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City approves purchasing closed Catholic school property in South Laguna


City Council this week unanimously agreed to purchase a closed Catholic school property in South Laguna.

Councilmembers voted 5-0 Tuesday (Aug. 16) to authorize the city manager to make a formal offer to the Diocese of Orange for $23 million for the purchase of St. Catherine of Siena School property, with an escrow period up to 120 days.

There are tremendous opportunities for the property, said Mayor Pro Tem Bob Whalen.

“I’m excited, really, that we’re at this point where we can move ahead and make a commitment. We started working on this property 14 months ago,” Whalen said. “It’s great.”

In a rare agreement, council unanimously decided to move forward on July 19 to study possible uses, gather more community feedback and directed staff to develop a detailed financial plan for the 6.5-acre property at 30516 Coast Highway (formerly St. Catherine of Siena School).

In 2021, the Roman Catholic Diocese of Orange County contacted Laguna Beach officials to determine if the city was interested in acquiring the property, City Manager Shohreh Dupuis explained at the July meeting. Staff has since been discussing the term and price of the sale with the council in closed session.

A few months ago, the diocese reached back out about the property. It took some time because the diocese had to get approval from Rome to confirm they wanted to sell the property, she noted. 

Tuesday’s action adopted a financing plan that includes appropriating $23.5 million for the purchase of the property using $4 million from the Future City Facilities account, $2 million from the available American Rescue Plan Act (ARPA) funds designated for city facilities, $3 million from the General Fund mid-year savings, $2 million from Vehicle Replacement Fund mid-year savings and $1 million Insurance Fund mid-year savings.

Council also directed staff to seek a direct loan via a private placement sale for the balance of $11.5 million.

City approves aerial 1

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Photo by Steven Georges/Diocese of Orange

City Council this week approved purchasing the former St. Catherine of Siena School property for $23 million   

There was some discussion of borrowing that amount internally from funds for parking, vehicle replacement and other areas, but councilmembers and staff agreed that private placement financing was the better choice.

After preparing the agenda report, the city treasurer received updated information that an internal loan would require the city to sell investments. Based on market conditions, investments are worth 90-91% of their purchase price and the city would incur a realized loss of about $1.1 million, explained Director of Administrative Services Gavin Curran.

Based on the new information, staff updated the cash flow analysis and received investment maturities over the next two years and determined that after receipt of property tax payments in December there would be enough liquidity for the internal loan, Curran reported. 

However, reduced liquidity puts unnecessary stress on cash flow and investments over the next two years. Reduced liquidity would also likely require the sale of investments if there is a significant unplanned event.

“There really would be a challenge in some of the liquidities,” Curran said. “Based on that reduced liquidity, we would have a lot of stress – unnecessary stress – on our cash flows and our managing our investments over the next two years.”

It’s a better plan to borrow the money now and save the cash, he added. 

Mayor Sue Kempf agreed it’s the better option. 

“We don’t need any stressors,” Kempf said. “We just don’t know what’s going to happen in the future.”

Whalen also favored the private placement because he doesn’t want to take such a large amount of money from projects they will likely need in the future.

“I don’t like borrowing this much money internally,” Whalen said. 

Parking funds should be used for the increasing parking demands. The vehicle replacement fund related to other items they had on Tuesday’s agenda, he said, noting that the fund would be needed in the future as they work to update the city’s fleet. Borrowing that much money could cause the city to be low on cash when they need it in these important areas, he said.

“It’s always a question of choices,” he said.

Typically, in private placement, the financial group wants to make a certain amount of money off of the investment, Curran explained, so it might be limited when the city could do a payoff without a penalty.

Repaying the loan can happen around the five-year mark, he said. 

“That was one of the reasons that this seemed like a better option,” Curran said. “So when things do improve and where we are in a better place, say in five years, we can either do the internal borrowing at that point because we’re in a better place or just repay it altogether.”

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Jim Fabian of Fieldman, Rolapp & Associates said they will be doing a competitive solicitation to about two dozen different banks and will evaluate the terms received to get the most flexible deal for the city. They’ll return to city council for approval of the private placement financing sometime in October, he added. 

There is some uncertainty in the market, he noted, so they’ll look at their options and the city’s future in order to make the best financial decision.

City approves aerial 2

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Photo by Steven Georges/Diocese of Orange

The closed school site offers a variety of possible community uses 

Council and city staff previously discussed working on a comprehensive, multi-year process to develop a master plan for the future use of the property. At that time, staff will continue to pursue all partnership opportunities that align with the council and residents’ vision of the property. 

At the July 19 meeting, staff suggested a few possible long-term preliminary concepts, including a community pool, parking structure, permanent skate park, city hall/civic center, or a cultural arts building.

Considering the good condition of the buildings on the property, which were constructed in 2010, many short-term services could kick off immediately.

The property includes four buildings which provide approximately 39,500 square feet of indoor space. 

A large, indoor gym has a multipurpose court and a performance stage, along with a kitchen, bathrooms and class space. It could also be used for pickleball courts, a community meeting site, a safe refuge site for evacuation, or an emergency incident camp for first responders.

Other buildings on the property could be used for community meeting rooms, a library extension, technology center, pre-school/transitional kindergarten or day care facility, an Emergency Operations Center, public safety substations and training center, or a city administration annex.

There are also multiple outdoor spaces, including a basketball court, grass sports field, playground structures and picnic areas. The grassy area could provide up to 70 spaces for overflow or summer parking needs.

City approves St Catherine signage

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Photo by Steven Georges/Diocese of Orange

City officials will continue to pursue partnership opportunities

Laguna Beach Unified School District (LBUSD) previously submitted a letter to the city indicating that they are open to a potential cost-sharing arrangement and partnership to acquire the property.

Dupuis explained that the district has expressed interest in leasing a portion of the property for immediate use if it meets the state standards for a transitional kindergarten facility. Those standards can include classroom size, play yard design, location of the facility to the drop-off area, self-contained restrooms and other conditions. 

The LBUSD board is interested in planning it out, said LBUSD Assistant Superintendent of Business Services Jeff Dixon.

“This is an incredible opportunity with that property,” Dixon said. “We really look forward to planning what this could be, short and long term.”

They will continue to pursue partnership opportunities during the master planning phase of the project, Dupuis added. 


Sara Hall covers City Hall and is a regular contributor to Stu News Laguna.

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