San Diego’s 101 Ash Street Affordable Housing Project Enters Critical Phase with 2028 Target

After eight years of sitting vacant, San Diego’s 101 Ash Street building is moving closer to its transformation into affordable housing, with developers now providing concrete timelines for the ambitious $268 million conversion project.

Following the San Diego City Council’s unanimous approval late July of the redevelopment plan, the development team of cREate Development and MRK Partners faces a crucial 24-month window to secure financing and begin the complex conversion of the 21-story downtown tower into 247 affordable housing units.

The project’s immediate future hinges on a September application deadline for competitive state and federal tax credits that will provide $114.7 million of the total $267.6 million project cost. Kelly Moden, president of cREate Development, outlined an aggressive timeline that could see residents moving in by early 2028 if all milestones are met.

“We are planning to submit our application for tax credits and tax-exempt bond financing in September,” Moden told NBC 7 San Diego. “If we’re successful in September, folks would move in about two years after that timeframe, so I would say Q1, Q2 of 2028.”

The September deadline represents the project’s first major hurdle. If developers fail to secure financing or tax credits within the 24-month window, the ground lease agreement with the city can be voided, leaving San Diego to continue shouldering the building’s $2.55 million annual maintenance costs.

Before any construction can begin, the development team must tackle extensive asbestos contamination that originally derailed the building’s use as city office space. Moden estimates the abatement process will take six months once it begins, representing a $40.1 million portion of the total project budget.

“The abatement timeline is six months. That’s how long it will take to abate all of the floors in the building,” Moden said in the NBC 7 San Diego report, expressing confidence that the environmental challenges can be overcome despite the building’s troubled history with contamination issues.

The building, constructed in 1967 and formerly headquarters for San Diego Gas & Electric, has sat empty since the city evacuated it in 2020 due to environmental hazards discovered after signing a lease-to-own agreement in 2017.

The project comes as San Diego faces an unprecedented housing affordability crisis. With nearly 31,000 more people leaving San Diego County than arriving between July 2022 and July 2023, and median home prices reaching $1,050,000, the need for affordable housing has never been more acute.

The 247 units will serve households earning between 30 percent and 80 percent of the area median income, with the project averaging no more than 60 percent AMI. With San Diego County’s current AMI at $130,800 for a family of four, the apartments will house families making between approximately $39,240 and $104,640 annually.

“The units are deed restricted, which means they’re rent restricted on various income levels, but between 30 percent AMI up to 80 percent AMI, with the average on the entire project of no more than 60 AMI,” Moden explained to NBC 7 San Diego.

The complex financing arrangement includes significant protections for the city. Under the 60-year ground lease agreement, San Diego won’t receive immediate payment but will issue a seller’s note to recover costs plus 4 percent simple interest over 55 years, with no payments expected until year 15.

The deal reflects lessons learned from the building’s scandal-plagued history, which cost the city $86 million in a 2022 settlement after the original lease-to-own agreement collapsed. The city continues paying off bonds issued for the failed project while leasing alternative office space for millions annually.

Beyond securing tax credits, the development team must navigate complex permitting processes and coordinate with general contractor Swinerton and architect Gensler on the conversion work. The project’s $1 million-per-unit cost reflects the substantial challenges of converting a decades-old office tower while addressing environmental contamination.

The mixed-use development will include 25,000 square feet of retail space and a 4,000-square-foot childcare center, designed to activate the surrounding Ash Street corridor and serve the broader downtown community.

The 101 Ash Street project represents San Diego’s largest office-to-residential conversion as the city adapts to post-pandemic commercial real estate changes. It adds to recent momentum in affordable housing development, including $14 million in state funding awarded last week for 10 affordable housing projects countywide that will create nearly 1,000 new units.

For a city where nearly two-thirds of residents are considering moving due to high costs, the project offers both practical progress and symbolic hope. Success would transform the city’s most visible real estate failure into its largest affordable housing victory, while failure would extend the building’s expensive limbo indefinitely.

“I’m hopeful that people are surprised that we could pull it off and that we did it, and that people genuinely value what we’ve provided for the city and for the Ash Street corridor,” Moden told NBC 7 San Diego.

With the September tax credit application deadline approaching, the next few months will determine whether San Diego can finally turn the page on its 101 Ash Street saga.