At its Feb. 4 meeting, the Rancho Santa Fe Association Board of Directors discussed the possibility of selling a portion of the Osuna property but decided against it at this time.
The Association purchased the 28-acre Osuna property in 2006 for $12 million with the goal to preserve the historic adobe, protect open space and prevent subdivision. A three-acre parcel was sold for $1.7 million in 2013, leaving 25 acres as one legal parcel.
The property is also home to a working horse ranch — 45 percent of the horses boarded at Osuna Ranch are owned by Covenant residents. Non-Covenant owners pay more than residents to board animals there.
“If you polled the Osuna Committee, they would say they’d like to keep the whole property,” said board member Jerry Yahr, chair of the Osuna Committee. “But being realists, they see that there is an opportunity to take some component of net proceeds or built up reserves and that money could be put into the preservation of the adobe, it could be put into improvement of open space and, at the end of the day, create 10-12 acres that is viewed as more usable to the entire community much like the Arroyo property but not require the Association to be in the horse-keeping business.”
At the direction of the board, the Osuna Committee analyzed three valuation scenarios. The first scenario included selling the property as is, which was valued at $8.96 million. In a second scenario the Association takes on the role of a developer, makes improvements and sells the lots as a two-to-five-lot subdivision assuming all development risk and expense. In this scenario the property is valued at $7.97 million to $8.75 million, generating $3.8 million to $5.13 million in cash.
A third scenario is a developer subdivision, in which the Association sells the unentitled land to a developer and the developer manages the subdivision and assumes all risk and expense. In this scenario, the property is valued at $6.56 million to $7 million, generating $2.7 to $3.39 million in cash. In all scenarios, the Association would retain the adobe parcel.
As Yahr noted, the Osuna Ranch is a positive cash flow, not a huge one, but it’s anywhere from $30,000 to $50,000 a year and it covers all the costs of operating the adobe and repairs. If that property is sold there will be no revenue generation.
According to Yahr, if the Association decides to proceed with a sale, the Osuna Committee recommends that the Association not be a developer but a wholesaler.
“I personally don’t think it should be sold,” Yahr said. “We’ve been in a rising market, we have $7 million in the Covenant Enhancement Fund, we don’t need the cash right now. It’s good to understand where we are but I wouldn’t recommend that we proceed at this time.”
In reviewing the valuation scenarios, the board members agreed that it was not the right time to move forward. Board member Philip Wilkinson expressed disappointment with how low the appraisal was.
“We should wait until market conditions are right and we have a need for the cash,” Wilkinson said.