San Diego’s long-planned plan to turn the vacant 21-story tower at 101 Ash St. into income-restricted apartments has run into a money problem. City and development officials now say the ground-lease deal will not close this month as expected, putting a temporary halt to a project touted as a major affordable-housing win for downtown. The delay throws the mid-2026 construction schedule into doubt and puts fresh attention on the intricate financing behind one of the city’s most controversial real estate sagas.
According to The San Diego Union-Tribune, the real estate transaction between the city and 101 Ash Venture LP will not close this month because the development team did not secure final financing. The announcement halts an escrow closing that city leaders and developers had described as imminent.
Why the closing stalled
As outlined in the city's Keyser Marston Associates analysis, the conversion depends on a very tight stack of loans and tax credits. KMA's tables list roughly $63.4 million in a supportable permanent loan, about $87.8 million in low-income housing tax-credit equity and around $36.1 million in historic tax-credit equity. That slender mix leaves little room for anything to shift, which helps explain how one unresolved piece could be enough to push the deal past its planned June close.
How the deal was supposed to work
The City Council signed off on a 60-year ground lease to the development team last July to turn the tower into 247 income-restricted units, along with retail space and a childcare area, according to KPBS. City documents and local reporting pegged the retrofit and lease package at about $267.6 million, including roughly $40.7 million for asbestos abatement, and noted that the city would stay on the hook for about $2.55 million a year in maintenance while escrow remains open. Developers had planned to put together tax-exempt bonds, tax-credit equity and other gap financing so construction could start soon after closing; with the current delay, that schedule is now up in the air.
Why the city is watching closely
101 Ash has been a political and legal flashpoint for years, tied up in asbestos concerns, earlier lease-to-own disputes and litigation, a history documented in detail by Voice of San Diego. That track record means even a modest slip in timing is politically charged, since the tower has already cost taxpayers both time and money. With maintenance costs continuing to pile up, missing key financing dates increases pressure on city officials to show that the current plan can still work or to prepare a serious fallback option for the site.
What comes next
The ground-lease agreement gives the developer a 24-month escrow period to finish due diligence and lock in financing, according to the Office of the Independent Budget Analyst's presentation to the council. That window offers some breathing room to rework the financing stack, but the missed June closing heightens the risk that costs or market conditions will shift again before crews can get inside the building.
For now, the promise of nearly 250 affordable homes at 101 Ash is on pause while the city and developers try to close the funding gap. Neighbors, council members and housing advocates are likely to be looking for a revised financing blueprint and firm dates before they believe that ground will actually be broken.
