Laguna Beach will offer $23 million to purchase the closed St. Catherine of Siena Parish School, moving forward on a landmark deal 16 months in the making.
The Laguna Beach City Council unanimously voted Tuesday to enter a 120-day escrow with the Diocese of Orange on the 6.5-acre property. The City will put down a $690,000 refundable deposit to start its environmental analysis of the site.
With widespread community support for the purchase, the more puzzling question for the City Council was how to best finance the deal. About half of the purchase price will be funded by city savings accounts including $4 million set aside for future city facilities. Councilmembers will also spend $2 million in federal funds received via the American Rescue Plan Act.
The City Council directed staff to seek an $11.5 million loan through a private placement sale to a bank that’s yet to be determined. City staffers and finance consultants are expected to return with the loan documents for council approval in October.
Gavin Curran, director of administrative services, advised councilmembers that private placement would be cheaper in the long run than a municipal bond in light of rising interest rates. City staffers anticipate securing a 20-year term loan with a 4.84% interest rate. Laguna Beach could refinance or pay off the loan after five years, Curran said.
Councilmembers evaluated selling some city investments or borrowing internally from parking and vehicle replacement funds but decided not to go this route. The investments if liquidated before maturity would be sold with a loss, City Treasurer Laura Parisi said.
“My bigger reason for going with private placement is I don’t like borrowing this much money internally. Parking funds should be used for parking. We’re going to have lots of parking demands,” Mayor Pro Tem Bob Whalen said.
The Laguna Beach Unified School District has expressed its interest in leasing a portion of the property for early childhood classrooms and other educational programs. However, the Division of the State Architect first needs to review the property for state building code requirements for school facilities. In light of that necessary investigation, Laguna Beach will enter escrow as the sole buyer.
“To use the Kindergarten portion of the facility, there’s state requirements about how the bathrooms have to be separated and if we’re going to use the property for multi-purposes there has to be separate spaces for the students versus other uses,” City Manager Shohreh Dupuis said.
After the close of escrow, Laguna Beach will pursue a master plan for the site evaluating all potential uses. A staff report identifies possible uses as a public pool, new civic center, cultural arts center, and/or parking structure. The property falls within the Very High Fire Hazard Severity Zone by the California Dept. of Forestry and Protection.
This would be the latest in a string of real estate deals sought by city officials over the last year. In May, Laguna Beach and Laguna Presbyterian Church inked a tentative deal that could add 92 spaces of public parking through a ground lease agreement for a $10 million parking structure.
Last year, the City Council voted to acquire two South Laguna properties for future public use. The $2.7 million deal was for the vacant Ti Amo restaurant and parking lot at 31727 and 31735 S. Coast Hwy. Fire officials have studied building a new fire station on the site but the plan faces opposition from the South Laguna Civic Association.View Our User Comment Policy