Seaside approves buying back a property for 10 times more than the city got for it six years ago.

When the Seaside City Council convened for a special meeting Dec. 1, the issue at hand wasn’t whether the council previously erred in its decision to sell, in 2016, an approximately 1-acre parcel of city-owned land just across from City Hall. The question was whether they should buy that land back.

The property, at 1271 Canyon Del Rey (adjacent to Laguna Grande Park and Chili’s), is currently a vacant dirt lot with one notable exception: It’s got a well on it.

When Seaside sold the property in 2016 to local developer Don Orosco, who’s since died, the $250,000 sale price was contingent on there being sufficient water rights associated with the property so that it could be developed. If not, the purchase agreement stated, the price of the purchase would be renegotiated.

Orosco’s company, Orosco Group, started drilling a well on the property in late 2018, and City Attorney Sheri Damon says the city paid about $100,000 toward that process. The well struck water – it can produce about 40 acre-feet annually, if current volumes last – so the sale went through. But because of the money Seaside put in, the city only netted about $150,000 on that transaction.

The property sold again in 2020 for $1 million, and on Dec. 1, Seaside’s council voted 5-0 to buy back the property for $1.59 million. That’s more than 10 times what the city effectively sold it for six years ago.

Why? The answer, Damon says, is water: The property’s well is outside of the Seaside Basin – which is in overdraft and subject to strict restrictions with use of its water – and it’s outside of the Coastal Zone. So theoretically, Damon says, the city could put the water into the system operated by California American Water and, through water credits, it could be used to serve any property in the city, whether its water comes from Cal Am, Seaside Municipal or Marina Coast Water District.

Most new water connections in Seaside have been barred since the state’s cease-and-desist order against Cal Am in 2009.

In explaining the council’s 2016 decision before taking the vote Dec. 1, outgoing Councilmember Jon Wizard said, “The city’s not a business. We don’t have a lot of experience taking a lot of risk on developable parcels. We decided to let someone else take that risk…

“It’s a fair complaint to say, ‘You sold it for a song, and you’re buying it back for the farm,’ but we didn’t want to gamble with your money,” Wizard added.

Presently, the city has no concrete plans as to how it would like to use the water, and in any case, there are various bureaucratic approvals needed in nearly any path the City Council chooses, outside of using the water – which at the moment is not potable – to irrigate landscaping on city-owned properties.

Monterey Peninsula Water Management District General Manager Dave Stoldt says a water-wheeling agreement of the type Seaside may be envisioning is not without precedent. For example, Malpaso Water in Carmel Valley recently sold entitlements for water it pumped into Cal Am’s system.

Whichever water utility the credits would ultimately be wheeled to, Stoldt adds, customers would still have to pay the utility’s going rate for water, regardless of its source.