Lack of Funds Mires Plans to Buy Slough

Nearly eight months after Mayor Maureen O’Connor announced a deal to preserve Famosa Slough, the city of San Diego remains $1.5 million short of what it needs to buy the 20-acre wetland near Ocean Beach from a developer, with little immediate hope of raising the money.

With a November purchase deadline long past, the city and developer Terry Sheldon are renegotiating an extension of their escrow agreement to give the city until Sept. 30 or longer to buy the slough, one of San Diego’s last remaining natural wetlands.

Nevertheless, both sides and environmentalists who have battled for nearly two decades to preserve the slough say that the sale eventually will go through, perhaps before the proposed new deadline is reached.

“We continue to be optimistic,” said Jackie Sanders, a board member of Friends of Famosa Slough. “We feel that negotiations are moving along, and the fact that they’re delayed does not concern us.”

“We are hoping to close considerably before September,” said Hal Valderhaug, the deputy city attorney involved in the negotiations with Sheldon’s attorney, Robert Caplan.

Remaining Funds a Mystery

But no one knows exactly how the city will raise the rest of the $4.6 million it agreed to pay Sheldon last May, when O’Connor proclaimed a “major victory for environmentalists.”

“We’ve been working diligently on this deal, and so far we are $500,000 short in the best of all possible worlds,” said Patricia Tennyson, director of the city’s lobbying efforts. “And we may be $1.5 million short” if requests for $1 million in state funding are denied, she added.

The chairman of an organization that had pledged $280,000 to restore the slough and maintain it for five years is growing tired of the delays.

Terry Huff, chairman of the San Diego chapter of Ducks Unlimited, said he was “totally embarrassed by the lack of action” on the deal after he won approval for the project from state and national branches of his organization.

Huff blames both O’Connor and State Rep. Lucy Killea (D-San Diego), both of whom have been involved in the fund-raising. “Between those two . . . one of them is stretching the truth, because it’s not happening,” Huff said.

O’Connor and Councilman Ron Roberts, whose 2nd District includes the slough, announced May 11 that they had struck a deal to buy the slough from Sheldon for $4.6 million. The city pledged $2.6 million toward the purchase, and O’Connor said she was relying on Killea to win state funding for the balance.

Under the escrow extension now being negotiated, Sheldon would begin to collect interest on the $2.6 million the city has set aside for the purchase, Valderhaug said. The City Council, which approved the purchase, must vote to approve the extension.

Although $500,000 toward the purchase was appropriated by the legislature last year, another $1 million that was to have come from the environmental license plate fund was vetoed by Gov. George Deukmejian.

Tight State Budget

This year, the city is asking for a $500,000 appropriation from the state Coastal Conservancy and another $500,000 from the Wildlife Conservation Board, but both requests are far from certain because of a predicted tight state budget, Tennyson said.

“The Wildlife Conservation Board is not wild about this project,” she said. “If you took that $500,000 and took it somewhere else in California where they’re trying to preserve something, you could probably buy a lot more for the money.”

Even if both appropriations come through, the city will be $500,000 short of the $4.6-million purchase price, and it has had no success finding federal or private funding, Tennyson said.

Nevertheless, proponents of the deal are convinced it will go through, largely because they believe that Sheldon has little chance of developing the property. Sheldon, who has owned the land four years, originally proposed developing it into a 416-unit condominium complex and later offered to put up a 250-unit complex and set aside some of the wetland for preservation.

In the face of strict local and federal restrictions on the development of wetlands, Sheldon’s best option appears to be to sell the land, even if he is forced to accept less than $4.6 million, some officials said.

“They don’t have any development rights at this point, and who knows what they’d get out of the development process?,” Valderhaug said. “There’s no guarantee they’re going to get what they want. . .this is not a bad option from their standpoint at this time.”

But Caplan, Sheldon’s attorney, said his client expects to be paid the full $4.6 million. “We have a deal with them. Why would we take less if we have a deal with them?,” he said. “We have negotiated a transaction and we expect it to be consummated.”

After watching previous attempts to raise money for the slough fail over the years, Sanders, of Friends of Famosa Slough, remains optimistic and philosophical about this effort.

“Negotiations can be compared to a dance,” he said. “Sometimes you have to dance all the steps.”