City Beat

by Eric Wolff

November 2, 2006

High-level staff in the office of San Diego Mayor Jerry Sanders influenced the discounted sale of city land in La Jolla to a Jewish student organization, according to documents filed in court last week.

The filings accuse Jim Waring, Sanders’ deputy chief operating officer for land use, of compelling an appraiser to reduce the price of the property by more than $400,000 at the behest of the mayor himself. The deal raises questions about whether the mayor violated city policies governing discounted land sales.

UCSD Hillel, the student group, wants to build a community center on a three-quarter-acre parcel of land at the corner of La Jolla Scenic Drive and La Jolla Village Drive. Negotiations for the property have dragged on for years, starting back in 2000. In early appraisal, an appraiser set the value of the land at $1.1 million, but then reduced it to compensate for work Hillel would have to do, such as moving sewer lines and building sidewalks. The sale price then became $780,000.

But by the time the deal was set to come before the City Council for approval, city law required a new appraisal. A preliminary appraisal set the value of the property at $1.36 million. The higher figure derived in part from rising land costs, but mostly was based on the determination that the improvements mentioned in the first appraisal would be needed only if the community center were built. Part of Hillel’s purchase would include land currently serving as a street. Taking over part of the street would require moving the sewer main and creating new sidewalks. If the land were used for the construction of two houses, the improvements would not be needed.

The final appraisal report set the price at $940,000. This was the price vetted by the city attorney and sent to the City Council in May. In an e-mail included in court documents, Waring wrote that he would not include background information about the negotiation or the discount in the report from city staff to the City Council. In a special May 9 meeting held in La Jolla dedicated to this issue, Waring told the council that the value of the land had been reduced by the appraiser because of the improvements that would be needed to build a community center but did not mention that the work would not be required if the property were residential.

The attorney for the plaintiff, Marco Gonzalez, alleges that the omission was part of a plan by the mayor and his staff to lower the price illegally.

“We’re bringing this up in a civil matter, but there may be misdemeanor-level criminal problems here,” Gonzalez said.

In a memo included in his appraisal, appraiser Gary Rasmuson wrote that the reduction was based on “a specific valuation assumption at the request of my client.” In other words, his client, the city of San Diego, asked him to lower the price. In the pages of the appraisal itself, Rasmuson wrote, “The market value under a two-lot development is higher than the proposed Hillel plan. This alternative value estimate as a two-lot residential development is not presented at the request of my client.”

According to e-mails submitted with the court documents, Sanders had met with Hillel’s development consultant, Dene Oliver of OliverMcMillan, on three occasions in the winter and spring of 2006, well before the final appraisal report was filed. Sanders delegated the task of working out a deal to Waring. Oliver, who was working pro bono for Hillel, wrote to Waring that “a price of 1.3 million will kill the deal and that is NOT Jerry’s desire.” Waring later instructed the appraiser to include the cost of the improvements in the price and submitted the lower price to the City Council.

Roads surround the undeveloped, triangular plot of land on all three sides. Across two of those roads are rows of houses, while the third looks across the busy La Jolla Village Drive at UCSD. Currently, the land sits empty with some moderately tended scrub, which is how residents of that area want it to stay.

Community groups have argued the project is too large and would overwhelm the neighborhood. Sherri Lightner, who heads Taxpayers for Responsible Land Use, the plaintiff, said she and other members have been trying to get a meeting with the mayor and have been unsuccessful. She wants to know why Oliver got access to Sanders when they could not. In response to e-mails group members sent to jerrysanders@sandiego.gov, a community outreach representative wrote, “Unfortunately, since the project is under the category of ‘land use,’ the Mayor does not have jurisdiction in this matter.”

Waring was not available for comment, but the mayor’s position, articulated by spokesperson Fred Sainz, is that a land sale like this one is simply a negotiated deal, “just like one you’d have for your house.”

Sainz scoffed at the notion of a backroom deal suggested by the plaintiff’s attorney, Marco Gonzalez, in his filing.

“This is a complete fabrication by Marco, and it will fall on the judge’s deaf ears,” Sainz said.

Taxpayers for Responsible Land Use are asking for an injunction to temporarily halt the land sale, which is expected to be completed on Friday, Nov. 3.

In addition to the question of backroom dealings, a key to the case is an interpretation of City Council policy on land sales. The policy typically does not allow negotiations for land sales, but it makes exception or nonprofit groups. In those cases, it calls for a “fair market price” and says that any discount on that price must be approved by a council resolution. The report to the City Council made no suggestion of a discount. But it also gave permission to the city manager to negotiate deals with nonprofits. The function of the city manager now resides in the mayor’s office under a new form of government that began in January.

So, was it a negotiation or a discount?

City Council President Scott Peters, who represents La Jolla, said through his spokesperson that he believes the valuation issue was adequately aired at the May City Council meeting and declined further comment.

The deal was vetted by the city attorney’s office, but none of the three lawyers on the project is still employed by the city, and CityBeat was unable to get comment from anyone else in the office.

Lynn Heidel, an attorney representing Hillel in the sale, but not the lawsuit, said, “I know of no backroom deal” and declined further comment.

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