CELEBRATE! VOLUME II : ORANGE COUNTY’S FIRST 100 YEARS : PERSONAL INFLUENCES : SWEDISH RHAPSODY

The saga of four generations of Segerstroms--immigrants, laborers, farmers, developers, movers and shakers, friends of royalty, patrons of the arts.

Last April, the king and queen of Sweden came to Orange County to see Disneyland and visit the grandchildren and great-grandchildren of a Swedish immigrant family that made good. So good, in fact, that the clan was introduced to King Carl XVI Gustaf and Queen Silvia in a performing arts center with a main hall named for the family. And the royal visitors were the descendants’ lunch guests at a private dining club in a commercial, industrial and office complex in Costa Mesa on land upon which the family once grew lima beans.

Today the Segerstroms--the family on friendly terms with Swedish royalty--find their name linked as patrons of the internationally renowned sculptors whose works decorate the grounds around the six high-rise office buildings of Costa Mesa’s Town Center.

The Segerstroms developed those high-rises, including the 21-story, granite Center Tower--Orange County’s tallest and probably most prestigious office building. And they are the creators and owners of South Coast Plaza, one of the most profitable and fashionable retail centers in Southern California. But glamour and affluence have come to the family only in the last few decades.

If my grandfather saw his family having lunch with the king and queen of Sweden, he would have been awed by the whole thing. It is sort of like a movie--something that could only happen in a script,” says Ruth Ann Moriarty, granddaughter of Charles John (C.J.) Segerstrom, who in 1882 emigrated to the United States.

Moriarty, the history buff of the family, says that when C.J., his wife Bertha and their three eldest children arrived at Castle Garden, N.Y., after a stormy 14-day ocean voyage, they did not bear the Segerstrom name. Charles, born the son of Gustav Adolph Segerstrom, registered with the immigration authorities as Gustafson, the name that also was recorded on the boat passenger list, Moriarty says. (A common practice in Sweden at the time was for a son to add “son” to his father’s first name to make a last name, hence, Gustaf-son.)

Sometime after their arrival, she says, the family changed its name back to Segerstrom. However, her brother Henry Segerstrom contends that the family’s name never was Gustafson, pointing to an early family history and affidavit by his grandmother that referred to his grandfather as C.J. Segerstrom.

For 16 years, the young Segerstrom family lived in the Midwest, moving from Chicago to Prentice, Wis., to St. Paul, Minn., where C.J. was a railroad worker.

Life was hard. In later years, the eldest Segerstrom son, Charles, reminisced about how rain would drip through the roof of the Segerstrom house and how on one Fourth of July his father gave up his last dime to buy fireworks. Another son, Eric, would often tell his children about how, as a 3-year-old in Wisconsin, his fingers would bleed from pulling prairie grass that would be burned for heat.

In 1898, lured by reports from C.J.’s younger brother Henry, a bachelor living in Los Angeles, about greater opportunities and a more pleasant climate in the West, the Segerstrom family moved to Orange, where they leased 20 acres to grow apricots. Orange County’s population at the time was only 15,000.

Then one day, while out in his wagon, C.J. Segerstrom saw what he wanted--land flat enough and rich enough to grow just about anything. It was located in an unincorporated area that now is part of Costa Mesa but then was called Greenville.

By then, the Segerstroms’ 11th and last child, Harold, had been born. In all, there were five daughters and six sons.

The two eldest sons, Charles and Eric, stayed with their uncle in Los Angeles and later moved north to Sonora, where they made their marks in banking and the title insurance business. Charles, a lawyer, struck it rich in gold and tungsten mining. When he died in August, 1946, businesses in Sonora closed for two hours to show their respect.

The rest of the family leased and later bought 40 acres of fertile land in what is now Costa Mesa, where they raised alfalfa to feed cows and established a dairy. In time they bought a second dairy where South Coast Plaza now stands and increased their farm holdings to 2,500 acres. In 1915, they built the two-story farmhouse that still stands on Fairview Road next to the Segerstrom business offices constructed in 1962.

A family partnership was formed by all the male Segerstroms living on the Orange County farm, including C.J. and his sons--Anton, Harold, Fred and William. The latter two lived on the farm and remained bachelors. Anton and Harold raised families in Santa Ana and commuted daily to the farm.

While the men worked in the fields, the housework and cooking were handled by Bertha and the four daughters who never married: Christine, Ida, Clara and Ann.

Segerstrom descendants describe the first generation of immigrants as “extraordinarily close”--so close, they say, that Christine, the eldest child and a schoolteacher, rejected a marriage proposal so she could continue helping her mother care for her siblings.

However, circumstances and time dispersed some of the family. Esther, the only daughter to marry, died in childbirth, and her two children were raised away from the ranch. In 1964, after the deaths of Anton and Ann, a legal dispute over inheritance erupted between Harold and the heirs of Anton on one side and the heirs of Esther, Charles and Eric on the other.

C.E. Parker, an attorney and husband of Esther’s daughter Marilyn, says that the feud was settled without a trial when the Segerstroms who had remained attached to the Costa Mesa ranch agreed to distribute $932,500 to his wife Marilyn, her brother Robert Meyer and the heirs of Charles and Eric.

THE BUSINESS OF KEEPING a farm going and growing, however, united the Segerstrom bachelor sons and Anton’s and Harold’s families. For years the men not only would work together in the fields but also would gather with their wives and children at the Costa Mesa farmhouse on Sundays and holidays.

“For 50 years, there was no business activity but farming,” recalls Henry Segerstrom, Anton’s son, who is the driving force behind today’s C.J. Segerstrom & Sons. Henry Segerstrom, 65, shares the title and responsibilities of managing partner in the family business with his 60-year-old cousin Hal and his 90-year-old mother Ruth.

The Segerstroms remained in the dairy business until 1942, when a shortage of workers caused by World War II contributed to the family’s decision to sell out. “My father and uncles didn’t believe in milking machines” because they were convinced that the newfangled contraptions would harm a cow’s udders, Henry Segerstrom says.

Hal Segerstrom remembers it a little differently. He said that although less injurious milking machines had been invented, the family did not want to make the considerable investment required to modernize.

But by then, the Segerstroms’ lima bean fields--cultivated since 1916--were thriving. From 1948 to 1956, the family would be the nation’s largest independent producer of lima beans.

Henry Segerstrom remembers that his father and uncles were among the first farmers in the county to convert from horses and mules to tractors, and that they led local efforts to build drainage systems for fields plagued by repeated flooding of the Santa Ana River.

One of the family’s key business strategies, he says, was to gradually expand its acreage by buying parcels that were considered top quality for growing beans.

“I was brought up on the motto you buy and don’t sell,” says Segerstrom, who to this day tries to retain ownership of most of the land and buildings that are part of his family’s industrial, commercial and office developments.

During the Depression, the Segerstroms succeeded in holding onto their farmland despite plunging bean prices.

However, the family had no option but to sell a third of their land in 1958 when the two bachelor sons of C.J. and Bertha--William and Fred--died, and the family had to pay estate taxes.

The Segerstrom family’s transition from farmer to developer/landlord began after World War II as a result of Orange County’s military buildup and the emergence in the family business of Henry Segerstrom, who even in his childhood had shown signs of leadership.

Segerstrom recalls that after serving in the war--where his right arm was severely injured by artillery fire--and obtaining a master’s degree in business administration from Stanford University, he decided to return to the family farm out of admiration for his father and Uncle Harold, who then were running the operation.

Until the family built a separate headquarters in 1962, Segerstrom says, all family business affairs were conducted at the ranch house, which continued to served as a residence until the last of the 11 children of C.J. and Bertha--Henry’s Aunt Ann--died about 14 years ago.

“We did all of the management in the ranch house, and we didn’t have a full-time secretary,” Segerstrom says. “We would type the letters ourselves and do the income taxes.”

BUT TIMES WERE changing. Segerstrom says that on the day in 1963 that his father Anton died, the local newspapers reported that the 1 millionth citizen had been born in Orange County.

Not only was the county’s population exploding, but plans to build the San Diego Freeway through Orange County promised to accelerate that growth and bring economic benefits to property owners in its path. The Segerstroms, led by Henry, lobbied hard to get state highway planners to build the freeway through their property and, as an enticement, offered to donate the right of way.

As another boon to their future developments, the family also formed a lasting alliance with the city of Costa Mesa. When the family made known its intention to build a giant shopping center, both Santa Ana and Costa Mesa vied to annex the Segerstroms’ unincorporated land.

Costa Mesa prevailed because it was willing to give the Segerstroms more, and in 1959, annexed property that includes present-day South Coast Plaza. Henry Segerstrom says that the family was concerned about “how we could retain ownership of our property under the burden of municipal taxes.” As a solution, he says, Costa Mesa officials agreed to postpone levying taxes for municipal services on Segerstrom land until after it was developed. In turn, the Segerstroms agreed to let the city use water from the family’s wells.

Robert Wilson, who was Costa Mesa’s mayor at the time, says he knew the city had made a good deal after he shook hands with the Segerstroms. “I could just see pots of gold everywhere.” In short order, he says, taxes derived from the Segerstroms’ South Coast Plaza shopping mall helped the city of Costa Mesa finance construction of a civic center and a golf course.

That was just the beginning. In 1986 South Coast Plaza generated $5 million in sales tax revenue for Costa Mesa, according to city officials. (The 1987 figure was not available.) Last year the mall, with 2.7 million square feet of retail space, reaped more sales than any other shopping mall in Southern California--$613 million. Moreover, the mall has been designated a major national tourist attraction by the Travel Industry Assn. of America.

But when the covered mall opened in 1967, it was not obvious that it would be a success. Retailers had to be convinced that a regional shopping mall could survive in an area surrounded by bean fields and two-lane roads. At the time, the San Diego Freeway was no more than a line on a planning map.

To persuade May Co. and Sears to anchor the first phase of the mall’s development, the family sold each firm the land on which to build for $1.

Segerstrom says the family saw a need to hustle with the plans because other developers were planning competitive regional centers--Fashion Island in Newport Beach and Huntington Center in Huntington Beach. “We realized we had to hurry or be left behind.”

Similarly, it was a competitive desire to stand out from the burgeoning local retail crowd, Segerstrom says, that motivated the family to develop a higher fashion profile at South Coast Plaza, starting with the decision to bring in Bullock’s in 1973, followed by I. Magnin, Nordstrom and Saks Fifth Avenue.

John Nordstrom, co-chairman of the board of Nordstrom, says that Henry Segerstrom is “progressive, precise--and relentless.” When Segerstrom first invited Nordstrom, another Swedish family-owned business, to open a department store in South Coast Plaza, the Nordstrom retail operation was confined to Seattle. “We had no intention of coming to (the) Los Angeles (area). It was too far away, and we felt our first expansion would be to San Francisco,” Nordstrom recalls.

But after more than a year of negotiations, Henry Segerstrom got his way, and in 1978, Nordstrom opened its first California store in South Coast Plaza.

Most recently, the Segerstroms opened a $100-million annex to South Coast Plaza called Crystal Court. And Henry Segerstrom, in partnership with Cincinnati-based JMB/Federated, undertook a major remodeling of Santa Ana’s Fashion Square shopping mall, now called MainPlace/Santa Ana.

Exactly how much the Segerstrom family is worth is difficult to determine, primarily because the family jealously guards its privacy.

The Segerstroms control an estimated 400 acres of the 2,500-acre South Coast Metro area in Costa Mesa and Santa Ana, including some of the most valuable developed land in the county. Assets range from South Coast Plaza, high-rise office buildings and the Westin South Coast Plaza Hotel to strip retail developments, community shopping centers, industrial complexes and apartments.

Forbes magazine last October listed the Segerstroms among the wealthiest American families and reported that C.J. Segerstrom & Sons has equity “well over $400 million”--a figure the Segerstrom family contends is much inflated.

FREQUENTLY, the Segerstroms’ business decisions have been decried as overambitious by critics who later had to swallow their words. In retrospect, the Segerstroms are generally admired as a farming family with foresight and patience who planted seeds for a shopping center, high-rises and hotels and then waited for the market to ripen.

By waiting, the family was able to attract a big-league financial partner, cream-of-the-crop professional tenants and finally a glittering centerpiece--the Orange County Performing Arts Center.

At first, the Segerstroms’ plans for a hotel and high-rise office buildings in Town Center across the street from South Coast Plaza seemed out of step with the times. A 1970 real estate consultant’s study commissioned by the Segerstroms predicted that if the family started right away, they could within five years cover all of their property with successful office projects--provided that they stuck to low-rise structures. But if the Segerstroms wanted to build high-rises, the report said, it might take 15 years before the market could absorb the space.

“There was a temptation to take the early dollar,” says Bill Lund, who conducted the study. “But of all the men I’ve known in development, Henry Segerstrom has one of the best long-term perspectives.” Segerstrom decided to wait while companies that had moved to Orange County in the ‘60s and early ‘70s were rapidly expanding, creating a need for increased support services from bankers, accountants, lawyers and other professionals who were the tenants Segerstrom wanted in his high-rises.

He was receptive when, in the spring of 1977, officials of the Prudential Insurance Co. of America, one of the nation’s largest investors in office buildings, paid a courtesy call on the Segerstrom family to explore the possibility of a joint office-building venture.

When the Segerstroms’ first office tower was completed and the second two started in late 1979, the county’s office vacancy rate was low, demand was high and a potential major competitor, the Irvine Co.’s Newport Center, was hamstrung by an anti-growth movement in Newport Beach.

One “tenant” the Segerstroms say they did not solicit is today perhaps Town Center’s biggest drawing card--the Orange County Performing Arts Center. Elaine M. Redfield, who was president of the group searching for a site for the center, says she approached Henry Segerstrom because the Segerstrom family earlier had donated a site for the smaller South Coast Repertory theater.

Ruth Ann Moriarty, Henry’s sister, says that Orange County was virtually devoid of cultural opportunities when she and her brother were growing up. Moreover, she says, while their mother Ruth encouraged education, she “wanted us always to take solids like math and science.” She says their mother considered art and music to be “frivolous.”

Nonetheless, Henry Segerstrom today is considered a major patron of the arts in Orange County. He steered the county’s biggest and most successful arts campaign--raising to date more than $138.5 million to build and endow the 3,000-seat performing arts center that opened in 1986. The Segerstrom family donated the five acres on which the center was built and an additional $6 million in cash to the project.

And Segerstrom personally selected the sculptures in Town Center, including a 10-foot boulder sculpture by Isamu Noguchi that is called “The Spirit of the Lima Bean” in recognition of the Segerstroms’ farming origins.

ALTHOUGH HENRY SEGERSTROM is the most visible family member, he and his kin stress that C.J. Segerstrom & Sons remains a family enterprise in which numerous family members play active roles. All important policy decisions are made in concert by the three managing partners, whose signatures are required on all leases.

Henry’s cousin Hal, who still has a yen for farming, also runs the family’s remaining 180 acres of agricultural land sandwiched between industrial, commercial and residential developments in Costa Mesa and Santa Ana. And Henry’s mother Ruth still comes to work daily--a routine that recently was temporarily interrupted when she broke a hip. In addition, Eugene Moriarty, Henry’s brother-in-law, manages family-owned office buildings in downtown Santa Ana.

A fourth generation of Segerstroms--all in their 20s and 30s--has joined the family business in varying capacities. Henry’s eldest son Toren is developing Harbor Gateway, a high-tech complex in Costa Mesa, as well as apartments in Santa Ana; another son Anton is operations manager at Crystal Court, and son-in-law David Grant is operations manager at South Coast Plaza.

On the other branch of the family tree, Hal’s son Ted and daughter Sandra work in the company’s real estate management department. Another daughter, Sally, was her father’s secretary until she left the job recently to have a baby.

Unlike most large businesses, the Segerstrom enterprise has no president or chairman. According to family members, the younger Segerstroms are assigned particular projects on which to exercise their entrepreneurial skills--and for which they are held accountable by the senior managing partners.

Under the umbrella family partnership are a myriad of other project partnerships in which family members, some key Segerstrom employees and a few financial institutions and outsiders participate.

Ray Watson, vice chairman of the Irvine Co. and a former partner with the Segerstroms in a high-tech business park, called C.J. Segerstrom & Sons “one of the most fascinating companies in the (development) business.”

He described the company as “a bunch of individual operations held together by family unity and common ownership of land and also by the personality of Henry on the real estate side . . . . Henry is the man who conceives of a project and then brings the team together.”

David Grant, 38, who has worked for C.J. Segerstrom & Sons for more than 10 years, says that the older family members give their children “a lot of latitude” and let them learn on the job. After a while, he says, it is easy to anticipate what the family would think of a particular business proposal.

None of the younger Segerstroms admitted to being pressured into joining the family business. “If you asked me six years ago if I would be here, I would have said no,” Anton says. But having graduated with a master’s degree in business from the University of Oregon, he decided to accept his father’s invitation.

Says Jack Matthess, general manager of South Coast Plaza: “If something happened to Henry, there would be no problem. He has two sons who fit the groove.”

Toren Segerstrom says he believes that Orange County has benefited from the long-term commitment of families such as his that take pride in the developments attached to their name.

Many matters vital to the community and the family, such as whether to provide a site for the performing arts center, he says, were initially discussed in the parlor of the farmhouse--along with more mundane matters such as the latest news about Hal’s new boat or the birth weight of a great-grandchild.

In that parlor decorated with overstuffed couches, tables and lamps from a bygone era, Segerstrom family members who are involved in the business routinely gather each weekday after a family lunch “to decide where the family’s destiny is going,” Toren Segerstrom says.