussions, as were two other bids that are still in the running for a permanent-housing project on the downtown property.

But mayoral spokesperson Rachel Laing did say that Bloom lacked experience in the housing and homelessness space and that his plan lacked specifics about financing, operations and other elements.

“In addition to being unable to demonstrate in any way the viability of this endeavor beyond the $10 million cash payment to the city, Dr. Bloom has no track record to evaluate on a project of this type or scale,” she said by email.

“Mayor Gloria appreciates the civic goodwill and spirit we assume was behind Dr. Bloom’s proposal, but ultimately he and the City Council are tasked with delivering the best outcome for the taxpayers of San Diego,” Laing added.

Federal records show Bloom was involved in a bankruptcy case filed in 2022 that resolved last month. The proceeding began as a Chapter 11 case, meaning it sought a reorganization of debts, but ended as a Chapter 7 filing, with thousands of dollars in obligations that were forgiven.

Bloom said the bankruptcy was not a personal filing but the result of a trustee relationship he entered into. He said he showed city officials and their consultants documents indicating that he had more than $12 million in cash on hand and access to millions more from business partners.

Emails obtained by The San Diego Union-Tribune show Bloom negotiated with mayoral adviser Jay Goldstone for months. The project also was vetted by the city’s property consultant, Keyser Marston, before it was brought to the council.

Emails show Bloom delivered a copy of his plan to each council member last summer.

“Our homeless project, presented to you today, requires no funds from the city of San Diego,” Bloom told the elected officials.

Council President Sean Elo-Rivera declined to comment on the Homelessness No More plan directly due to rules governing closed sessions, but he sought to assure constituents that he is committed to securing the best outcome for the city.

“San Diegans deserve to know that any transaction involving public property is in the best long-term interest of the city,” he said in a statement. “That is especially true for a property like this one, and each decision I make in this process will be guided by that goal.”

The project Bloom envisioned was geared to getting unhoused people into temporary quarters, where they could receive services before transitioning into more permanent housing.

The remaining two bidders — Affirmed Housing Group and a joint pitch from Create Dev LLC and MRK Partners Inc. — would remake the 19-story building into one-, two- and three-bedroom units of permanent affordable housing.

The terms proposed by the two remaining bidders were not clear.

Both Affirmed and Create Dev issued statements supporting the city’s effort and promoting their respective bids, but stopping short of providing details such as the number of units or timetable.

“We look forward to continuing the conversation with the city and delivering San Diegans,” the Affirmed statement said. “Our team is very excited about the potential to change the story of 101 Ash,” Create Dev wrote.

A 20-page business plan outlining the Homelessness No More effort called for retail and restaurant space on the first floors of the high-rise, along with showers, restrooms, a resident check-in area and some 59 studio apartments.

The third to 19th floors would have up to 39 units each, with common gathering space, food-preparation areas and places to eat. Each unit would be just over 200 square feet, including private kitchenettes and bathrooms.

Bloom incorporated Homelessness No More in August in the business-friendly state of Wyoming, government records available online show. He said he has filed papers to convert the company to a nonprofit.

In rejecting the Bloom proposal, the city all but committed to converting the Ash Street building to subsidized rent-restricted housing.

While such projects are required to remain rent-restricted for 55 years, offering low-income people affordable housing options for generations to come, they also take years to finance and develop.

Earlier this year, San Diego abandoned a nearly year-long negotiation with a different developer that had sought to renovate 101 Ash St. into residential units serving low-income people and families.

That company kept requesting additional subsidies the city was unwilling to grant.

Besides the $10 million Bloom offered San Diego to buy the Ash Street building, the sale would have relieved the city of more than $2 million a year in security and operating costs for the building.

A sale also would have returned the property to the tax rolls, generating $100,000 or more in new revenue to the public treasury every year.

Perhaps more importantly, Bloom said he would complete renovations and open the 800 apartments within 16 months. The supportive housing project would be kept financially viable with government grants and private donations he said he had secured, and he had created a  schedule to complete the work within 16 months of getting approved.

“I’ve done a lot of construction,” he said. “I know how to do renovations. As far as serving the homeless, I’ve done work for children in Virginia, and I’ve been involved in senior care facilities.”

The decision to dismiss the Homelessness No More offer was made late last month.

Hundreds of shelter beds are due to be removed from the city’s existing inventory over the coming months. At the same time, more people lose their housing every month than move into supportive or permanent housing, records show.

Meanwhile, Gloria is still promoting his plan for a massive new shelter north of downtown.

The proposed temporary shelter at the corner of Kettner Boulevard and Vine Street would provide up to 1,000 beds inside an abandoned warehouse near San Diego International Airport.

It remains under negotiation, six months after Gloria pushed for a quick approval from the City Council. A green light from the council has been delayed over worries about the project’s cost, safety questions and legal risks.

Gloria’s initial plan called for a 35-year lease for the warehouse at $3 million per year, with annual 3 percent increases. Adding in $30 million or so in yearly operating costs pushed the Kettner and Vine project past $1 billion over the next three-plus decades.

Bloom is a longtime San Diego businessman with a colorful history.

He was a standout high school athlete who was once recruited by the Chicago White Sox. He also ran track but traded his chance to compete for a spot on the U.S. Olympic team for dental school.

Bloom made his fortune in orthodontics and later owned the San Diego Conquistadors before the American Basketball Association merged with the NBA in 1976.

Three years earlier, he signed Wilt Chamberlain to the Conquistadors, but legal squabbles between the two leagues prevented the 7-foot, 1-inch icon from taking the court for the San Diego club.

Bloom also owned the Los Angeles Sharks professional hockey team, founded the World TeamTennis league with legend Billie Jean King and for decades managed sports and entertainment venues through his investment and development arm, U.S. Capital.

The 101 Ash St. tower has been a public embarrassment for the city of San Diego for years.

Former Mayor Kevin Faulconer pushed the City Council to approve a 20-year lease-to-own agreement in 2016. Without conducting an assessment of the property’s condition, San Diego agreed to pay $128 million over 20 years to use the building for city employee work space. It had been appraised at just over $67 million.

Much of the building’s infrastructure turned out to be decrepit and in need of upgrades, and a badly botched renovation effort exposed asbestos throughout the building and delayed any occupancy for years.

Later, the lease-to-own agreement would lead to criminal charges, after a real estate broker collected millions of dollars for his consulting work on the deal. He would plead guilty to a misdemeanor charge and repaid the city $9.4 million.

While the agreement was mired in civil litigation, Gloria proposed a buyout for the full value of the lease — and a majority of the City Council agreed, against the advice of City Attorney Mara Elliott.

In addition to the $70 million-plus in cash that San Diego paid for the unusable property, the bonds issued to finance the purchase will cost the city more than $7 million a year for three decades.

It is not clear when the city will decide which of the two remaining bidders might be selected to redevelop the 101 Ash St. tower, if it chooses either.

Once that choice is made, the city is likely to enter negotiations while the developer nails down financing and tax credits. That process could take months or longer.