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Santa Monica to Pick Buyer for Prime Oceanfront Land
By Jorge Casuso
July 6, 2012 -- What's half an acre of land on Santa Monica beach worth? In just two months, the City has received 15 bids for a parcel of land just south of Pico Boulevard, with the highest offer coming in at $15.75 million. Cash.
The City Council Tuesday is expected to direct staff to sell the 23,000-square-foot parcel it has owned on the beach next to Casa del Mar and use the money from the sale to build affordable housing elsewhere in Santa Monica.
"The letters of interest include 12 cash offers, as well as one proposal to exchange property, one proposal to increase affordability on deed-restricted units currently in development, and one proposal to best any offer by 10 percent," according to staff.
City officials anticipate that the intense interest in the site -- which is just southwest of the 13-acre parcel the City purchased from RAND for $53 million a decade ago -- could lead to a bidding war.
"Staff believes that direct negotiation with interested buyers is in the best interest of the City, as that approach would allow for competing and counter-offers among multiple buyers," said the report prepared by Jim Kemper, the City's housing administrator.
"This process is expected to achieve more favorable terms including the best price, minimal contingencies and a short escrow period," Kemper wrote.
Kemper declined to release the names of the bidders, but said the prices offered did not surprise him.
"That is a prime piece of real estate," Kemper said. "There's not a whole lot of vacant pieces of land" along the beach.
The top cash offer, Kemper said, is contingent on the buyer obtaining a final tract map that outlines how many condominium units could be built. Other offers, he added, did not have similar contingencies.
If the City sells the property, which it has owned since 1979, for $15.75 million, it could build some 60 to 80 affordable apartments at another site, depending on location, land price, and construction costs, staff said.
The second highest price offered -- $12.5 million -- would produce 50 to 65 affordable apartments, staff said. If the City chose to build the units at the current oceanfront site, it could build between 25 and 36 affordable units, but it would have to invest $5 to $16 million.
"The broad funding range stated above reflects a variety of development scenarios involving number of units, parking costs, and uncertainty about successfully leveraging the highest level of tax-credit financing," Kemper wrote.
The City's offer to sell the property came after plans in 2008 to swap the land with Edward Thomas Companies, which owns the Casa and Shutters hotels, for the company's lot at 1828 Ocean Avenue failed to materialize.
Kemper declined to say if Edward Thomas made a bid on the property for sale, which abuts Casa to the south.
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