Much of the city’s need for parks and recreation space could be met if officials succeed this week in outbidding two developers competing to acquire a 35-acre parcel of land on Trancas Canyon Road — popularly known as Trancas Town — that is the subject of a bankruptcy proceeding.
City officials are saying little about their last-minute move to acquire the property, parts of which are flat and suitable for ball fields. But according to a source with knowledge of the bankruptcy proceedings, creditors in the case have been negotiating separately for several months with the two developers and are supposedly leaning toward a purchase offer by developer Dean Isaacson, who is also building 38 townhomes on property adjacent to Trancas Town.
The two bidders have been trying to create a plan the creditors committee will accept to reorganize the project. In the plan by Isaacson, he would bring in $900,000 in cash to pay off the first, second and third trust deeds. The other creditors (there are supposedly 10 trust deeds on the property) must agree to accept a percentage of the profits off the back end when the completed homes are sold.
The 35-acre parcel is currently zoned by the city for seven five-acre lots, although, in the past, it was zoned for as many as 57 homes.
A foreclosure sale on the land had originally been scheduled for last November, but U.S. Bankruptcy Court Judge Kathleen Lax halted the foreclosure when the land became the subject of a Chapter 11 bankruptcy proceeding. The parties have been negotiating since.
Apparently, in an attempt to wind up those negotiations, Lax scheduled a new foreclosure sale for Sept. 13 in the event the parties cannot strike a deal.
She has also set aside Sept. 8 and Sept. 10 for hearings on the matter. If the negotiations fail, she will let the foreclosure proceed on Sept. 13 .
It is far from clear what the city could do at this late juncture. If it were to come in with a cash offer to pay off the creditors, which sum reportedly totals more than $3 million, the situation could change rapidly. The city could also bid at the planned foreclosure.
According to Planning Director Craig Ewing, city officials got wind of the foreclosure sale less than two weeks ago. In a special City Council session last week, council members instructed Finance Director Bill Thomas and Interim City Attorney Richard Terzian to initiate negotiations on behalf of the city with the creditors in the case.
At a special Planning Commission meeting last week on the city’s possible acquisition of the property, Isaacson prodded commissioners and Ewing to reveal the city’s planned purchase offer. But city officials, at least publicly, are not talking. The purpose of the commission meeting was to determine whether such an acquisition by the city would conform with the General Plan, and the commission voted unanimously that it would.
If the city succeeds in topping Isaacson’s, or anyone else’s, bid, it could go a long way toward solving its needs for recreation space. The state parks department has repeatedly told the city it wants to remove the ball fields from Bluffs Park. Additionally, the city would like facilities for a community center.
The city could also sell the portion of the Trancas Town property it does not need — with its ocean views, a highly valuable parcel — and perhaps reap a huge windfall.
But the city may have entered the picture too late to cut a deal, said Alan Block, an attorney who has worked on the case.
“There is nothing improper for the city to come in and bid on this, but I suspect the bank will approve one of the two [other] plans,” said Block.