City officials will try to raise tens of millions of dollars by selling off real estate assets throughout the city, including two residences in La Jolla.
The San Diego City Council voted 7-1 on May 21 to place 17 city-owned properties up for sale through a private broker. The combined value of the properties has been appraised at about $37 million. The assets encompass a variety of properties including the two residences in La Jolla, high-rise buildings downtown, vacant lots in Southeast San Diego and elsewhere.
Councilmember Brian Mainschein cast the only vote against the proposal to sell the properties, which Mayor Jerry Sanders made in hopes of raising funds for the fiscal 2008 budget.
The La Jolla properties were initially acquired by the city between 1958 and 1960 as the city prepared a plan to extend Fay Avenue further south. It was envisioned as a parallel thoroughfare to La Jolla Boulevard that would help ease traffic congestion on that street.
In 1958, the city purchased a 4,600-square-foot house at 801 Nautilus St. for $8,500. The two-bedroom, one-bathroom house is today appraised at a value of $850,000.
In 1965, the city purchased a 9,100-square-foot residence at 6216 Beaumont Ave. for $32,295. The three-bedroom, two-bathroom house has now been appraised at $1,670,000.
The Fay Avenue extension never happened, and now the city is prepared to rid itself of the properties, which it considers underperforming assets. City Council President Scott Peters said the time was right for the city to sell the assets because it was never its intention to become a residential landlord in the first place.
“I don’t think the city is the right entity to manage them,” Peters said. “It’s not a core business of the city to own residential properties.”
Peters removed a third La Jolla property that the mayor had originally proposed to sell. A duplex at 7021 and 7023 Fay Ave. includes a two-bedroom, one-bathroom unit and a one-bedroom, one-bathroom unit. Only the smaller unit at 7023 Fay Ave. is currently occupied, but Peters pulled the property because it includes a driveway that a nearby resident uses to access his garage.
“We could just sell the whole property and he would lose his driveway, he has no legal right to use it,” Peters said.
Peters said he worried that the actual driveway for the neighbor’s property is a safety hazard because of a lack of visibility.
“I’d like to find a way to keep the driveway access,” Peters said.
The city will sell the properties through a private broker. Many of the properties are considered to be in a state of disrepair, which was one of the main arguments made for selling them off at the May 21 council meeting.
“You can’t expect the city to take as good of care of them as a homeowner would,” Peters said.
In the past, city properties have been sold by public auction. This time, the city will use a private broker. Mayor Jerry Sanders will have the power to authorize any sale of individual properties above their appraised values. He will have to seek council approval to sell any of the properties at a price lower than their appraised values.
Peters said the use of a professional broker would help the city get good bids that have been missing in past city auctions.
“Even though the broker has a cost, it’s pretty important in terms of finding buyers,” he said. “We’re setting a minimum value and expect to get a lot more.”
Donna Frye pushed for a hard cap on broker commissions at the May 21 meeting, but the commissions will be set individually then returned to the council for approval. If the properties remain unsold after a year, they would be reappraised and the minimum sale price would be reset.
Other properties for sale throughout the city include a 12-story building at 1250 6th Ave. in downtown San Diego that has been appraised at $18 million. A Border Patrol station at the Mexican border was given to the city by the state in 1974 and is currently appraised at $2.6 million.