Tuesday, August 15, 2006

5 Burning Questions about the Mossy Land Deal

Five Questions to the city council by Kevin C,

I know this is a set of 5 questions, but each one is worth at least a
hundred grand and up to a million bucks of my tax dollars. So bare
with me.

1. Why did the City pay more than your own appraisal's estimate of
"fair market value?" How many of you were aware of this (or is that a

2. Why didn't the Council adequately answer questions about the tax
benefits to the seller of choosing to sell under friendly
condemnation? Is your staff not knowledgeable or did they fail to
inform you of the important consequences? (for a timely article see,

3. How many of you closely reviewed the appraisal and remain
comfortable with the 8.5 million dollar estimate of fair market
value? How much was Mossy trying to sell the property for before they
came to the City to sell?

4. Is it always necessary to buy property under the threat of
condemnation when a willing seller approaches the City with a
property that they have been trying to sell?

5. Can a City negotiate a price or do they have to purchase at what
ever the appraiser comes up with (as one Councilmember has indicated to me)? If you can't negotiate, then what was all the blabbing about how great you guys are at negotiation?

This purchase was a huge expenditure of the taxpayers' money. I think you should all be able to answer at least three of these questions and be curious about all of them. So, the first one to answer 4 or more wins several points in my book.

Kevin Cummins is a local yokel muckraker who married one of the most popular surfer girls around. A major coup for Kevin!


  1. I will repeat my self. The only way to change what is going on is to:


  2. Mossy makes 3 million more than the land is worth on the taxpayer's dime and doesn't have to pay taxes? A sweetheart deal. Must be nice.

  3. Dan is not the ManAugust 15, 2006 10:54 AM

    Excellent burning questions re Mossy, Kevin, good ones!

    There is a loophole for "private property negotiations" in the Brown Act. So Council and our awful attorney, Glenn Sabine, can decide in closed session how much we will pay for a property, as a City.

    Unfortunately, they are only using the freedom of info act for its loopholes. If the price is set by the appraisal amount, then what would it hurt to pubically negotiate? Oh, what's another million?

    I would not trust Dan Dalager with my checkbook for a minute.

    Whatever the case, he was less than honest with JP about the street name change; and he is all for avoiding public negotiations of private property, or public disclosure of all the unnecessary discussions that go on in closed sessions at City Hall. Dan also doesn't want us to get to vote on the huge Lease Revenue Bond that Council is proposing to pass, after the elections!

  4. These will be fantastic questions to ask Dano at the candidate forums. He will of course play dumb, but we need to hold his feet to the fire. He is either engaged in the process or out of the loop on everything (including, we now know, the renaming of B street)

    We need TWO new faces come November that are NOT puppets of Ecke and Meyer (guess that eliminates the plumber). Lets get busy!

  5. These are the types of questions you want to ask Dalager when he is in open public forum during the upcoming campaign.
    Uh, could I take another question from the audience? No, not that one.

  6. Hi Kevin,

    5 answers to burning questions.

    1) The City paid the fee simple appraised value which was 8.5 million. The use value was 9.5
    million. The complete appraisal document (40 pages) is available at City Hall for $4.00.

    2) The tax benefits are to the seller, they don’t directly impact the city. They may indirectly
    impact the country since the taxes on the capital gains could have paid for additional troop
    deployments to the middle east.

    3) Is it worth 8.5 million? The use appraisal puts the value at 9.5 million. If the use value is
    truly 9.5 million then it looks like a 1. million dollar net gain on paper. Mossy did not disclose
    his asking price to other car dealers when he was trying to sell the property. Mossy did not
    disclose that he was interested in purchasing other adjacent properties to construct something
    other than a car dealership on the combined properties.

    4) No. It is not always necessary to buy property under the threat of condemnation but
    occasionally it makes a deal desired by both parties doable. Mossy’s net would have been
    considerably less if completed outside of the umbrella of condemnation. It is conceivable that
    this would have made the deal undesirable to Mossy and he would have moved in a direction that
    did not include the city. Would this have benefitted the city? Not being a seer it is difficult for
    me to answer that question. Would the city have put the PW yard on the Ecke land? Not if I
    could have helped it. Would the city have put the PW yard on Quail Springs Rd? Perhaps.
    Were either of those proposition going to cost less than the cost and retrofitting of the Mossy
    property? Based on the finished plans for the new PW yard already drawn up and the current
    library project’s actual cost, probably not.

    5) Not being privy to all the aspects of the negotiations on the Mossy property, it is difficult to
    know just what kind of negotiation was involved.. It may very well have been the “friendly
    condemnation” that swayed Mossy to not seek another buyer or to accept the City’s appraised
    value on the property. The city negotiated a deal that keeps the PW yard off the Ecke land and
    off Quail Springs Rd. and has a turn key operation that can be occupied almost immediately. It
    still seems like a good deal to me.

    Have I answered enough of any of the questions to get any points?

  7. Does gil know more than the council?

  8. Maybe the IRS and the Franchise Tax Board should decide.

  9. Gil does more than the Council even though he can get it wrong sometimes.

    Phil Cotton's recommendation to the Council was to spend way over 9million for the site.


    The UT reported, "The Encinitas City Council decided unanimously last night to purchase the Mossy Chevrolet property for $9.5 million," on July 20th.

    Gil might be confused because it makes no sense to pay that much when the fee simple fair market value IS 8.5 million.

  10. could have been betterAugust 15, 2006 9:19 PM

    There is a lot to be said for the site as a public works yard and this purchase really helps the Council dig themselves out of the hole they put themselves in.

    My guess is that they were so excited to get out of that hole that some on the council were going give Mossy whatever they wanted and others on the Council just don't look into details because they just trust staff.

    I knew what they had budgeted so Mossy probably did too. When the price came in a just about what we had budgeted I was far from alone in being suspicious. I was even more suspicious when I found out the appraiser was the same one that acknowledged missing the mark on a different real estate transaction.

    I would like to be convinced that the appraisal was done before the price was set.

    This deal could have been so much better for the taxpayer. Critically evaluate the appraisal and you will see that the 8.5 estimate is easy to question as being too high. You don't even have to look that deep.

    Did anyone at the City look at the appraisal critically?

    Now assuming it isn't totally flippen wrong to cheat the IRS and we did a great job at negotiation shouldn't we have seen a benefit in the cash price for giving Mossy the tax break? What did we get out of that? Usually when people decide to cheat at least you can attribute it to some sort of self-serving motivation. Here I can't see it.


  11. Poor por Kevin...August 15, 2006 10:23 PM

    Poor poor Kevin...:(
    Gil answered your questions with thoughtful answers and you are reduced to asking more inane questions... Weak dude, so frickin weak! When Gil answers your current spate of inane questions with thoughtful answers you'll probably just have another list of inane questions to ask... (That's why so many real people just shine you on dude!)

  12. Those 5 questions must be burning someone when the poor por writer tries to attack. Getting too hot around the campfire?

  13. Weaker still anonymous (Kevin) mouse

  14. Gil go back to EF. Why would we want to read your bullshit. The burning question is: did the city overpay? The answer is in who hired the appraiser and was he honest in his assesment. Gil I am sure you don't know these answers, but you certainly seem to support the conclusions the city has reached.

    I personaly have written the IRS about the attempt by the city and Mossy to avoid paying the same taxes I have to pay when I sell property.

    Another case of the city council not looking after the citizens. They are trying to act like the San Diego City Council. A 10 million dollar garage? I am surprised they haven't offered to build a Charger Stadium on the Hall property.

  15. Dear stay in ef...

    Sorry, not going to happen. If i don’t chime in occasionally some readers might think some of
    the mis-direction of this blog site was well founded fact. The burning question of over-payment
    has to be decided by the citizens of Encinitas. The heart of the question is, ”Do the residual benefits of the Mossy site compensate for the purchase price?” And yes i do
    support the purchase of the site.

    As to the IRS, the key word in your second para. was AVOID. It is not illegal to avoid paying
    taxes by deferring those taxes for two years which is what the friendly condemnation allows, it is
    illegal to evade paying taxes. This deal allows Mossy time to reinvest in something else before
    computing the taxes on the sale. As to your sale of your property. If it is commercial piece you
    can negotiate a 1031 exchange. If it is residential, then you got a windfall when the IRS decided
    to allow you and your spouse to each pay no taxes on the first 250K of the sale price. And that
    windfall wasn’t a once in a lifetime deal. Noooo. You can buy property after property and sell after two years of residency and the 250K can be saved over and over and over again. Ain’t it sweet. I would expect your IRS letter to fall on deaf ears.

    There is no correlation between the Encinitas city council and the San Diego city council. Sorry,
    but that’s a fact. It’s not a ten million dollar garage, it’s a ten million dollar piece of land with a
    PW yard set-up already in place. The Hall property isn’t big enough for a stadium, isn’t zoned
    for lights, and would never pass coastal. You probably knew that, but think of the taxes it would
    generate for the city if it was. notaxlady would probably have loved it.

    Could have been kevin said...

    The “hole” the council found themselves in was one they did not dig. The predicament must rest
    on those who drew up the zoning matrix for the city originally. Not making allowances for light
    industrial and public works was incredibly short-sighted.

    Cheat - to defraud, rob, swindle, embezzle, loot, or pillage. None of these describe the financial
    maneuver used in this case. Defer - to dely, postpone, reschedule, interrupt. These more correctly describe the maneuver. The city is striving to build an infrastructure and infrastructure
    service system that will carry the city through the century. I would expect nothing less from any council or staff. Again Kevin, it could, should, have been better said.

    OK blog-ers, I’ve got a few free days, throw some grenades but expect some responses.

  16. Gil,

    Follow the story of U.S. Rep. Gary Miller (R,CA).

  17. Right on, Kevin; Chill, GilAugust 16, 2006 1:08 PM

    Kevin, I think we did overpay. The point here is that if the citizens could be in on the process, not just try to understand the aftermath, we would be far happier.

    So it is confusing, whether we paid, as the NCT article said, 9.5 million, or 8.5 million. And Gil, although you attempt to answer questions about the taxes that are deferred, you don't speak to Kevin's excellent questons about the appraisal, the appraiser.

    If this wasn't all wink, wink, nudge, nudge, if the public could participate, we would be much more trusting. We know that Guerin is a scammer. We know that Dan Dalager can't figure it all out. We know that staff and the lawyers that Council rely upon are often not looking out for the best interests of the taxpayers.

    So, I'm happy you brought this to our attention, Kevin. You know what, Gil, why weren't you there, in the beginning, when Encinitas was first incorporated, to try to make sure that the zoning was right? It's easy to look back and blame stuff on our founding fathers and mothers. At any time, the zoning could be changed, just not on agricultural preserves. Does Solana Beach have zoining for light industrial? Or for a public works yard? Did they? I doubt it. Our General Plan and the financial report we submitted to incorporate was patterned after Solana Beach, which incorporated one year before we did, in 1985.

  18. Right on Gil,

    No grenades, Just a thank you for the factual answers.

    I think it is reasonable to dissagree with the purchase, but the clearly their is a biased and an attept to paint everything and everyone associated with city hall with the same brush dipped in conspiracy.

    That's crazyness, myopic, and small minded.

  19. tons of light industrial in Solana Beach on the way down to Fidel's


  20. An open question to Gil:
    I appreciate your interest in Encinitas, but I am curious as to WHY you always seem to have so much more information than most of the citizens that live here. When you state things so definitively, it appears as if you have inside knowledge. If so, let us know everything. For example, what did Glenn Sabine say to you about Jenifer? You have yet to respond to that question, and this is not K.C. Just another "activist" with an interest in City politics etc. It seems as if you pick and choose what you tell us. Give us all the information please. Most of us cannot get a straight answer from City Hall. If you have an inside source, please share, or don't say things and then not tell.

  21. Actually i was there in the beginning, i attended CAB meetings and spoke and wrote on light industrial, public works and an ag element. i was only a young man at the time and no one wanted to listen, they figured i'd just go away. Although i didn't get my way as per those zone designations i haven't gone away. i continue to hammer away at things that would help make encinitas a better place to live,work and play, in mho.
    The jury is still out on the rep miller case so there isn't much to follow right now.
    the information i have is available to any citizen who goes to council meetings, coastal commission meetings and has been involved in the city for over thirty years as is my situation. i don't pick and choose what to write, but i am so involved in the actions of the coastal commission that sometimes i have too many irons in the fire. if you have too many irons in the fire, none of them get hot. i don't have any inside connections and most of the council and staff just wish i would just go away, not unlike some of the blog-ers on this site.
    i am just a guy with another point of view. it is a point of view that suits me and since this is a public blog-site i see no reason not to speak my mind from time to time.

  22. Gil,

    Again you make statements that aren't true but are your spin on the truth. You seem to use the old adage that if you add a little truth to your statement it will be believable. Here is the definition of tax fraud and where you can report it.

    Title 26 USC § 7201 -Attempt to evade or defeat tax

    Any person who willfully attempts to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof:
    • Shall be imprisoned not more than 5 years
    • Or fined not more than $250,000 for individuals ($500,000 for corporations)
    Or both, together with the costs of prosecution

    Anybody that wants to report this illegal misuse of the tax system can go to this web site and report these crooks over the internet.

    Gil if you believe that the city council and Mossy haven't conspired to avoid paying the same tax everyone pays when making a capital gain then perhaps some of your transactions need to be looked at.

  23. Again the key words are evade or defeat... Mossy is doing nothing not allowed by law. If he is he will have to make it right.

    The city council haven't conspired to do anything that looks blatently illegal. They have put together a deal (negotiated) that serves both parties and it includes the use of threat of eminent domain.

    As to my taxes, the gov. can look at any time. I don't think that I make enough to be of concern but they are welcome to look. I'm a farmer, most of my profits are eaten up by seed cost, soil components, wages, workmens comp., petroleum based products (plastic pots, fertilizer,etc.) and vehicle insurance and maintenance. I choose to do what I do not because I'm getting rich but because I love to grow seedlings. I feel blessed to have a job that I look forward to going to every day that provides the excitement of germinating seed, sort of natures mid-wife. I hope you are as lucky.

  24. Gil said the Hall property isn't zoned for lights. Does he know that the city council included lighting for the swimming pool and the sports field as part of the Hall EIR? The council justified this by saying they wanted to keep their options open. Options open, when it's not zoned for lights? I think the council knows something Gil doesn't know. Otherwise why are they wasting money on studies that are going nowhere? Or are the studies going somewhere?

  25. Gil, I am confused about what you said when you said "the jury is still out on the rep miller case." I was asking what Glenn Sabine told you about Jenifer Smith's qualifications to be Director of Finance. I don't know what "rep miller" means. I am still interested, however, on what Sabine told you. Could you fill us in? I know you do more than your fair share of getting as much info as you can and passing it on. I just cannot seem to get this piece of info on Smith from anyone in the City, including Sabine, and word on the street is that you may know. Thanks for any help, as it would appear that one day she was Kerry Miller's assistant, and the next day she was Director of Finance, even though Jay Lembagh has been there 20 years and has a CPA license, something I know Smith does not have, or at least it is not listed with this State.

  26. Actually Glenn Sabine said he asked J. Smith if I could have info that would satisy requirements as stated by calaware in an email forwarded to me by kevin. she was out of town the rest of that week and then i had in-laws visiting and just didn't get back to her. I have made a note to get that info tomorrow and will pass anything i get along or forward to JP if it is a scannable document. i thank kevin again for the calaware document it seemed to make a difference in attitude. hammer on me until i get the info if it is still available to me. sorry blog-ers.

  27. Glenn Sabine should submit his resume.

  28. BTW Solana Beach was incorporated in July 1986, not 1985 as was posted here earlier.

  29. Gil,

    The Council is responsible for all of this uncertanty about the use of condemnation in this case. Why?

    First, because the Council was asked about this issue in open session and instead of answering with great clarity and relieving possible dissatisfaction the Council danced around this issue. Council with help from a knowledgeable staff could have saved us from a lot of hassle and private discussion had they done a good job of responding to public concerns. Upon being given information that the concerns were valid, I decided to send the Council an email asking them about this multimillion dollar transaction. JP ended up posting that email. There has been no response from that email. They should know the answers to most of those questions if they want to be responsible for such large transactions.

    The condemnation issue is a reminder of the missed opportunity. Council should have come up with a solid explicit policy for the limits of the legitimate use of eminent domain and a policy for its fair implementation when it is needed. There is massive room for improvement.

    Food for thought- would it have been ok to force Mossy off the property unwillingly when we had an adequate alternative site?

    I still don’t know the legalities of adding the condemnation clause to the sales contract. My issue is not fundamentally based on the legalities, but instead on whether it was the right thing to do. Why else is it in the contract other than to sweeten the deal? Can anyone offer something up? If not, then it was wrong because there is no reason to believe for a second that City was going to take the property by force.

    Again the Mossy site seems to be a pretty good. To make it explicit, I am not arguing that the site might provide a worth to the city equivalent to the price. Heck! It could be more but that doesn’t mean we should pay more. I think Gil has been looking at the purchase from that perspective. Gil and I are focused on different aspects of this transaction with regards to the price. This is a disagreement of personal perspective. There is no resolution to that.

    Lets not forget how much the Council was patting themselves on the back a few weeks ago saying they had negotiated a great price. Even if they paid fair market value, that is pretty bland dealing. From the seller’s standpoint it is very clear that they are the ones that got a great deal. You can use the City's own appraisal to get there. It is unlikely we will ever know with great certainty, but I sure would have worked to bring the price to something much closer to what they could have likely sold it for. I wouldn’t have claimed to be a great negotiator if I couldn’t accomplish that.

    As for the hole, Gil’s point about our original zoning matrix is worth considering. I have and think it is valid. That is not the issue I refer. The City planned poorly and got themselves’s into a time bind. Some of that had to do with the Ecke land swap and prop A. Mixing up the public works yard into that had bad ramifications for where we are now. There were some missed opportunities. I will let someone else develop that issue.

    Man I wrote too much, gotta go.

  30. Kevin,
    Go take your meds or go to bed, bra! You start off writing to Gil, then in the first person, then in the 6th paragragh you write ABOUT Gil in the 3rd person... Mind bending to say the least!

    Take a break
    Take your pill
    Take a nap

  31. I e-mailed Jennifer Smith over 3 weeks ago asking her for her credentials to be Director of Finance. She never got back to me. Is she still out of town? Sabine did not return my calls. Sooo? According to our own City guidelines, Directors of any City Department must have a Masters degree in the related field, 7 years of experience in that field, plus some other qualifications. That is afar as I could get with the City, having asked just about anyone I could think of, including Miller, Sabine, Council. I sent a request yesterday to City Clerk Cervone asking for the THIRD time, Jennifer's qualifications. According to law, she has 10 days to respond. We will see. Why this is so interesting to me is that Jay Lembach, in finance, has been with the City for 20 years and has a CPA license, something I could not find for Jenifer. All licenses are listed on the internet, and her name did not show up in this State. It would be interesting to see how many Directors really have all the qualifications for the jobs they hold.

  32. Gil,

    The city and Mossy conspired to evade (avoid)and/or defeat capital gain taxes. What they did is illegal based on the USC. The IRS enforcement division will investigate. Whether Mossy ends up paying the capital gains or the city amd Mossy gets indicted will be up to the US Attorney not you proclaiming their actions legal.

  33. The true value of the land has more to do with what rights the land comes with, as well as what a buyer is willing to pay for it. These two elements came together positively in the city's favor in this transaction. It's a good deal because it is such a good fit, as others have pointed out.

    In addition, the city still has the Quail Gardens site that can be liquidated to offset the cost of the Mossy site. The Eckes would love to purchase the Quail Gardens site as they have already expended lots of cash to develop it.

  34. The new cost of the Mossy land deal is $10,100,000, because the city needs an additional $500,000 to renovate. What is that sucking sound? The SDWD and sewer divisions money going down the drain.

  35. I was in LA this last week and only had short windows to respond to the blog. I just got caught up and now I have the time to sit and digest the blog.

    I have a feeling I should say it again. It was a good location to purchase. I question the price we paid–the negotiations. I am not asking questions regarding the property's use value to the City.

    Gil did provide answers to the questions. I would like the Council to confirm his answers to 1 and 3, because Gil's answers don't jive with my documents. They may not be factual and can be misleading if you believe we paid the fair market value for the property. It looks to me like we paid 1 million more than the already over inflated appraisal of fair market value. (Shouldn't at least one person be asking about that?)

    As to Gil's response to number 4, that is what I thought but that doesn't appear to be what everyone on the council thinks (or thought at the time). I still think we should hear their answers.

    As for number 2, he doesn't at all address the question and that is probably because he wasn't behind the dais the night of the sale, so he can't provide a satisfactory answer. He doesn't directly address number 5 either. I didn't ask about what actually did happen. I know that at least one councilperson thought differently than Gil on this. I wasn't really interested if Gil knew or not. I wanted to know if our elected officials had a clue when they initiated a 10 million dollar deal.

    The questions were originally addressed to the Council. I still have not had a response from any of them. I was far from the only one asking these questions in private AND IN PUBLIC. It should not be acceptable to have a council that does not wish to explain their actions (9.5 million dollar actions especially).

    As for Gil's comment, "The burning question of over-payment has to be decided by the citizens of Encinitas," I don't think the voters will be able to make a good assessment if they don't know things that are germane to making such an assessment.

    Beyond my original questions, they should know the details of how the site was valued in the appraisal. This is important because I know at least one councilperson said they voted to purchase AT THE GIVEN PRICE because that is what the appraisal said to pay, but don't forget that the appraisal is troubled.

    As for a conspiracy? I have no idea where that came from. I don't see any reason to think that a regional car dealership with little connection to the Council would consider or dare to try something like offering a kickback (how would that work?). Anyways why would they bother, they didn't need to with the Council we have. They were easy prey for people like Mossy. Also, they wouldn't have been so sloppy had this been something actively concocted.

  36. Hey out of town,

    No one has mentioned kick backs. When two or more persons conspire to violate or circumvent a law it is a conspiacy by definition. Mossy and this council conspired to circumvent our nation's tax laws by calling this deal a condemnation when we all know it was a seller offering his property for sale with a willing buyer. The price paid is a different matter.

    Their little move costs all us taxpayers approximately $2,060,000. The amount of money you would have to pay in capital gains in the same deal.

    Gil thinks that is Okay. He doesn't pay taxes here so I question his judgement.

  37. In response to the question of Jennifer Smith aand her experience and educatiuon to qualify for the position of Finance Department. Jennifer has a PHD in stonewalling and would fit into any position at Kerrysville. My hope is that Kerry realizises and takes her on to Folsom.

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