Mission Viejo Co. Sells 400-Acre Parcel for Home Project

Mission Viejo Co. sold a 400-acre chunk of vacant land in the city of Mission Viejo on Friday to Irvine home builder Barratt American Inc. and a San Diego thrift.

The price was about $57.3 million, or more than $143,000 an acre, according to county records. That makes it one of the largest recent local land deals.

Barratt said it would build 1,500 homes on about 300 acres and leave as much as 100 acres for open space.

Barratt’s joint venture partner in the deal is Home Capital Development Group, a unit of San Diego’s Home Federal Savings & Loan Assn. The thrift is the state’s seventh largest, with $14 billion in assets at the end of last year.

Mission Viejo Co., a subsidiary of cigarette manufacturer Phillip Morris Cos. and one of the county’s largest landowners, said last year that it was leaving the home-building business.

In February, the company sold 144 acres in Mission Viejo to Bramalea California Inc. for $61.1 million.

Barratt said its Mission Viejo tract would become the “centerpiece” of the company’s business in Orange County.

The tract is bounded by La Paz Road on the north, Oso Parkway on the south and Marguerite Parkway on the west. Felipe Road will be extended by Barratt on the eastern boundary.

Barratt American, a subsidiary of British home builder Barratt Developments PLC, entered the California market in 1981 as a builder of inexpensive housing.

In the last few years, Barratt--like other home builders--has turned to building more expensive homes for the “move-up” market of second- or third-time home buyers, a market that has been strong recently.

At the affluent planned community of Mission Viejo, however, the company will build houses more in the mid-price range, said Barratt President Mark L. Frazier.

The 1,200 single-family homes will cost between $200,000 and $350,000, Frazier said, while 300 townhouses and condominiums will sell for between $125,000 to $200,000.

Barratt had sales of $150 million last year and built 1,000 homes in Orange, San Diego, Riverside and San Bernardino counties. The company will build 1,200 homes this year, Frazier said.

Grading of the Mission Viejo land will begin soon and take as long as two years. The homes will be built over another three to four years, Frazier said.

Prices have been skyrocketing for Orange County land that has already been approved by government for construction of houses or condominiums.

Because Mission Viejo recently incorporated as a city, the Barratt land would be affected less by a pending slow-growth initiative than unincorporated areas, which the initiative would directly affect.

The initiative, expected to be approved by voters in June, requires the county to forbid development where roads and other services are inadequate unless the roads are first improved.

The Mission Viejo land is also protected by a development agreement concluded with the county before the city incorporated. Under such an agreement, developers can build a specified number of housing units--in this case, 6,400--in return for improving roads and providing other public facilities.

Supporters of the initiative have sued the county supervisors for granting development agreements in the southern part of the county, saying the agreements are merely a way to circumvent the initiative.

So far, however, the initiative supporters have made a court challenge to the Mission Viejo agreement, which was concluded by supervisors in October.

Under the Mission Viejo agreement, Barratt will be required to widen Oso and Marguerite parkways and La Paz Road in addition to extending Felipe Road.

Barratt says it doesn’t foresee legal problems with developing the Mission Viejo land.

“Our legal advisers say there’s some exposure and risk to legal attack,” Frazier said. “But they also point out that this area is merely the completion of a master-planned community that has been in the works for years.

“The area’s got substantially all its roads and improvements in, and it’s just completing an existing urban area.”

Barratt, which Frazier said had been using up much of its reserve land, has been “a little more aggressive in buying land this year, not directly because of the initiative but because of our belief the market is going to remain good.”

Mission Viejo Co. declined to comment on the sale.