The Laguna Canyon Pact: A Unique Deal : Development: Observers caution against reading too much significance into the Irvine Co.’s startling agreement to sell the canyon tract to the city.
When you own the largest piece of private land in Southern California, it pays to be reasonable.
That’s the logic, developers and civic activists said Monday, behind the Irvine Co.’s stunning agreement over the weekend to sell 2,150 acres in Laguna Canyon at a cut-rate price.
A year ago, the huge developer had nearly all its permits and was preparing to begin work on Laguna Laurel, a development of 3,200 homes tucked inside a gorgeous coastal canyon admired for years by tourists and local residents alike. Suddenly, opposition grew intense, and the developer last December agreed to negotiate a sale.
Last weekend, the firm agreed to sell land that had just been appraised at $105 million for only $78 million. For the first time in memory, a massive development was stopped outright in Orange County, home to some of the largest and most powerful developers in the nation.
But those looking for broader significance in the events of the weekend may be disappointed, experts said, because in most ways, Laguna Canyon and Sunday’s purchase agreement are unique.
The Irvine Co. is not the average developer. It owns 64,000 acres, or about a sixth of the land in Orange County, and is said to be the largest private urban landholder in the nation.
Unlike a smaller developer who may have borrowed money to buy a piece of land, the Irvine Co. doesn’t have to hurry to build something on most of its land in order to start repaying a bank loan.
And unlike a smaller developer, the company depends on the goodwill of the cities where it builds not just once but time after time.
“When you’re here for the long term, you’ve got to be more sensitive, because you’re going to be back again tomorrow,†said Gary H. Hunt, an Irvine Co. senior vice president.
The company worries constantly about its public image, unlike some other developers who seem to relish their hard-nosed images. One of the reasons Chairman Donald L. Bren bought control of the company in 1983, according to his testimony in a recent trial, was that he believed the company’s management was clumsily antagonizing the public.
Now the huge concern would like to revive the fond feelings many residents had for it in the 1960s, when the company was run by a sleepy family foundation and development wasn’t a big issue because subdivisions and strip malls hadn’t yet engulfed big swatches of the county.
Finally, Laguna Canyon is only one small square of the enormous chessboard over which the company operates and on which it can ill afford a public relations disaster such as the one that was brewing there. The company’s holdings reach 22 miles inland from the narrow canyon and stretch 9 miles at their widest point. Clearly, there was more at stake than just Laguna Laurel.
Then there’s affluent, trendy Laguna Beach, which has more environmentalists than most other cities in the county and more undeveloped land around itself to protect.
And there was the size of the project. Few developers have enough land to plan whole cities, as the Irvine Co. did with the city of Irvine in the 1960s. Irvine Co. projects tend to draw lightning because they are big, although they are also tightly planned, right down to where the churches, schools and firehouses will be. In the Laguna Laurel plan, three-quarters of the 2,150 acres were to be left vacant.
But according to Laguna Beach Mayor Lida Lenney, that wasn’t enough. “Voters are so sick of houses covering the hillsides in Orange County that this canyon became a symbol,†she said.
It was, both sides agreed, a very emotional issue, with people picketing Bren’s opulent Newport Beach home and pledging to lie down in front of the bulldozers. It was not a prospect that Irvine Co. executives relished.
Opponents of most big Irvine Co. projects merely hope to force the company to scale down its plans. On the Newport Coast, for instance--the breathtaking stretch of hilly coastline between Newport Beach and Laguna Beach--the company was forced to negotiate a much smaller project than it originally wanted to build.
Many of the same community activists who fought that project were in the Laguna Laurel Advisory Group, which helped negotiate Sunday’s agreement.
But in another twist that makes the Laguna Laurel scenario unique, the company’s opponents this time wanted the whole ball of wax: They wanted the entire project scotched.
And up until this weekend, there were still top Irvine Co. executives who wanted to build the project. It was Bren, the billionaire who calls his thousands of acres “my canvas,†who insisted on a compromise, a company insider said.
So what’s the upshot of the whole affair?
The firm, Irvine Co. executives said, will probably take some criticism from more conservative local developers who feel it knuckled under to environmentalists. But one home builder disagrees. “I think most people are going to assume they made a legitimate business trade-off,†said Peter Ochs, president of Newport Beach’s Fieldstone Co.
Officials at the local Building Industry Assn., the trade group for home builders, said they see a hopeful sign in a city offering to pick up some of the tab for open space rather than making developers shoulder most of the burden in return for permission to build.
“It’s clearly a milestone,†said Thomas F. Daly, director of government affairs for the trade group. “It’s the first time in this area a city has made that kind of financial commitment to preserving open space rather than exacting it from the developer during the approval process.â€
Lenney, the Laguna Beach mayor, said the fight brought together members of a fledgling environmental movement in Orange County, a place which has not traditionally been known as a hotbed of environmentalism.
At least one slow-growth activist admitted to being “totally perplexed†by the company’s compromise on Laguna Laurel. “I’m amazed,†said Russell Burkett of San Juan Capistrano. “I expected them to sell the land to somebody else and let the new owner take the heat, as they’ve done in the past. This is not really in character for the Irvine Co.â€
But it is in character, Irvine Co. executives insisted.
“Is this a kinder, gentler Irvine Co.?†said senior vice president Hunt. “No. Our philosophy has always been to try to build with the approval of the community.â€
THE IRVINE CO.’S MAJOR PROJECTS The Irvine Co. owns more than 64,000 acres in the Orange County. Below is a list of the company’s major projects that are either under development or being planned: 1. The Newport Coast: After years of fighting with environmental groups, the Irvine Co. scaled back its plans for the stretch of barren coast between Newport Beach and Laguna Beach. The company has approval from the county and the Coastal Commission to build three hotels, two golf courses and up to 2,600 homes on the hills’ 9,400 acres, 72,00 of which will be open space. The first 50 or so lots for houses will probably go on sale later this year, and the golf courses will open next year.
2. Laguna Laurel: The company has approval from county government to build what’s essentially a small town of 3,200 homes with its own golf course, school and shopping center on 2,150 acres in Laguna Canyon, which stretches inland from Laguna Beach. The company has agreed to cancel the project and sell the land to Laguna Beach for $78 million. But if the city defaults on payments, the company will have the right to resume its development plans.
3. Irvine housing: The company is finishing up two residential neighborhoods, Westpark and Turtle Rock. It had requests before the city to build more houses in Westpark and the Northwood neighborhood but withdrew them recently while it waits for the city to decide how much affordable housing it will require developers to build.
4. Jamboree Center: At the San Diego Freeway and Jamboree Road in Irvine, the company is building the last two of five mid-rise office buildings. Jamboree Center has landed more large tenants recently than any other office project in the county.
5. Irvine Spectrum: At the juncture of the San Diego and Santa Ana freeways in Irvine, the company is building what it says is the largest business park in the world. The company is selling some of the 2,600 acres at the Irvine Spectrum and keeping others to build its own portfolio of industrial and office buildings.
6. Tustin Ranch: About 1,500 homes have already been built on 1,740 acres the company owns in an unincorporated part of the county abutting the city of Tustin. A total of 9,000 are planned and approved.
7. Orange: The company’s East Orange development covers 7,000 acres just east of the city of Orange but within the city’s planning jurisdiction. The company proposes to build up to 12,350 houses here, and the city in December approved the company’s rough plans for the first 1,500 acres.
8. Anaheim Canyon: East of the city of Anaheim in the canyons at the furthermost reach of the company’s landholdings, the company proposed recently to build 10,000 homes, although no official application has been made to the city yet. An outcry from environmentalists and others made the company reconsider its plans, which it now says will be “scaled back significantly.â€
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