Premium Price for Dana Point City Hall Studied

The Orange County district attorney’s office is studying the City Council’s recent decision to buy the City Hall building for more than $1 million in excess of its appraised value.

According to a July 26 memorandum written by the city manager and sent to council members, the district attorney’s office is acting on a complaint about the price paid for City Plaza, a two-story, 32,600-square-foot building at 33282 Street of the Golden Lantern.

The memo, obtained by The Times, indicates that Deputy Dist. Atty. Bruce Moore requested complete details about the sale in a letter dated July 17.

Moore declined to comment on the inquiry.

After years of searching for alternative locations for a new City Hall, the council in May voted 3-0 to pay $4.05 million to Moba Development and Management Inc. for the building, although it had been appraised for only $2.95 million. The city paid cash with money saved since 1989, Councilwoman Judy Curreri said.

Curreri, Mayor Karen Lloreda and Councilman Harold R. Kaufman cast the votes, with council members Toni Gallagher and Bill Ossenmacher absent.

Lloreda said there was no other building available in the city that could accommodate City Hall without major renovations. The council also determined that buying a lot and building a City Hall would have cost $1 million more, she said.

“When you look at the whole picture, we made a very good purchase,” said Lloreda, noting that the city will recoup some money by leasing out part of the building. “We saved the costs of moving, we saved the $32,000 a month we were paying in rent . . . we saved money every which way.”

The owner had paid $7.5 million for the property, Lloreda said.

Curreri said she is confident there was nothing wrong with the sale. The city had been renting space in the building since Dana Point incorporated in January 1989, and the council majority decided to buy it only after months of study and consideration of many other local properties, she said.

The council’s rent of $32,000 a month was due to increase 20% at the first of the year, Curreri said.

“I still think it’s a good deal,” Curreri said. “We looked all over town, and a lot of other buildings had problems.”

But other city officials and local activists were highly critical of the deal.

Jack Roberts, a former real estate broker and longtime council critic, said he had never heard of anyone paying that much more than the appraised value.

“They in effect gave the owner a $1.1-million tip,” said Roberts, who has been in real estate since 1964. “I have never, ever seen this happen before. I’ve seen people go in and bid against each other in a real hot market, but nothing like this.”

Ossenmacher, who had told council members before the sale that he opposed the deal, said he would have voted against it if he had not been sick the night of the meeting. Ossenmacher said he had heard his colleagues’ reasons for approving the sale and was not impressed.

“I would have opposed it for the same reason I wouldn’t have spent my own money that way,” Ossenmacher said. “If I wouldn’t spend my own money for it, I wouldn’t pay $4 million of the taxpayers’ money for it.”

Susan Cannan, Dana Point’s director of finance and administration, sad the city had hired CB Commercial Real Estate Group as a consultant to oversee the sale. The city and the property owner equally shared the $40,500 fee to CB Commercial, which included all costs of the appraisal as well as the necessary pre-sale environmental and structural studies.

Cannan said the city is looking for a property management firm to help lease the remaining space in City Plaza. The city occupies about 13,500 square feet of the building on its second floor.

Interim City Manager Dayle Keller, who was not working for the city at the time of the sale, declined to comment on the district attorney’s inquiry other than to say that “we expect this to be concluded very shortly.”