The real estate broker sued by the city attorney’s office last week for having a financial interest in one of the two hotels he recommended for the city’s purchase last year said on Wednesday that senior officials were aware of – and approved – his investment prior to the closing of the transactions.
Jim Neil, who has been silent for months amid questions about the cost of the properties and his personal involvement in one of the deals, also said city attorney Mara Elliott had omitted critical facts and in had misrepresented others when she announced her lawsuit earlier this month.
“Sir. Neil informed the Housing Commission of his intention to purchase the shares prior to the transaction and was told that there would be no problem with these actions from the staff of the Housing Commission,” says a statement released by Neil’s public relations firm.
“The city attorney’s office and the Housing Commission were aware of this fact before issuing their press release,” the statement added, which did not include any evidence to support the claim.
The assertion was one of many points in the announcement from Neil’s public relations firm, Paragon Communications of West Sacramento.
The statement says Neil retained a legal defense team but did not identify the law firm. The PR firm did not respond to follow-up questions.
Neil also dismissed a claim by the city attorney’s office that the brokerage fees he collected exceeded the contract amount. The statement does not respond to the city’s claim that the city overpaid for the properties.
The city attorney’s office announced last week that it was suing Neil and Kidder Mathews Inc. for allegedly breaking state conflict of interest laws for their role in the November purchase of two hotels to help protect the homeless from COVID-19.
An Elliott spokesperson issued a statement in response to Neil’s claim, but the response did not say whether Housing Commission officials had been made aware or approved of Neil’s investment.
Spokeswoman Leslie Wolf Branscomb’s statement implied that there was no legal difference.
“Sir. Neil’s claim that he disclosed his unlawful conduct to Housing Commission staff is not a defense against California’s strict disclosure laws, which protect taxpayers from ethical breaches public officials, ”she said by email.
“The city is determined to recoup every public dollar illegally spent and find out more about these troublesome transactions through discovery and deposit,” Branscomb added.
San Diego Housing Commission spokesperson Scott Marshall did not respond to a request for comment on Neil’s claims on Wednesday. Likewise, the commission did not respond to the city attorney’s office trial last week.
Another Elliott spokeswoman said last week the city attorney had not approved hotel purchases. Instead, the deals were approved by the commission’s outside law firm, spokeswoman Hilary Nemchik said at the time.
The San Diego Union-Tribune reported in February that the two properties were bought by the city as part of assessments prepared before the pandemic, which lowered the rate in the hotel market across the country due to the lockdown. global.
The San Diego Housing Commission has agreed to pay just over $ 106 million for the pair of hotels, a 192-room Residence Inn in Mission Valley and a 144-room Residence Inn in Kearny Mesa.
The Mission Valley property on Hotel Circle was purchased for $ 67 million – or $ 349,000 per room – by far the highest cost per key of any hotel property traded in San Diego County last year, according to public records.
City housing officials have agreed to pay $ 39.5 million – nearly $ 275,000 per room – for the Kearny Mesa Hotel, making it the fifth highest cost per room for a hotel sold in San Diego County last year.
Real estate experts specializing in the hospitality industry have said hotel properties have lost up to 40% in value due to the pandemic-induced lockdown.
Four more Residence Inns have been sold in California since 2019 for an average cost per room of $ 227,000, all ahead of the March 2020 lockdown. City housing officials have said both San Diego properties are in good shape. condition and the sale price was fair.
In the lawsuit filed in San Diego Superior Court early last week, Elliott said the values of both properties had been inflated and one was sold for a higher price than necessary in an apparent attempt to increase the broker’s commission.
The lawsuit also accused Neil and Kidder Mathews of collecting brokerage fees that were higher than what was stipulated in the agreements. He said the fees were to be capped at $ 250,000, but noted that the city paid brokers $ 502,500 and brokers also received almost $ 600,000 from the seller.
The Housing Commission defended the broker’s fees in February, saying real estate experts had done a good job and the commission felt the payment was justified.
Marshall did not comment on the city attorney’s claim that the fees were excessive, but Neil’s public relations firm said the city insisted it take the commission on the property of the city. Circle hotel.
“It was the city that proposed that Mr. Neil’s commission on the purchase of the Circle hotel be paid by the city, in order to benefit the city,” the statement said. “Sir. Neil followed the instructions of the city attorney as to who would pay the commission and how it would be paid.
“The city has clear documentation on this but has chosen to ignore it,” the statement said.
Online news agency Voice of San Diego first reported in May that Neil had purchased 40,000 shares of a real estate investment trust that owned the Residence Inn on Hotel Circle.
Neil’s investment should have disqualified him from participating in the city transaction, housing commission attorneys said in a note to commissioners and city council, but the deal was struck nonetheless.
The broker’s public relations firm said on Wednesday that there had been no violation of state conflict of interest rules.
“Sir. Neil had no ownership interest in the company that directly owned the Hotel Circle property,” the broker’s PR firm said. “This company was a subsidiary (of the trust).”
The release also says Neil’s stake is less than 0.1% and falls under an exception to the section of the state government code that deals with conflict of interest.
The city attorney’s office’s conflict of interest claim in the Residence Inn transaction is similar to those in a separate lawsuit that Elliott filed earlier this summer in an ongoing litigation involving a vacant office tower at 101 Ash St.
The city argued that the lease-purchase agreement for this high-rise building and the nearby Civic Center Plaza should be canceled because real estate broker Jason Hughes received $ 9.4 million in undisclosed commissions for his help in these transactions.
Hughes also said, through his attorneys, that city officials were told he expected to be paid for his work on the deals, although then mayor Kevin Faulconer and his staff insisted that they were not aware of the commissions.
Neil’s statement on Wednesday touted his decade of service to the City of San Diego as a contract broker and pledged to vigorously fight the city’s lawsuit allegations.
“During his long career in San Diego, Mr. Neil has demonstrated an unwavering commitment to operating at the highest level of integrity and ethical standards,” it read.