Navy Scuttles Plan to Sell El Toro’s Parcels in Phases

The Navy has abandoned a plan to sell the closed El Toro Marine base in phases and will now auction all four sections of the 3,700-acre facility together as originally intended, Irvine city officials said Wednesday.

Dan Jung, Irvine’s director of strategic programs, said the Navy changed its mind once its officials realized such a move could yield less money for the federal government.

Navy officials declined to explain further, saying simply in a written statement that “the Navy and the city are continuing to work toward a new agreement.”

Representatives from the city, which annexed the former base last year and is overseeing its redevelopment, met with Navy officials Monday.

Jung said details, including when the auctions will take place, should emerge in the weeks to come.

The sale is being closely watched by federal authorities as a possible model for disposing of other land as the military readies for another round of base closures. Proceeds are to be set aside for environmental cleanup efforts at decommissioned bases.

State and federal environmental agencies have certified that most of El Toro is ready for sale to developers.

However, about 1,000 acres -- spread throughout three of the four parcels -- will be leased to buyers until further environmental testing and cleanup are completed. Until that is done and those portions are finally transferred to the buyers, development of those areas will be restricted.

In May, the Navy announced that the parcels would be sold in phases while details of those restrictions are worked out, instead of all at once as previously envisioned.

The only parcel without restrictions, a 202-acre lot on the former base’s southeast corner, would be auctioned first, sometime this fall.

Under the plan for phased auctions, the sale would not have been complete until the end of 2005.

That forced Irvine officials to revise their estimates of infrastructure costs for the Great Park redevelopment project, which will include as many as 3,625 homes.

Irvine officials put the new costs for that infrastructure, including roads and utilities, at $411 million -- up $40 million from previous estimates because of rising financing and material costs. Developers will pay for more than half of those costs in exchange for building rights. The remainder will come from property levies on Great Park homeowners and business owners.

The higher costs for developers meant potentially smaller bids for the land and less money for the federal coffers. Local real estate experts have estimated El Toro’s land value between $800 million and $1.2 billion.

With the phased sale now scrapped, the city will develop a new estimate of infrastructure costs.

Jung said that he, City Manager Allison Hart and City Attorney Joel D. Kuperberg met with Wayne Arny, principal deputy assistant secretary of the Navy, and his staff.

“They indicated they want the sale to happen concurrently,” Jung said.

“Obviously, the earlier [the sale] the better.”