Tony Kranz reflects on Pacific View purchase

After weeks of analysis and discussion, the $10 million purchase of the historic Pacific View property was formally approved by the Encinitas City Council June 11 as part of Encinitas’ 2014-15 budget plan. The vote passed on familiar lines, with newly installed Mayor Kristin Gaspar and councilmember Mark Muir voting against it.

Encinitas Deputy Mayor Tony Kranz was instrumental in the city's acquisition of the treasured Pacific View property.

Encinitas Deputy Mayor Tony Kranz was instrumental in the city’s acquisition of the treasured Pacific View property.

Deputy Mayor Tony Kranz was arguably the primary architect of the often-grueling Pacific View purchase process, a series of unlikely plot twists that ended up snatching the 2.8-acre blufftop parcel from the hands of developers at the last minute. On the occasion of this budget-approval milestone, asked Kranz to share his perspective on the events of the past several months.

SavePacificView: Does the Encinitas City Council’s approval of the final budget mean that the Pacific View purchase is a lock?

Deputy Mayor Tony Kranz: In governing and politics I don’t know if “lock” is the right word to use. There will be another vote to approve the issuance of the bonds, but to scuttle the deal at that point would be folly, and it’s very unlikely.

So, right now what they’re doing is working with the bond counsel, and establishing all the legal documents that are necessary in order to issue bonds. They’ll be going to the market and soliciting information about what sort of interest rates and other things we might be able to obtain. A lot of work will go into the issuance of the bonds and so the likelihood that it will not be approved is pretty low.

SPV: Do you see the city council’s final approval of the budget to be a significant landmark for the purchase of Pacific View, or is it just another incremental step?

Kranz: I suppose in the big picture it’s another incremental step, but it’s a big one. It included budgeting for bond payments, and that is the key part of issuing the bonds and acquiring the site, so it’s a very big step.

SPV: After ten years of so many efforts to have Encinitas acquire the property, what do you think happened to make it all come together when it did?

Kranz: Well, that is somewhat of a mystery to me. It’s really hard to account for the way the whole thing worked out, and it was unusual enough that I was actually quite surprised that it did work out, but in terms of my desire to see that site remain public property, I couldn’t be happier with the outcome.

SPV: Can you talk about those last days when you weren’t sure you had the votes to get the property, and the auction was just days away?

Kranz: Yeah, it was pretty stressful. I served on the subcommittee with [then-Mayor] Theresa [Barth], and I had a pretty good sense of what her feelings were about the value of the land, its historical significance and the importance of keeping it public property, so I had a good sense there, but wasn’t sure how the rest would shake out.

Meanwhile, it was surprising actually to even be to the point where we were preparing to reply to the letter that we got from the school district and make that last-ditch effort to get the auction canceled.

When all was said and done, we were successful and very satisfied, so it was a great sense of relief, but I also knew that it was just one step in a long journey. There were going to be more votes that would be important and keeping the three votes in the right column was pretty important to me.

Kranz-03SPV: How did it feel in that closed session when you realized that you had the votes?

Kranz: It was very satisfying actually. I think there were a lot of people who were pretty shocked about the way the whole thing happened and it was a bit of a surprise because we were so close to not having that opportunity– I don’t think there were any expectations that we were going to get to that point. It happened pretty quickly and we got it done.

SPV: What do you say to people who criticize the price and terms of the purchase agreement?

Kranz: I say to those people that the long journey, the ten years of struggle over that property, was a very difficult period for a lot of people in this community and to see that ended was worth a whole lot.

When you get down to looking at state law having to do with the disposition of that surplus property, once it had been declared surplus, the value of the land was pretty significant and I think higher than what we actually paid for it. Of course, that was a question of law, and there are many people who thought we should have litigated this matter. But I am very happy that we are not going to be providing generous income to attorneys throughout the county while this is fought in court.

We are going to pay the school district what I think to be a fair price based upon the way the laws read, and they will use that money to further the education of the kids in the community and we will be able to use the Pacific View site as a gathering place for the community and, most likely, pursuit of the arts.

SPV: The school district had specified a $9.5 million minimum bid, and the city council countered with $10 million. What was your reasoning?

Kranz: My goal was to get the auction stopped. The city had no ability, really, to participate in a public auction of the property. The idea was to make them an offer to get them to stop their auction process.

SPV: So was it as much of a psychological incentive as a financial one?

Kranz: Psychological, from the standpoint of getting them to postpone or cancel the auction? Yes, it was. It would have been very difficult for them, politically, had they proceeded with the auction after a bid of $10 million from the city. My concern was with how much they had invested in the auction process, with rumors of bids in hand, that they would decide not to accept outright our $9.5 million, were we to make that offer, so instead we made an offer that I thought would be enough to get them to cancel the auction— which is how it worked out.

SPV: Metaphorically speaking, it’s difficult to determine how much force it takes to stop a runaway train.

Kranz: Correct; I would agree with that. In fact, when we were talking in closed session, [then-Deputy Mayor] Mark Muir was confident that the $10 million offer would get the auction called off. With his endorsement of that strategy for getting the auction canceled, we moved forward.

SPV: You said you were surprised that the purchase actually occurred. Did anything else unexpected happen?

Kranz: Yeah, I was surprised that the school district was so quick to move to the public auction. I’ve spent a lot of time thinking about things that we might have done differently to avoid getting to that point. [One factor was] probably my lack of awareness as to the toll the previous years of discussions with the city had taken on the school board and the school superintendent. I was not prepared for, how quickly when they got our initial offer, they would just say “oh no, not this again” and move right toward the auction and just pretty much break off the conversation.

Because I think in the end we probably would have been able to come to an agreement, but I approached the negotiations as if I had an obligation to work with the property in a way that was most favorable to taxpayers. I picked a starting point that I thought reflected that, and in the end, the school board was doing the same thing. They felt that they were wasting their time with trying to negotiate this, and [to] move right into a public auction, which they felt was the best way to establish what the value of the property actually was. So, they had their strategy, and I think they had the high level of frustration that I was not dialed into when we made our first offer.

SPV: Do you think the auction was also partially a tactic to get the city off the dime? Did the school district have any expectation that the city was going to react so strongly at the last minute?

Kranz: No, I’ve heard people say “yeah, we were bamboozled” and “they played us” and that sort of thing, but if you go back and look at the documents that they prepared for the auction, they didn’t appear to me to include the city as a participant in the auction. The terms of the auction, and any other requirements that were detailed in the auction instructions were not framed in a way that made it even possible for the city to participate. I think that they were fully prepared to sell the property to private parties, and in fact that is what the auction was set up to do.

It’s possible that they just modeled their auction documents based upon what the San Diego School District had done, and I don’t think the City of San Diego was prepared to buy any of those properties that the San Diego School District had. But meanwhile, I think the school district was just moving ahead with the idea that the City of Encinitas wasn’t going to participate, and that the way to liquidate the asset was to auction it off publicly and let the highest bidder take on the legal challenges of getting the city to rezone the property R-15.

At the March 27, 2014 joint press conference to announce the Pacific View purchase price, Councilmember Tony Kranz prepares to read "The Road Not Taken" by Robert Frost as School Board President Marla Strich looks on.

At the March 27, 2014 joint press conference to announce the Pacific View purchase price, Councilmember Tony Kranz prepares to read “The Road Not Taken” by Robert Frost as EUSD Board President Marla Strich looks on.

SPV: Speaking of bidders, do you have any information that there actually were people champing at the bit, ready to put their money down?

Kranz: I have no inside knowledge of that. I do know what I’ve read and heard was that there were. I haven’t seen any bid packages nor have I talked to any developers who were prepared. Most of them, I think if they were prepared, it was probably not something they were at all interested in talking about since the whole thing went the way it did. There’s no doubt that the legal challenges to a private bidder were significant, but there are some very deep-pocketed developers that had a lot of incentive, because of the value of that land, the fact it was located a few blocks from two of the greatest beaches in the world made the upside of acquiring the property for development quite high.

The school district had already sued the city years ago, and it had essentially prepared the legal framework for any private developer to file a lawsuit the day after the auction. [Click here for a copy of the December 2011 lawsuit.] The city would have found itself facing that lawsuit and either defending itself or rezoning [the property]. I think the community would have expected us to fight the lawsuit, and there would have gone a significant amount of resources towards attorney fees both by the city as well as the private developer. It’s just another reason why I look at this as “The Road Not Taken.” We avoided the litigation that was sure to come from a private developer after the auction.

SPV: Besides the pleasant surprise of having the votes, were there any other happy occurrences in this process for you?

Kranz: It was very pleasant to get a lot of thank-yous from the community. There was a surprising amount of interest in broad circles of the community in keeping the property public, so, it made me scratch my head a little bit and wonder where they were years earlier when the conversations were going nowhere. I think that our community is such that it just expects the city council to do the right thing, and there was quite a bit of applause from people who had been silent on civic matters in the past. So it was pretty pleasant.

SPV: What was it like being a part of the ad hoc subcommittee to work with the school district on the terms of the purchase?

Kranz: I went into the first meeting after we’d agreed on the price and pulled out a very famous Grateful Dead quote, “What a long, strange trip it’s been.” There was some laughter and we were all very pleased that we were past that point where there was a great deal of contention about what the value of the property was.

We got into the terms, and it was a little frustrating because there were terms being asked for the city to include that were not part of the public auction document. We were being asked as the city to add a little bit of language that I thought was unnecessary but in the end I think was about a general lack of trust that had developed in the ten years that the city and the school district had been working together on the disposition of that surplus property.

As far as I was concerned, what they were asking was moot, and having to do with the city turning around and selling the property. I just can’t imagine that happening, so to me the request that was being made was just not significant enough to cause the deal to fall apart. I advocated for not having it, but there was a basic insistence that that condition of sale be in this document, and what we came up with I thought was just not worth fighting over.

SPV: You are referring to the part of the agreement that allows the city to sell after ten years, which, if I understand correctly, you feel was a decent compromise and a fairly abstract item given the city’s commitment to the property?

Kranz: Correct. As soon as the city acquires the property, it now becomes subject to a public vote if there is any effort to rezone it, and I don’t see that happening any time in the future. So, it was just moot.

The vandalized and defaced interior of one of Pacific View buildings on June 14, 2014.

The vandalized and defaced interior of one of the Pacific View buildings on June 14, 2014.

SPV: What do you think the state of trust is now between the city and the school district?

Kranz: I’d like to think it’s improved. The fact is that the business between the school district and the city is very limited from a financial standpoint. To me, the importance of the relationship between the city and the school district has to do with how important what they do is for keeping our city great. And so, when I see the school district’s teachers winning awards, and the school district being recognized by the state on environmental issues, I take a lot of pride in that. To me, it’s fantastic to have this particular issue no longer a burr in the saddle, so to speak– a source of irritation. So, my belief that the school is the center of the community is something that I’m really committed to. While I’m serving on the city council, I like to make decisions that I think are good for the schools as well.

SPV: Can you give us any idea of what we can expect next?

Kranz: As I mentioned, there’s work by the director of finance, city manager, and the bond counsel that the city has retained to get the documents prepared to issue bonds. That will take anywhere from 90 to 120 days. There’s some continued due diligence as far as inspection of the building and evaluation of site cleanup that will be necessary to open the site to the public, so that is ongoing. There will be an agenda item coming up in the fairly near future that will lay out what the short term plan is going to be.

SPV: Is that City Manager Gus Vina’s activation plan presentation that got postponed a couple of meetings ago?

Kranz: Right. It was just outlined during the budget hearings and it was decided that the important part of that plan was to have more information about the condition of the buildings. It will get back on an agenda when we have a more detailed report on those conditions. That way we will be able to give more direction as to how to get the site open and accessible, and make use of as much as the facility as possible.

The old telephone switchboard in the abandoned Pacific View School office. (Photo by Tony Kranz)

The old telephone switchboard in the abandoned Pacific View School office. (Photo by Tony Kranz)

SPV: At a recent council meeting, a city staffer said they had received the reports, but hadn’t had a chance to analyze them yet. Have you looked at those reports? Some people say that the buildings are packed with asbestos, or maybe the ground has been polluted with oil– do you know anything about that?

Kranz: I haven’t seen the reports. The issues that you just raised– they did not have a report on those particular things. Their initial due diligence was essentially surface– nothing in depth and nothing in that first phase report was of concern, but the issues that you ticked off have all been raised, not just by members of the public, but also by other council members, and it’s very important that we get more information about those issues.

I personally can’t imagine any hazardous materials at this site. It has been used as a school site for 130-plus years, so where any possible contaminants could come from is beyond me, but people say “look what happened when we bought the Hall property.” And what I want to point out is that the Hall property had been used as a commercial flower-growing operation for decades. So it wasn’t surprising that pesticides and fertilizers had contaminated the soil there.

SPV: So you don’t think the fact that Pacific View has been used as a towing yard had much of an environmental impact on the property?

Kranz: No. That part in the yard is covered with asphalt so, no, it has not been used for that purpose for very long.

SPV: You’ve spoken before about how people are going to feel about Pacific View 50 years from now. Do you have a vision for the next few months and next few years?

Kranz leans against the chain-link fence outside the old schoolhouse, a fence he hopes will yield to open space, sculptures and flowers.

Kranz leans against the chain-link fence outside the old schoolhouse, a fence he hopes will eventually yield to open space, sculptures and flowers.

Kranz: I see myself at that schoolyard with my kids as each of them graduated and did their sixth grade plays. I see it as a place where people are gathering and kids are playing. It’s a fantastic vision for me because I’ve lived it and I’ve seen it. Of course that’s when [my kids] were school-aged and now they are all adults, but meanwhile there are future generations that will be able to experience something similar.

I’m looking forward to getting the site open, getting the fences around the school yard down, and cleaning the place up. I was in the old schoolhouse recently, and when I came out the door the first thing that was in my face was a chain-link fence with a green screen on it. I’m looking forward to walking out that same door soon and finding open space and a very welcoming and inviting place to walk, gather, and enjoy our beautiful coastline. That’s the immediate thing I am looking forward to.

Long-term, it is really difficult to say. Would I be satisfied if it stayed just as configured, yet open? I can see that happening, but if there is a feasible plan that surfaces and includes a new facility there, I’d imagine it is going to be something that involves the ability to have a musical performance, a small venue, and it might be open-air with covering, perhaps over a round stage. Something that allows you to enjoy the smell of salt air and the cool ocean breezes.

I’d also like to see us perhaps develop some sort of sculpture garden and maybe a floral garden so as to pay tribute to our history as the flower capital of the world. I grew up across the street from greenhouses that grew carnations and roses. I worked for Aschbrenner Greenhouses where there were carnations growing there as well. While our Ecke history is quite strong with poinsettias, there are many other flowers that I think we need to pause and appreciate and acknowledge the history that our community has with the floral industry. So it would be great for me to see gardens of flowers throughout that site.

Kranz visits with former Pacific View principal and Encinitas Historical Society Vice-President Lloyd O'Connell in the old schoolhouse on the Pacific View property.

Kranz visits with former Pacific View principal and Encinitas Historical Society Vice-President Lloyd O’Connell in the old schoolhouse on the Pacific View property.

SPV: Is the city going to be spearheading the creative process to determine the future of the property or are you looking for private sector people to initiate that dialogue?

Kranz: Well, when I think you say “initiate,” there is no doubt that the city is going to be involved in initiating the conversation. Some of the questions about the structure of whatever organization is developing ideas and those sorts of things will be a political conversation, and it is yet to be had. So, we’ll have to see how that all plays out.

Looking to the south in Del Mar, where they have a school site that they are currently discussing, you see the master planning process that they are going through. There was a committee that was set up of stakeholders, they hired a consultant and they’re doing some inventory.

Another part of our budget this year included our arts master plan update. We have one; it talked about a variety of facilities. It’s important that we gauge the needs, and it was one part of this process that was a little frustrating. Mayor Gaspar is correct in pointing out that we had decided during strategic planning to pursue an update of our arts master plan and the way this all went down short-circuited that process.

While I personally would have preferred that we had the time to update the arts master plan prior to making this decision, that just wasn’t the way it worked out. I was prepared to make a choice here and we have acquired this site which means when we move forward with our arts master planning, we will know that we have about three acres of land half a block from the ocean with significant historical value to the community. We will be able to decide how to make improvements on that site that might benefit the arts community.

SPV: In terms of the public input you have received, can you give us a rough idea of the percentage of people who are appreciative about what you did versus those who are critical?

Kranz: It’s hard to break that down. I would say it’s about 75/25 [in favor]. There is no doubt that the media coverage of this purchase focused on the two appraisals that we had done, looking at the value of the land as it is currently zoned: public/semi-public. Most people are not aware that the school district did an appraisal in 2007 that showed the value of the land at $13.5 million. So what I have found is that most people who scratched their heads about how much we paid for it because of the public/semi-public appraisals, when they understand that the school district according to the law had a right to have it rezoned and that the value of the land rezoned was significantly higher than we paid, they have a better understanding and they appreciate the process that we went through.

It’s a matter of education. Unfortunately, we were not aggressively out making that point. We didn’t really have the time to make that point. I assume with a normal negotiation process, we would have had the ability to make the case for the higher price we were paying. It just didn’t work out that way.

People wonder why we paid what we paid, but when they have the full explanation, they are generally understanding. Almost to a person, even when they are critical of what we paid, they are happy that it was acquired by the city and is not going to be developed. I have heard from no one who said, “You should have let that property be developed.”

Kranz-11aSPV: Is there anything you’d like to add?

Kranz: The people who made the effort to express themselves through the [] website, not just by giving their e-mail and sending it, but also including their heartfelt feelings about the property; I appreciated all that. That was definitely something that gave me inspiration to keep going. It’s always amazing to see people step up and watch the internet work. I enjoyed that and I have to figure that while you are quite proud of your efforts to keep the 760 [area code], that this one probably adds a little more self-satisfaction with the outcome of this particular fight that you spearheaded. Congratulations to you.

SPV: Thanks! On behalf of the 750 people who wrote those e-mails, and probably many more in the community who wanted to see this happen, we salute you, along with your allies Teresa Barth and Lisa Shaffer, for your courage and your vision in making this very difficult process come to fruition. To me, it was a Hail Mary pass that turned into a miracle.

Kranz: I appreciate that; thanks. I did say several Hail Marys throughout the process. I don’t know what everyone else in the group’s religious beliefs were, but it was pretty miraculous and I believe in the outcome. When Father Brian [Corcoran] at Saint John’s told me after Mass, he says, “Hey, great job on getting that property,” I knew that if my priest was applauding it, I felt pretty good about it.

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