SAN JUAN CAPISTRANO : City Delays Decision on Property Sales

Prospective buyers of several downtown landmark properties now have another month to ponder their offers.

To the relief of several merchants, the City Council this week postponed a decision on selling the properties, including the Swallows Inn, Cafe Capistrano, Paisley Penguin and El Peon. Instead, the council voted unanimously to wait for an April report from a citizens committee that is studying a new downtown configuration.

Given the city budget crisis, however, City Manager Stephen B. Julian and the majority of the council again emphasized that the property sale is imminent.

“These properties were acquired with the intention of implementing a plan,” Julian said. “Our intent was certainly not to own property in perpetuity. . . . We need to turn our property assets into liquid assets.”

The downtown properties, which comprise about six acres, were purchased in the mid-1980s when the city was planning a downtown commercial center with the San Diego-based firm OliverMcMillan Inc. That deal died last June in the face of public opposition.

“The intent was a quick flip,” said Councilman Gary L. Hausdorfer. “We would buy them, assemble them, and turn around and sell them to OliverMcMillan. Quite frankly, if (OliverMcMillan) hadn’t hit a bump in the road, they would own the properties now.”

Instead, the city spent $4.1 million for downtown properties that are returning very little in the way of revenues, except for monthly rental receipts from tenants. The council has decided to use 3.5 acres in the downtown area for a public plaza and hopes that the remainder of the property can be sold to recoup the lost revenue.