An executive of a major development firm, apparently acting independently, made the high bid of $4.2 million at an auction Thursday of 2.13 acres of federally owned land at a prime Westwood location just south of Wilshire Boulevard.
If the bid is successful, the buyer faces months of wrangling with county officials over the eventual use of the property. There may also be a lawsuit filed by heirs of the families who gave the land to the federal government 98 years ago.
Despite those problems, the high bid submitted by William A. Schainker, senior vice president of the Kaufman & Broad Development Group, amounts to a good price for the government, according to other developers.
"I thought they got a very good price. It was more than we could afford to pay," said Robert Hirsch, a partner in Goldrich, Kest & Associates.
Schainker said he has not yet formulated his plans for the triangle-shaped piece of land tucked in between the San Diego Freeway and heavily traveled Sepulveda Boulevard, which he apparently intends to develop independently. "I'm not sure yet," he said after the auction. "I just don't know. It's an investment. I'm not sure what to do with it."
A spokeswoman for Kaufman & Broad said she was not familiar with the project. Schainker said he was representing the 1401 Sepulveda Corp.
The address of the property is 1401 Sepulveda, which previously was used by the Veterans Administration for records storage and briefly leased to the city of Los Angeles as the site of the Flyaway airport bus terminal.
Schainker's bid was significantly lower than the $7.5 million that federal officials named as their asking price in earlier negotiations with Los Angeles County, which had hoped to buy the property for senior citizen housing.
The next step is for officials of the General Services Administration to consider Schainker's offer and give him a chance to increase it if they feel it is too low.
"We'll probably make a decision in a few days," said Peter G. Hebert, director of the agency's real property disposal division in San Francisco. The procedure allows for negotiations to extend over two months, he said.
"What normally happens is that by being the high bidder all you've earned is the right to negotiate with them," said another developer, Robert M. McClellan, a partner in Metro II, a Newport Beach firm. "They're notorious for hiking the price once the bidding has already happened." McClellan said he was interested in the property as the site for a self-storage facility but dropped out almost immediately when it became clear that other bidders were interested in it for more expensive commercial use.
Hirsch said his firm hoped to erect an apartment building on the site, which is currently zoned R4 for multiple-residential use and is set aside for public or semi-public use in the county's general plan.
The R4 zoning would allow for construction of about 100 residential units, with the possibility of adding more units as a bonus for including low- and moderately priced apartments.
But a developer would have to win the approval of the Board of Supervisors and the county's regional planning commission for virtually any project constructed on the site.
Supervisor Ed Edelman has made it clear that he wants senior citizen housing built there.
Although the General Services Administration sent out more than 1,700 full-color brochures describing the property to prospective bidders, only nine signed up to take part in the auction, which was held in an airport hotel ballroom.
"That's a fairly good number considering the adverse publicity and attempts to foil it (the auction)," the agency's Hebert said.
Auctioneer John Conolly began the sale by explaining the legal problems that a potential buyer might face, including a claim by the heirs of the Bandini and Jones families, whose ancestors gave the land to the federal government for use as a soldiers home.
Now that it has been declared surplus, the heirs say ownership should revert to them.
Conolly also warned that any use of the land would have to be approved by county officials. That announcement was ordered Monday by U.S. Judge David V. Kenyon as part of a ruling in which he denied the county's attempt to force the government to postpone the sale.
"I didn't come all the way from Washington to mislead anybody or to get less than the market value of this property," Conolly said.
The government's invitation for bids said that title would be conveyed by quitclaim deed, which means that the seller makes no guarantees that he actually owns the property.
But Conolly said federal attorneys are convinced that the government does have "good and conveyable fee title, and this is what we will convey."
Responding to a question from a bidder, he said the government will return the purchase price if a lawsuit determines otherwise.
The heirs' claim applies to the entire 300-acre Veterans Administration tract donated by their ancestors to the federal government in 1888. The Reagan Administration has announced plans to sell about 100 more acres of the Veterans Adminstration's Westwood complex, which is separated from the Flyaway property by the San Diego Freeway.