Chevron to Bring Down Coto de Caza Prices : Development: As the new majority owner, the company plans to offer less expensive homes in the resort community.

Chevron Land & Development Co., for years a silent partner in the Coto de Caza master-planned resort community, has flexed its considerable muscle, shouldered aside partner Arvida Co. and taken over direct operation of the 4,000-acre development.

In recent months, sources said, Florida-based Arvida sold a portion of its interest in Coto de Caza to Chevron when it was unable to meet lenders’ demands for additional capital for their partnership. The sale made Chevron Land & Development majority owner and put a financially stretched Arvida in the back seat.

The change in management is likely to bring about big changes to what has been one of Orange County’s most expensive residential enclaves.

Officials of Coto de Caza Co. are now re-examining their 1988 decision to stick with luxury single-family housing and have begun talking openly about encouraging a much wider mix of product, with prices going down into the $150,000 to $160,000 range for townhomes planned for property next to the sprawling Coto de Caza Golf & Racquet Club.

Currently, typical low-end prices at Coto de Caza run from $270,000 to $350,000. The average price of a new home in the gated community during the third quarter was $489,796, according to the Competitive Housing Market Report published by the Meyers Group in Newport Beach.

As part of the management restructuring, consultant Thomas Martin has been hired as vice president for marketing, replacing Rod Gilliland, who was laid off in March.

Gilliland, who had worked for Arvida, has since signed on as head of marketing for a major planned resort community in Las Vegas.

But it was under his marketing direction that Coto’s management decided just a year before the Southland housing crash began to emphasize big, expensive single-family homes in the remote canyon development just east of Rancho Santa Margarita.

“They had made a lot of money in late 1980 with expensive, exclusive homes,” said an industry consultant who asked not to be named because of past association with Coto de Caza Co. “And then they found themselves mispositioned with a one-dimensional mix when the market fell. So sales (at Coto de Caza) plunged and revenue stopped coming in.”

One builder who has dealt with Coto’s management both when Arvida was in charge and since Chevron took over said that the oil company’s real estate development arm--which also owns the Huntington Beach Co.--”apparently got tired of not selling anything” at Coto de Caza.

Martin, the new vice president for marketing, said officials at Coto de Caza now “are trying to get real” about pricing new homes “to where the market is.”

And residential marketing specialists say the market is for homes priced well below typical selling prices at Coto de Caza.

The only new project expected to be launched in 1993 is a J.M. Peters Co. single-family detached home development where prices will be in the $350,000 to $400,000 range.

But Martin said there are tentative plans for less expensive townhomes and single-family residences as the economy improves in 1994 and beyond.

Over the next five years, he said, “I see Coto offering a wider range of product that would allow us to compete with the surrounding communities of Rancho Santa Margarita, Foothill Ranch and Aliso Viejo.”

That does not mean Coto will start offering entry-level condominiums priced at $100,000, he said, but rather that its lower-priced homes will compete with some of the homes offered in surrounding, non-gated communities.

“Being behind this guard gate, with the exclusivity and the amenities we have means something, but we still have to look at the market and price our products so we can get some sales.”

Most of the new homes to be built at Coto de Caza will be in the still-undeveloped southern half of the canyon, where a second 18-hole golf course is planned and where the company has donated 500 acres for a regional park.

Martin said the company plans to complete Oso Parkway from its current terminus in Rancho Santa Margarita through to the south end of Coto de Caza, which would provide access to that section of the gated community.

The general plan for Coto’s development has always called for lower-priced homes with slightly higher density to be built in the south end because it is less private than the northern half of the canyon--where the hillsides are dotted with multimillion-dollar custom homes.

“What’s important about their new planning,” said Irvine real estate consultant Ken Agid, “is that it sounds to me that they are making a conscious effort to produce market rate housing, and that is an intelligent repositioning of their project.”