DM council seeks ways to retire Shores property loan
All options are on the table to retire the remaining $3.25 million loan the city used to buy the Shores property last year - except one. The council agreed the city’s general fund cannot be used to pay off the loan.
“When we made this leap of faith … we promised the community we were not going to obligate the general fund,” Councilman Carl Hilliard said at a special Shores workshop June 15.
While fundraisers have contributed more than $5 million toward the $8.5 million purchase price for the property to date, donations have declined in the past year. The city held the workshop to begin planning how to retire the loan when it comes due in November 2011 if donations come up short.
Joe Sullivan, president of the Friends of Del Mar Parks, said the nonprofit is committed to the fundraising campaign, but does not think the group will be able to pay off the loan without a major contribution in exchange for naming rights to the park.
Several other ideas were discussed, including floating a general obligation bond and selling other city property to raise the necessary funds.
A general obligation bond would be paid for by all property owners in the city. Residents’ shares would be based on the assessed valuation of their property and paid as part of their property taxes.
For example, a 15-year loan with a 4.25 percent interest rate would mean the owner of a $500,000 house would pay $74 a year, the owner of a $1 million house would pay $148 a year, and the owner of a $2 million house would pay $296 a year.
A general obligation bond requires two-thirds voter approval, something all agreed is difficult to achieve.
“I personally don’t think we would have much success of getting two-thirds of the community for assessments on parcels of property.” Hilliard said. “I could be wrong. I would love to be wrong.”
Council members and residents said it would be important to hold community conversations to get a feel for voter support, or lack thereof, before spending city funds on an election.
“People seem to love it if they didn’t have to pay for it,” Councilman Don Mosier said. “The extent of their affection does not seem to go too deep.”
Selling, swapping or leasing city property is another option to raise cash. The council directed the staff to investigate unusable surplus parcels that could be considered for sale.
The council was not enthusiastic about possibly selling the multimillion Balboa property, once the site of a city reservoir with sweeping views of the ocean and San Dieguito wetlands, in the worst real estate market in the last decade. Councilman Mark Filanc said he was also skeptical about whether there is enough time to complete a sale before the loan becomes due.
Resident Dwight Worden said if the city does sell the Balboa property, citizens should have the opportunity to comment on how they would like the revenue spent, which may or may not be on the Shores property.
More in-depth workshops on each of these topics and others, such as generating revenue from the Shores site itself, will be held later this year with the goal of deciding how to proceed by November.