Land Deal May Open ‘Gateway’ for Town’s Entry

For the past decade, most residents paid little attention to undeveloped property near the Art-a-Fair grounds at 725 Laguna Canyon Road. If pressed, they might recall purchasing a Christmas tree there, watching brush-clearing goats at work or seeing it overflow with the parked cars of festival-goers in summer.

But now that the city of Laguna Beach made a deal to buy the two parcels totaling 3.8 acres, for $5.3 million, locals are taking notice. Some, such as City Council member Steve Dicterow, see the property as a potential “game changer” in the contentious debate over whether the city should proceed with a costly $42 million park and parking structure on land that abuts the new purchase.

Currently owned by Ventura Laguna, LLC, and managed by Jonathan Hansen of Newport Private Capital, the property’s only consistent use for the past 12 or more years has been its transformation into a pay parking lot during the summer art festivals and a Christmas tree sales lot in December.

At least three development proposals for the land never made it off the ground.

Back in 1998, Laguna Beach architect Horst Noppenberger, working on behalf of Don Fox Greene, agent for the parcel, advanced a concept for an actor’s conservatory and artists’ live/work units for the space. After three years in development, Noppenberger said the city’s 12-foot height limit at the time stymied the project. “It was going to be really interesting,” said Noppenberger.

While Planning Commission members liked the concept, they would not allow a height variance, he recalled. At the time, commission members suggested waiting for an expected rezoning. That occurred in 2000 when the area was re-designated a civic arts district. But the increased 36-foot height limit only applied to public projects until 2005 when private arts-related projects were included. That was too long coming and the applicant and owners moved on, said Noppenberger.

Two subsequent proposals also foundered, including construction and operation of a residential, commercial and restaurant mixed-use project designed by Newport Beach’s Thirtieth Street Architects in 2002. A 2007 proposal by Newport Private Capital for 31 artists’ live/work units was rejected by the Planning Commission in 2008 because they found it too big for the site, city records show.

Over the years, the city periodically approached the owners to gauge their interest in selling the property, but agreement on a fair price proved elusive, City Manager John Pietig said.

This time, the owner showed an interest in selling and agreed to a price after negotiations that Pietig said factored in “the value and availability of vacant and developable land in Laguna Beach, the proximity of the property to other city property, the possibility that this property may assist with beautification of the Village Entrance, and the interest of other potential buyers that were reportedly interested in the property even though it wasn’t officially on the market.”

As to why the owners finally agreed to sell now, Pietig couldn’t say, and Hansen, the property’s agent, failed to return repeated phone calls.

Gauging whether the city obtained a fair market price isn’t easy, as there are few comparable pieces of undeveloped commercial land for sale in Laguna, several local realtors attested.

Local resident and real estate investor Mike Meyer, of Newport Beach-based Twin Rock Partners, said he and a colleague had recently estimated the value of an acre near El Toro Road at about $1.5 million. So, a price of $1.4 million per acre for prime real estate closer to town, Meyer figured, “that’s a good deal for the city.”

Meyer also pointed out the frustration for private owners when repeated attempts to develop a property fail to make it through the city planning process. And private developers may have less interest in a lot that abuts city property, whereas for the city “it’s an incredible parcel,” he said.

A price of $32 per square foot seems like a great deal for the city, said local resident and commercial property broker Paul Meyer.

Monetary value aside, the true value of the parcel may lie in its potential to alter discussions on the village entrance project. Currently proposed as a park and a parking structure, city officials have indicated some willingness to change the project’s parameters based on public input from a workshop scheduled for Nov. 12. Mayor Pro Tem Elizabeth Pearson confirmed the site’s capacity for 65 to 75 parking spaces, which some already see as a means to remove the parking structure from the equation all together.

“It is a gateway property,” said Noppenberger, and that may prove true in more ways than one.