101 Ash Street Secures $146M for 247 Affordable Units: What Downtown Condo Owners Need to Know
TL;DR: 101 Ash Street Gets $146M for Affordable Housing Conversion
On December 19, 2025, the California Debt Limit Allocation Committee awarded $146 million in federal subsidies to transform the asbestos-ridden 101 Ash Street office tower into 247 affordable apartments—downtown's largest office-to-residential conversion. Construction starts late 2026 after escrow closes. For downtown condo owners within 2-3 blocks, this creates a decision window: sell before construction begins and avoid 12-18 months of disruption, or hold through the transformation betting on long-term neighborhood strengthening. Academic research shows affordable housing typically has neutral to positive effects on property values. Cash buyers offer 7-14 day closings for strategic exits.
San Diego's most controversial building just took a major step toward redemption. On December 19, 2025, the California Debt Limit Allocation Committee awarded $146 million in federal subsidies to transform the asbestos-ridden 101 Ash Street office tower into 247 affordable apartments—the largest office-to-residential conversion in downtown San Diego's recent history.
For the thousands of condo owners living within a half-mile radius in East Village, Cortez Hill, and Core-Columbia, this $252 million project by MRK Partners represents both opportunity and uncertainty. Construction is expected to begin shortly after escrow closes in mid-2026, adding significant affordable housing density to downtown's core while potentially impacting property values, traffic patterns, and neighborhood character.
Whether you're a downtown homeowner evaluating your options or an investor reassessing your portfolio, understanding the timeline and radius of impact is critical. Some owners will choose to sell before construction begins in late 2026, while others will hold through the transformation betting on downtown's long-term strengthening. Cash buyers offer a particularly attractive exit strategy for those seeking certainty in an uncertain market, with closings in as little as 7-14 days.
The 101 Ash Street Story: From Scandal to Affordable Housing Solution
The 101 Ash Street saga is one of San Diego's most expensive political and real estate failures. Built in 1966 and occupied by San Diego Gas & Electric until 2015, the 21-story office tower became a cautionary tale when Mayor Kevin Faulconer's administration arranged a $128 million lease-to-own deal in October 2016.
City officials told the City Council that the building was in excellent condition and required little more than a $10,000 power scrubbing before 800 employees could move in. According to NBC 7 San Diego's investigation, the reality was starkly different. Within weeks of closing the deal in January 2017, city officials learned the property needed far more extensive repairs than anticipated—and was riddled with asbestos that was being disturbed with nearly every renovation.
By late 2019, the city began moving employees into the building despite ongoing asbestos violations from San Diego County health officials. In January 2020, county officials ordered a full evacuation following the discovery of substantial amounts of asbestos inside. The building has remained vacant ever since, costing taxpayers more than $58 million in lease payments and renovation costs while producing zero functional office space.
The criminal investigation that followed revealed real estate broker Jason Hughes pocketed $9.4 million for facilitating the sale—despite presenting himself as a volunteer helping the city address its real estate needs. In March 2023, the City Council approved a settlement requiring Hughes to return the full $9,433,872.30 he earned from the transaction.
Now, five years after the evacuation, 101 Ash Street is getting a second chance. On December 19, 2025, the project secured the critical federal funding needed to move forward, marking a turning point from scandal to solution.
The $146 Million Funding Breakthrough: How the Numbers Break Down
The California Debt Limit Allocation Committee's December 19, 2025 decision unlocked $146 million in combined federal subsidies—the financial catalyst needed to transform 101 Ash Street from vacant eyesore to functional affordable housing.
According to the San Diego Union-Tribune, the funding breaks down as follows:
Funding Structure
- Tax-Exempt Bonds: $63.8 million in tax-exempt bond allocation, providing low-cost construction financing
- Tax Credit Equity: $82.2 million in tax credit equity, generated from $9.6 million in federal low-income housing tax credits annually for 10 years (valued at 86 cents per dollar)
- Total Federal Subsidy: $146 million combined
The total project cost is estimated at $252 million, meaning the federal subsidies cover approximately 58% of the conversion. The remaining funding comes from multiple sources:
- City of San Diego Ground Lease: $45.6 million (appraised building value), structured as a 60-year lease with the 101 Ash Venture LP development entity paying just $15,000 annually in base rent (increasing 3% yearly or with CPI)
- Federal Historic Tax Credits: $34.8 million (pending National Park Service historic designation approval)
- Developer Equity and Additional Financing: Approximately $25.4 million to close the remaining gap
MRK Partners president Sydne Garchik told the Union-Tribune the team is "ahead of schedule, and we're doing exactly what we said we were going to do." Escrow is expected to close before the end of June 2026, with construction starting shortly thereafter.
Project Specifications: 247 Units Targeting 30-80% AMI
The 101 Ash Street conversion will create 247 deed-restricted affordable apartments plus three unrestricted manager units, making it one of the largest 100% affordable housing developments in downtown San Diego.
Unit Affordability Breakdown
All 247 units will be restricted to families earning between 30% and 80% of San Diego's Area Median Income (AMI). According to U.S. Department of Housing and Urban Development figures, the 2025 San Diego AMI is $130,800 for a household of four.
Here's what that means in practical terms:
- 30% AMI (Extremely Low Income): $49,600 for a family of four, or $34,750 for a single person
- 80% AMI (Low Income): Approximately $104,640 for a family of four
Rents will be capped at 30% of household income, creating deeply affordable options in one of California's most expensive housing markets. For a family of four at 30% AMI, maximum monthly rent would be approximately $1,240. At 80% AMI, maximum rent would be approximately $2,616.
Additional Amenities
- Retail Space: 25,000 square feet of ground-floor retail, potentially including groceries, restaurants, or services
- Child Care Center: 4,000 square feet dedicated to child care facilities, addressing a critical need for downtown working families
- Manager Units: Three unrestricted apartments for on-site building management
The project represents a significant expansion of affordable housing inventory in downtown San Diego, where condo prices dropped 5.1% through Q3 2025 and the median condo price stands at approximately $660,000—far out of reach for families earning 30-80% AMI.
Property Value Research: How Affordable Housing Impacts Urban Neighborhoods
The question on every downtown condo owner's mind: Will 247 affordable units hurt my property value?
The research is surprisingly clear—and counter to many people's assumptions. According to extensive academic studies, affordable housing in urban areas typically has either neutral or positive effects on surrounding property values.
Urban Institute Alexandria Study (2022)
Researchers found that affordable units in Alexandria, Virginia were associated with a small but statistically significant increase in property values of 0.09% within 1/16 of a mile—roughly one city block. The study specifically examined dense urban environments similar to downtown San Diego.
National LIHTC Analysis
An April 2022 Urban Institute white paper found that Low-Income Housing Tax Credit developments resulted in immediate increases of 3.8% in nearby property values, according to a comprehensive 2007 study. The same research noted that more than seventeen studies conducted since 1963 in cities including Denver, Minneapolis, Philadelphia, and Portland found either neutral or positive effects.
Orange County Study (2022)
University of California Irvine research concluded that affordable housing siting does not negatively affect housing prices in Orange County, with modest increases in both sales prices and price per square footage—particularly in higher-poverty areas.
Context Matters
Two important nuances emerged from the research:
- Quality and design matter: Well-executed affordable housing projects with good design, professional management, and community integration minimize any potential negative impacts.
- Neighborhood income levels matter: Studies showed that affordable housing built in affluent areas sometimes showed small negative effects, while projects in moderate-income areas showed positive effects.
For downtown San Diego—a mixed-income urban environment with median condo values around $660,000 in Cortez Hill and East Village—the 101 Ash Street project likely falls into the "neutral to slightly positive" category, particularly given MRK Partners' professional development approach and the project's institutional-quality design requirements.
Downtown San Diego Market Context: Office-to-Residential Conversion Trend Accelerates
The 101 Ash Street conversion isn't happening in isolation. Downtown San Diego is experiencing a wave of office-to-residential transformations as post-pandemic work patterns fundamentally reshape urban cores.
According to commercial real estate data, downtown San Diego's office vacancy rate hit nearly 36% in 2025—one of the highest in the region. With Q3 vacancy in the high 20% range and future availability in the low 30s, building owners are scrambling to find alternative uses for empty towers.
Several major conversion projects are now underway:
- 707 Broadway: Vintage Housing purchased the empty skyscraper with plans to start construction in March on an office-to-residential conversion focused on low-income housing.
- 530 B Street: Encinitas-based Ambient Communities intends to convert vacant floors at 530 B Street into one-, two-, and three-bedroom residential units, working with architect Carrier Johnson + Culture.
- Tower 180 (180 Broadway): J Street announced plans to transform Tower 180 into a 560-key dual-branded Hyatt Place and Hyatt House hotel in one of Southern California's largest office-to-hospitality conversions, costing approximately $250 million.
This wave of conversions represents a fundamental shift in downtown's character—from a primarily commercial district to a mixed-use, 24/7 residential neighborhood. According to Voit Real Estate Services, office conversions are gaining momentum due to rising vacancy rates, low multifamily vacancy rates in Southern California, falling prices of obsolete office buildings, changes to zoning rules, and government incentives.
For downtown condo owners, this trend cuts both ways. On one hand, increased residential density strengthens the neighborhood's vitality, supports retail businesses, and creates a more walkable urban environment. On the other hand, the construction phase for multiple simultaneous projects may create cumulative impacts on traffic, noise, and quality of life from 2026 through 2028.
Impact Radius Analysis: Which Downtown Neighborhoods Are Most Affected?
101 Ash Street sits at 101 Ash Street in downtown San Diego's Columbia district, bordered by East Village to the east, Cortez Hill to the north, and the waterfront to the west. Understanding the geographic radius of impact is essential for downtown property owners evaluating their options.
Based on urban planning research and the Alexandria study cited earlier, here's how proximity affects impact:
0-0.25 Miles (1-2 Blocks)
Properties within 1-2 blocks of 101 Ash Street will experience the most direct construction impacts from late 2026 through completion in 2027-2028. This includes:
- East Village condos along J Street, Island Avenue, and Market Street
- Columbia district properties near B Street and C Street
- Portions of Cortez Hill near the western edge
Expected impacts: Construction noise, truck traffic, street parking disruption, visual impacts from construction staging. These are temporary effects during the 12-18 month construction window. Long-term property value impacts in this radius are typically neutral to slightly positive based on research, assuming professional project management.
0.25-0.5 Miles (2-5 Blocks)
Moderate proximity zone includes:
- Central East Village properties
- Most of Cortez Hill
- Core-Columbia neighborhoods
- Northern portions of Gaslamp Quarter
Expected impacts: Minimal construction impacts. Potential long-term benefits from increased downtown residential density supporting local businesses and street activity. Property value effects in this range are typically neutral.
0.5-1 Mile
Lower-impact zone includes:
- Little Italy
- Marina District
- Southern Cortez Hill
- Eastern East Village near Petco Park
Expected impacts: Negligible direct construction effects. Long-term impacts nearly unmeasurable based on distance decay patterns in urban research.
The key insight: If you own property within 2-3 blocks of 101 Ash Street, you'll experience temporary construction disruption from late 2026 through 2028. If you're planning to sell anyway within the next 2-3 years, selling before construction begins may be strategically advantageous. If you're holding long-term (5+ years), the construction phase becomes a minor blip in your ownership timeline.
Cash Buyer Solution: Strategic Timing for Downtown Exits
For downtown condo owners within the impact radius, timing is everything. The mid-2026 escrow closing followed by late 2026 construction start creates a narrow window for strategic decisions.
Scenario 1: Sell Now (Before Mid-2026 Escrow Closing)
Advantages:
- Capture current equity before any construction-related market uncertainty
- Avoid 12-18 months of construction noise, traffic, and visual impacts if you're within 2-3 blocks
- Exit while downtown condo market is still relatively stable (5.1% decline through Q3 2025, but no freefall)
- Eliminate risk of concurrent construction projects at 707 Broadway and 530 B Street creating cumulative impacts
Disadvantages:
- Miss potential long-term appreciation if downtown strengthens post-conversion
- Lose opportunity to benefit from increased residential vitality and retail support
- Exit during a softer market period (median condo values down 2% year-over-year in Cortez Hill)
Scenario 2: Hold Through Construction Cycle (2026-2028+)
Advantages:
- Bet on downtown's long-term transformation from office district to vibrant residential neighborhood
- Benefit from research showing affordable housing typically has neutral to positive long-term effects on property values
- Avoid selling in current soft market, waiting for potential recovery
- Capture equity after 101 Ash Street, 707 Broadway, and other conversions complete and neighborhood stabilizes
Disadvantages:
- Endure 12-18 months of construction impacts if within 2-3 blocks
- Risk that multiple concurrent downtown projects create extended disruption through 2028
- Uncertainty about whether office-to-residential conversions will successfully revitalize downtown or oversupply housing market
Why Cash Buyers Provide Strategic Advantage
For owners choosing Scenario 1, cash buyers offer unique benefits:
- Speed: 7-14 day closings versus 30-60 days with traditional financed buyers, allowing you to exit before construction begins
- Certainty: No financing contingencies, appraisal gaps, or buyer credit issues that could derail sales in a softening market
- Convenience: No repairs, staging, or open houses required—particularly valuable for investment properties or owners who've already relocated
- Timing Control: Flexible closing dates allow you to coordinate with your next move
The decision ultimately comes down to your personal circumstances: investment timeline, tolerance for construction disruption, confidence in downtown's long-term trajectory, and alternative opportunities for your equity.
Frequently Asked Questions
When will construction actually begin on 101 Ash Street?
According to the San Diego Union-Tribune, escrow is expected to close before the end of June 2026, with construction starting shortly thereafter. This means late summer or fall 2026 is the most likely construction start date, with completion estimated in 2027-2028 depending on final timelines and any permit delays.
How close to 101 Ash Street do I need to be for my property to be affected?
Research on urban affordable housing impacts shows effects follow a distance decay pattern. Properties within 0-0.25 miles (1-2 blocks) will experience the most direct construction impacts during the 12-18 month build period, including noise, traffic, and visual disruption. Properties 0.25-0.5 miles away see minimal construction effects, while properties beyond 0.5 miles typically experience negligible impacts.
Will 247 affordable units in downtown cause my condo value to drop?
Multiple academic studies suggest no. Research from the Urban Institute, University of California Irvine, and other institutions found that affordable housing in urban areas typically has either neutral or slightly positive effects on nearby property values. An Alexandria, Virginia study found a 0.09% increase in values within one block of affordable housing. Quality matters—well-designed, professionally managed projects like 101 Ash Street minimize any potential negative impacts.
What does 30-80% AMI mean for downtown tenants?
AMI stands for Area Median Income. San Diego's 2025 AMI is $130,800 for a household of four. 30% AMI equals $49,600 for a family of four ($34,750 for a single person), while 80% AMI equals approximately $104,640 for a family of four. Rents are capped at 30% of household income, meaning a family at 30% AMI would pay maximum rent around $1,240/month, while a family at 80% AMI would pay approximately $2,616/month.
Should I sell my downtown condo before or after 101 Ash Street opens?
This depends on your proximity, timeline, and tolerance for construction disruption. If you're within 2-3 blocks of 101 Ash Street and planning to sell within 2-3 years anyway, selling before construction begins in late 2026 avoids 12-18 months of noise, traffic, and visual impacts. If you're holding long-term (5+ years), the construction phase becomes minor in your overall ownership timeline, and you may benefit from downtown's transformation into a more vibrant residential neighborhood.
How quickly can cash buyers close on downtown San Diego properties?
Cash buyers can typically close in 7-14 days compared to 30-60 days for traditional financed buyers. Because there's no mortgage contingency, no appraisal requirement, and no lender underwriting process, cash transactions move much faster. This speed is particularly valuable for downtown condo owners wanting to sell before the 101 Ash Street construction begins in late 2026.
Considering Selling Before Construction Begins?
Get a no-obligation cash offer within 24-48 hours. We buy downtown condos in East Village, Cortez Hill, Little Italy, and all downtown neighborhoods in as-is condition with flexible closing dates. Close in 7-14 days before 101 Ash Street construction impacts your neighborhood.
Get Your Free Cash Offer →The $146 million federal funding awarded December 19, 2025 transforms 101 Ash Street from San Diego's most embarrassing real estate scandal into a tangible affordable housing solution. The 247-unit conversion by MRK Partners represents the largest office-to-residential project in downtown's recent history and signals a broader transformation as office vacancy rates hit 36% and multiple towers pursue residential conversions.
For downtown condo owners, the implications are nuanced. Academic research consistently shows that urban affordable housing has neutral to positive long-term effects on property values, particularly when projects are well-designed and professionally managed. The real question isn't whether property values will collapse—they almost certainly won't—but whether the construction phase from late 2026 through 2028 creates short-term disruption worth avoiding.
Owners within 2-3 blocks of 101 Ash Street face the most direct decision: sell before construction begins and capture current equity with certainty, or hold through the cycle betting on downtown's long-term strengthening. Both paths have merit depending on your timeline, tolerance for disruption, and confidence in urban San Diego's trajectory.
For those choosing to exit before construction impacts begin, cash buyers provide a strategic advantage with 7-14 day closings, no financing contingencies, and flexible timing. Downtown San Diego is transforming—the question is whether you want to be part of that transformation or deploy your equity elsewhere.
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