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Date: |
October 27, 2026 |
05 |
Title
Adopt Resolution to Sell Approximately 11.71 Acres on Cottonwood Avenue and Authorize Public Auction, Declare Approximately 12 Acres on Magnolia Avenue Surplus, Authorize Notice of Availability and Approve CEQA Exemption (District: 2)
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Overview
On December 3, 2013 (18), the Board of Supervisors (Board) declared County of San Diego (County) Parcel Number 2013-0091-A (Property 1) surplus to County needs. Property 1 is further identified as Assessor’s Parcel Number (APN) 381-051-17 and consists of approximately 11.71 acres of vacant land located on Cottonwood Avenue in the City of Santee (City). Over the years, the property has been offered for sale several times but has never sold. Most recently, a public auction on March 20, 2026, resulted in no bids. Staff conducted an after-action review and noted opportunities to refine the appraisal approach and adjust certain sale terms that may have been less attractive to buyers in the current real estate market.
A new appraisal was performed, and the updated value is a range between $7.8 million and $8.7 million, compared to the previous value of $15 million in 2025. The appraisal factors in current market conditions, the preservation of the property’s natural drainage feature, updates to City’s requirements regarding allowable dwelling units, and development requirements imposed by the affordable housing covenant required by the California Surplus Land Act (SLA).
Additionally, an approximately 12-acre portion of APN 381-050-81, located at 9200 Magnolia Avenue in the City, further identified as County Parcel Number 2023-0036 C - D, has been determined to be excess to County use. The approximately 22 +/- acre property (Remainder Parcel) is located east of the Las Colinas Detention and Reentry Facility and west of Magnolia Avenue. The northern approximately 3.5 acres includes the historic Polo Barn, which is currently being used by the Santee Historic Society pursuant to a license that expires in July 2031. The remaining 5 acres of the southwestern portion will be retained for future undetermined County uses. The County’s Fiscal Year (FY) 2026-31 Capital Improvement Needs Assessment (CINA) includes a proposed library in the City with Pre-Planning funding requested in FY 2028-29. No other capital project is identified on the CINA in the City. Staff are requesting authorization to declare a 12-acre portion of Remainder Parcel surplus to the County’s needs and approval to issue a Notice of Availability pursuant to the requirements of the SLA.
Today’s request is for Board authority to take the actions necessary to sell Property 1 to the highest bidder in accordance with California Government Code Sections 25520 et seq. If the Board takes the actions recommended on October 27, 2026, then on January 22, 2027, the Director of General Services, or designee, will conduct a public auction and return to the Board at a later date for the final acceptance of the selected bid and approval of the sale. The minimum bid for Property 1 is $7.8 million, based on the appraisal prepared by the Dore Group dated August 19, 2026. As permitted by California Government Code Section 25527, if the winning bidder is represented by a licensed real estate broker, a commission equal to 2% of the sale price will be paid to the broker from the sale proceeds. Additionally, today’s requests regarding the Remainder Parcel are for Board authority to declare the 12-acre portion surplus to the County’s needs and authorize staff to issue a Notice of Availability pursuant to the requirements of the SLA. Pursuant to Board Policy F-38, and Board direction on February 10, 2026 (10), the net proceeds from the sale of the properties will be deposited to the Edgemoor Development Fund, with excess revenue after payment of outstanding debt service to facility development of Missing Middle Housing in San Diego County and return to the Board to appropriate the excess revenue.
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Recommendations by Chief Administrative Officer:
1) Find the proposed sale of County Parcel Number 2013-0091-A and declaration of County Parcel No. 2023-0036 C - D as surplus are categorically exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15312.
2) Find the proposed actions of adopting a resolution, advertising County’s Notice of Adoption, conducting a bid opening, and selecting highest responsible bidder for County Parcel Number 2013-0091-A and issuance of a Notice of Availability for County Parcel No. 2023-0036 C - D are not subject to review under the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines section 15060(c)(3) because the actions are administrative and will not result in direct or indirect physical changes in the environmental effect on the environment, and are, therefore, not a project subject to CEQA as defined in section 15378.
3) Approve and adopt the Resolution entitled: RESOLUTION OF INTENTION TO SELL REAL PROPERTY AND NOTICE INVITING BIDS FOR REAL PROPERTY NUMBER 2013-0091-A. (4 VOTES)
4) Direct the Clerk of the Board of Supervisors to post the adopted Resolution and advertise the County’s Notice of the Adoption of the Resolution of Intention to Sell Real Property Number 2013-0091-A in accordance with the Government Code Sections 25528 and 6063.
5) Authorize the Director, Department of General Services, or designee, to conduct the bid opening and select the highest responsible bidder for Real Property Number 2013-0091-A, on January 22, 2027, and return to the Board for the final approval of the highest bidder.
6) Declare the approximately 12-acre portion of the Remainder Parcel, County Parcel No. 2023-0036 C - D, surplus and not necessary for County’s use.
7) Authorize the Director, Department of General Services, or designee, to issue a Notice of Availability for the approximately 12-acre Remainder Parcel, County Parcel No. 2023-0036 C - D, pursuant to the requirements of the Surplus Land Act.
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Equity Impact Statement
Parcel Number 2013-0091-A (Property 1) and Parcel No. 2023-0036 C - D (Remainder Parcel) are among numerous sites in the City of Santee (City) that were rezoned to support the development of affordable to moderate-income housing. It is anticipated that the approval of today’s recommendations will increase housing production that meets the needs of the community in the City. As required by Surplus Land Act (SLA) Government Code Section 54233 and California Department of Housing and Community Development, the County will record a restrictive covenant against Property 1 at the time of sale, which states that if 10 or more residential units are developed on Property 1, then at least 15% of the total number of units developed on the property shall be sold or rented as affordable housing. The revenue resulting from the sale of the properties will be deposited to the Edgemoor Development Fund and used to support annual debt service for the Edgemoor Skilled Nursing Facility and any excess revenue will be appropriated for the development of future Missing Middle housing in San Diego County.
Sustainability Impact Statement
N/A
Fiscal Impact
There is no fiscal impact associated with these recommendations. There will be no change in net General Fund costs and no additional staff years.
If the sale of Parcel Number 2013-0091-A (Property 1) is completed, fiscal impact will be included when staff return to the Board for final approval. The sale is expected to result in revenue of at least $7.8 million and is anticipated to be received in FY 2028-29, which represents market value via a public auction following the unsuccessful good faith negotiations pursuant to the Surplus Land Act. Pursuant to Board Policy F-38, Edgemoor Property Development, the net proceeds from the sale of the property will be deposited to the Edgemoor Development Fund to support the annual debt service for the Edgemoor Skilled Nursing Facility. Also, per Board Policy F-38, revenue generated in excess of debt service payments can be used to pay for costs associated with management, maintenance or marketing of the Edgemoor property. Revenue from the potential future sale of the 12-acre portion of the Remainder Parcel, in excess of what will be required to pay the outstanding Edgemoor Development Fund debt service, will be used to facilitate the development of Missing Middle housing in San Diego County, as directed on February 10, 2026 (10). There will be no change in net General Fund cost and no additional staff years.
Business Impact Statement
N/A
Advisory Board Statement
N/A
Background
In the 1920s, the County of San Diego (County) acquired approximately 426 acres of land in what is now the City of Santee (City). In 1923, the property was transitioned from a commercial dairy farm to a County-run institution that provided housing and work on the farm for those unable to support themselves. By 1955 farming activities were phased out, and the hospital became a Public Medical Institution. In the 1960’s Edgemoor became a Specialty Geriatric Hospital and then in 1972 the designation was changed to Edgemoor Skilled Nursing Facility, in which it remains today. Over the years, portions of the 426 acres have been developed into the Las Colinas Detention and Reentry Facility, sold or leased to private entities, conveyed to the City for public purposes, or are currently undeveloped, as is the case for the two subject properties in this action.
Property 1
County Parcel Number 2013-0091-A (Property 1) is the only County-owned undeveloped residential land north of the San Diego River in the City. Property 1 is also identified as Assessor’s Parcel Number (APN) 381-051-17 and consists of approximately 11.71 acres of vacant land located immediately south of the Edgemoor Skilled Nursing Facility between Cottonwood Avenue and Park Center Drive in the City (Attachment A). The property was re-zoned by the City to TC-R-14, which allows 14 to 22 residential units per acre. A buyer that contemplates a development that deviates from the City General Plan or Municipal Code will assume costs associated with a General Plan Amendment or rezone and work with the City Planning Department to determine process and timing.
Over the years, Property 1 has been offered for sale several times but has never sold. On December 3, 2013 (18), the Board of Supervisors (Board) declared Property 1 surplus to County needs and adopted a Resolution declaring the County’s intention to sell the property. On January 28, 2014 (6), Property 1 was offered for sale through a competitive bidding process, the Board approved the sale, but the bidder elected to cancel the transaction. On September 12, 2017 (9), the Board again adopted a Resolution of Intention to Sell Real Property and Notice Inviting Bids, offered the property for sale, and approved the sale to the highest bidder. A Purchase and Sale Agreement for Property 1 was executed and escrow opened on October 31, 2017. Although obtaining development entitlements was not a condition to complete the sale, the ability to sell Property 1 was impacted by zoning issues that affected the ability to develop the property as contemplated at the time of the bid opening, which resulted in escrow being canceled.
The County worked with the City on a rezone that shifted high-density housing from Property 1 and the adjacent County parcel immediately south (Property 2) to the 21-acre Edgemoor Remainder Parcel, located east of the Las Colinas Detention and Reentry Facility (APN 381-050-81). In October 2022, the City approved a General Plan Amendment, Town Center Specific Plan Amendment, and a Zoning Amendment Ordinance. As a result, Property 1 was rezoned to TC-R-14, allowing 14 to 22 residential units per acre. This change reduced the residential density and made the property eligible for by-right residential development. The rezone became effective on November 26, 2022 and the County continues to pursue the sale of Property 1.
On August 1, 2024, the County issued a Notice of Availability (NOA) to public entities and housing sponsors as required per Surplus Land Act (SLA); interested parties were given 60 days to respond to the NOA. The County did not receive any proposals from public agencies but did receive proposals from three housing sponsors. As required per SLA, Government Code Section 54227, the County selected a proposal based on the greatest number of affordable units proposed. However, after almost 8 months of good faith negotiations, the parties could not agree on mutually satisfactory terms for the sale. This was primarily because the proposers requested extended escrow periods, closing after entitlements had been obtained (typically 2+ years). The adopted Resolution required escrow close within 180 days, so there was no flexibility in this negotiation. California Housing and Community Development confirmed that the County complied with the requirements of the SLA, and as such, the County could sell the property to the public.
On February 10, 2026 (10) the Board adopted a Resolution of Intention to Sell and authorized a public auction on March 20, 2026, at a minimum starting bid of $15 million. No written bids were received by the submission deadline, and no bidders submitted oral offers during the live auction. The lack of bidders highlighted the need to reassess the sales strategy in the context of the current real estate market conditions, which included ordering a new appraisal and re-evaluating the terms of the sale. One such term is the previous requirement of an 180-day escrow. The general global economic volatility and instability have influenced buyers’ risk tolerance. As a result, developers cannot fully assess total development costs without a more detailed analysis - something that is difficult to complete within the required 180-day escrow period. Staff are proposing a 12-month escrow term, and the buyer will have the ability to extend escrow by two additional 6-month increments for a maximum escrow period of 24 months. An initial deposit of 3% of the purchase price will be deposited at escrow opening and to exercise each extension option, the buyer will be required to deposit an additional of 3% of the purchase price each time. The purchase price shall also be increased by 1% each time the buyer exercises the buyer’s right to extend the escrow period, though this requirement may be modified or waived in the Director’s sole discretion. The deposits will be applied to the final purchase price at the close of escrow or paid to the County as liquidated damages if escrow does not close and the sale is cancelled due to a buyer’s default.
Further, County consulted with its real estate as-needed consultant, Jones, Lange, La Salle (JLL), on creative solutions to help ensure a successful sale and will utilize JLL to assist with marketing of Property 1. A new appraisal has been finalized, and the value of Property 1 is determined to be a range between $7.8 million - $8.7 million. The decline from the previous value reflects current market conditions, preservation of the property’s natural drainage feature, updates to City’s requirements regarding allowable dwelling units, and restrictions imposed by the required affordable housing covenant via SLA. Additionally, the Director of Department of General Services will have the discretion to allow the purchase price or a portion thereof to be paid after the close of escrow pursuant to an agreed upon payment plan and interest rate secured by a deed of trust in accordance with California Government Code section 25522 and as provided in the Resolution.
The Edgemoor Development Fund, established in 1979, is intended to accumulate sale and lease revenues from the County-owned Edgemoor properties. In 2002, the County financed the Edgemoor Skilled Nursing Facility through long-term debt and created a repayment strategy which includes applying revenues in the Edgemoor Development Fund against debt service payments. To date, the remaining principal outstanding for the Edgemoor Skilled Nursing Facility is $19.76 million through the final maturity in Fiscal Year 29-30.
Today’s request is for Board approval to take the actions necessary to sell Property 1 to the highest responsible bidder in accordance with California Government Code Sections 25520 et seq. for the new appraised value of $7.8 million - $8.7 million. Pursuant to Board Policy F-38, Edgemoor Property Development, the net proceeds from the sale of the property will be deposited to the Edgemoor Development Fund to support the annual debt service for the Edgemoor Skilled Nursing Facility.
Remainder Parcel
County owns approximately 22-acres located at 9200 Magnolia Avenue, Santee and is further identified as APN 381-050-81 (Remainder Parcel). It is bounded by Riverview Parkway to the north, single-family residential to the east and south, and the Las Colinas Detention and Reentry Facility to the west. The historic Edgemoor Polo Barn is located on the northern portion is the last remaining building of the Edgemoor Dairy Farm and listed as an historic structure on the National Register of Historic Places. An approximately 12-acre portion of the Remainder Parcel has been determined to be excess to County use by staff. As shown in Attachment B, the middle section of the Remainder Parcel includes approximately 7.75 acres and is zoned R-22, which is intended for residential development of 22 to 30 dwelling units (DU) per acre. The 10-acre bottom portion of the Remainder Parcel is zoned R-30, which is intended for residential development of 30 to 36 DU per acre and requires new development to meet the minimum density of the zone (30 DU/acre). Five of the ten acres are included in the 12-acre portion proposed to be declared surplus and sold, and the remaining 5 acres will be retained for undetermined future County program use. The County’s Fiscal Year (FY) 2026-31 Capital Improvement Needs Assessment (CINA) includes a proposed library in the City with Pre-Planning funding requested in FY 28-29. No other capital project is identified on the CINA in the City.
The approximately 12-acre portion of the Remainder Parcel has been determined by County staff to be excess land. The first step in the disposition of this property is for the Board to declare the property surplus and not necessary for County use. Following the Board’s surplus declaration, the California Surplus Land Act (SLA) requires the circulation of a Notice of Availability to local public entities as defined in State Health and Safety Code Section 50079 and California Housing Finance Agency (CalHFA)-certified housing sponsors, pursuant to the terms of the SLA. Entities then have 60 days to respond and if any entity submits a timely response and the proposal meets the SLA requirements, then the County and the responding entity will enter a 90-day good faith negotiation period. If negotiations are successful, County will return to the Board for approval of the sale. If no entity responds or negotiations are not successful with all interested parties, then staff will return to the Board for approval to sell the parcel to the highest bidder via a public auction. Additionally, if the property is sold to the highest bidder via a public auction, SLA requires that County record a restrictive covenant stating that if ten or more residential units are developed on the property, not less than 15% of the total number of residential units developed shall be sold or rented as affordable housing. Revenue from the potential sale in excess of what is required to pay outstanding Edgemoor Development Fund debt service will be used to facilitate the development of Missing Middle housing in San Diego County, as directed on February 10, 2026 (10).
Environmental Statement
The proposed sale of Real Property Number 2013-0091-A and declaration of County Parcel No. 2023-0036 C - D as surplus are categorically exempt from environmental review pursuant to Section 15312 of the California Environmental Quality Act (CEQA) Guidelines, as it involves the declaration and sale of surplus government properties that are not located in an area of statewide, regional, or areawide concern identified in Section 15206(b)(4) of the CEQA Guidelines. Additionally, no exceptions listed in CEQA Guidelines Section 15300.2 apply to the project. See Attachment C for Notices of Exemption.
The proposed actions of adopting a resolution, advertising County’s Notice of Adoption, conducting a bid opening, and selecting highest responsible bidder for County Parcel Number 2013-0091-A and issuance of a Notice of Availability for County Parcel No. 2023-0036 C - D are not subject to review under the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines section 15060(c)(3) because the actions are administrative and will not result in direct or indirect physical changes in the environmental effect on the environment, and are, therefore, not a project subject to CEQA as defined in section 15378.
Linkage To The County Of San Diego Strategic Plan
Today’s proposed action supports the Sustainability Strategic Initiative in the County of San Diego’s 2026-2031 Strategic Plan by aligning the County’s available resources with services, maintains fiscal stability, and ensures long-term solvency. This action will enhance fiscal stability through the generation of revenue from the sale of the two properties to repay the Edgemoor Development Fund annual debt service. This action also aligns with the draft Housing Blueprint's goal of Producing Housing for All directed by the Board on December 13, 2022 (30). This goal aims to support and implement policies to increase housing production of all kinds in areas with access to transit, jobs, and amenities that enhance quality of life for residents.
Respectfully submitted,
Ebony N. Shelton
Chief Administrative Officer
Attachment(s)
Attachment A - Location Map - Property 1
Attachment B - Location Map - Remainder Parcel
Attachment C - Notices of Exemption
Attachment D - Property 1 Resolution
Attachment E - Property 1 Bid Package
Attachment F - Property 1 Notice of Adoption of Resolution