Overhead view of the old Teen Center property on Atascadero Road, which the City Council has declared surplus property. Photo courtesy City of Morro Bay
The City of Morro Bay is moving ahead with potentially selling a former teen center on Atascadero Road, after declaring it to be “surplus” property.
Airlin Singewald, the Community Development Director, brought the matter to the Council’s Feb. 24 agenda proposing a Resolution that would start a lengthy process for potentially selling the property at 231 Atascadero Rd., which has sat largely unused since 2020 and the start of the COVID 19 pandemic.
Citing the State’s Surplus Lands Act, Singewald said, the SLA “requires that the City declare property to be ‘surplus land’ before the City can take any action [sale or lease] to dispose of the real property. Surplus land is land deemed not necessary for a local agency‘s use.”
Since 2019, when the SLA was amended by Assembly Bill 1486, such surplus lands have to first be offered for redevelopment as affordable housing, Singewald’s report said.
“The amendment,” he said, “requires that surplus property, which does not qualify as ‘exempt’ under the SLA, must be made available through a specific process, which provides notice of its availability to housing developers and other local agencies.
“In addition, the SLA mandates reporting of surplus land inventory to the California Department of Housing and Community Development [‘HCD’].”
Ironically, this same SLA process is being followed by the San Luis Coastal Unified School District in its efforts to dispose of the surplus Morro Elementary School property, as well as Sunnyside School in Los Osos.
The City has notified the District it is interested in buying at least part of the Morro Elementary site, and Los Osos voters will be asked to approve a special property tax measure in June that would fund the purchase of Sunnyside for the Community Services District.
Both efforts to obtain the schools have been led by community groups formed specifically to work on the purchases.
Simply passing a Resolution and declaring the old teen center as surplus really just gets the ball rolling towards a potential sale.
“The SLA notification process,” the report explained, “requires the City to send a written Notice of Availability [NOA], either by mail or electronically, to other public agencies whose jurisdiction covers the area in which the subject property is located, and prospective affordable housing developers which have registered with HCD expressing an interest in surplus land within the county.”
HCD requires companies and organizations interested in bidding on surplus properties for affordable housing sign up with the agency and become so-called “Qualified Entities” or QEs.
“QEs,” the HCD said, “are entities that are willing to maintain the affordability of the property.
“QEs are tenant associations, local non-profit organizations and public agencies, regional/national non-profit organizations and regional/national public agencies, or profit-motivated housing organizations or individuals that are interested in bidding on affordable properties and have been deemed certified to own and operate assisted housing developments by HCD.” One simply must apply and meet certain criteria to become a QE.
HCD’s current list of QEs includes dozens that are qualified to operate statewide but only three specifically in SLO County. They are People’s Self-Help Housing, Corp. (PSHH), KDF Communities, LLC, and the Housing Authority of San Luis Obispo (HASLO).
PSHH and HASLO each have existing affordable housing developments in town. PSHH has senior apartments on Elm Street behind Spencer’s Market and Section 8 housing on Sequoia Street, and HASLO has a 35-unit apartment house on Atascadero Road about two blocks from the old teen center.
The property has had an interesting past. For decades it was just vacant land, used by the high school’s agriculture department to grow hay for the school farm. Then it was developed in the latter 1990s, as “The World’s Most Difficult Miniature Golf Course,” and operated for several years as a dinky golf and arcade business. That entity went bankrupt and the City of Morro Bay was able to purchase the site in the bankruptcy proceedings at pennies on the dollar, given its location just about 250-yards from the beach.
The City opened a teen center in 2003 and operated it until the pandemic restrictions forced it to close. It’s never re-opened.
The local Boys and Girls Club reached an agreement to lease the building and re-open as a clubhouse in 2022 but couldn’t get the money together for renovations, so it never opened.
Most recently, the City was approached by the Marine Mammal Center about leasing it to that organization for a new triage center for sick and injured marine mammals, after its lease for a small slice of the Morro Bay Power Plant property was canceled by plant owner, Vistra.
But those talks never went anywhere and the MMC is now planning to lease property from the Cayucos Sanitary District on Toro Creek Road for its new facility.
Currently, some City employees have moved into the old arcade building as temporary office space after the City Hall Annex Building, a small standalone space at 535 Harbor St., across from the Post Office was damaged in a fire last July 9.
The repairs to the Annex building that previously has housed the Dial-a-Ride Office and the planning department, are expected to be done in August and the employees will move back there at that time.
Given the SLA’s time constraints, the timing for a possible sale and the building again being vacant, shouldn’t be a problem.
After the City sends out its Notice of Availability to the QEs on HCD’s list, it starts a 60-day clock ticking for a response to at least express interest in the property.
“The SLA then requires that the City enter into a period of good faith negotiations with responding interested parties for at least 90 days,” the report said.
If the City can’t find a buyer willing to build affordable housing, it has to notify the State, which starts another 30-day clock ticking for HCD to determine if the City has acted in good faith in trying to find a buyer willing to build affordable housing and pay fair market value for the 1.33-acre property that sits about 250-yards from the beach.
Zoning could become an issue, too as it sits in the midst of a Visitor-Serving Commercial area dominated by two big RV parks and three motels.
The zoning is one of four main issues with the property, which Singewald’s report listed as:
• It’s Visitor-Serving Commercial zoning designation, and exclusion from the Mixed-Use Residential Overlay;
• Residential uses are not permitted within the VSC zone if properties are not included within the Mixed-Use Residential Overlay;
• The high value of the property due to its location; and,
• Existing buildings on the site that would hinder the development of a large-scale housing development without demolition.
The old teen center is one of three properties on that end of Atascadero Road that could hold big promise for Morro Bay’s future. The former sewer treatment plant property is beginning the process now of being demolished and cleared for potential redevelopment, and there’s another sizable private property across the street bordering the dunes that has been For Sale for quite some time now.
Each has its own peculiar issues to deal with, as the vacant lot has willows growing on much of it (considered protected wetlands); and the sewer plant has “coastal hazards” as declared by the Coastal Commission over a decade ago when it denied the City’s project to build its new treatment plant there.
So, while the town has several sizable parcels near the beach that could be re-developed into commercial, tax producers for the City treasury, various boggles loom large over each of them.
