City Enters Exclusive Negotiations with Medical Real Estate Developer

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By C Jayden Smith

Seeking a potential partnership with Hoag Memorial Hospital Presbyterian to develop a medical facility on city property, the San Clemente City Council voted 4-1 on Tuesday, September 20 to enter into a three-month exclusive negotiation agreement (ENA) with a medical real estate developer.

The agreement restricts the City of San Clemente to holding good faith discussions only with Pacific Medical Buildings (PMB) regarding the potential sale or lease and development of commercial space on the southwest corner of Avenida Vista Hermosa and Avenida La Pata.

Councilor Kathy Ward was the only vote against joining the ENA.

The land in question, a 99,750 square foot vacant 2.29-acre lot, was designated as surplus land in 2014 and valued at $4.99 million in 2021. Hoping to generate income from the sale of the property and possible development, the city has fielded numerous bids to purchase the property in recent years.

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Most recently, in January 2022, a majority of the council declined to complete an ENA with Cypress Express Partners, which had offered to pay $7.5 million to purchase the property or lease the land for $500,000 per year lease to build a gas station.

This comes after public pressure against such activity, which Council member Steven Knoblock was referring to on Tuesday night when he said he had “mixed feelings” about the current issue before the council.

“This particular party that we are proposing to enter into an exclusive negotiation agreement with was part of that initial group of bidders,” Knoblock said, referring to the city’s initial bidding for bids for the land. “My concern is that so many years have passed and there may be other possibilities.”

He suggested restarting the tendering process (RFP) to attract new bidders for the property, as the majority of previous bidding plans also focused on gas stations that have now been rejected.

Knoblock didn’t get much support from his peers.

Regarding her decision to vote against the ENA, Ward cited concerns that the proposed project would not generate as much revenue as she wanted the city to receive.

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“This is a property owner who isn’t going to pay property taxes,” Ward said. “I come from the old council, where this property was considered a source of income for the city of San Clemente. We felt it was our most important draw.”

Under the terms of the ENA, the City and PMB will discuss pricing and terms of potential development.

Other council members identified a need for healthcare options near the Talega neighborhood and wanted to focus on upcoming negotiations.

Mayor Pro Tem Chris Duncan said Hoag is a “respected healthcare provider” and expressed his desire to move forward.

Councilor Laura Ferguson called health services “critical to the community” and said the initiative is not about revenue but about the community’s desire for a concept similar to what the city and PMB could be working towards.

Mayor Gene James echoed Ferguson’s comments, stating that from his perspective, “we need healthcare in this area.”

“We need healthcare overall,” James said. “I can’t think of a better quality group than Hoag to come to our town and provide health care.”

San Diego-based PMB has worked with numerous well-known healthcare brands to develop medical facilities throughout California and beyond, including Mission Medical Plaza in Mission Viejo and Hoag Health Center in Irvine.

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City officials said they will be communicating with the California Department of Housing and Community Development regarding the Surplus Land Act (SLA), which imposes certain restrictions on how municipalities can solicit bids from potential developers for surplus property.

Changes to the SLA since 2014 – when the land was declared in surplus – could delay the ENA process by requiring the city to issue a new notice of land availability and conduct good faith negotiations with affordable housing developers, who react to it.

According to the agenda report, the city will obtain a written determination from the HCD.

Interim City Manager Sean Joyce will lead negotiations with PMB, which could extend for another 60 days if both parties agree to continue working together.

C Jayden Smith

C. Jayden Smith graduated from Dana Hills High in 2018 before earning a bachelor’s degree in digital and broadcast journalism from the University of North Texas. After graduating in December 2020, he reported for the Salina Journal in Salina, Kansas. Jayden loves college football and bugs his black lab named Shadow.

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