Deal conserves land, perhaps not tax dollars
Eight years ago, Brian A. Sweeney, a Manhattan Beach real estate investor and developer, began buying land in the Santa Monica Mountains.
As environmentalists watched, he persuaded owners to sell him 26 parcels of prime coastal real estate. Piece by piece, he got L.A. County permission to alter boundaries that added road access and filed plans to develop homes. When he was done, Sweeney had quadrupled the market value of the land, without hammering a single stick into the ground.
In December, Sweeney sold 626 acres of that real estate in Corral Canyon to a conservation group, and he plans to sell 199 more acres by late summer, for a profit of about $12 million and a $7.4-million tax write-off.
Conservationists have hailed the deals, involving $17.2 million in public money, as a rare opportunity to link protected mountain land with the coast without negotiating parcel by parcel and without lengthy legal battles. Sandwiched on nearly all sides by local, state or federal property, the canyon fits like a missing puzzle piece in the patchwork effort to preserve wildlife corridors in the Santa Monica Mountains.
But the deals have left some pondering whether state agencies paid a premium for land that was in no imminent danger of development.
“People all day long threaten development, but a threat doesn’t mean anything if there’s no way of actually getting a development on a property,” said David Myers, executive director of the Wildlands Conservancy.
Sweeney said he was doing what any good real estate investor would do with property. “When I buy a piece of land, I see what the law allows you to do with it,” he said. “I’m really trying to add something of value to the property and getting it in a position where you can sell it -- because you don’t know if the state’s going to buy it. Who knows if the money is going to run out tomorrow? You’d be waiting forever.”
Sweeney bought much of the rugged canyon land through his Denver-based company, Malibu Ocean Ranches LLC, and transferred parcels among four other limited liability companies that he helps manage.
Because no two adjacent lots belonged to the same owner, each was treated separately and did not get the scrutiny that would come with a multi-parcel development.
Los Angeles County Planning Department and California Coastal Commission records show Sweeney made four lot-line adjustments and acquired a 60-foot-wide easement for road access. He also obtained certificates of compliance, required before development, and was given the go-ahead to build five single-family residences. Sweeney received permits to remove at least 30 oak trees.
What looked like a canyon divided among various owners, upon closer scrutiny, started to look like a major development.
“The issue is: can you build in such a pattern that is really environmentally destructive, putting these paths in, roads every which way, without taking a look at the whole thing?” said Joseph T. Edmiston, executive director of the Santa Monica Mountains Conservancy, which will help preserve the southern property. “You can’t do bits and pieces and put it all together and say, ‘Voila!’ you have this big project. Well, under state law you can now.”
Sweeney is well-known among conservationists and government officials. Legislators in 2001 tightened rules governing lot-line adjustments partly in response to his activities on coastal land farther north. Environmentalists thought he could not do anything similar this time around.
“Well, it turns out that it was, unfortunately, easier than anyone thought,” Edmiston said.
The Corral Canyon properties, located in a coastal zone, require Coastal Commission review before bulldozers can break ground. The task of processing and approving so many parcels for residential development takes years and can lead to protracted legal battles.
“The dirty work is not getting the certificate of compliance or lot-line adjustments; that’s the easy part of it,” said Gina Natoli, a supervising regional planner at the county’s Department of Regional Planning. “The hard part is developing, that’s what takes a lot of time.”
A private firm last summer appraised Sweeney’s re-jiggered parcels at $24.6 million, based on comparable property sales.
The Trust for Public Land, a nonprofit land conservation organization, helped broker the deal and contracted the appraisal. It optioned the property, then approached the Mountains Recreation and Conservation Authority, which applied for state funds.
On Dec. 28, Sweeney sold the lower 626 acres to the Trust for Public Land for about $12.6 million, according to the trust, more than double what he paid for it but well under the appraised value. The difference can be claimed as a tax write-off.
State law does not require the trust or Sweeney to reveal the option price of the transaction.
The trust sold about half the acreage to the Mountains Recreation and Conservation Authority, a local partner of the Santa Monica Mountains Conservancy, for $6.5 million. Portions of the land are expected to be sold to the authority this week and by the end of the summer. Sweeney plans to sell the remaining 199 acres to the Trust for Public Land by the end of this summer. The trust then plans to sell that land to California State Parks. Not included in the acreage is a parcel that will be donated to the Mountains Recreation and Conservation Authority.
The use of an intermediary to help broker the deal gives the government flexibility and time to come up with funding to help pay for the land, according to those familiar with such transactions. But some also find the practice too opaque.
“The problem is the way these groups operate,” Myers said. “They say these appraisals are privileged information. You can’t see it until the deal is done. But if it’s public money you should have a right to see the appraisal . . . and look at the comps and see if there are comparables of equal lands with equal worth.”
A report by the Legislative Analyst’s Office released in October criticized the lack of objectivity and transparency in the appraisals for land acquisition deals involving the state.
Since 2000, California voters have approved more than $22 billion in bond money to be used to acquire land for natural-resource protection and parks. The Corral Canyon land will be paid for mostly by money from Proposition 50, approved in 2002, and Proposition 84, approved in 2006.
Bill Fulton, president of the Ventura-based land-use policy firm Solimar Research Group, said there is no “ideal solution” to the way private lands are purchased with public funds: Government and public agencies move much more slowly than private individuals. Although the taxpayer may pay a higher price, “everything’s a trade-off,” he said.
Lack of funding
A report released today by the National Parks Conservation Assn. found that about 1,300 privately held acres in the Santa Monica Mountains National Recreation Area are developed each year, and a severe lack of federal funding over the last eight years has kept the National Park Service from preserving 25,000 acres in the mountains designated as key for recreation and habitat connectivity.
“The end result might be no land conservation at all,” Fulton said. “If you compare [this method] to the ideal of the government buying the land, it’s less than ideal. If you compare it to the very real alternative -- in many of these cases, that the land gets developed even though the public interest is to conserve it -- then it doesn’t look so bad. It’s a necessary way of doing business sometimes.”
The canyon, a watershed with a year-round stream that flows into Santa Monica Bay, has been atop the state and the local conservancy’s priority list for decades. The land winds up past Corral Canyon Park on the Pacific Coast Highway to Malibu Creek State Park. Deer, mountain lions, coyotes and bobcats roam the area, and despite last November’s fire that swept through 70% of the canyon, stands of oak trees, coastal sage scrub and chaparral subsist, sprouting through the ash.
In the early 1990s, the conservancy tried to buy 1,100 acres in the canyon from then-owner Ernest Auerbach for $11 million, but the money never materialized. In 2000, amid a real estate recession, Sweeney bought nearly half of Auerbach’s acreage for about $1.8 million.
“I don’t want to walk away from this a second time,” said Los Angeles County Supervisor Zev Yaroslavsky. “As distasteful as this is, and as infuriating as it is, it’s a deal we have to make.”
Sweeney, 47, said he has not bought new property since 2002 and has sold 1,725 of his total 3,000 acres in the Santa Monica Mountains to about 40 private buyers (not including the Corral deal).
Sweeney has been a party with the Trust for Public Land on at least three other preservation deals farther up the California coast in which he has reaped millions of dollars in profit: Bixby Ranch, Sand Hill Bluff, and Coast Dairies.
His remaining large properties, Ramirez Canyon and Malibu Creek, are being discussed for purchase by TPL and state and federal agencies.
“I’ve really slowed down in my real estate acquisitions,” Sweeney said. “I don’t think I’d be nearly as aggressive as I had been in the past. Before I got married, I was keen on buying as much of California as I could, but after . . . I’ve kind of got different priorities.”
Sweeney said his development history was limited to “medical centers in strip malls” when he lived in Toronto, and an office building in Denver.
“I think I’m going to go back into that; there’s not great opportunities in land investment,” he said. “I’ve had a lot of great parcels . . . but it takes a different mind set . . . and oversight is ridiculous.”