ENCINITAS — Two varying appraisals of the 2.8-acre Pacific View school property were posted on the city’s website last week following City Council direction.
The first appraisal, from Carlsbad-based James W. Waldorf, came in at $3.29 million. A second appraisal completed by Integra Realty Resources was listed at $7.28 million.
The city asked for appraisals of the site’s market value after it agreed to consider buying Pacific View from EUSD (Encinitas Union School District). In June, each firm was presented with the same guidelines, including taking the location’s current public/semi-public zoning into account.
To determine the value of the site, both appraisers looked at comparable properties that were recently sold.
After receiving the appraisals in closed session, council members were “concerned and curious” about the discrepancy, said City Manager Gus Vina earlier this week. So, the City Council directed Vina to sit down with both appraisers at the same time.
What the gap came down to: Waldorf’s appraisal was lower because it largely looked at inland North County areas when searching for comparable buildings, while Integra cast its net up to Los Angeles. Relatedly, Integra placed more value in ocean views, according to Vina.
“I asked both if they had reason to change their appraisals at the end of the meeting,” Vina said. “And they said ‘no.’”
Vina added that Pacific View is a “rather difficult property to appraise” given its age.
Both appraisals note that the buildings on the property are in poor condition, with significant signs of deferred maintenance. The Waldorf appraisal also mentions that the buildings have termites, and there are reportedly bees in some of the structures’ attic spaces.
The former school, located near the beach on Third Street, between E Street and F Street, shuttered 10 years ago due to declining enrollment. Since then, residents have made the case that it’s the best spot for a community arts center.
At a previous City Council meeting, councilmembers directed Mayor Teresa Barth and Councilman Tony Kranz to join Vina in upcoming school site negotiations with EUSD.
EUSD Superintendent Tim Baird, who had yet to review the city’s appraisals, said the school board would be appointing its own representatives at its next district meeting.
Baird noted that the district has reached out to real estate companies to determine how much the site is worth under several zoning scenarios. This includes gauging the worth of the site if it were rezoned to accommodate residential housing, known as R-15. If rezoned to R-15, he noted the property would become more valuable.
But with the recent passage of Prop A, some residents at a previous City Council meeting argued that a potential rezone request from the district would have to go to a public vote. Because Prop A makes it more difficult to rezone, it limits the district’s ability to negotiate over the purchase price, they maintained.
But Baird said his understanding is that an R-15 rezone request ultimately can’t be denied. That’s because Prop A, a local initiative, is trumped by state government statute. He said the government statute affords school districts the right to develop a property based on the zoning of the surrounding area if the land goes unused.
In any case, Baird said EUSD has a number of options. Notably, there’s a chance the city could purchase the property and keep the zoning as is, he said.
“We really haven’t started negotiations,” Baird said.
He said that the district’s last appraisal of Pacific View was performed about six years ago. However, that $13.5 million appraisal was based on mixed-use zoning. Since mixed-use zoning permits housing and a wider array of uses, it’s worth more than the current public/semi-public zoning.
The current zoning allows for everything from a theater to a medical complex, according to the Waldorf appraisal.
Waldorf drew upon four comparable properties to inform its appraisal: two medical buildings in Oceanside, one in Escondido and another site in Carlsbad.
Integra’s appraisal looked at four properties in Los Angeles, including land for a proposed community center and the site of a school.
It also analyzed land for a community college expansion in San Marcos and a planned sports field in Carlsbad.
Integra’s appraisal cost the city $6,000. Waldorf’s totaled $4,500.
The appraisal figures were previously only known to officials after a closed session meeting.
But Deputy Mayor Lisa Shaffer made the figures public in an email to a resident because she mistakenly thought a U-T San Diego article listed them. Later, the City Council voted to release the full appraisals.
Baird said there are no current plans for EUSD to release its land evaluations.
Two weeks ago, the city discussed its capacity for financing large investments like Pacific View.
City staff members said the city could borrow up to $3.3 million, but beyond that could risk taking on too much debt. Or the city could look at selling land along Quail Gardens Drive and other places to fund Pacific View.
EUSD and the city will be meeting in closed session this month to discuss the potential sale.