One month after San Diego Mayor Kevin Faulconer agreed to buy a defunct indoor-skydiving property downtown for $7 million without the benefit of a current appraisal.
County assessors have completed a new valuation of the two parcels, placing the value at the same amount — $7 million.
Correction: This story and headline have been corrected from the original posting, which reported a lower amount for the county assessment. The mistake was the result of county officials providing the San Diego Union-Tribune a value for only one of the two parcels that make up the property.
County officials completed their reassessment for the former indoor skydiving center last week, about six months after the property was seized in foreclosure.
The report estimates the value as of the last private transaction, in September. No new assessment will be performed because the property has now been purchased by the city, which does not pay property taxes.
Faulconer recommended that the City Council approve the purchase of the two parcels at 14th Street and Imperial Avenue early this year. The 26,000-square-foot building is slated to become a “navigation center” to help find permanent housing for homeless people.
Faulconer’s report to the council stated that the property was worth up to $22 million, even though the tax assessment at the time valued the property at $5.8 million. The report omitted any mention of a $330,000 lien against the property.
Escrow opened and closed within days, under terms demanded by the seller, a family trust represented by financier David Malcolm.
City spokeswoman Katie Keach told U-T Watchdog last month that no new appraisal was required and the sale price was reasonable based on multiple reviews by real estate professionals.
One document the city referenced was a two-page broker’s analysis of the property from December 2017. That report by ECP Commercial specifically stated that it was “not a formal appraisal” and “no physical due diligence has been performed on the property.” Another report the city relied upon was performed for a previous owner 18 months earlier.
In a statement Thursday, the city said the prior analyses were sufficient to protect the city from overpaying.
“The city relied on an appraisal from a member of the Appraisal Institute (MAI), dated June 13, 2016, which concluded a value upon completion of $22 million; and a broker opinion of value, dated Dec. 1, 2017, which concluded a market value of $15 million,” the statement said. “Since the value of real estate in the downtown San Diego market has continued to increase over the past year, it was reasonable to assume that a purchase price of less than half the most recent valuation was in the best interest of taxpayers.”
The facility closed within months of construction due to design flaws in the wind tunnel. Coronado businessman Alan Fink lost the property to Malcolm’s Suncoast Financial in September. It was then transferred to 1401 Imperial Holding Co. LLC, the transaction that triggered the recently completed assessment.
Faulconer said the former skydiving center would be a good place to open a “housing navigation center” to serve the growing downtown homeless population. The city said it would cost less than $300,000 to renovate the facility into a homeless-services center.