Coto de Caza Builders to Market Next Phase
It has been four years since a home builder bought a tract of land in this exclusive gated community, but developers of Coto de Caza believe the time is right to start marketing the second half of their community and today are set to unveil plans for 4,000 new homes and a second 18-hole golf course.
The big surprise is the launch of such an ambitious undertaking in the midst of the housing industry’s worst slump in more than a decade. Although few homes will be built during the next 18 months, the Coto development partnership is spending millions to build a golf course by noted course designer Robert Trent Jones Jr. to serve as centerpiece of the new phase. The company also is extending two main roads to serve the new developments.
Even more startling is that Coto officials said the first production, or tract, homes to come on line in this tony neighborhood’s so-called South Ranch project will be priced from $210,000 to $250,000.
Prices like that, brought about by the recession, will make it possible for growing numbers of middle-class home buyers to live behind the same gates that shelter moguls like builder William Lyon--whose $20-million estate dominates a hillside in Coto’s pricier northern half.
Analysts say the new development could be an early signal of the start of a building industry resurgence in Orange County.
Coto’s developers--a partnership of Chevron Land Co. and Arvida/JMB Partners--certainly believe that conditions are right for new land sales at the 4,000-acre community that occupies a four-mile-long valley just southeast of Rancho Santa Margarita.
“Six months ago we didn’t think we could start unless we offered to do things as joint ventures with the builders,” said Tom Martin, vice-president of marketing for Coto de Caza. In a joint venture, the landowner typically installs much of the infrastructure--access roads, sewers, rough grading and other services--and underwrites the cost of the land while the builder is building homes and isn’t paid for the property until the homes sell.
But in the past month, a number of builders have expressed interest in buying land outright in the South Ranch’s initial single family developments and Coto officials have scrapped plans for joint ventures in anticipation of being paid upfront for the land.
“It’s amazing how many builders have found some money in the last six months,” Martin said. “They are finding it because everyone is looking at 1995 and seeing that there isn’t much land being readied for development.”
The timing of the South Ranch appears to be very good, said Irvine development consultant Kenneth Agid. “There are a lot of builders sniffing around. The market has not, by any measure, staged a recovery,” he said, “but it appears that it will be coming back by next spring. And even at the reduced levels of demand that we see, there is a tremendous shortage of new housing coming on the market next year in Orange County.”
Agid lauded Coto de Caza’s owners for “adjusting their philosophy to say that they will be willing to price their products to the (depressed) market for the next couple of years rather than sitting back and waiting for the 1980s boom to come back.”
Industry sources said that Coto officials have had at least a dozen inquiries on the project’s first two parcels, one zoned for 94 homes on relatively small lots of 3,500 to 4,000 square feet and the other set for 90 homes on larger lots. Home sales could start by late 1994, Martin said.
Coto’s land sale packages will be mailed this week, but Martin would not say how many are being sent. He said the first parcel is earmarked for homes to range from 1,700 to 2,000 square feet in size and that should retail at $215,000 to $250,000. Houses in the second parcel would be 2,700 to 3,000 square feet that should retail at $280,000 to $350,000, he said.
There also will be plenty of Coto’s trademark million-dollar custom homes and a goodly sprinkling of $350,000-and-up tract and semi-custom homes in the South Ranch community, expected to be built-out in about a decade.
But present strategies also call for more homes in the $300,000-and-under range than were available in the northern portion of Coto, which was largely built during the raging housing inflation in the late 1970s and 1980s.
And the prices of about 1,200 attached and detached single family homes to be built outside the gated community should range from $120,000 to $250,000, with detached homes starting at about $160,000, Martin said. The lower-priced homes, required by the county when plans for Coto first were processed, will be just north of Wagon Wheel Canyon Regional Park and will separate the gated portion of Coto de Caza from Mission Viejo.
Access to the lower-priced homes will be on Oso Parkway, which is scheduled to connect with Coto de Caza sometime next year and will provide a second entrance to the community, which now can be entered only at its extreme northern end off Santa Margarita Parkway--a 10-mile trek on often congested surface streets from Interstate 5.
When Oso opens, it will provide an access to the center of the ranch that is just five miles from the freeway. And by the end of 1994, Coto de Caza Drive, the main drag in the gated community, is expected to be open to the south end of the community, where it will hook up with Crown Valley Parkway for a third gated entry even closer to the freeway.
Martin says there is one more piece of good news for consumers in Coto’s new phase--lower taxes.
He declined to provide specifics, but said that with special financing and “further subsidizing (by the development company) of the water district bond, we will be able to get the effective tax rate in the South Ranch down to the 1.4% to 1.5% range.”
Home buyers still will pay for the streets, curbs and gutters in the price of their houses, but the cost will be spread over the life of their mortgage loans and, Martin insisted, will be less than if the infrastructure were financed through a Mello-Roos assessment district bond.
With property and Mello-Roos taxes in much of the South County now hitting or exceeding 2% of a home’s market value, the lower rates could slash $1,250 to $1,500 a year from the tax bill for a $250,000 house.
New Plans for Coto de Caza
Developers of Coto de Caza are set to unveil plans for the second half of their community, called South Ranch, which will include 4,000 new homes and a second 18-hole golf course in the four-mile-long valley just southeast of Rancho Santa Margarita.
