City Prepares to Sell First Batch of Land

Thursday, Jan. 11, 2007 | The city of San Diego has taken preliminary steps to sell 34 properties — including raw land, a mobile home park and La Jolla homes — in an offering that provides a glimpse of what the Mayor’s Office will be unloading as it begins to evaluate the city’s vast real estate portfolio.

Aides said Mayor Jerry Sanders aims to sell $20 million worth of property in each of the next five years as he attempts to manage the city’s fiscal crisis and that the posting was the first of what are likely to be many. Although the city charter forbids Sanders from using land-sale proceeds to directly fund such pressing issues as the $1.4 billion pension deficit or to pay raises for police officers, the additional money could go toward another expensive need on the mayor’s extensive wish list: infrastructure projects.

The city’s Real Estate Assets Department posted the 34 lots — deemed “surplus” by officials — onto its website recently. State law mandates that governments disposing of surplus land first make an offer to sell or lease the property to other local agencies involved in such activities as affordable housing, parks and transit.

The plots on the market include: city-owned homes from southeast San Diego to La Jolla; mismatched and road-side strips; the 74.9-acre Linda Vista Village Mobile Home Park; agricultural land in the Cleveland National Forest; 67.9 acres of undeveloped land near Chula Vista; a 3.2-acre lot in the Torrey Pines Science Park; and a U.S. Border Patrol building at the U.S.-Mexico border.

Many of the lots fall outside the city of San Diego’s boundaries.

Although the city has periodically sold parcels of land piecemeal, the postings appear to be the first broad land offering by the city in years. And the $20 million annual land-sales figure provided by city officials marks the first time the Mayor’s Office has articulated how much it plans to sell in city assets.

Any final land sales must be approved by the City Council on a case-by-case basis.

Jim Barwick, the city’s real estate director, said the postings are part of a comprehensive cataloging of the city’s 3,400 properties. He stressed that the postings do not mean the 34 properties will ultimately be sold.

“Whether we end up selling them or not will be determined in the future,” Barwick said.

Those that are considered surplus will be put on the market, he said. “Surplus in our mind means we don’t see a potential use for the city for these properties,” Barwick said.

Real estate analyst Gary London said he doesn’t disagree with the city selling land, but said any sale needs to be accompanied by a strategy other than simply the unloading of surplus land.

“This is a very OK process, but we need to know why they’re doing it. … Selling short because we have immediate cash needs is not the best way to put your assets to work,” London said.

Land sales have long been discussed as one of many remedies for the city’s financial troubles, which go far beyond its pension system.

Sanders, last fall, abandoned hope of using land-sale proceeds to fill the pension deficit after he was informed that the city charter prohibited such uses. Instead, he supported using land sales to help him on one of his newest pursuits — paying down more than $1 billion in deferred maintenance on the city’s aging infrastructure.

To that end, the mayor has floated a proposal to increase water fees by 29 percent and wastewater fees by 35 percent over the next four years to fund upgrades to both systems. The funds will be used to bring the systems into compliance with state and federal health and environmental orders and to replace the cast-iron pipes that are frequently the culprit of water-main breaks.

At least 23 of the 34 lots up for sale or lease are owned by the Water Department. Proceeds from the sales go to the department that owns the land, where they can only be used for infrastructure projects.

The Water Department, for example, has its own budget and operates separately from the city’s day-to-day budget. It makes annual payments for such things as the pension system and retiree health care in order to fund the costs of its employees. While land-sale proceeds can’t go directly into the pension system, they could help free up other funds within the department that would have otherwise gone to system repairs and upgrades.

A land sale “will help alleviate some of the rate increase,” Barwick said. “How much, I have no idea.”

In total, the Mayor’s Office estimates an $800 million-$900 million backlog in general infrastructure needs and another several hundred million between the water and wastewater systems. Both systems have had to dip into reserves to fund infrastructure projects because of the city’s financial troubles.

The city accumulated real estate for “years and years and years,” Barwick said, through such things as gifts or settlements and for projects that never happened. He classified many of the parcels as “nuisance properties” — vacant lots that accumulate trash, attract dumping and require cleaning several times a year.

“Whether the city had financial issues or not, we’d be pursuing these strategies,” he said.

While the properties on the block right now are small, Barwick said larger properties will be evaluated in the future. He said such properties as dedicated parkland and Torrey Pines would need to be approved by two-thirds of city voters.

Real estate officials are also looking to change the way in which they sell land. Council policy has mandated a public auction of land in the past; real estate officials hope to convince the council to put the properties on the standard real estate market through a broker with the hopes of reaching a wider audience.

The lots being offered to other government agencies for sale or lease include:

• A catalogue of slivers and scraps of land that are right-of-ways along intersections, roads or pipelines.
• The 74.9-acre Linda Vista Village Mobile Home Park, which abuts the eastern edge of Tecolote Canyon and hosts more than 200 permanent residences.
• Two- and three-bedroom homes in La Jolla at the following addresses: 7021 and 7023 Fay Ave., 801 Nautilus St., and 6216 Beaumont Ave., which is blocks away from Windansea Beach. Two-bedroom homes at 540 W. Laurel St. and 904 33rd St. are also posted for sale or lease, as well as a 900-square-foot home at 7629 Jamacha Road.
• A 3.2-acre lot at the Torrey Pines Science Park and a 42-acre lot at Campus Point Drive in Sorrento Valley. The undeveloped Campus Point Drive property is designated for use as a scientific research facility and 25 percent of the parcel is considered developable because of its irregular shape and topography. The city acquired the land in 1966.
• A 4.5-acre lot containing a Border Patrol building along the pedestrian border crossing in San Ysidro.
• The 4.6-acre Pacific Beach Reservoir, which is designated in the Pacific Beach Community Plan for low-density residential development (between two and five dwelling units per acre).
• Nearly 68 acres of vacant land in an unincorporated area of the county off Telegraph Canyon Road near Chula Vista that is planned for rural residential and single-family residential development.
• One-hundred-and-eighty acres of agricultural land east of Barrett Lake in the Cleveland National Forest.

Previously, the city has notified other agencies of the land sales solely with physical letters. This time, the department chose to post the properties on the Real Estate Assets Department website instead of sending out of any direct notification.

The postings have been on the website since November, Barwick said, and the city has yet to receive any interest from other governmental agencies. State law requires that the land be posted for 60 days before it can be offered to the public.

Barwick said City Council members would be provided with detailed background information on each property when it is slated to be sold, such as how the city acquired it, how much it paid and where any sales proceeds will go.

April Boling, who has served on a number of commissions examining city finances, said the city would otherwise need to be paying for maintenance on the land and could instead benefit from increase property taxes if sales occur.

“It just doesn’t make sense for a city to be holding property, keeping it off the tax rolls, if it doesn’t relate to its core duties,” she said. However, she warned against stretching to unload properties simply to meet a $20-million-a-year goal.

La Jolla attorney Pat Shea said selling these assets, which could be needed or helpful in the future, does little the cure the city’s systemic financial problems.

“They’re not going to have any problem selling this stuff. But it’s hard to know what the point of it is. Let’s say they pick up a few million bucks, now what?” he said.

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