101 Ash Street awaits City Council approval for affordable housing future

The 101 Ash Street affordable housing project is in the final stages of review, pending San Diego City Council approval on Tuesday afternoon to move forward and convert the vacant building into affordable housing. 

The project, if approved, would supply nearly 250 affordable housing units in the heart of downtown San Diego. With a variety of units ranging from studios to three bedrooms, the project would supply housing for a range of individuals making between 30% and 80% of the area median income. The property would also have a childcare center and additional retail space on the main floor.

“I look out of my office window and stare at this building on a daily basis, and I am very much looking forward to the day when instead of seeing an empty building we see one thats full of families and kids being dropped off at childcare in the morning, people stopping by the food hall for lunch,” said Counci member Sean Elo-Rivera in the July 2 Land Use and Housing committee meeting.

“There’s a lot of good that will come there, that’s important,” he said.

The project would convert the currently empty 101 Ash Street office building into an affordable housing complex through what’s called adaptive reuse, or converting a building meant for one thing into a building meant for another.

However, a flurry of mixed emotions surrounds the project, with many hesitant to move forward because of the property’s past, and others excited for the building’s new future.

Councilmember Kent Lee of District 6 said he looks forward to the conversion of the property and the space for affordable housing and childcare, but also “the opportunity to turn what has been part of a dark chapter in our past into something that does serve the public in a meaningful way.”

In 2017, the city signed a lease-to-own deal for the property, planning to use it as office space for city employees. But renovations proved costly and unveiled another issue — asbestos. The building was built back in 1966. 

In 2020, the city evacuated the building, halting renovations. Ultimately, San Diego acquired the building for $86 million, but additional costs ensued via lawsuits filed by construction workers and the annual building maintenance costs.

Currently, 101 Ash Street costs $2.55 million a year to maintain. This doesn’t include any renovation efforts, just the bare minimum maintenance to keep the building in shape. That comes out to just under $7,000 a day in maintenance costs for the city. 

Hoping to give the building a new future, the city is in talks with MRK Partners and Create Development LLC. After going through the Land Use and Housing Committee, the agreement has made its way to the City Council. 

The City Council meeting to approve the agreement is at 2 p.m. on July 29, the last meeting before the council enters a legislative recess through the end of August. 

The ground lease disposition agreement would establish a 60-year lease to MRK Partners, with building ownership returning to the city at the end of that time frame. The agreement puts MRK in charge of all renovation efforts and building management, including asbestos abatement. 

The president of Create Development is San Diego Planning Commission Chair Kelly Moden. According to the city’s Economic Development Department, the Independent Ethics Commission determined that there was no conflict of interest because the project did not have to go before the commission. 

The renovation cost is expected to exceed $200 million due to environmental hazards like asbestos, but mostly because of the conversion process. Shifting an office space into a residential building is no easy task. 

If approved by the City Council on Tuesday, the project would enter escrow. During this time, the developer, MRK Partners, would begin filing for tax credits, the primary way the company plans to cut costs. Many of the tax credits are competitive, so funding is not guaranteed for the project.

If the developer fails to secure funding within the 24-month escrow period, then either party can terminate the agreement. However, if the developer secures tax credits from the round of filings due the second week of September, construction and renovation could begin as early as the second quarter of 2026. 

In the meantime, the city would still be responsible for building maintenance until MRK breaks ground, a detail that council member Raul Campillo, of district 7, was not a fan of. 

“That seems a little problematic to me that we’re going to be, in essence, turning over the building so that they can move forward with all these things, but we’re still responsible for maintaining it until that point. That’s a detail I’d like to see fleshed out,” Campillo said in the Land Use and Housing meeting.

Campillo said he also understood the benefits of the project and that “one of the biggest upsides of moving forward with the project is that it will take that $7,000 a day, $2.55 million a year item off of our budget.”

Campillo seconded the motion to move the project forward to City Council approval, with the caveat that he’d be watching closely and reviewing the agreement thoroughly ahead of full council. He is still reviewing the agreement and has declined to comment at this point in time.

Once completed, the project would provide 247 affordable housing units. The majority of the units would be priced for families making low income, or between 60% and 80% of the area median income. Roughly 10% of the complex would be designated to those with extremely low income, or 30% of the area median income, and another 15% of the complex dedicated to those making between 40-50%  of the area median income.

The complex is expected to serve 625 to 800 San Diegans. 

Because the city will maintain ownership of the building at the end of the lease, it can choose to repurpose the building, find new operators, or dispose of the site, depending on what is best then.