By Shawn Raymundo
City council voted on Tuesday, Aug. 18, to table talks until after the new year on whether to sell or lease a city-owned lot that developers hope to turn into a gas station, leaving the decision up to the next city council body.
In a unanimous vote, the council supported a motion by Councilmember Chris Hamm to table the discussion until early January, as his colleagues could not come to a consensus on how to move forward with the potential sale or lease of the 2.29-acre property near Talega.
“So, I’m hearing four different voices going in four different directions; I haven’t heard any two of us agree,” Hamm said, explaining his motion to defer the vote. He later added: “On the horizon is an election; we’ll have a five-member council and, hopefully, at that point, there will be a consensus among them.”
OFFERS ON THE TABLE
In June 2019, the city began to solicit proposals from developers looking to either purchase or lease the parcel located on the southwest corner of Avenida La Pata and Vista Hermosa, adjacent to the fire station.
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. Some of the applicants have also proposed a hybrid approach in which they would buy a portion of the land outright and lease the rest.
According to the staff report to the council, the city stands to receive $230,000 to $350,000 in annual sales-tax revenue from the proposed gas stations, on top of an estimated $15,000 to $25,000 in annual property-tax revenue.
Tuesday’s discussion came roughly eight months since councilors and the public heard proposals from three of the prospective developers—Fountain Head Development, Property Nine Development and Heslin Holdings—all of which are vying for the land to put in a gas station and other amenities.
During those talks, back on Dec. 10, 2019, the council directed staff and the city’s consultant CBRE to solicit final and best offers, and compile a review of the top five offers, instead of just the three.
On Tuesday, the council again heard proposals from Fountain Head, Property Nine and Heslin, as well as two others: Cypress Express Partners, LLC and Cadence Acquisition, LLC. The other two developers also made similar pitches to use the site to build a fuel station.
According to the staff report, Fountain Head, the top finalist, is proposing a 76 fuel station with a Starbucks and Bliss Car Wash on-site. It has offered to purchase the land for $7.5 million or lease the grounds annually for $450,000 under a 20-year minimum commitment.
Cypress has offered to buy the parcel for $7.5 million or lease the land for $500,000 a year, with a 10% increase every five years under a 25-year agreement. If chosen, Cypress would build a Chevron or Shell station with an H2Go Express Car Wash.
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. The developer is also prepared to commit to a 50-year lease with four 10-year options, starting out on $200,000 a year on rent.
If Cadence is selected, it would build a 7-Eleven station with a Fast N’ Furious Car Wash. It has offered to pay between $6 million and $7.5 million for the full parcel, but would also agree to a hybrid model, buying two-thirds of the land, for a price ranging from $3.6 million to $4.5 million, while leasing the remaining property for at least $16,000 annually.
Property Nine’s proposal includes an offer of $6 million to construct an ARCO ampm or Chevron, a car wash and a satellite location for the San Clemente-based coffee shop Zebra House Coffee. The developer has also proposed a hybrid option to purchase one acre of the land for $3.25 million while leasing the remaining land for 50 years at $125,000 a year.
Following a lengthy presentation period and a public-comment portion, in which several members of the public voiced opposition to the proposals and questioned the need for a gas station, the council began to deliberate but was unable to find common ground, despite their agreeing the proposals were intriguing and of good quality.
Touching briefly on some public comments, asking why the city isn’t instead considering “a family-friendly” amenity such as a restaurant, both Mayor Pro Tem Laura Ferguson and Councilmember Kathy Ward explained that the site isn’t conducive to such an establishment.
“We couldn’t get a restaurant there. We tried to talk to people, and it just wouldn’t pencil out, and it wasn’t adequate. No one could move on it,” Ward said, after noting that the city’s consultant, CBRE, believed the gas station to be the best available use of the land parcel.
Had the council moved forward with the proposals, Ferguson said she wanted to sell the lot.
“We’re at a point where the city could use the revenue,” she said, noting the city had proposed to earmark those monies for future capital improvement projects.
Councilmember Gene James, however, was against selling the property, citing the concerns raised by the public. While acknowledging that the city must find a way to pay down its unfunded liability—around $45 million—James said he couldn’t support a gas station.
“To sell this asset is a little bit like someone lived beyond their means and they’re taking their family heirlooms to a pawn shop to derive some revenue,” James said, adding: “I just can’t support selling it at this time; I just can’t support a gas station at this time. Most every letter received were (from) people who were adamantly opposed to a gas station.”
Ward also had differed from her fellow councilmembers, advocating instead to lease the property, which she said would likely yield more revenue in the long run than just selling the property now. And like Ferguson’s proposal on funding infrastructure projects with the revenue, Ward suggested setting aside those monies to pay down the city’s unfunded liability.
AGREEING TO DISAGREE
Prior to making his motion to table the discussion, Hamm noted that while he wasn’t for selling the property, he had previously pushed the lease option, allowing the city to hold on to the property. In the end, however, Hamm said he wasn’t in favor of either route, believing the city is financially stable and has a balanced budget.
“I’m not a fan of selling off property when we have a balanced budget, and we don’t need to generate additional revenue at this point in time,” Hamm said, before pointing to other “financially stable” cities that lease their properties. “I would love to see this property be a legacy property for the residents of San Clemente. That being said, I don’t support a lease or a sale of this property, I don’t think we need to do it.”
A decision on the sale or lease of the land will mark one of the first major decisions the new city council makes when it convenes for the first meeting of January 2021.
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.