SAN JUAN CAPISTRANO : Swallows May Find a Big ‘For Sale’ Sign

On this St. Joseph’s Day, the swallows returning to San Juan Capistrano could be flying into a downtown that’s been placed on the market.

Faced with a budget crisis and city employee layoffs, the City Council tonight will decide which of its historic downtown properties, including the well-known Swallows Inn bar, should be offered for sale. Much of the heart of the downtown area, nearly 3 acres in all and including many landmarks the city’s Redevelopment Agency has acquired during the past decade, must be sold to help deal with a city budget shortfall of more than $1 million.

Along with the Swallows Inn, the entire two-block area across Ortega Highway from Mission San Juan Capistrano, including the El Peon gift shop and the Cafe Capistrano, are included in the package. The property is being leased to local business owners on a month-to-month basis, said Jeff Parker, assistant to City Manager Stephen B. Julian.

But those lease arrangements are only temporary and must soon make way for a deal more profitable to the city, officials say.

“It seems to me we have a lot of valuable property lying in limbo . . . not providing any income,” City Councilman Gary L. Hausdorfer told a budget session discussing the downtown property last month. “We’re going to have to do something downtown to rejuvenate the area and create some revenue.”

Renovating much of the downtown area has been at the center of city plans for the past decade. Most of the property the city is now considering selling was included in an ambitious downtown commercial project that called for a 125-room hotel, restaurant and shops.

That plan, drawn up in 1985, was killed last year after it was met with fervent opposition, much of it from local historical preservation groups who argued the project would destroy precious local artifacts. Instead, with much fanfare, the city decided to create a 3.5-acre downtown park with an amphitheater and museum called the “historic town center.”

That park, however, will not bring in the much-needed revenue the city would reap from a commercial project. City officials hope the sale of what is left of its downtown property will do that, Parker said.

“These properties were incorporated into that whole downtown concept,” Parker said. “That’s why we bought them originally. But, since we’re not going to be doing that project, this is the time to move forward with something else.”

All of the current downtown tenants will be able to bid for the property they currently occupy, Parker said. A recent appraisal of the Swallows Inn and its next door neighbor, the Paisley Penguin, showed a value of about $600,000, or nearly twice what the city paid for those parcels back in the mid-1980s.

At least part of their value could be based on another decision the city is expected to make tonight concerning whether to realign Ortega Highway through the downtown area. If the highway is moved half a block south, as is proposed, more of the area would have street frontage and traffic could flow more smoothly, said local developer Paul Farber, who built the Franciscan Plaza across Camino Capistrano from the project area.

“It would a much more marketable property (with the realignment),” Farber said. “You would have a much better retail area, with a great window for those businesses.”

Brandon Birtcher, managing partner of the Birtcher Real Estate Group and a prominent downtown San Juan Capistrano property owner, said he believes that the city must come up with a master plan for the area so potential developers can know where they stand.