Update on Rainbow MWD headquarters site development provided

The Rainbow Municipal Water District is planning to sell some of its property to fund the replacement of its current headquarters, but that will require prerequisites to have potential buyers interested in the land.

Rainbow has contracted with MasterCraft Homes Group, LLC, for a development study which is being performed in phases, and on March 23 Rainbow general manager Tom Kennedy provided the Rainbow board with an update on information which has been obtained from the study.

"The first part of that project was to do a market study," Kennedy said.

The Rainbow Municipal Water District headquarters property consists of four separate legal parcels. The headquarters building itself was constructed in the early 1970s, and sale of part of the headquarters land would cover the cost of a replacement building.

The headquarters property totals 34 acres, and the district believes that no more than 14 acres are needed for district operations. Rainbow's five-year plan calls for the first capital expenditures for the new district headquarters during fiscal year 2022-23, although funding in the 2018-19 budget allowed the project planning to begin.

"We've got to improve our facilities," Kennedy said.

The June 2020 Rainbow board meeting included a 5-0 vote to award MasterCraft Homes Group, LLC, a contract for development study services which includes reviewing the accuracy and completeness of reports prepared or compiled by other consultants and making independent recommendations to the district after the reports have been received and analyzed.

The potential interest in purchasing part of the property will be contingent upon resolution of a general plan amendment which will allow commercial or residential use, and the MasterCraft tasks include a market analysis and determining what land use changes would need to be approved by the County of San Diego.

Three milestones in the studies will lead to Rainbow decision points which will allow for changes in plans or even to stop the development vision should any fatal flaws be identified. The first milestone will be the completion of a marketing study which will provide information about cost-effective uses for the land which can be marketed.

The second milestone will follow the due diligence review of the property which will include an appraisal. The final milestone will be after the soils investigation process is completed, which will determine if geotechnical and soil conditions will allow feasible development.

"We're trying to identify any fatal flaws in the process," Kennedy said.

Although approximately 20 acres of the current property are not expected to be needed for future Rainbow operations, environmental constraints will reduce that amount. "The county has a wetlands buffer," Kennedy said.

The wetlands buffer triggers a limited building zone within 50 feet of the buffer. The structures would also have a 100-foot fuel modification zone. Approximately 12.3 acres are considered buildable.

"The flood plain area is smaller than originally anticipated," Kennedy said.

Residential and commercial development were both considered prior to the market study. "The best dollar amount that we can get for our customers is to develop it into residential," Kennedy said.

Two concepts have been considered. One would provide single-family houses at a density of 6.4 dwelling units per acre, which would allow for 84 homes. The "motor court" or condominium plan would have a density of 9.6 dwelling units per acre and would allow for 119 residences.

The higher density and the replacement of single-family homes with condominium units might not be supported as well by the Fallbrook Community Planning Group. "They look down on these kinds of things," Kennedy said.

The planning group's recommendation will be provided to the county's Planning Commission, which will also make a recommendation. Because a rezone and a general plan amendment as well as a subdivision map would be involved, the San Diego County Board of Supervisors would make the final decision.

(The Planning Commission has the authority to approve a subdivision map, although that decision can be appealed to the Board of Supervisors.)

The county may appreciate the site's proximity to highways and to the transit center northwest of the intersection of State Route 76 and Interstate 15. "We're kitty corner from the park and ride," Kennedy said.

The development conditions could require frontage improvements to Old Highway 395, but the project likely wouldn't impact other residential streets. "We think the community around us will appreciate it," Kennedy said.

Rainbow will work with the Fallbrook Community Planning Group and the county. "We're very optimistic that we'll be able to work this through the county process," Kennedy said.

Kennedy noted that the beneficiaries of a development would be the approximately 8,200 Rainbow ratepayers whose rates wouldn't be increased to fund the new headquarters. "This project isn't being done to enrich a developer," he said.

Rainbow expects to receive between $10 million and $12 million from the sale of the land. "All of that depends on market value at the time," Kennedy said. "Right now it really depends on the market."

Working with the planning group and the county will precede progress on subsequent phases. "We don't want to invest too much money into the next phases until we have a pretty good roadmap where we want to go," Kennedy said.

The potential development of the headquarters property will likely be a board action item rather than a report in the near future. "I think that over the next two months we'll be bringing something back," Kennedy said.