‘Surplus’ Land Lures Buyers, but Should It Be Sold? : Councilwoman Would Rather See 291 Acres Near Lake Hodges Be Used as Parkland

Officially, it is “surplus” land--291 acres near Lake Hodges that the City of San Diego owns but doesn’t need. Purchased more than 30 years ago for a reservoir project that never happened, the land for years drew only limited attention from would-be buyers.

Then, shopping center magnate Ernest Hahn built his North County Fair regional shopping center nearby.

That was enough to give new meaning to the 291 acres flanking the shopping center on the east and the west. Months before the center opened to much hoopla in February, developers began calling the city’s property department with one pointed question: Willing to sell?

So far, the city has resisted the advances. But now the pressure is building on city officials to cash in on the land--recently valued at $11.7 million--and plow the money back into municipal coffers, perhaps to help offset a hefty hike in water rates in July.

First in line to buy the land is the City of Escondido, San Diego’s neighbor to the north. Escondido officials want to buy the land and convert part of it into a a sorely needed municipal golf course.

However, San Diego officials may have plans of their own for the real estate. Some want to lease part of the land to eager developers. Others say the city should simply hold onto the property so that rising land prices will bring a more handsome price in the future.

And Councilwoman Abbe Wolfsheimer, whose district abuts the North County Fair shopping center area, maintains that the land shouldn’t be sold at all. She wants it preserved as part of a proposed San Dieguito River Valley Regional Park, which would stretch 42 miles from Del Mar to the Cleveland National Forest.

“They’re asking for something that is very special,” Wolfsheimer said of the land. Just how special the surplus land was didn’t become clear until the last few years. Situated within the southern city limits of Escondido, the 291 acres were part of a larger chunk of land purchased by the City of San Diego water utilities department in the 1950s in hopes of expanding Lake Hodges. Sometime thereafter, the project was abandoned.

Although some have expressed interest in buying portions of the land over the years--the City of Escondido purchased 256 acres for additions to its Kit Carson Park--a considerable amount remained in San Diego’s hands.

Considered surplus because the water department no longer needed it, San Diego city officials tried to think of ways to sell off the land. At one time, for instance, San Diego and Escondido officials proposed using the land to build a strip of car dealerships, much like the “Mile of Cars” in National City. The suggestion never bore fruit.

Then came June, 1979.

Hoping to spark of commercial redevelopment, Escondido voters approved the idea of putting a massive, 78-acre shopping center in Kit Carson Park. With that vote, San Diego’s surplus land began to look better.

Like giddy land speculators, San Diego officials decided they should cash in quickly on the anticipated land rush by selling their 291 acres adjacent to the center site. They wanted to put the property up for auction in April 1979--two months before the deciding vote--at an asking price of $5.6 million, or about $19,240 an acre.

But they suddenly withdrew their offer after deciding to wait a while to see how the property would escalate in value.

An appraisal performed within the last three months shows that the land is now worth about $11.7 million, or $40,200 an acre, said Jim Spotts, the city’s property director.

“I think waiting has borne merit,” said Spotts. “The land has appreciated substantially.” And with the construction of North County Fair over the last year, interest from prospective buyers has increased, too.

“I’d say we have more interest in those properties than any others” of the 3,000 surplus acres owned by the City of San Diego, said Spotts. “That’s only natural. They just completed the largest shopping center in the county.”

Some of the strongest interest in buying the acreage has come from the City of Escondido, which holds zoning powers over the property. Escondido officials made a formal request to purchase the water utilities land in January.

Rod Wood, Escondido’s assistant city manager, said Escondido wants to buy the land for two reasons. First, it believes a parcel of San Diego’s land east of the North County Fair center would be perfect for a 130-acre municipal golf course, something that doesn’t exist in the city of 80,000, many of whose residents are retirees.

The second reason has to do with a promise that Escondido officials made in 1979 during the shopping center vote, said Wood. At that time, the officials vowed they would only permit land surrounding the center to be used for residential development, not the kind of commercial and industrial buildings that might be expected on expensive land surrounding a shopping center, he said.

If the City of San Diego would agree to sell, Wood said the City of Escondido would then resell the property to the Loma Serenas Company. The company, in turn, has promised to build the 130-acre golf course and use the balance of the land for about 580 residential units.

Wood said Escondido officials are not looking to make a fast buck. “If the land is sold and there is a profit, we’re prepared to say San Diego should get it,” he said.

Perhaps inspired by Escondido’s plan, San Diego officials are kicking around a plan of their own. Why doesn’t the City of San Diego lease the land itself?

One scenario involves yet another parcel of land near Lake Hodges and south of the shopping center, but located within the San Diego city limits. Get a developer to build a resort hotel there, and he might be willing to build a golf course on the Escondido property, with lease payments going to the City of San Diego.

Wolfsheimer, however, is the most vocal critic of doing anything to the surplus 291 acres.

She contends that any exclusive negotiations with the City of Escondido may violate San Diego City Council policy, which calls for a public auction of surplus property unless it is to be sold to another government agency for a public purpose. Selling the land to Escondido so it can resell it to a private developer is hardly a public purpose, she argues.

Besides, she says, selling the land to anyone would violate the spirit of the Proposition A, which held that land in the city’s so-called “urban reserve” could only be developed prior to 1995 if San Diego voters were to give their approval. While the 291 acres are in Escondido and technically are not subject to a Proposition A vote in San Diego, the water utilities land is close to other San Diego lands that fall under the slow-growth measure, she said.

“If we were to sell it, it looks very much like a way to move around the purview of Prop. A,” said Wolfsheimer.

Wolfsheimer said the city should hold onto the land and make it part of a regional park she has proposed for along the San Dieguito River valley. The land is important because it is in the Lake Hodges water shed, and its run off and percolating water underground could be tapped in the future, she said.

“I think we’re being short-sighted,” Wolfsheimer said about a sale.

If city officials determine that a sale is necessary, Wolfsheimer said she believes the city can receive more than $14 million for the property, not the $11.7 million mentioned by the city property department. She suggested the proceeds be used to mitigate a 26% increase in residential water rates over the next two years.

Yet the sale of the land may not be enough to make much of a dent in the increase, water officials said. Proceeds from the sale would only cover a small part of the projected $142 million deficit in the department projected by 1992, and would scale down the water rate increase only slightly.

For that reason, water department officials say they have another recommendation: Hold onto it even longer.

In the shadow of the North County Fair, the surplus land is only going to appreciate more, possibly faster than the general rate of inflation, they say.

“We think it is premature to sell it,” said Yvonne Rehg, San Diego water department spokeswoman.