The more things change, the more they stay the same. At 1 p.m. sharp today, the most well-known — and perhaps publically beloved — bit of real estate on the Gaviota Coast went to auction on the steps of the Santa Barbara County Courthouse.
Four minutes later, after nary a person amongst the several dozen in attendance dared enter a bid above the $50 million starting price for the wedge of coastal heaven known widely as Naples, the primary lender that made hopeful Naples conqueror Matt Osgood’s purchase of the land possible more than a decade ago, First Bank of Missouri, became the official owner. However, thanks to a last-minute deal brokered late last night between Osgood and the folks from First Bank, the Orange County-based developer will remain the primary shot-caller as the large-scale luxury home plan for Naples attempts to move forward.
According to Osgood — in an interview with The Independent just moments before the anticlimactic auction commenced — as per the deal signed last night, he will remain the lead manager of the 1,046-acre holding and the Santa Barbara County Supervisors’ approved (though currently stalled) plan to put 72 mansions and assorted outbuildings on the property. Additionally, Osgood reserves the right to once again purchase the land at a later date as well as have first refusal should another buyer emerge.
Though he acknowledged the risk in allowing the property to go to auction and ultimately default to the bank’s ownership, Osgood explained, “This really was the best possible business decision for us at this time … So much has changed [in real estate] since I first bought the property 12 years ago, this was a way for me to reduce the leverage on my investment.” Osgood also added that his deal with First Bank does indeed have a sunset date though he declined to say when exactly that was. Laughing, he opined, “I can’t let my opposition know that.”
Interestingly enough, while Osgood, at least in his opinion, and the many citizen-supported environmental groups that have worked tirelessly to oppose the long-stewing development plan can both claim victories of some sort today, the La Jolla-based Avalon Capital Group — which carried Osgood’s second and equally defaulted-upon loan on the property for some $18 million (the First Bank note was for $63 million, but with interest and missed payments currently amounts to roughly $78 million) — loses out entirely as a result of today’s plot twist with no real hope of recouping its money. “It is unfortunate,” said Osgood of Avalon’s loss, “but that is business.” The only way Osgood could have avoided today’s auction would have been to come up with $78 million in cash or declare bankruptcy.
What exactly all this means for the fate of Naples remains unclear. Despite barely earning an approval from a previous incarnation of the County Supervisors in the fall of 2008, the project has gone nowhere in the time since. Relations between Osgood and a newly comprised Board of Supes have broken down since Doreen Farr replaced Brooks Firestone in the 3rd District seat, the Memorandum of Understanding between Osgood and the county that was helping guide the process has been terminated, and a required thumbs-up from the California Coastal Commission has not even had the hearing that would make it possible scheduled.
Asked if the writing was on the wall for him to eventually walk away from the deal, Osgood scoffed, “We still have a substantial amount of capital to keep playing in this deal … It is going to be a long haul.” Then, after regretfully explaining how he thinks the overall value of the property hasn’t changed much at all since he bought it despite earning a development approval nearly two years ago, Osgood added, “I will say, I never want to fall in love with a piece of property again.”