$8-Million Santa Monica Mountains Acquisition : Mystery Bid for Costly Parkland Questioned

The decision by the National Park Service last month to pay a record $8 million for a tract of land in the Santa Monica Mountains was based partly on unverified reports of a higher competing offer for the property.

In memos last fall to his superiors, a staff appraiser with the park service in Woodland Hills questioned the authenticity of the purported offer, which surfaced at a critical stage in negotiations for the land in lower Cheeseboro Canyon, just east of the City of Agoura Hills.

Because of the timing, the mystery offer--the origin of which was never disclosed to the park service--"has a certain odor to it" and could be "a setup deal" to raise the sale price, the park service official warned in the memos.

Tom Hickman, project appraiser for the Santa Monica Mountains National Recreation Area, also urged his superiors to find out why an initial appraisal report that apparently set a lower value on the 337-acre tract was discarded without explanation.

But according to public records and interviews, agency officials approved the second appraisal without asking to see the original appraisal report. They also failed to investigate the validity of the mystery offer cited in the appraisal that they approved.

Although ardent park supporters generally have praised the acquisition, others have criticized the price and the way the deal was handled by the park service and the Trust for Public Land, a San Francisco-based conservation group that negotiated the purchase with Oren Realty and Development Co. Inc. of Encino.

The aura of intrigue and controversy surrounding the sale reflects the intensity of the struggle between development and conservation interests in the Santa Monica Mountains, which a trust official called "the toughest" place in the Western states to negotiate for parkland.

"The pressures for development are the greatest and the land costs are high," said Lisa McGimsey, a vice president with the trust. "(With) the kind of developers you've got down here, you're usually not going to get a second chance."

The market value of mountain land varies significantly from parcel to parcel, depending on factors such as slope and zoning restrictions that may limit intensive development. In the case of the Oren property, the park service paid nearly five times as much per acre as Oren did to acquire the land in 1978.

Margot Feuer, a member of the Santa Monica Mountains National Recreation Area Advisory Commission, criticized the trust and park service for agreeing to pay an "outrageously high" price that is "not substantiated by anything."

She said the price--the highest paid for a single addition to the mountain park--is likely to inflate the demands of other landowners, thus complicating efforts to acquire the 24,000 acres still needed for the park.

Dan Kuehn, superintendent of the national recreation area, said he is not convinced that the price will imperil future acquisitions and said some small tracts have been purchased at a higher cost per acre.

Dave Brown, a Calabasas environmentalist, said the park service "ideally . . . should have paid less," but credits the agency with rescuing a "valuable natural resource . . . from the grasp of a particularly aggressive developer," referring to Oren.

McGimsey of the trust said her group had to meet Oren's price or a strategic addition to the park "would be developed, period." She said the purchase should be viewed as "a triumph of park preservation over development."

Several observers have said they believe the Oren purchase--and a flurry of smaller acquisitions since--were influenced by rumors from Washington earlier this year that federal funds to buy parkland might be frozen.

The acquisitions mean that park service officials have already spent virtually the entire fiscal 1985 appropriation budgeted for purchases in the Santa Monica Mountains National Recreation Area, plus several million dollars left over from fiscal 1984. This year's appropriation was $8 million.

Brown said park service officials had indicated to him their desire to spend the funds before the freeze went into effect. Agency officials, however, said there is no direct connection between recent land-buying activities and concerns about a freeze.

The quarrel over the Oren acquisition has not been limited to questions of price. On Jan. 11, the day after the transaction, a consultant who managed the sale for Oren Realty filed a lawsuit accusing the firm and its chief executive, Jerry Y. Oren, of defrauding him of a $750,000 consulting fee. The real estate firm has denied owing the money to the consultant, Rad Sutnar.

The Oren property is an attractive swath of oak-studded hills and meadows just north of the Ventura Freeway. Because of its stands of ancient oaks, the property was designated a significant sensitive ecological area under county zoning laws, severely restricting the potential for intensive development. Still, the zoning might have allowed Oren to proceed with a plan to divide the property into 46 equestrian estates.

On Jan. 10, the firm sold the tract for $7.5 million to the trust, a nonprofit group that has acquired and transferred parkland to public agencies in 20 states and Canada. The trust, which obtained an option from Oren in 1983 when the park service had no funds for the purchase, immediately resold the land to the federal agency for $8 million, keeping $500,000 to plow back into its public land program.

Second Appraisal

The second of the two appraisers hired by the trust set a value of $8.4 million, or $25,000 per acre, on the property, which was part of an 811-acre tract Oren bought in 1978 for $5,000 per acre, or $4.1 million.

Trust and park service officials, citing the $8.4-million appraisal, boasted that the $8-million cost to the government was well below market value.

The national recreation area encompasses 150,000 acres of public and privately owned land between Griffith Park in Los Angeles and Point Mugu State Park in Ventura County. Plans call for eventual state or federal ownership of about half the area, with trail easements securing some land that stays in private hands.

Park service files show that in 1981 Oren wrote to former Interior Secretary James Watt and to former San Fernando Valley Rep. Barry Goldwater Jr. in an unsuccessful effort to have his property dropped from a list of priority acquisitions.

Option Granted

But he changed his stance in 1983, when the Los Angeles County Regional Planning Commission rejected an initial development plan. Encouraged by county Supervisor Michael Antonovich, among others, to reach an accommodation with the park service, Oren granted the trust an option to buy a portion of the land.

Trust officials say that in July they asked Oren to extend the option, which was about to expire, but that he told them he was negotiating with another buyer. Eventually he agreed to extend the option until Nov. 15 but at a new price of $7.5 million. None of the parties involved in the transaction would disclose the original option price.

Ironically, the deal threatened to unravel at this point--not because of the hefty asking price but because an initial appraisal was apparently not high enough to support that price.

The problem was that the park service cannot pay more than the appraised value for land without congressional approval. So unless the trust could get a higher appraisal, there was no way the park service would meet Oren's price and the trust's costs.

Although it is known that the original appraisal commissioned by the trust was lower than the second appraisal, the amount of the first appraisal has never been disclosed. Trust officials have declined to discuss in detail the first report, which was prepared by Steve Whittlesey, an independent appraiser based in Pasadena who said he could not divulge his estimate of the property's value.

They have acknowledged, however, that the deal could not proceed on the strength of the Whittlesey report.

So the trust decided to commission another report and, McGimsey said, "would have taken a walk" had the second estimate come in too low.

But the second appraiser, Thomas W. Erickson of Santa Monica, put the value at $8.4 million, partly on the basis of the mystery competing offer.

Erickson said in an interview that Oren representative Sutnar would not show him the competing offer until he pledged to keep the bidder's identity a secret--even from the trust. In a letter to the trust, Erickson merely identified the competing bidder as "a very sophisticated nationally known firm."

Erickson Didn't Verify It

Erickson said he made no effort to verify that the offer was serious because Sutnar told him, "I don't want anyone contacted."

Erickson said a brief letter marked "confidential"--with names whited out--was a copy of the offer that he had provided to a park service official in San Francisco. The 1 1/2-page letter, dated July 13, offered $9.37 million for the 337 acres sought by the trust and $29.5 million for the entire 811 acres. The proposal was open-ended, with no deadline for acceptance and no indication of the use to be made of the land.

Worried that the park service might pay too much, Hickman, the project appraiser for the recreation area, urged his superiors in San Francisco not to approve the Erickson appraisal without further details about the mystery offer and without a review of the earlier appraisal report by Whittlesey.

Landfill Nearby

Hickman also suggested that Erickson's estimate should be adjusted downward to reflect the presence of the Calabasas Landfill on the property's southern boundary. Hickman said the landfill, where toxic substances were disposed of until 1980, "resembles a Mayan temple" and is "in clear view of some of the more 'prestigious' lots" of the planned equestrian development.

In a recent interview, Hickman said he did not want it "to appear that I am at war with the park service. I love the park service." He said that in questioning the appraisal, "I was doing my job the best I know how to."

But other agency officials did not share his concerns.

Although Hickman's memos clearly alluded to the Whittlesey report, Jack MacDonald, chief appraiser at the park service's Western regional office in San Francisco, said in an interview last week that he did not know for a fact that there had been an earlier appraisal of the Oren land.

'Had a Valid Appraisal'

Anyway, he said, it was not necessary to review another report because "we had a valid appraisal in hand from Tom Erickson."

MacDonald also said it was not necessary to authenticate the mystery offer because "Mr. Erickson indicated that he was fully convinced it was a valid offer." He said, "Appraisers live by their reputation and Tom Erickson has an excellent reputation."

Erickson denied that he gave the $9.37-million mystery offer "100% credence" and said his $8.4-million estimate was well-supported by other market data.

Erickson said Hickman's critique was based largely on a "gut feel" that a developer could not profitably develop and sell 46 equestrian estates on land that cost $8.4 million. That opinion, said Erickson, is "completely erroneous."

Didn't Know of Estimate

Erickson said he did not know of Whittlesey's value estimate and thus wrote his report without bias. As a professional appraiser, he said it is his job to use "well-supported data" to reach "a value conclusion, and that's what I've done."

Jerry Oren said the government got a good deal. "I never would have sold it to a private individual for this price," he said.

Oren said he went through with the deal only to honor "the promise that I gave different people that I'd try to cooperate with the park." He expressed hope that his gesture will help him gain approval to develop 1,000 units of housing and a commercial and industrial complex on the adjoining land he has retained.

In recent months, Oren said, he actually had "several" lucrative offers for the property. "Frankly, I tried to get out of the deal" with the Trust for Public Land "and they know it too," Oren said.

Officials with the trust said Oren gave every indication he had another deal cooking.

Oren Walked Out

For example, McGimsey said that on Nov. 15, with the option on the property about to expire and no final commitment from the park service, she met with Oren at his office to request another brief extension. But, according to McGimsey, Oren said he needed the weekend to think it over and abruptly left the room.

Fearing that the deal would evaporate at the stroke of midnight, McGimsey said she called Martin Rosen, president of the trust, and "recommended that we do it (exercise the option) or we're going to lose it." Rosen concurred and McGimsey wrote a statement exercising the option and left it at Oren's office.

Between that time and the closing, McGimsey said, there were other unnerving signs, such as delays in completing required paper work, that suggested Oren "was trying to sabotage the deal."

Ralph Benson, vice president and general counsel to the trust, said that on Dec. 24, Sutnar's lawyer called him to report that Sutnar and Oren had had "a serious disagreement," leading the lawyer to consider putting a lien on the property.

Lawsuit Filed

On Jan. 11, the day after the transaction was completed, Sutnar filed his lawsuit, alleging that Oren had reneged on a contract to pay Sutnar a consulting fee of 10% in return for managing the sale.

Sutnar could not be reached for comment and his lawyer said he is out of town.

The lawyer, Mike Klarfeld, said the dispute is a case of "a big developer trying to hose a poor little guy."

For more than a year and a half, said Klarfeld, Sutnar "put his whole blood, sweat and tears" into the sale, only to "have the rug pulled out from under him . . . That's dirty pool."

Oren declined to comment on the Sutnar suit and later was unavailable to respond to trust officials' statements about his reluctance to complete the deal.

But in documents filed in Los Angeles County Superior Court, Oren said the consulting contract with Sutnar is "illegal, void and unenforceable." Sutnar, Oren said, is in effect trying to collect a real estate broker's commission although he is not a licensed broker.

Oren said that payment of the money to Sutnar "pursuant to the illegal contract constitutes a crime."

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