By Jorge Casuso
September 13, 2012 -- Santa Monica sold off a piece of prime beachfront real estate for more than $13 million to the neighboring luxury hotel, a deal that will likely net the city both market rate housing at the site and cash to build affordable housing.
The deal was sealed by the City Council Tuesday night when it authorized the sale of the City-owned property at 1920 Ocean Way to the Edward Thomas Hospitality Companies (ETC), which owns the neighboring Casa del Mar and Shutters on the Beach hotels for $13,150,000.
"ETC's purchase offer represents the best combination of highest price, no contingency or due diligence period and shortest escrow period," City officials said. "The key terms of the ETC offer include… a $2,600,000 good faith deposit, no due diligence and a five-day escrow period."
The City received 15 bids between March and July for the 23,000-square-foot parcel just south of Pico Boulevard that it has owned since 1979. The bids included 12 cash offers, one of them for $15.75 million.
But Edward Thomas offered the surest deal, City officials said. The three other offers considered had strings attached, including obtaining entitlements or paying after the final tract map is recorded, steps that could have taken years.
Revenues from the sale will be deposited into the Citywide Housing Trust Fund to create affordable housing.
The revenues would likely produce between 55 and 70 new affordable housing units, based on estimates released by City officials in July.
The money comes at a time when Santa Monica's redevelopment agency was one of the 400 RDAs axed by California governor Jerry Brown to bridge a state budget shortfall.
According to Santa Monica officials, the City will have to rely on other sources of funding -- including hotel and commercial developers -- to finance affordable housing projects that would have been purchased or built under a five-year plan with about $111 million in RDA funds.
The sale to the Thomas Edwards Companies also is expected to produce market rate oceanfront apartments, according to a source familiar with the negotiations.
Former Mayor Michael Feinstein opposed the sale, saying that any new housing at the site "will be upscale and our diversity along the beach will suffer as a result."
City staff noted that if the property's new owner should "pursue development of the site, such development would be subject to CEQA review," City staff wrote.