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The city of San Diego’s Real Estate Assets Department, which is poised to unload $100 million in property over the next five years, is asking the City Council to break with its past practices and sell that land through a broker rather than a public auction.
In a report today to the council’s Land Use and Housing Committee, department officials say putting the properties on the traditional real estate market will increase exposure and spur multiple offers for properties — factors that the officials say will drive up the sale prices.
The City Council’s practice of selling land through public auctions limits its properties’ exposure on the market and minimizes the pool of potential buyers, according to the report. Others believe that public auctions can also drive up the price of properties if there is sufficient interest and competition.
The report is a summary of a department-wide review performed by consultants with Grubb & Ellis Corporate Services.
The department is also asking the council to give it more discretion to sell property. Currently, the council must approve each sale. The report recommends that the real estate department be able to sell batched properties in groups or through predetermined strategies and that council approval only be necessary when the sale departs from established standards.
Mayor Jerry Sanders wants to sell $20 million in real estate each year for the next five years.
The report states that selling land will provide revenue for infrastructure projects, relieve the city of potential liabilities and maintenance cost, return the properties to the tax rolls, and stimulate the economy “by providing opportunities for private sector development.”
The strategy does have its opponents. They say the sale of certain city land, such as residential homes, is short-sighted because the city will lose the long-term revenue stream it could rely on from leasing the land.
We recently did a story on the first batch of possible sales. We did another one this week about how the city came to own some of the properties for sale (such as a Border Patrol station and homes in La Jolla) and how it wasn’t collecting the full rent that was likely available.