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By Shawn Raymundo
The pool of five developers looking to construct a gas station and other amenities on a city-owned lot near Talega was narrowed down to the top three offers on Tuesday, Jan. 19, when the new city council resumed discussions over the proposals that had been tabled this past summer.
The council voted, 3-2, with Councilmembers Laura Ferguson and Steve Knoblock opposed, to thin out the prospective applicants interested in either purchasing or leasing the property on Avenida La Pata and Vista Hermosa, selecting Fountainhead Development, Cypress Express Partners and Heslin Holdings to continue negotiations in the coming weeks.
The three developers were ranked as the top contenders by CBRE, the city’s consultant tasked with soliciting offers for the 2.29-acre parcel next to the fire station. The potential sale, which could yield more than $7 million in revenue to the city, has been in the works since mid-2019, when the city began collecting proposals.
According to the city, 15 proposals were received, with the bulk of them offering to buy or rent the land and use it as a gas station, along with a convenience store and car wash. Others included charter schools and assisted-living facilities.
Offers to buy the land have ranged from $6 million to $7.5 million, while offers to lease the grounds have ranged from $200,000 to $500,000 annually.
Fountain Head, ranked as the top finalist, has proposed to purchase the land for $7.5 million or lease the grounds annually for $450,000 under a 20-year minimum commitment to build a 76 fuel station with a Starbucks and Bliss Car Wash on-site.
Cypress Express has also offered to buy the parcel for $7.5 million, with plans to construct a Chevron or Shell station with an H2Go Express Car Wash and a quick service food and coffee outlet. The applicant’s proposal also includes a lease option for $500,000 a year, with a 10% increase every five years under a 25-year agreement.
Heslin, which is offering $7.15 million for the parcel, proposes to develop a Kroger Fuel Station, Fast 5 Express Car Wash and a Toyota Hydrogen Fuel Station. If the council opts for a rental option, the developer is prepared to commit to a 50-year lease with four 10-year options, starting out at $200,000 a year on rent.
The council’s vote Tuesday removed Cadence Acquisition, LLC and Property Nine from the running.
Both Knoblock and Ferguson said they opposed moving forward with the proposals, as they questioned whether a gas station was the best use for the land. Knoblock proposed that the council look at the other developers that submitted offers to see if there were better uses.
“It’s not all about the money—it’s important—but I just think there might be better uses,” Knoblock said. “I just think there’s no immediate need for this.”
In the early part of the council’s deliberations, Mayor Pro Tem Gene James also had initially expressed concern with the proposals and about putting a gas station and car wash at a city gateway area. He noted that while there’s likely a need for a gas station there, he didn’t “know that I’ve spoken with three people who are in favor of a gas station.”
“I’m going to be hard-pressed to support a gas station,” he continued. “I’d probably like to go down the list to some other use. As it stands tonight, I’m not going to be able to support any of these bidders for a gas station, convenience store and coffee shop.”
Mayor Kathy Ward argued, however, that a gas station is the best use for the land, as Avenida La Pata now connects San Clemente to San Juan Capistrano, Rancho Mission Viejo and Ladera Ranch. She added that the extension to Los Patrones Parkway, which will connect to La Pata, is also in future plans.
“I think with La Pata coming in, this is the best use and the use that we’re going to get the most money out of this very important lot,” Ward said. “It is an amenity that can be said that is good for this area because of its connection to La Pata.”
James, who appeared to be moved by Ward’s statements, asked acting City Manager Erik Sund how the revenue from the sale or lease would be spent, and whether the city would commit to using half of it to pay down the unfunded pension liability, which currently stands at about $45 million.
Sund touched on the city’s prior experience when it sold land to Target on Vista Hermosa. He explained that the city put together a roadmap, or blackboard, as part its Long-Term Financial Plan ahead of annual budget talks to earmark funds from that revenue for certain projects.
If the council approved a sale, the city’s financial staff, he said, would put together another roadmap for the upcoming LTFP workshop this March outlining how that money would be dispersed.
“What I can tell you is what we’ve been thinking about, and you’re absolutely spot on. We would like to see some paydown of pension liability,” Sund said. “We’d like to review our reserve analysis in funding our reserves or funding more reserves so that would relieve some future general fund expenditures.”
Ward and James later raised questions about the design of each proposal, inquiring how the bidders intend to integrate the property into the current landscape.
“In other words, I don’t want it to be that obvious that it’s there,” James said, noting that he’d like to see the developers use vegetation and other landscaping so it fits the environment “in such a way that it’s not so obvious.”
“They gave us site plans. Are those set in stone that we have to agree to?” Ward asked of city staff. “I looked at the same thing, I looked at the vegetation around and the gas station, the pumps, that was important to me also. But it sounds like the applicants, what they said today was they were going to work with the city.”
Economic Development Officer Jonathan Lightfoot responded that the site plans are not finalized, reminding the council that the city and developers are currently in the bidding process. An entitlement review, which would include input from the city’s Planning Commission on the site plan and architectural permits, would be the next step after an applicant is selected.
“So, these are conceptual plans alone, they’re not final plans at this point,” he said.
Earlier in the night, freshman Councilmember Chris Duncan had also sought assurances from the developers that they would commit to including charging stations for electric-powered vehicles and maintain the city’s design standards.
All five bidders affirmed that they would do so, many of which noted that their proposals already include plans for electric charging stations.
With the council’s vote to continue talks with the top three bidders, city staff, Sund explained, will go back to the developers to refine the proposals, addressing some of the desires and concerns councilmembers had expressed with the potential gas stations.
Afterward, final offers can be made and then the council could further deliberate over them, he said.
James asked Sund to come back to the council after 30 days with the refined bids.
Shawn Raymundo is the city editor for the San Clemente Times. He graduated from Arizona State University with a bachelor’s degree in Global Studies. Before joining Picket Fence Media, he worked as the government accountability reporter for the Pacific Daily News in the U.S. territory of Guam. Follow him on Twitter @ShawnzyTsunami and follow San Clemente Times @SCTimesNews.