Compare and Contrast CUSD and City Land Acquisition Practices

Last week the City of San Juan Capistrano announced that it would purchase Rancho Capistrano from the Crystal Cathedral Ministries to add to the city inventory of open space. The City agreed to pay about $86,000 per acre for 116 acres of land. This is a great deal for the City and its residents!

The purchase is made possible by a public/private partnership between the City and a developer of “senior living” facilities. The developer will take 34 acres of Rancho Capistrano (apart from the City portion) for an undisclosed sum of money. Everyone involved in this deal is cheering. Why?

Well, it seems that Rancho Capistrano is essentially “landlocked”. The railroad and Oso Creek prevent unrestricted access to the property, except at an existing substandard and controversial rail crossing off Camino Capistrano. The present owners and the developer anticipated difficulty in convincing the CPUC and the railroad to cooperate in planning an improved crossing. The City negotiating team pointed out that the City could more persuasive and, like magic, the “value” of the property suddenly fell to wholesale!

This situation is identical that that which faced Dennis Gage (Whispering Hills LLC) when he sought to develop the landlocked property now known as Whispering Hills. There was no access from La Pata, the land was occupied by overhead electrical transmission lines, and there was no possible road access from San Juan Capistrano. Gage first offered to "give" land to the Capistrano Unified School District for a high school in order to get the district into the game. This gift of land became controversial because it required a modification to the City of San Juan Capistrano General Plan. The question was put on the ballot in 2002 as an advisory measure and the plan was defeated.

Responding to this defeat, CUSD turned around and paid Gage the astronomical price of $1,040,000 per acre for 50 acres of land, a price determined by comparing the raw land with construction-ready residential sites in Ladera Ranch and San Clemente. Then CUSD used its government authority to override the General Plan (in favor of Gage and the school, and to the dismay of the city), then threatened Rancho Mission Viejo Company with eminent domain to force sale of 35 acres of land to Gage (not CUSD) to get access to La Pata (this land is now the Villa Montana apartment site), and then pushed the CPUC to force SDG&E to move their overhead electrical transmission line so that Gage could optimize his residential development plan.

What did CUSD get in return for providing all this help? Nothing! In fact, it seems clear today that CUSD paid Gage about $900,000 per acre over market value to be involved in his development scheme. The only remaining question is why?

The Rancho Capistrano deal ($86,000 per acre) and the earlier Shea deal ($19,200 per acre) can serve as benchmarks by which to judge the CUSD site acquisition for San Juan Hills High School. All three properties have similar development challenges. All involve expenditure of public money to secure land for public use. The City expenditures are prudent and responsible.

The CUSD transaction was something else.