Tycoon Bids for Big Block of San Juan : Redevelopment: Council opts for Richard O’Neill’s offer for property in historic heart of city.

Richard J. O’Neill, a local rancher and one of the county’s wealthiest men, is expanding his vast holdings in South County by purchasing an entire downtown block across from Mission San Juan Capistrano.

In a closed-door meeting, the City Council decided to negotiate exclusively with O’Neill and a partner for the commercial property in the heart of the historic city.

O’Neill, 70, won out over a Riverside-based investment group that offered the city exactly the same $1.1-million bid. The decades-old unreinforced brick buildings, including a former City Hall, need extensive retrofitting to bring them up to earthquake standards.

Councilman Jeff Vasquez said Wednesday that O’Neill’s standing in the community convinced the council his group was the better choice to buy the block.

“The O’Neills have created a tradition in this city,” Vasquez said. “I think the feeling of the council was that, with the O’Neill family’s commitment to San Juan Capistrano and their generosity here, they would be more sensitive to creating something that fits within our parameters.”

Both of the finalists for the property owned by the city’s redevelopment agency were well qualified, but the council knows the O’Neill family better, said City Manager George Scarborough.

“The purchase prices ended up the same, so the council made a decision not on financial issues,” Scarborough said. “It just came down to different approaches made by both groups. I think the majority of the council is more comfortable with Mr. O’Neill and his group.”

The council directed the staff to negotiate with O’Neill in an executive session held Tuesday night.

However, the other finalist questioned the council’s action, although he is still in the running if the city cannot complete a deal with O’Neill.

As recently as last week, Riverside Commercial Investors had been informed it was the highest bidder and would probably be the council’s choice, Rufus Barkley of Laguna Beach, a co-owner of the company, said Wednesday.

“I’m frustrated and upset,” Barkley said. “We have some serious concerns with regard to the process we have been put through. What apparently happened . . . is that O’Neill changed his offer.”

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City officials said O’Neill teamed with another bidder, Steve Nordeck, the owner of the legendary Swallows Inn, and matched RCI’s offer.

“If negotiations are not successful with O’Neill, our expectation is we would approach one of the other parties and come to a successful conclusion with them,” Scarborough said. “Both groups are very qualified and there is no real possibility for a bad decision.”

The sale comes at a time when the city is studying revamping the entire downtown near the 218-year-old mission. Among the possibilities is a realignment of Ortega Highway to Verdugo Street, directly behind the property O’Neill is negotiating to buy.

Meanwhile, San Juan Capistrano real estate brokers hailed the expected sale as a boon to the community.

The price also seemed appropriate for 17,500 square feet in three aged buildings that could need major investments of time and money, said Wit Muller of Muller Commercial Real Estate.

“I’d call it a fair deal for both the buyer and the seller,” Muller said. “I don’t think they stole it or necessarily got a great bargain. They entered into an unknown situation with property like this . . . so maybe they got a good deal and maybe they didn’t.”

Muller added that he was “pleased it is going to people in the community who are interested in the community.”

If the deal closes as expected, O’Neill will extend his already formidable holdings in San Juan Capistrano and the South County. His family owns the 40,000-acre Rancho Mission Viejo, and O’Neill is chairman of the board of the Santa Margarita Co., developers of master-planned Rancho Santa Margarita.

In San Juan Capistrano, O’Neill owns the El Adobe restaurant, where then-President Richard M. Nixon liked to dine, and the former Tiny Naylor’s restaurant along Interstate 5, which has been closed for years.

In 1992, Forbes Magazine listed O’Neill--a former chairman of the state Democratic Party--as one of the 400 richest people in the country with an estimated wealth of $275 million.

He could not be reached for comment Wednesday.

Block Purchase

The purchase of a block of downtown will expand the O’Neill family’s holdings in San Juan Capistrano. The acquisition, next to the historic mission, has some landmarks of its own.

1) El Peon Building

Built: 1966

Square footage: 13,500, including courtyard

Tenants: Variety of retail booths that sell Mexican and Latin American arts, crafts and jewelry; bakery; Guatemalan clothing store and pottery yard

2) Old Pharmacy Building

Built: 1931

Square footage: 4,350

Tenants: Cafe Capistrano, ice cream shop, Western art gallery and jewelers

3) Original City Hall

Built: 1925

Square footage: 4,100

Tenants: Retail shop, photography studio and office space Source: city of San Juan Capistrano