Why doesn’t the Board of Directors of SANDAG want to work with Protea Properties in developing the Vacant Lot?
The question was asked at the “Choose or Snooze” event on Oct.1st, “Why doesn’t the Board of Directors of SANDAG want to work with Protea Properties in developing the Vacant Lot?” Rory Devine of NBC Channel 7 News asked me the same question. Julie Stalmer, while preparing her article for theReader, asked me the same question.
Allow me, for the moment, to put on my my “real estate broker” hat. In my opinion, the reason for the Closed Session vote to continue eminent domain action against the new owner of the lot, Protea, is very clear.
Concerned with justification of placing two trolley stations in an neighborhood where limit use of public transit could occur, the gain for residential housing was one resolution.
The February 2014 meeting notes between SANDAG, Michael Prinz , our community planner with the City of San Diego, and Marina LLC, the previous owners of the Vacant Lot, demonstrate that SANDAG wanted six story condominiums built on the site.
Marina LLC’s six-story condominium project would have been in conformance with the mandatethat SANDAG has in encouraging TOD within a half-mile of the transit hub, the Clairemont trolley station.
The community was informed about the project, news that the potential breaking of our Clairemont 30Ft height limit overlay might happen, and opposition formed. Out of that opposition, the grass-roots organization, Raise the Balloon was created.
SANDAG and the City of San Diego were forced to remove the suggested zoning change and 60Ft height allowance from the Morena Study.
Marina LLC wanted only their project of six-story condominiums, despite the fact that prior permits were obtained from the seller of the Vacant Lot, C.W, Clarke, to build a shopping center complex to 45 feet. TheCCPG has approved the project, and Marina declined to move forward with the prior approved plans.
Residential only on the Vacant Lot brings a higher ROI (return on investment) than any other use of the raw land.
Marina LLC put no further project forward, and SANDAG moved to seize the lot via eminent domain, and offered $8.9 million to the owner, Marina LLC.
Marina LLC, sought to sell the lot to another developer for a higher price than the $8.9 million offered by SANDAG.
Enter Protea Properties in February/April of 2016. Protea saw the opportunity to invest in the Vacant Lot because it is the most important parcel in the chain that will become the Bay Park Boardwalk under the Morena Specific Plan, and offered $11.5 million to Marina LLC. On 9/30/16, Protea and Marina LLC closed escrow on the Vacant Lot, and title to the property was transferred.
In May of 2016, Protea began working with SANDAG project engineers, the Director of Rail, and their respective attorneys. Issues, such as SANDAG’s requirements for 158 parking bays, a transit power station, and other miscellaneous needs were addressed and resolved. An agreement in principle was reached between the two entities and vote for approval to cease eminent domain and proceed with negotiations with Protea was scheduled for a Closed Session on 9/9/16 of the Board of Directors regular session.
Both entities, having spent time and money on attorney fees to reach their agreement in principle, were expectant that the Board of Directors would gladly approve Protea’s development proposals.
All were shocked when the vote came down to find that only one vote, Lori Zapf, Councilwoman for District 2, was in favor of continuance with Protea.
I put on my “real estate broker’s hat” and began to dig through title documents. The lone public voice in favor of the seizure of the Vacant Lot, was Bruce Kleege, of Kleege Enterprises, the owner of the Clairemont Village Shopping Center, who had submitted plans to the CCPG in January of 2014, for a variance to build to 57 feet and include 368 residential units with a new shopping center where Keils’ Food Stores is now located.
Why would Bruce Kleege speak out in favor of seizure of the Vacant Lot? I kept digging, and it dawned on me!
I have no way of knowing why Mr. Kleege was for seizure of the lot, but some things became apparent. After a title search, I found that Mr. Kleege owns the Best Western Hotel site which is adjacent to the Vacant Lot.
It is my opinion, that if Mr. Kleege had the opportunity to purchase the Vacant Lot, which he didn’t because Protea had the lot in escrow, he could offer SANDAG more land (the Best Western site plus the Vacant Lot) for residential units. Protea’s mixed use project includes approximately 36 residential units, whereas Mr. Kleege’s redo of the shopping complex had detailed 368 units if his variance was granted.
Clearly, in my opinion, SANDAG would potentially have more to gain from Mr. Kleege’s development of the Vacant Lot than Protea’s. In my opinion, the Board of Directors would have been acting in accordance with their mandate for TOD, to approach Mr. Kleege and ascertain whether he had any interest in purchasing and developing the Vacant Lot. Did they? Who knows?
But how could Mr. Kleege develop the lot when Marina LLC, and now, Protea, owned it?
Mr. Kleege stated in his public testimony that we was for eminent domain seizure of the Vacant Lot, so that “other developers” could be considered for future development of the site.
Certainly, if SANDAG seizes the lot, becomes the new owner, after using it for the 3 year construction of the trolley station, and then puts it out for RFPs (Requests for Proposals), the most likely “other developer” that they would entertain would be Mr. Kleege as he is the owner of the adjacent and contiguous parcel, the Best Western Hotel.
This would be a sound business decision by SANDAG in keeping with their mandate.
Community activity could die down by the time SANDAG finishes using the Vacant Lot for their 3 year need of a “lay down yard” (construction equipment site), and if the RFPs were issued in a more “favorable” community climate, maybe the two lots could yield all residential units.
It would be worth the Board of Directors’s gamble to wait until more residential units could be had to justify ridership for the Clairemont trolley station.
This is my opinion, wearing my “real estate broker” hat. It runs along the lines of the adage in real estate 101, “highest and best” use of any real estate parcel.
I’m doing more digging. No reasonable or explainable justification for seizure of the Vacant Lot was given to the public, only that SANDAG will “continue to work with the community.” Knowing SANDAG’s miserly “public participation” from the beginning of the MCT project, the seizure is merely a ploy to wait it out and get want they wanted all along- DENSITY.
I implore my neighbors to work hard to help Protea Properies win this upcoming battle to reverse the Board of Directors bad decision to seize the Vacant Lot. RTB/Bay Park Boardwalk Committee members will help organize the public protest.
In our community, SANDAG has an extremely poor reputation of “working with the community” unless you feel that choosing the colors of the trolley instead of where trolley stations should be placed, is the exchange of ideas and “work” with the community you desire from SANDAG.