City buys property, delays Village Entrance soil testing

The Laguna Beach City Council voted to spend $5.3 million on a piece of land along Laguna Canyon Road but did not authorize testing soils for possible environmental contaminants near the proposed Village Entrance site at its Tuesday meeting.

The council voted 4 to 1 for the city to accept title to the property at 725 Laguna Canyon Road after several residents said the price was too high and accused the council of making a deal in secret. Councilwoman Toni Iseman dissented.

The 3.8-acre plot of land south of Tivoli Too could handle 65 to 75 parking spaces, according to Mayor Pro Tem Elizabeth Pearson, who first announced the city would enter escrow to purchase the private parcel — currently an open field — during the Oct. 15 council meeting.

Village Entrance plans currently include a four-level parking structure and pedestrian park in an area near Forest Avenue and Laguna Canyon Road, but a veil of uncertainty surrounds the project as to whether a parking structure or park will be built and to what scale.

A public workshop on the project is scheduled for 6 p.m. Tuesday in council chambers. The workshop will allow residents, city staff and council members to discuss current design renderings.

Some residents suggested the council hold off on buying the land until after the public workshop.

“Making a decision to purchase [the land] may in the long run prove to be a great opportunity; however, making this decision before the scheduled workshop will make the workshop look like a perfunctory exercise the city is going through simply as an appeasement measure,” resident Johanna Felder said as she read from a prepared statement.

“To commit over $5 million of our city’s funds at this time will limit the city’s ability and flexibility to pursue in good faith the best alternatives that could come out of the workshop,” she said.

Councilman Bob Whalen would like the property to remain as open space and supported the purchase as means toward that goal.

“It’s worth us to buy [the land] purely for the open space of the hillside,” Whalen said. “It creates more flexibility with the site.”

Resident Alan Boinus called the purchase price into question, alluding to two years ago when the Laguna Canyon Road property went into foreclosure.

“Now the city should have known about this, and so I ask how and why did the city pass up bidding on the property for $548,000?” Boinus asked.

The reason was because the land had multiple liens, said Realtor Cary Glenn, owner of Laguna Beach-based Main Beach Realty, who contracted with the city on the current transaction.

“In 2011, the property was foreclosed on for $548,000,” Glenn, a 25-year Laguna resident told the council. “There were five other liens senior to that lien. They [property owners] needed to pay off millions of dollars in liens. In addition, there was a lawsuit on the property by a former owner who had to get paid $1.2 million.”

The current cost is reasonable for the site, said Glenn, who gave examples of real estate prices within the city for comparison.

“Since Jan. 1 of this year, of 24 lots sold in Laguna Beach [on the Multiple Listing Service], eight lots sold for $2 million to $5 million per acre,” he said. “Twelve lots sold for more than $5 million per acre. If you look at what’s available right now in Laguna Beach [38 lots], 15 are priced between $1.2 million and $3 million per acre, and 18 are priced at $4 million or more per acre.

“If you look at the city’s $1.4 million per acre, that is a very competitive price.”

Pearson was on the council in 2011 when it looked into purchasing the Laguna Canyon Road property.

“Real estate transactions are always done in closed session, not just this project,” Pearson said. “[The previous property owner] said, ‘I think I am going to need to sell the property. Would the city be interested in buying it?’ I thought it would be a great idea.”

The owner offered to sell for $4.2 million then, Pearson continued.

Pearson and council colleagues met with City Manager John Pietig in closed session and requested an appraisal.

Pietig returned with a figure that was too much, Pearson said.

“I could not get one other person, either on council or the city manager, at that time to support purchasing the property in 2011,” Pearson said. “That opportunity went away, but we continued to work on this property as a subcommittee. I pushed because I believed it was the right thing to do.”

On Tuesday the council also voted 4 to 1, with Whalen dissenting, to delay testing soils for possible environmental contaminants.

The council voted to spend $85,000 on tests at its Oct. 15 meeting, but Iseman questioned whether the expense was worth it with the project’s uncertain future.

“It seemed like a lot of money if the Village Entrance parking structure isn’t going forward,” Iseman said. “I asked [Pietig] several weeks ago to please not spend money on a soils test because it looks like a parking structure was not going to happen.”

The city returned to the council on Tuesday with an offer of $48,000 for testing in only certain areas, such as where a former gas station and paint department once stood, a city staff report said.

“There have been a lot of comments and concerns about the soils,” Pietig said. “We took those comments seriously. It’s important at some point if you put in a park or landscaping or a farmer’s market, you would want to know what’s there.”

Iseman asked Pietig whether remediation would be required if a crew drilled into the soil and discovered toxins.

“Generally yes, but there are levels of remediation depending on what you find, what chemicals, what level of contamination,” Pietig said. “In some cases you may need to remove the soil, in some cases you have to dispose of it in special dump sites. If we find something we have to have a plan to manage it within regulatory limits.”

“We’re going to be disturbing soil in some way,” Whalen said. “I think it’s irresponsible not to test. To raise this as an issue then stick our heads in the sand is totally irresponsible.”

Meanwhile, Laguna resident Paul Merritt stopped his petition drive to place the Village Entrance on a future citywide ballot, he said Wednesday.

Merritt made his decision after watching Tuesday’s meeting.

“It seems that the purchase of new land for [possible] parking will save tens of millions of city dollars from being spent at the Village Entrance,” Merritt wrote in an email.