Redevelopment May Solve the Antiquated-Subdivision Woes

Jessie Watkins lives in the Canadian province of Alberta and owns an old subdivided lot along the Ventura County coast in California. Sounds ideal, except Watkins has a problem: Her vacant property sits in a protected coastal zone, and she will probably never be able to build on it.

Thousands of people like Watkins own land in subdivisions that have little or no development value. Some of the parcels were inherited, some of them were purchased through speculative investments or real estate ploys, and others were given away through promotion schemes.

There are at least 400,000--maybe as many as 1 million--antiquated subdivided lots in 50 of California’s 54 counties. By one estimate, there are 10,000 substandard parcels in the Santa Monica Mountains, another 10,000 in Lake Tahoe, 9,000 near Cambria, and 59 subdivisions in the coastal zone. These lots cannot be developed in their present configuration or under present laws.

“A number of them were laid out decades ago in forests and deserts without water, sewer systems or roads,” says California state legislative consultant Peter Detwiler.

“Many of these subdivisions--with evocative names like ‘Desert Shores’ and ‘Bombay’--were plotted on a drafting table in New York; they subdivided a hillside that looked flat on paper,” says land-use specialist Madelyn Glickfeld. “There was little or no concern about environmental, health or safety issues.”

Until 1921, other than preparing and recording a subdivision map, subdividers had no rules to follow. Then the state began to require that all new subdivisions had to be approved by local government--though the regulations were easy to comply with. It wasn’t until 1937 that a comprehensive subdivision map law was passed that prohibited the sale of parcels in unapproved subdivisions.

“Picture over a long period of history: land being subdivided, followed by more and more regulations controlling how the land can be developed. The result is more and more antiquated subdivisions,” says Glickfeld.

Kern County Planning Director Randall Abbott says many of them were real estate scams “designed to attract investors from out of state and even out of the country.”

But investment scams weren’t the only way these subdivisions were created. In the ‘20s in Santa Barbara County, “spiritualist” H. L. Williams sold lots to his followers for $25 apiece; they pitched tents to start a religious community.

Subscription Bonuses

At the turn of the century, Sunset Magazine--which at the time was owned by Southern Pacific Railroad--reportedly gave away small parcels in the Bay Area as a promotion plan for subscribing to the magazine. Mel Lane, chairman of Lane Publishing, the current owner of Sunset Magazine, says that his office receives occasional calls from people who opened a family lockbox and discovered a deed for a lot.

Most of the experts agree that there is no quick fix to the problem of antiquated subdivisions. But tenacity and creative deal-making have helped Santa Barbara developer Thomas Carey work out a solution for one subdivision in Oxnard. For the past five years, Carey has scrambled to get 54 separate owners in the Ormond Beach “paper subdivision” to move forward on a complicated development scheme.

In 1934, Ormond Beach was subdivided into 68 25-by-100-foot parcels. At the time, there were very few rules that controlled how they could be developed; today, state coastal zone regulations make development impossible.

But unlike most antiquated subdivisions, there is a happy ending for the property owners in Ormond Beach. Carey has put the parcels into a land trust and is arranging to trade the subdivision for a piece of city-owned property where he will build a hotel. According to Carey’s innovative plan everyone wins: The city and state protect an environmentally sensitive coastal area, the property owners will begin to get a fair return on their investment and the community gets a new hotel.

Carey says it was a nightmare trying to track down all the owners and confirm that they held a legal title. He was also frustrated by the lack of legal direction provided by the City of Oxnard. “If they had adopted an ordinance for this kind of thing, we could have saved two years in the process.”

Local government has decades of experience subdividing land--turning large sites into small lots--but it has no experience un-subdividing land--turning small lots into large sites.

The State Coastal Conservancy offers a unique solution to landowners. Created by the state legislature in 1976, the conservancy buys antiquated subdivision lots along the coast, reconfigures them consistent with all local and state laws and sells them back to a private buyer. In 10 years, the Coastal Conservancy has purchased 639 lots. But scarce resources and a legislative charter that only extends their authority to coastal properties has limited their success.

Blue-Ribbon Committee

State Sen. Marian Bergeson (R-Newport Beach), chairwoman of the Senate Local Government Committee, is trying to find a more comprehensive solution. She is opposed to passing more laws to solve the problem, but she has formed a blue-ribbon advisory committee of developers, environmentalists and land-use specialists that she hopes will recommend a role for the state.

“We have done two decades of land planning in this state, but it doesn’t jibe with the old land-ownership scheme,” says the advisory committee’s staff consultant Madelyn Glickfeld. “We have to bring the old system up to date.”

As a first step, Bergeson’s committee is looking at the benefits of requiring greater disclosure when an antiquated-subdivision lot sells. “When landowners discover they cannot get a building permit, they turn around and sell their land without letting the new owner know that they will be unable to do anything with it,” says Glickfeld. “As a result, the land values go up and the stakes steadily get higher.”

Federal and state laws already require sellers to disclose certain facts, but Glickfeld says that the rules don’t address the peculiar problems associated with antiquated subdivisions.

One proposal would require that all vital information on the lot be recorded in the deed of trust. But title companies oppose this recommendation because they don’t believe the deed should become the “bulletin board for the community.”

More Forceful Remedy

A more forceful remedy is for local government to condemn land, compensate the property owners, readjust the subdivision in accordance with today’s rules and sell it back to a private buyer.

In 1954, the California Supreme Court affirmed the constitutionality of this approach--referred to as redevelopment--after the San Francisco Redevelopment Agency condemned and redesigned the antiquated subdivision in what is now the residential neighborhood of Diamond Heights. Nevertheless, many cities and counties are reluctant to use the complicated redevelopment process to solve the problem of outdated subdivisions.

The antiquated-subdivision issue may be a preview of more fundamental changes in land policy and development. The ability of developers to find raw land unconstrained by regulation dwindles with the passing of each decade. “All of this may be a sign that we are beginning to reach the end of the frontier,” says Glickfeld.