San Diego city attorney, mayoral aides met with lobbyists over Ash Street litigation – The San Diego Union-Tribune

One of San Diego’s highest-profile lobbying firms has met privately with City Attorney Mara Elliott, her top lieutenants and two senior aides to Mayor Todd Gloria in an effort to resolve litigation over the ill-fated lease for the former Sempra Energy headquarters at 101 Ash St.

The confidential discussions with Southwest Strategies lobbyists came at the same time the company was raising tens of thousands of dollars in political donations for Elliott, Gloria and members of the City Council, according to public disclosures required to be filed with the City Clerk’s Office.

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Legal and political experts say the arrangement is unusual and questionable.

So far this year, Christopher Wahl of Southwest Strategies lobbied Elliott and two of her senior attorneys, the disclosures show. He also has met with Jay Goldstone, the city’s chief operating officer who reports directly to Gloria, and the mayor’s chief of staff, Paola Avila.

“Seek resolution of litigation regarding 101 Ash building,” the company’s lobbying disclosures say.

The records show Southwest Strategies was paid $16,000 for efforts to hash out a settlement in the Ash Street lawsuits.

The company listed its client as Lexterra, a law corporation run by San Diego attorney David Dick, according to California Secretary of State’s Office records. The Cisterra Development website also lists Dick as the company’s general counsel.

Cisterra is the middleman company that acted as the seller and landlord in the 2016 lease-to-own deal for the Ash Street property and for a similar contract for the nearby Civic Center Plaza.

Cisterra is a defendant in the city’s lawsuit to get out of its Ash Street and Civic Center Plaza deals. Until recently, Cisterra shared a Carmel Valley address with Lexterra, which told state regulators last week it is located in Point Loma.

Wahl said his client is Cisterra. He declined to explain why he cited Lexterra as the client on his most recent lobbying disclosures. He said it is not uncommon for his firm to lobby public officials on issues that are being disputed in court.

“Southwest Strategies frequently represents clients in complex public policy issues,” Wahl said in a statement. “These projects often involve litigation. For this matter, we have been retained as consultants to Cisterra’s lawyers.

“Due to client confidentiality policies and agreements, we cannot disclose the details of our work,” he added. “That said, we take our legal responsibility to comply with the law very seriously and fully report our lobbying activities.”

It’s not clear from the disclosures how many times Wahl and his employee, Kenneth Moore, met with Elliott, her associates James McNeill and Travis Phelps, or Goldstone and Avila.

The disclosures show Elliott and her assistants met with Wahl in the first three months of this year, along with Goldstone. In the second quarter of the year, Wahl met with Goldstone and Avila. The documents were filed between January and August and include disclosures between October 2020 and June 2021.

The records show the lobbying sessions were held at the same time Wahl and other Southwest Strategies employees raised more than $150,000 for council members, a committee opposed to the recall of Council President Jennifer Campbell, and for District Attorney Summer Stephan, who has opened a criminal investigation into the Ash Street transaction.

Wahl said the fundraising amounts were filed in error and pledged to amend the disclosures. He said the total amount raised this year was closer to $70,000.

“It appears (but I can’t tell yet because the city’s system does not provide receipts when you submit your filings) our office made a mistake,” Wahl said by email. “This is not the first time we have experienced problems with the city.”

Southwest Strategies’ lobbying report from the last three months of 2020, when the firm represented Cisterra directly, shows fundraising contributions to Elliott of $4,500 and $6,430 to Gloria. The same document shows the company raised $30,000 for the local Democratic Party, $8,250 for Councilman Joe LaCava and $11,718 for Councilman Sean Elo-Rivera.

Wahl and other Southwest Strategies employees also raised lesser amounts for other members of the City Council, the disclosures say. Those political contributions are significant because any settlement of the Ash Street litigation would have to be approved by the council.

Elliott said through a spokeswoman that there is nothing unusual about elected officials meeting with lobbyists to settle a legal dispute that is already in court.

“It is entirely appropriate for the city to meet with representatives of parties against which it is litigating,” spokeswoman Hilary Nemchik said in an email. “Such discussions are not only encouraged by the courts but are required at various stages of litigation.

“The city does not determine Cisterra’s representatives.”

Elliott said she has received campaign donations from hundreds of San Diegans — but the political contributions do not affect the way she performs her public duties.

“I was unable to self-fund my campaign like my opponent, so I did what most candidates do — raise money to support my candidacy and to advance my vision for the office,” she said. “My only allegiance is to the city I serve, and I work every day to protect the interests of its 1.4 million residents.”

The City Attorney’s Office did not respond to questions about whether its contracted lawyer in the Ash Street litigation attended the settlement discussions with Wahl.

Gloria spokesman Nick Serrano declined to answer questions about why the mayor’s chief operating officer and chief of staff have been meeting with lobbyists to resolve the Ash Street litigation.

He cited the lawsuits as the reason for the mayor’s silence, though it remains unclear why no lawyers for the city were listed as being at the meeting between the senior aides and lobbyists.

“Since your questions directly concern ongoing litigation, we’d refer you to the City Attorney’s Office for comment,” Serrano wrote in an email.

A spokesman for Cisterra declined to answer questions about the company’s arrangement with Southwest Strategies, except to say that it is legal.

“Cisterra complies with all applicable laws and regulations with our consultants and our public policy activities,” spokesman Eric Rose said in an email last week.

‘A political solution’

In addition to the city’s lawsuit against Cisterra and others involved in the Ash Street transaction, Elliott is defending a lawsuit filed by San Diego resident John Gordon.

Gordon filed a complaint last year that accuses city officials of violating state rules when they approved the 20-year lease for the high rise.

The plaintiff’s lawyers told The San Diego Union-Tribune that using a political lobbyist to mediate a legal dispute corrupts the process.

“It changes the discussion from ‘What is fair based on the law?’ into ‘What is politically expedient?’” attorneys Lawrence Shea, Michael Aguirre and Maria Severson said in a joint statement. “It fuels the perception that the city is looking for a political solution.

“It also doesn’t help public perception that this was done secretively to keep John Gordon’s legal team in the dark,” they said. “We can envision a settlement we will support, but it has to be on the legal merits.”

Other legal and political experts say the meetings with lobbyists are unusual — even if they do not violate a law or ethics rules.

Robert Fellmeth, of the Center for Public Interest Law at the University of San Diego, said city lawyers should avoid meeting with people not directly involved in legal cases because the discussions could compromise the integrity of the court proceeding.

“The municipality should not be negotiating with or through such third parties,” Fellmeth said. “It would be appropriate for the city to tell the lobbyist ‘Sorry, we cannot discuss this with you at all … The subject is inappropriate for extra-judicial disclosures while pending in court’.”

Scott Cummings, a UCLA law professor who specializes in legal ethics, said it was not typical for an elected city attorney to meet with lobbyists to discuss settling a case, even if plaintiffs and defendants both approve.

“It’s unusual that you would see a lobbyist between parties,” he said in an interview. “It does raise the appearance of impropriety, if not actual improprieties.”

Cummings said possible conflicts of interest can be waived under certain circumstances by clients in litigation, but it was potentially troubling that Wahl and other Southwest Strategies lobbyists were raising political donations for the city attorney and elected officials charged with approving any settlement offer.

“It gives me pause to know this specific lobbyist has made specific contributions to the lawyer representing the city that’s working on the case and is charged with resolving it in a way that’s in the best interests of the city and not the defendant,” he said.

Elliott first sued Cisterra a year ago this month, asking a judge to affirm former Mayor Kevin Faulconer’s decision to stop making the $535,000 monthly lease payments because the Ash Street building cannot be safely occupied due to asbestos and other issues.

The city’s lawsuit came two months after Gordon sued the city, Cisterra and others, demanding that tens of millions of dollars in rent payments be returned to taxpayers.

In June, Elliott amended her complaint, seeking to void both the Ash Street and Civic Center Plaza, alleging that Cisterra worked secretly with commercial real estate broker Jason Hughes to cheat the city.

Hughes was paid almost $10 million for his work on the two contracts even though he represented himself as a volunteer consultant to the San Diego mayor.

Attorneys for Hughes said their client informed city officials verbally and in writing that he would seek to be paid by other parties in the deals, but city officials dispute that.

Carl Luna, a political science professor at Mesa College who has been following the Ash Street case for several years, said he has never heard of an elected city attorney meeting with lobbyists for a defendant in a case filed by the city.

“City officials should immunize themselves from even the appearance of a conflict of interest in matters like this by refusing to meet with lobbyists representing interests in a city lawsuit,” he said. “Nothing forces them to take the meeting.”

Luna also said elected officials who accept political donations from lobbyists or their defendant-clients should recuse themselves from voting on matters related to the cases — “or at least not take campaign money from those parties during the lawsuit.”

Criminal investigation

Earlier this month, dozens of agents from the District Attorney’s Office executed multiple search warrants at Hughes’ home and office and the Cisterra headquarters in Carmel Valley. It was the first confirmation that the Ash Street matter is under criminal investigation.

Stephan campaign official Dan Rottenstreich said the political contributions that Wahl initially reported were overstated, but no amount of financial support would affect the ongoing criminal case.

“We had a fundraising event at which he was one of many hosts that raised about $4,000,” Rottenstreich said by email. “Regardless, San Diegans know that Summer Stephan is independent, unwavering and upholds the rule of law without regard to politics or privilege.”

The agents who executed the search warrants seized computers, documents and other materials. Affidavits in support of those warrants show that investigators believe state anti-corruption laws may have been broken.

Experts say executing warrants does not automatically mean that criminal charges are forthcoming. Investigations into complicated financial transactions can take months or longer to complete.

Southwest Strategies has a long history at San Diego City Hall, representing many local and national brands on policy issues ranging from medical marijuana and card clubs to vacation rentals and utility rates.

Wahl also was instrumental in helping Hughes get appointed special adviser to former Mayor Bob Filner, according to emails dating back eight years.

“I’m sure we’ll talk about this more tonight, but attached for your reference is a head shot of Jason Hughes, should Irene wish to include it with her news release distribution,” Wahl wrote to Filner aide Allen Jones in 2013.

According to prior disclosures from Southwest Strategies, Wahl represented the former owner of the 101 Ash St. office tower even before Hughes helped bring Cisterra into the negotiations.

In the summer of 2015, Wahl lobbied Faulconer and four of his senior aides on behalf of a company owned by Sandor Shapery, the majority owner of the former Sempra headquarters.

The purpose of the meetings were: “Securing an office space lease with the city of San Diego,” the disclosure states.

Wahl said his work for Shapery ended in September 2015, more than a year before the City Council approved the Ash Street lease with Cisterra.

He also said his work for Cisterra began with a separate project in 2018, and his efforts related to the former Sempra building did not start until 2020, more than three years after the Ash Street lease was signed.

“These are the facts period,” he said Friday in an email.

Shapery was alleged to be a “silent” partner with Cisterra in the lease-to-own Ash Street transaction with the city, according to the search warrant affidavit filed by the District Attorney’s Office investigator.

The former owner of the mid-century high rise said the deal was put together by a team of lawyers and accountants on both sides to make sure it was legal.

Wahl is scheduled to be deposed by Gordon’s legal team next month.