A California appellate court has rejected the legal argument from taxpayer John Gordon that San Diego’s lease-to-own deal for the 101 Ash St. property violated the state constitution and should be reversed. But the opinion issued Friday by a three-judge panel of the 4th District Court of Appeal stopped short of saying the original 2016 agreement was legal. Instead, the appeals court judges said the issue was no longer debatable because Mayor Todd Gloria and a majority of the San Diego City Council decided to buy out the lease and settle a civil lawsuit before going to trial. Combined with ongoing bond payments and other costs, the lease buyout pushed the city’s investment in the 101 Ash St. property past $200 million for a building that still cannot be safely occupied. The 4th District judges said those costs had no bearing on their decision, which came one week after an appellate court hearing. “On appeal we independently conclude that the claims in Gordon’s operative complaint are moot because the lease ceased to exist under the settlement agreement,” the ruling states. A message at the top of the 26-page opinion notes that the decision is “not to be published in official reports.” The designation, which is discretionary on the part of appellate judges, means the ruling cannot be cited as precedent in future legal disputes. Lawyer Michael Aguirre, the former San Diego city attorney who represented Gordon in the long-shot lawsuit, said he intends to take his claim to the state’s highest court. “We hope to persuade the court to publish its opinion finding it to be lawful to use taxpayer funds to pay an illegal debt,” he said. “This will allow the California Supreme Court to decide the case.” The City Attorney’s Office, which defended the appeal at a hearing last week even though City Attorney Mara Elliott opposed the deal buying out the lease, did not immediately respond to a request for comment. Gordon, a restaurant consultant and long-time San Diego resident, sued the city in 2020, nearly four years after the City Council approved a recommendation from then-Mayor Kevin Faulconer to enter into a 20-year lease-to-own arrangement for the former Sempra Energy headquarters. In court filings, the plaintiff argued the lease was illegal because the city was receiving no direct benefit for its $128 million investment, due to the asbestos exposure and other problems that made it unsafe for city employees to occupy the 19-story building. By September 2020, Faulconer stopped making the $535,000 monthly payments under the legal theory that the deal violated the state constitution because the city was not benefiting from the lease. The next month, Elliott brought her own lawsuit against landlord Cisterra Development and lender CGA Capital of Maryland through trustee Wilmington Trust. San Diego “is not able to occupy any portion of the premises as envisioned by the lease,” the city’s suit asserted. “The premises are therefore unusable for the purposes intended and thereby confer no value to (the) city.” By 2022, however, as both the Gordon case and the city’s lawsuit inched toward trial, Gloria proposed a settlement with Cisterra and CGA Capital that called for taxpayers to spend $132 million buying out the Ash Street lease and a similar deal for the nearby Civic Center Plaza. Over the objections of the city attorney and three council members, the deal was approved. The appellate court said that was all they needed to reject the Gordon appeal. “As a result of the settlement of the city lawsuit, the lease terminated and the city was no longer obliged to make any further payments,” the court wrote in its opinion. “Thus … there is no longer any controversy on which ‘effectual relief’ can be granted.” The appellate judges said they never considered Gordon’s claim that buying out an illegal lease was itself illegal, or whether the mayor and council majority acted reasonably when they agreed to buy out the lease. “We deem it unnecessary to address other issues raised by the parties, including whether the lease complied with Section 18(a) (of the California constitution) and/or the city acted in ‘good faith,’” they ruled. The 4th District judges also said the fact that San Diego real estate broker Jason Hughes collected $9.4 million for his work on the Ash Street and Civic Center Plaza leases was not pertinent to their decision. Hughes pleaded guilty to a misdemeanor conflict of interest charge last year, the only criminal count filed by District Attorney Summer Stephan related to the city’s acquisition of the Ash Street property, which remains vacant. The lender, landlord and city are entitled to their respective costs of the appeal, the judges ruled, although the city’s settlement deal in 2022 included accepting liability for future legal costs. It was not immediately clear Friday if the city would seek to recover legal expenses from Gordon.