SAN JUAN CAPISTRANO : Former Home of City Manager Sold

Four years after spending $280,000 to purchase a home from City Manager Stephen B. Julian for “future municipal housing,” the City Council voted unanimously this week to sell the four-bedroom, two-bath residence to a San Clemente couple for $308,000.

“I signed the escrow papers today,” David Bentz, the city’s finance director, said Thursday. The purchase price leaves the city a profit of about $22,000, he said.

Mayor Kenneth E. Friess said the deal was welcome because of the city’s “cash-poor” status.

“If you look at it from a purely business standpoint, maybe we could have hung onto it for another two years and made a significant return for the money,” Friess said. “But that’s a long time to hold on to it when you are in a cash-poor condition. Right now, $300,000 in the city coffers looks real good. And we never really intended to get into the real estate business.”

The $308,000 offer from the buyer, Richard Hassett, was the fourth and largest that the city had received, Bentz said. Other offers started at $250,000.

Escrow should take between 30 and 45 days, Bentz said. Hassett, an employee of the Orange County Sheriff’s Department, has been pre-approved for a home loan, Bentz added.

The sale closes one chapter of the tangled financial relationship that the city has entered with Julian. Bentz said the city first loaned Julian $250,000 to buy the 2,650-square-foot home at 28121 Calle San Remo in July, 1981, when he arrived to take over the city manager’s job. Of that total, $207,500 was to pay for the home and the remainder was placed in a separate account for improvements, Bentz said.

Before Julian repaid that loan, however, the city bought the home from him in November, 1987, for $280,000,

Julian’s loans from city funds, some of which were made with no interest, have been the source of controversy in recent months. A local group headed by attorney Carlos F. Negrete has sued the city and several council members over the transactions, claiming that they were a misuse of public funds.

Councilman Jeff Vasquez, who was not a member of the council when the loans were approved, said Thursday that he was glad the house was no longer in city hands.

“I’m glad to see the city get cashed out of that situation,” Vasquez said. “In my mind, I don’t think it’s appropriate for the city to be providing a housing loan for a city manager. The city manager is a government contract employee. This may be appropriate for private enterprise, but I don’t think it’s appropriate for government.”