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City OKs Balboa lot for sale

DEL MAR — Council members did not receive unprotested resident support to sell one city-owned parcel to help fund the purchase of another, but with a 4-0 vote at the June 14 meeting they were still able to move forward with the sale.
Del Mar is seeking to sell a panhandle-shaped 22,215-gross-square-foot lot on Balboa Avenue and use the proceeds to retire the debt on a 5.3-acre site on the southwest corner of Camino del Mar and Ninth Street that was once home to Del Mar Shores Elementary School.
Local agencies are allowed to sell real property if it is for the common benefit. A public hearing is required and a majority vote is needed to override any protests. With Mayor Richard Earnest unable to participate because he lives too close to the property, all remaining council members had to approve the sale.
The majority of public input supported the idea of selling the Balboa lot.
“The Balboa property is essentially an unused public property in an inaccessible location that should be ‘traded’ for the Shores property in the middle of town, that is currently used by many people in the community,” Gale Darling wrote.
“I support wholeheartedly the sale of the property for public benefit,” said Barbara Mandel Pache, who has lived next to the Balboa lot for 28 years and is the campaign coordinator for Friends of Del Mar Parks, the fundraising group seeking donations for the Shores purchase.
“(It) has not been a public benefit … since 1946.”
But two residents, Jacqueline Winterer and Ralph Peck, did not support the Balboa sale. Winterer said “very grievous miscalculations” were made when the city agreed to purchase the Shores property from the Del Mar Union School District in 2008 for $8.5 million.
“The miscalculation was that everybody was going to give a certain amount of money and everything would be hunky-dory,” Winterer said. “Well, the great majority of the people of Del Mar did not support this project, and that is where we are today.”
Winterer said council members, during a previous meeting, seemed to agree that given the current economic climate, this may not be the best time to sell the Balboa lot, a rare city parcel with ocean or mountain views from any direction. She asked about their change of heart.
“This is a very unique piece of property,” Councilwoman Crystal Crawford said. “The market of buyers is not as affected by the downturn in the economy.”
Winterer also expressed concern that the lot may not sell in time to pay off a $3.2 million balloon payment due on the Shores loan in November 2011.
Crawford said selling the Balboa lot was one of several options the city considered if fundraising efforts came up short.
“We didn’t want to go forward if we didn’t have a safety net,” Crawford said. “This was one of those safety nets.”
Crawford said the city will look at the other options if the lot doesn’t sell before the loan is due.
Rather than sell the lot through a conventional broker listing, the city opted to use a real estate consultant for an amount not to exceed $20,000 to market the property.
The buyer’s agent will receive a maximum of 2 percent commission for the sale. This will save a considerable amount of money since a conventional sale, which can also be time-consuming, could result in commissions of about $40,000 per $1 million in value.
There will be a sealed bid auction starting with a minimum bid that will be approved by council members before the process starts, followed by a live auction.
On a designated date, sealed bids will be received and opened. An oral auction will follow. Initial oral bids must be 5 percent more than the highest original submitted written bid.
Bidders will be required to submit initial deposits, which are refundable if their bid is not deemed the highest.
“This approach is recommended because it provides a defined process and timeline,” the staff report states. “It also avoids having to engage in numerous negotiations with interested parties and provides for the transparent process needed in a public sale.”
The city will be allowed to withdraw from the process at any time.
The city bought the Balboa lot from Del Mar Utilities, a private corporation, in 1965 for $250,392. At the time, it housed a pressure treatment plant and cement water reservoir tank that was partially buried.
Eventually deemed obsolete, the plant and tank were demolished in 1992. The lot is currently vacant and zoned for residential use.
Friends of Del Mar Parks raised more than $5 million to help buy the Shores property, but donations have dropped off significantly since the original purchase.