The Huntington Beach Co.: City’s Benefactor or Boss?

This growing, changing city of 180,000 has had many nicknames--Pacific City, Oil City and Surf City, to name just a few.

But some residents have another name for Huntington Beach, and it is not one usually associated with this bustling oceanfront enclave: “company town.” The term is used disparagingly.

In this case, the nickname refers to one of Orange County’s largest, but least known, land development firms, the Huntington Beach Co. And while few believe that the company controls everything in this diverse, urban community--other corporate giants in the city, such as McDonnell Douglas, employ more people and pay higher taxes--many believe that the power and influence the Huntington Beach Co. wields is unjustly great.

In recent months, in fact, the epithet “company town” has been used by many reform-minded critics in discussing the governmental problems of Huntington Beach.

Part of it has to do with history and the way the company, like the city itself, grew up and matured over the years.

The company, now wholly owned by Chevron, founded this beach city 87 years ago. Some say it has been a guiding, benevolent force ever since. But others say that when its interests are threatened, the company calls on its tremendous clout to pressure local officials to see things its way.

Debate about the role of the company in local affairs has picked up in recent months, largely because of downtown redevelopment and the building of residential tracts on land once reserved for oil drilling--both of major interest to the Huntington Beach Co.

Unlike the better-known Irvine Co. and Mission Viejo Co., the Huntington Beach Co. seldom makes the news. But like those other two development companies, which wield influence in the cities that bear their names, the Huntington Beach Co. is the dominant corporate institution in Huntington Beach.

Started as a land-development firm owning about 2,000 acres in 1903, the Huntington Beach Co., like the city, went heavily into petroleum drilling after oil was discovered there in 1920.

But with the suburban-residential boom in Orange County in the 1960s and 1970s, land became more precious than the oil under it, and residential development again became the prime company enterprise. The company still owns about 900 acres in prime areas of the city, making it the largest private landowner in Huntington Beach.

Its developments include the fashionable Seacliff Country Club area and the new Huntington Classics homes next to the Civic Center. Company officials say only 10% of the Huntington Beach Co.’s business is in oil, with the remainder devoted to land development and investments.

But critics say the company, because of its vast landholdings, has a penchant for trying to call the shots when its interests are perceived as being threatened.

“Huntington Beach is still very much a company town, and that company, the Huntington Beach Co., still tries to run this city,” said Geri Ortega, chairwoman of the city’s Planning Commission.

Another local resident, Golden West College history professor Rick Rowe, agrees.

“My perception is that the Huntington Beach Co. is the power behind the throne,” said Rowe, a former Planning Commission member and unsuccessful candidate for City Council.

Company officials downplay such accusations. And some prominent politicians, notably Orange County Supervisor Harriett M. Wieder, a former Huntington Beach mayor, say the days are long past when one land company could dominate the city.

“Maybe in the past, when Huntington Beach was smaller,” said Wieder. “But it’s not a company town now. The city’s too big; it has too many other companies. And most people who live in the city don’t even know about the Huntington Beach Co. I bet if you took a poll, less than 3% of the residents could tell you they know anything about the Huntington Beach Co.”

Mayor Thomas J. Mays said he thinks some critics exaggerate the power of the Huntington Beach Co.

“I think some people think it has more influence than it really does,” said Mays, who was elected to the City Council four years ago with financial support from the company. “They donate to campaigns, but they’ve lost races in the past. And I think all of us on the council have voted against the Huntington Beach Co. in one way or another; they never get everything they want.”

Roger Work, the general manager for the Huntington Beach Co., concurs and said most residents know little about the hometown company.

“The last poll I saw showed that the company only had about a 6% ID (identification by city residents), and 4% of that was positive and 2% negative,” Work said.

Critics say that if this is the case, it is only because the company tries hard to keep such a low profile.

“The Huntington Beach Co. is not upfront like the Irvine Co.,” Rowe said. “It’s analogous to the Irvine Co., but in a way, the Huntington Beach Co. is more powerful because it’s not very well-known.”

In terms of both landholdings and income, the Huntington Beach Co. is much smaller than the vast Irvine Co. In 1986, when Chevron bought out the last third of stock in the Huntington Beach Co. that it did not already own, it paid about $80 million. That purchase indicated that the land company’s overall worth was about $240 million, experts said.

Donald L. Bren, by contrast, in 1983 bought the two-thirds of the Irvine Co. that he didn’t already own at a price that meant the entire company was worth about $1 billion.

Given the Huntington Beach Co.’s historical low profile, two recent episodes involving the firm awakened critics to what they see as the company’s habit of using its influence to get its way with local politicians.

The first came Jan. 8, when Work, in public view during a recess at a City Council meeting, scolded the council for changing a zoning classification in a part of the 768-acre Holly Seacliff development. About 80% of that project is on Huntington Beach Co. land in the western part of the city. The council’s zoning change would have made part of the development less profitable to the company, according to William D. Holman, project manager for the Huntington Beach Co.

Councilman John Erskine listened to Work’s complaints and immediately moved for reconsideration of the zoning that Work found displeasing. The council, by a 5-2 vote, quickly reversed itself and readopted the original zoning.

The only opposing votes were from Councilman Peter M. Green and Councilwoman Grace Winchell, two environmentalists who were elected without the blessing or financial support of the Huntington Beach Co.

Winchell said the company “pulled the strings of their puppets. . . . It must have been very important to the company because they chose to do it right out there in front of God and everyone.”

Mays, who changed his vote after Work’s complaints, later conceded that it was “not the best way to do it. . . . It shouldn’t have been done in a hurried fashion.”

But Mays and Erskine also said there were compelling reasons for changing the zoning back to its original classification. They said the city would have lost some acreage for a new park had it kept the amended zoning, adding that Work’s comments had only served to alert the council to the potential loss of parkland. Erskine said some private-property owners, in addition to Work, had also urged him during the council recess to change the zoning back to its original form.

Nonetheless, critics point to the late-night vote change on Jan. 8 as an example of the influence the company wields.

About the same time, questions were raised about how the company was allowed to claim a big tax writeoff in a 1986 land deal with the city.

Debbie Cook, a leader in two planned-growth organizations, Save Our Parks and Huntington Beach Tomorrow, produced City Hall documents that showed the city estimated the value of some beach land near the pier at $10,000 and asked the Huntington Beach Co. to give up its partial claim to that land so it could be included in the Pierside Village redevelopment project. The company subsequently agreed to donate its share of the land but only after persuading the city to agree that the actual value of the donation was $3 million.

Said Cook: “How could the value be $3 million when the city had it appraised at $10,000? Did the Huntington Beach Co. get a huge tax writeoff for giving away nothing?”

Company officials, in rebuttal, said that the city’s original valuation of the land was wrong and that it actually was worth $3 million. But Cook said she remains suspicious.

“There is no other influence in this city like the Huntington Beach Co.,” Cook added. “They permeate everything.”

Still, whatever its critics say, the company has been a major donor--possibly the largest--to civic causes in the city. And the company’s charitable donations almost always are made with little or no fanfare. Even when the potential for favorable publicity is high, the company usually chooses to remain out of the limelight.

The company has given the city art, parks, educational aid and beaches. In 1975, it donated a 14-foot, bronze, abstract sculpture to the city’s new Civic Center, and it recently pledged to give $100,000 toward building a new municipal pier.

From his office located across the street from City Hall, Work, the company’s general manager, dismissed critics who claim that he heavily influences local politicians and, in effect, “rules City Hall.”

During an interview, Work pointed toward City Hall and said, “If I ran it, it would be a lot better than it is. Those people over there, they can’t even tell themselves what to do, let alone have me or anyone else tell them what to do.

“They’re all independent people. Contributions in an election--all that gets you is the ability to talk to them. And I think you probably have that ability anyway. Beyond that, I think it’s ludicrous for anyone to think that anybody (in City Hall) is controlled by anybody.”

Work also responded to charges by critics that the company’s political contributions are so large that they give an unfair advantage to its chosen candidates. While conceding that company political contributions totaled about $250,000 in 1988, Work said that it was an unusual year and that most of the campaign money went to fight a slow-growth measure.

“In that year, we contributed more than we ever have because of the no-growth issue,” Work said. He added that most of the $250,000 went to groups working against Measure J and not to individual candidates for the City Council.

Measure J, similar to slow-growth propositions passed in 1988 in San Clemente and San Juan Capistrano, lost in Huntington Beach that year by only 870 votes out of almost 68,000 cast. Doug Langevin, a member of Huntington Beach Tomorrow, which advocated the measure, charged that the Huntington Beach Co. was the main force in defeating it.

Ortega, a slow-growth advocate and former president of Huntington Beach Tomorrow, was among the City Council candidates on the 1988 ballot. She said that opinion polls showed her running first in a crowded field of 15 candidates shortly before the election.

“Because I’m identified as a slow-growth person and an environmentalist, the Huntington Beach Co. targeted me,” Ortega said. She said that three days before the 1988 election, two “hit-piece” mailers that “smeared” her name and reputation were mailed to city residents. She lost by only about 250 votes to Councilman Don MacAllister, who had the backing of the Huntington Beach Co.

“I wear my defeat due to the Huntington Beach Co. and Chevron as a badge of honor,” Ortega said.

The 1988 mailers attacking Ortega listed Southern California Caucus as being the sponsoring organization. But Ortega charged that the Huntington Beach Co. was actually the major force and political donor behind that organization.

Work said the company did contribute money to Southern California Caucus but was only one of many sources of revenue for the organization.

Five of the seven incumbent City Council members had financial campaign support from the Huntington Beach Co. when they ran their races: Mays, Erskine, MacAllister, Jim Silva and Wes Bannister. Green was not backed by the land company when he made his surprisingly successful first run for the council in 1984, stressing environmental issues. Winchell also did not receive Huntington Beach Co. support in her upset victory as a slow-growth council candidate in 1986.

Barbara Milcovich, a private historian who has spent years researching the city, said the Huntington Beach Co. has always taken a close interest in city elections.

“The company has always been a major influence (in city politics) behind the scenes, if not in front,” Milcovich said.

While Milcovich praised the company for being a pioneer in urban planning and for its many civic donations, including giving the city its first library, she was critical of the company’s “lack of a sense of history.” She said the company has needlessly torn down some historic buildings in the city, including the Holly Sugar Co. brick office building, constructed in 1910. Razing that old building in 1986, she said, “was an act of supreme vandalism.”

Milcovich added that company officials have “chosen not to acknowledge their own history. They’ve forgotten that a city is not just today. It’s that combination of yesterday, today and tomorrow that makes it a special place.”

Work responded that “history is in the eye of the beholder.” He said that some of the buildings Milcovich wanted to save had no real historical significance. The old Holly Sugar Co. building, he added, “was condemned by the city because it didn’t meet earthquake standards.”

Work, who is the immediate past-president of the Huntington Beach Chamber of Commerce, said it irks him how some people criticize his company.

“I think what they’re doing is being critical of perceptions rather than realities,” he said.