By Ken Williams | Editor
Developer misses escrow deadline, and seeks to subdivide property into three parcels
The developer who made the winning bid to purchase the Truax House and an adjacent home and vacant lot in Bankers Hill has yet to close the deal.
Nakhshab Design & Development has “held off on escrow,” company principal Soheil Nakhshab told members of the Metro San Diego Community Development Corp. (Metro CDC) meeting on May 8 at St. Paul’s Manor in Bankers Hill.
A resident of Bankers Hill, Nakhshab is a member of the Metro CDC and recused himself from casting any votes taken at the meeting. Nakhshab is also a member of the Uptown Planners, a citizen-elected volunteer board that advises city planners on matters related to growth and development in the Uptown District, which includes Bankers Hill.
In 2016, the city accepted the developer’s offer — the highest bid — to pay $2.5 million to buy the surplus property. Nakhshab vowed to restore the Truax House, considered by many people to be a sacred site because it was the home of San Diego’s first AIDS hospice. The local LGBT community and other groups successfully persuaded the city’s Historical Resources Board to designate the building as a “historical resource” to make it safe from the wrecking ball.
Nakhshab said his company decided not to go into escrow on April 28, as scheduled, and must now pay the city $10,000 every two weeks until the deal is finalized. “My deposit [of $100,000] is gone,” he said, stressing that his company does not to plan to walk away from the deal.
Some in the community have expressed concern that the closing has not taken place, including neighbor Al Olin, who owns a home at the end of the dead-end of Union Street, and Charles “Chuck” Kaminski, a local LGBT historian and activist. Both have emailed their concerns to city officials and discussed the matter with San Diego Uptown News.
City officials tell Uptown News that forfeiture of a deposit is common in real estate transactions if the buyer does not cancel the sales contract prior to a specific date.
“Further, additional consideration for failing to close escrow pursuant to the terms of the contract is also a common practice in real estate transactions,” Paul Brencick Sr., a senior public information officer for the city, wrote in an email in response to a series of questions. Brencick compiled the responses from officials in several city departments that are involved in this complex transaction.
Location, location, location
The property, situated on the northeast corner of Laurel and Union streets, provides a desirable view of San Diego Bay and Downtown. The Truax House perches on a hillside between a vacant house on the corner of Laurel and Union, and Olin’s home at the dead-end of Union Street.
The vacant lot is north of the Truax House and extends into the western opening of Maple Canyon. Supporters of the canyon trail have been heartened by Nakhshab’s promise to provide a trailhead for hikers, although Kaminski and Olin question whether this is feasible.
Meanwhile, the developer has pinned his hopes on a June 1 meeting of the Planning Commission, where Nakhshab is asking that the tentative map of the property be subdivided into three parcels. The city’s paper trail on the project shows that the subdivision request is more than a year old, despite Kaminski and Olin’s belief that it is a new request.
The developer is asking that:
- The corner house at 540 W. Laurel St. will be designated as Parcel 1.
- The Truax House at 2513-2515 Union St. will be designated as Parcel 2.
- The vacant lot will be designated as Parcel 3.
“The subdivision provides us economic security whereby allowing us to revitalize each parcel individually to avoid getting burned in a potential recession,” Nakhshab wrote in a letter sent to the Metro CDC ahead of the meeting.
He explained further at the meeting, saying that the subdivision would allow his company to “simplify costs on our side” and build one parcel at a time.
Kaminski and Olin say they are bothered by the subdivision of the large parcel. “Could the city be leaving some additional funds on the table?” Kaminski asked. Olin contends that three parcels would be worth $500,000 more than the selling price, stating that it “seems like such a big loss for the taxpayers.”
Brencick said the city, as the owner, will consent to the buyer’s application to subdivide the property.
“It is not unusual for the buyer to process entitlements prior to closing escrow,” he wrote in the email.
Red tape and more
At the Metro CDC meeting, Nakhshab described the challenges of working with the city to close the deal.
“We were given two pills to swallow,” he said.
One, the city asked that the dead-end street be turned into a cul-de-sac, but the developer said that idea wouldn’t work.
Two, the city said the dead-end street could be vacated from the public right-of-way, providing his neighbors agreed. Nakhshab said initially all the neighbors agreed to go along with that plan, but then two residents changed their minds. He said one of those neighbors wants the two buildings demolished so she would have a better view of the bay and Downtown.
“Private views are not protected by the city,” Brencick wrote. “However, this Process 4 project decision is appealable to the City Council and can be appealed by any interested party.”
The city has five processes, and the higher the process number the more steps must be completed by a developer. Process 4 gets a staff level review, and that recommendation then goes to the Planning Commission for a vote. Any Process 4 appeal would go directly to the City Council, which has the final authority.
After realizing that he couldn’t “swallow” either of the pills,
Nakhshab said he then went back to the city seeking the current compromise. “We want to push through [the red tape], not be held back,” he said.
Olin, despite getting reassurances from the city on a number of occasions over the past year, told Uptown News that he is still worried that the street will be turned into a private driveway for the developer’s projects. He said he feared getting cut off from the sewer system, trash pickup and mail delivery.
The city said Olin has nothing to fear.
Nakhshab told the Metro CDC that he would be making $400,000 in infrastructure improvements along the dead-end street, including new curbs, gutters, a pedestrian ramp, asphalt, utility relocation, street widening with retaining walls, a hammerhead turnaround for fire trucks and street landscaping.
City officials confirmed that Nakhshab would be required to make a number of improvements.
“The right-of-way (ROW) improvements include the repaving and expansion of a portion of Union Street fronting the site, a new sidewalk, a new pedestrian ramp on the northwest corner of Union Street and Laurel Street, retaining walls, the relocation of a private sewer facility, new driveway apron for 2526 Union St., street trees, and a new hammerhead turnaround at the terminus of Union Street,” Brencick wrote.
“Along West Laurel Street, public ROW improvements include the replacement of curb and gutter adjacent to the site and the relocation of water and sewer facilities. No construction is proposed to the existing dwelling units with this application. City staff does not have information regarding the buyer’s costs to make these improvements.”
Nakhshab told Metro CDC that the subdivision would give his company “economic flexibility” on developing the entire property in stages. He said he wanted to provide 15 percent “very low income housing” on an “affordable” multifamily apartment building that would target young professionals and senior citizens.
Goals for Truax House
Nakhshab’s letter described his plans for the Truax House:
“Vital for my vision for the property is the preservation and restoration of Truax House. I believe this is not negotiable, as we need to protect this resource that is a part of San Diego’s philanthropic history. I also believe that an interactive visitor center with elements such as a timeline for the Truax House’s history may be a welcome addition for the property. Also in the center, I believe some sort of memorial for Dr. Brad Truax as well as his patients should be created. We have already been proactive and have prepared a detailed historic report for the city of San Diego and are hoping to have a determination with the next few weeks.
“Given my track record of revitalizing aged and historic homes while creating financially feasible projects, I would be honored to perform a restoration for a significant cultural icon. As demonstrated in both my Union 4 project just one block away and my Sofia Lofts in Golden Hill, my firm and myself have been proponents of preserving the architectural fabric of our neighborhoods while also developing architecturally significant and inviting spaces that complement, not overpower, the historic structures.
“I have been proactive with the historic status and designated the project as a historic site.
“The Truax House sits on a gorgeous site with views out to the San Diego Bay and Downtown as well as Maple Canyon. Creating a community center with a multipurpose room and drought tolerant garden area would prove a great space for tenants, nonprofits and community organizations to enjoy. This aspect would continue the tradition started on the property by the AIDS Foundation in Dr. Truax’s spirit with values of welcoming and openness for the community.
“A section of this space may be reserved as a public art gallery that could house different local artists’ work throughout the year.”
Kaminski said he would tell the Planning Commission on June 1 that he would like to see in writing that the developer will not sell off the Truax House property without fulfilling his promise to preserving and restoring the historical building and proving a community room and communal garden.
In his letter, Nakhshab outlines his promise to provide an inviting entrance into Maple Canyon:
“Maple Canyon is beautiful open space that is not utilized enough by the community. This may be partly due to the fact that finding an inviting passage into and through is not easy. Opening up access through the Truax property would connect two public resources in a meaningful fashion that allows both places to be experienced more pleasantly.
“While this part of our proposal has some nuance of having the adjacent property owner agree to similar goals of giving the public a charming access to Maple Canyon, we are dedicated to working closely with the private property owner next door in putting together the required public access easement as this will bring tremendous benefit for the community as a whole.”
At the end of the meeting, Nakhshab asked the Metro CDC to support his proposal headed to the Planning Commission.
“I’m seeking positive energy,” he said, with a sigh. “I’ve lost sleep over this project.”
The Metro CDC members agreed to support the project and directed their administrator Leo Wilson to attend the Planning Commission meeting to speak in favor of Nakhshab’s efforts.
Learn more about the Metro CDC online at metrosandiegocdc.org and Nakhshab Development & Design at nddinc.net.
Sara is the editor of San Diego Uptown News.