The subject property consists of approximately 34.99 acres of vacant, unimproved hillside land located on the northwest side of Railroad Canyon Road, just north of Canyon Hills Road, within the City of Canyon Lake. The property is identified as Assessor Parcel Number 354-030-013 and is currently owned by the Martin Family Trust.

According to the appraisal prepared by Larry W. Heglar & Associates, the property is zoned R-R (Rural Residential) with a General Plan designation of Mixed Use. The appraiser concludes that the highest and best use of the property, in its current condition, is to hold it as an investment for potential future development substantially consistent with the current zoning and General Plan designations, or for possible open space or conservation acquisition. The appraisal establishes an “as is” fair market value of $2,895,000 for the fee simple interest in the property.

The property is a prominent hillside feature along a primary entry corridor to the City and is located between existing residential neighborhoods, the Canyon Lake Golf Club, and major regional transportation routes. Acquisition by the City would secure long-term public control over this highly visible parcel, preserve options for future public uses (such as open space, trails, or other City facilities), and allow the City Council to guide any potential future disposition, entitlement, or conservation actions consistent with broader community objectives.

Staff has negotiated a proposed purchase price of up to $1,500,000, which is substantially below the appraised fair market value of $2,895,000. The difference between the appraised value and the agreed purchase price, approximately $1,395,000, represents the “bargain” element of the transaction. Under federal tax and charitable giving concepts, a “bargain sale” generally refers to the sale of property to a governmental entity or qualified charitable organization for less than fair market value, with the charitable “gift” component equal to the difference between fair market value and the sale price. In this case, the transaction may constitute a bargain sale from the seller’s perspective, and the seller may seek to treat the bargain element as a charitable contribution for tax purposes, subject to the seller’s own tax and legal advice.

From the City’s perspective, the transaction provides an opportunity to acquire a strategically located 34.99-acre parcel for approximately 52 percent of its appraised fair market value, representing a significant discount and an efficient use of public funds relative to the independently appraised value of the property. The proposed Resolution would authorize the City Manager to finalize the Purchase and Sale Agreement, to conduct appropriate due diligence (including but not limited to title review, environmental review, and other inspections), and to execute the necessary closing documents, provided that all documents are approved as to form by the City Attorney. The Resolution would also authorize a modest contingency authority (five percent of the purchase price) to cover transaction-related costs.

If the City Council approves the recommended action, staff will proceed to complete negotiations and purchase. In the future, there will need to be additional policy direction regarding future use, entitlement, or disposition of the property.