The city of Claremont has lost a $1 million state grant to pay for the purchase of Johnson's Pasture, according to Will Bigham in today's Daily Bulletin.
Escrow has closed on the $11.5 million open space purchase, and Claremont has already made its municipal bond offering to pay for the land with the assumption that it would have that $1 million in state money. So there is no more bond money to be had.
In other words, Claremont is stuck with an additional $1 million tab that it did not anticipate. The problem, according to Bigham's article, is that the state grant agency argued that because when the city bought the land, Claremont had language placed in the deed to keep the parcel open space. The state argued that this lowered the value of the land since it cannot be developed. The state is claiming that the appraisal the city used overvalues the land.
This is the second time a city's appraisal has caused the state to pull its money. Earlier this year, the city had to get the buyers to agree to lower their sale price from $12 million (under the first city appraisal) to $11.5 million (under the second appraisal).
It occurs to us that all of this could have been avoided by simply waiting until after the purchase was recorded to have the open space deed restriction placed on the land. Then there would have been no problem with the second appraisal.
Of course, as the article indicates, to city officials this really is no problem. We've got plenty of money laying around, they tell us:
[Mayor Peter] Yao said that the $1 million expenditure was within the city's means.
"Last time I heard, we had about $5 million cash sitting in the general-fund reserve," he said.
We're hearing rumblings that the city is a lot more concerned about the egg on their face than Mayor Yao is letting on, and that the $1 million hit is pretty significant if the city ends up paying it out of their reserve.
They seem to be scrambling around to find grant money somewhere else.
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