The Scandal of San Juan Capistrano’s Not-So-Open Space


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We welcome our new South County blogger, known as “Capistrano Common Sense.”  We wouldn’t mind having one or two more bloggers from down there, to help unlock the dark secrets of that huge mysterious subcontinent which stretches south of Irvine.   Contact me – V.

2012 Swallows’ Day Parade; pic by Tom Irwin

San Juan Capistrano is probably best known for the swallows that for centuries have returned to nest at the historic Mission. It’s a fairly small town where it’s not unusual to see horses walking alongside cars and pedestrians – not the kind of town you might think of as corrupt. But appearances can be deceiving.

One example is the city’s purchase of “Open Space” with $27.5 million of public bond money.  In 2008 the city council majority convinced residents to tax themselves to purchase Open Space within the city.  The idea, voters were told, was to protect land in town from development by preserving it as “Open Space.”   It sounded great, and five properties in SJC were subsequently identified and presented to the voters as potential targets for purchase.   An aggressive Open Space preservation marketing campaign resulted in more than 70% of the voters approving a $30 million bond to purchase Open Space within the City of San Juan Capistrano (“SJC”.) 

Voters soon learned this was a big mistake.

Brad “Locked” Gates.

Rather than purchasing any of the proposed properties in town, a deal was struck in 2009, behind closed doors, to purchase 132 acres outside the city limits.  The team of “real property negotiators” included developers, led by former OC Sheriff Brad Gates (left, dubbed “the 6th councilman”.) The landowner from whom the property was purchased was none other than Gates’ good friend and former business partner Tony Moiso, CEO of the Rancho Mission Viejo Company, aka “the Ranch”.

City real estate transactions had always been conducted by the City Manager, so residents were surprised to learn that private citizens like Brad Gates had been appointed as “real property negotiators” on behalf of the city and were allowed to conduct the negotiations – including all restrictions and conditions – entirely behind closed doors.

The negotiators were somehow magically “exempted” from filing conflict of interest disclosures – for the first time in city history.  Brad Gates, of all people, should have been required to file disclosures given his lifelong friendship and former business partnership/financial entanglements with the seller, coupled with the fact that he owned two homes in close proximity to the property.

And there were other problems:  The purchase violated the public bond covenant which specified that the Open Space would be within the city limits.  Still, with the right amount of political pressure it was pushed through “LAFCO,” the county’s annexation commission, in record time, in order to annex it into SJC with close of escrow.

Additional problems with this “deal” were numerous and included:

  • An artificially inflated appraisal;
  • The fact that half the property was already protected Open Space (so much for the argument that we needed to buy it to “protect it as Open Space”);
  • Waiver of our city’s right to legally challenge or even oppose the huge volume of traffic to be generated by the Ranch’s proposed development of 14,000 homes and 5 million square feet of commercial/retail across the street, among others.  There’s even a condition that the property reverts back to the seller “within 15 days” if certain clauses are breached.

Since the whole deal was negotiated and approved behind closed doors, the public never knew that they had effectively purchased a park for the Ranch’s newly developed communities across the street – an “amenity” which the developers duly promoted in their marketing material.

Five years later, SJC residents are still prohibited from accessing most of this Open Space because the largest usable parcel, the “Rancho Mission Viejo Riding Park” (it’s even named after them) is leased for a relatively paltry sum to privately-owned “Blenheim Equisports,” an elite equestrian events promoter who generates and keeps the substantial revenue from events held on the property.

The average SJC property owner’s taxes have been increased several hundred dollars per year to pay for this Open Space that they are restricted from using, unless of course you count the “free movie night” the city holds on the property once or twice a year.  This presumably fosters the pretense that the property really is accessible to the general public.  Judging by my property tax bill, the movie is anything but free.

Since the property was purchased with public bond money as Open Space for ”general public” and not “private” use, the equestrian promoter’s lease appeared to violate a clause in the bond covenant which limits the amount of commercial revenue that can be generated on the publicly owned property.  In an effort to continue to allow the equestrian event promoter to lease the property, Ranch ally Councilman Sam Allevato (right) and his city council majority asked the City Attorney’s firm of Rutan & Tucker to come up with a way to skirt the bond’s revenue restriction.  The attorneys cooked up a clever “management agreement” which allows the equestrian event company to keep the majority of the revenue in exchange for “managing” the property.  Whether this circumvention of the public purpose bond is legal or not, residents are not fooled.  We continue to insist that the property be opened up to the public, as was promised in the Open Space bond measure.

The seller on the other hand is guaranteed ongoing access thanks to a clause negotiated by Gates which creates a monopoly for the Ranch by allowing it to hold its annual 3-day rodeo on the property free of charge for 50 years, while prohibiting all other rodeos.

Gates also negotiated a clause that directs the majority of the annual rodeo proceeds to his “San Juan Capistrano Open Space Foundation, Inc.” that he established around the time of the purchase. The foundation’s stated goal is “to purchase and manage Open Space.”  A view of their tax returns reveals hundreds of thousands of dollars in donations over the past few years.

Locked gates at Sendero Reata

At least once-sleepy San Juan is waking up to the cronyism; this issue is one of a number of reasons why voters in the last election tossed Sam Allevato’s council majority out by a wide margin. I will summarize other issues in upcoming posts.

Seeing is believing!  To read the purchase contract, scroll through the “RMV Purchase & Sales Agreement” at: http://tinyurl.com/oyybry5. The more egregious clauses are highlighted, starting on PDF page 15.

Much more to come…


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