The Capistrano Insider

The Fall Out of An Unfinished Community

Attorney Robert DeNichilo, representing the homeowners in the unfinished Pacifica San Juan project off Camino Las Ramblas, made this presentation to the Capistrano Unified School Board on July 6. Trustees did not act that night, but some said they found it an intriquing issue and asked staff to look into it. The city will also receive some money when the bond is actually issued. The money being collected now is apparently going into a bank account.

Also posted on the Beyond the Blackboard blog.

 

Good evening. My name is Robert DeNichilo, and I am corporate counsel for the Pacific San Juan Community Association. I have been asked by residents of Pacifica San Juan to address you this evening, and I thank you for your time and attention.

 First let me address the question of “why are we here.”  Pacifica San Juan comprises Community Facilities district 98-1 of the Capistrano Unified School District.  When the district was originally formed, the economy was in a very different state than it is today.  It was an era we now recognize as a housing bubble, and where demand far outstripped supply.  At that time, Pacifica San Juan was envisioned to be a community of 416 homes.  It was anticipated that such a community would have a large and real impact on the city, and in particular the school district and the services it provides its residents.

That was the environment where the rate of special tax to be levied was calculated.  An environment where it was envisioned that a 20 million dollar bond would be required to offset the impact of Pacifica San Juan on the school district, a number that was increased to 45 million dollars a few years later.  However, as we all know, we are in a very different situation today.

Rather than a community of 416 homes, Pacifica San Juan today, and for the foreseeable future, is comprised of 61 homes, only 54 of which have been sold and have families living in them.  Of these 54 homes, there are only 10 children attending school in the district.  Clearly this is a very different level of impact on the district than that which was envisioned when the CFD was created, and no one would have envisioned that it would take over 26 thousand dollars per student per year the residents have been taxed, or the 46 thousand dollars per student per year that I understand is being proposed, to offset the impact of the 10 children from Pacifica San Juan on the Capistrano Unified School District.

Despite the change in circumstances from what was anticipated at the time that the rate of special tax was determined, there has been no review of the real impact of Pacifica San Juan on the school district.

One impact is that there has not been any need for bonds to be issued.  In fact, until there is a significant change in circumstances it is unlikely any bonds will be issued. Further, once things do change, and development begins again, it is highly likely that any new developer will seek to change or eliminate the CFD, as the current rate of special tax negatively impacts on the marketability of the property.  In fact, it is my understanding that this may already be occurring in another community in the district.

We are in a unique situation here in light of the fact that no bonds have been issued in this CFD.  The Board is not hamstrung with debt that must be repaid by the special tax.  Rather, pursuant to Government code section 53330.5, this Board has the authority and power to reduce the rate of special tax currently being levied on the properties in Pacifica San Juan.  It is my understanding that this has been done by other districts where development in a community comes to a halt, as has happened in Pacifica San Juan.

The residents of Pacifica San Juan would like to work collaboratively with the Board to lower the rate of special tax on this CFD, with flexibility that may be required as circumstances change and development resumes.  In this light, pursuant to government code 53332, the residents will be filing petitions requesting that the Board adopt a resolution reducing the rate of special tax on Pacifica San Juan.  We look forward to working with you on this issue in the coming days.

Report: Mammoth Equities Buildings in BK

The Orange County Business Journal is reporting the Mammoth Equities buildings on Rancho Viejo Road are in bankruptcy.

From the story:

A San Juan Capistrano-based development built for small office users in 2006 has fallen into bankruptcy, according to court records.

Mammoth San Juan Capistrano I LLC filed for Chapter 11 bankruptcy this week in state court in Santa Ana.

The filing lists the company having between $10 million and $50 million in liabilities.

The company appears to be the registered owner of the Mammoth Professional Office Park, a two-building, 105,745-square-foot office complex built during the commercial real estate boom on the hills overlooking the San Diego (I-5) Freeway.

Click here for the link to the entire piece.

City Hosting Visioning Meeting

From the city:

The City Council on June 15 will host a public workshop to help guide the City in creating a mission and vision statement, the first of other public workshops designed to enhance the overall quality of life for those who live, work and play in San Juan Capistrano.

San Juan Capistrano is a community that is proud of its distinctive character, history and natural beauty. City leaders appreciate the need to take an active approach toward preserving and building on the City's valuable assets in order to ensure the continued viability of the community.

The City must maintain a careful balance between preserving what residents value about San Juan Capistrano and actively deciding how to preserve the character of San Juan Capistrano and the City's ability to provide services in modern Orange County.

A "mission statement" and "vision statement" can articulate what the community values about San Juan Capistrano and the City's role in preserving and enhancing the same.

The council will discuss challenges and opportunities to achieving the mission and vision as well as opportunities to advance those objectives. Discussion will also focus on identifying how the community can help City Hall achieve the mission and vision.

Council members will also consider recommendations for enhancing economic development in San Juan Capistrano's downtown by the Mayor's Internal Subcommittee to the Chamber of Commerce Economic Development Committee. Committee members have studied past downtown redevelopment plans and existing conditions. They've considered current proposals and engaged major stakeholders to develop a recommended course of action for revitalizing San Juan Capistrano's Historic Town Center.

The public is invited to attend the meeting and provide input.

The meeting starts at 2 p.m. June 15 in Council Chambers at City Hall, 32400 Paseo Adelanto.

City Manager Adams Addresses Chamber Committee

San Juan Capistrano City Manager Dave Adams addressed the Chamber of Commerce Governmental Affairs Committee this morning, touching on a range of topics that will have a big impact on town.

I didn't jot them all down, but here's some of the keys that haven't been talked about as much as some of the others:

* Public Improvements: Adams said several large projects will start later this year, including reconstruction/widening of the intersection at Rancho Viejo Road and Junipero Serra, the reconstruction of the intersection of Camino Capistrano and Del Obispo and the widening of the Trabuco Creek Bridge.

* Downtown: Initial plans for the new hotel on the old Mission Inn property across from the Mission have been submitted to City Hall. The challenge: To make the project pencil out, it has to be a certain size, and the property's not that big, so the project has to go up. Three or four stories, taller than currently allowed and in the sensitive spot next to the MIssion. Mechelle Lawrence, excecutive director of the Mission, said the board discussed it this week. No endorsement yet.

* Transportation: The Ortega Highway widening east of town will go on another year. The city is still working with Caltrans to find something acceptable for the stretch of Ortega from the Hunt Club east.

* Extending La Pata into San Clemente would cost $60 million, and San Clemente isn't pleased with the current plans. That project, Adams said, was 2015-2016, at best.

* Business: The city's watching the potential bankruptcy of General Motors carefully, because of Weseloh Chevrolet in town. The city has been over-reliant on income from car dealerships, Adams said, and has a couple of studies moving forward to help address that.

* A new Costco, with fuel sales, could be under construction on city-owned land off Stonehill in a year to 18 months -- providing residents from the adjacent Capistrano Valley Mobile Estates don't put up too much of a fight. That move would increase the city's sales tax, diversify the economic base, and make way for a Target or similar store to move into the current Costco location.

* The City Council asked staff to look at a head tax for private schools. That, Adams, said, would require voter approval, and likely spur a backlash from private-school parents who would argue they spend money in town at various shops and restaurants while they're here. (About 25 percent of the students at St. Margaret's are SJC residents ... I've heard similar numbers for other private schools in town.)

* Budget: Adams noted the city spends about $7 million a year on police services. That's up from last year, but running our own police department would cost twice that, Adams said. He also noted the city hasn't added an additional deputy to the local force in a decade, despite the growth of the city.

Councilwoman Laura Freese was also there. She added a couple of tidbits:

* A committee is working on celebrating San Juan Capistrano's 50th anniversary of incorporation as a city. (They're working way ahead: The city incorporated in 1961.)

* The City Council is exploring a marketing campaign for local business, potentially involving television commercials and ads in travel magazines. (Trivia: Did you know San Juan Capistrano has 73 food-service establishments? They generate $596,000 in annual sales tax, but the city's losing another potential $1.1 million when residents eat elsewhere.)

Here's a staff report from the initial idea.

William Lyons Homes: Big Cuts, Big Losses

Jonathan Lanser over at the Orange County Register is reporting that Newport Beach-based William Lyon Homes has lost about $69 million this year and is working on half as many projects as last year.

A big chunk of the losses was write offs for property no longable economically viable for construction.

Lyon Homes, of course, built the 120-unit Rancho Madrina on Rancho Viejo Road in San Juan Capistrano.

Here's his full post: http://cli.gs/5Mge7V