Costain Homes Ready for Building Debut in O.C. : Real estate: Company will specialize in developing abandoned school sites, including an $8-million parcel in Fountain Valley.

By DEBORA VRANA

Nov. 15, 1994 12 AM PT

TIMES STAFF WRITER

NEWPORT BEACH —

Though it has been based in Orange County for nearly a decade, Costain Homes Inc. has never built a house here--until now.

Flush with a cash infusion from its publicly owned British parent company, Costain recently outbid some of the better-known local names in home building to buy an $8-million Fountain Valley property that was formerly a school. In what will be the company’s first Orange County project, Costain plans to build more than 60 homes there priced at about $375,000 each.

The company, which pioneered move-up housing in the Inland Empire, is also venturing into the Los Angeles market. Costain will pay about $18 million for 54 acres in Thousand Oaks, where it plans to build nearly 200 homes.

“I am positioning this company for future growth,” said Julie Newcomb Hill, who is Costain’s president and chief executive officer and, according to the trade publication Builder Magazine, the only woman now single-handedly running a publicly owned U.S. home-building company.

Hill, 48, a former teacher, said Costain will specialize in acquiring abandoned school sites in some of the most affluent neighborhoods in Southern California. With about500lots in inventory, the company plans to build nearly 200 homes in 1995, a far cry from a “painful time” during the early 1990s, Hill said, when the company got caught in the Inland Empire’s downward real estate spiral.

Costain has survived not only the real estate market slump but also internal turmoil--two attempts to purchase the company from its British parent company, which has more than $2 billion in annual revenue. Just last year, when Costain Group PLC in London decided to shed its home-building arm in England, Hill arrived in London with heavyweight financial backers and made her own bid for the Orange County-based company.

Costain was so impressed with Hill’s acumen that it decided to keep its Orange County building company and give Hill added fiscal incentives to remain in charge.

“She’s doing a good job stabilizing the company and positioning it for a new round of growth,” said Kenneth W. Agid, a real estate consultant in Irvine.

“You’ve got to take your hat off to her ability to deal with corporate politics long distance and keep the company going.”

Now on surer footing, Costain Homes expects to report nearly $28 million in revenue this year from the sale of 177 homes, a slight increase. Last year, the company sold 171 homes for a total of $26 million.

Costain was recently selected for the first time by the Irvine Co., Orange County’s largest landowner, to build homes in Irvine Ranch. But Hill turned down the prestigious offer.

Hill is gearing the company instead to compete for increasingly scarce land with the larger publicly traded builders such as Kaufman & Broad Home Corp., California’s largest. While Costain may be hampered now by its relatively small size and a British parent company sometimes unable to respond quickly to changing market conditions, competitors aren’t underestimating Hill’s vision or her marketing and sales skills.

“She’s smart, she’s been very aggressive recently on land acquisition, and Costain’s got money,” said Larry Webb, president of Greystone Homes Inc. in Newport Beach.

“They’ve been working through their problems, and she’s getting them ready to grow. The fact that she’s in control now signals to me that they will get bigger.”

A former UCLA homecoming queen who graduated with honors, Hill grew up in the small San Bernardino County town of Colton. She attributes her success in part to ignoring bad advice--like that of the high school guidance counselor who steered her away from business.

After teaching junior high school for several years, Hill took a position as general manager of marketing for Mobil Land Development, a subsidiary of Mobil Oil in Atlanta.

After joining Costain in 1988, she became part of a team that attempted two years later to buy out the company. When the effort failed, her team members Hadi Makarechian and Dale Dowers went on to buy another Newport Beach home builder, J.M Peters Co. Hill, however, stayed on and was subsequently selected to lead Costain.

“Costain never seriously considered me as part of the buyout” attempt, Hill said. “They perceived that I cared, that I knew what was going on and that I would be able to lead.”

Costain Homes Inc.

The company saw its sales plummet when the real estate market soured in the early 1990s but is now positioning itself for future growth.

Headquarters: Newport Beach

Business: Home builder

Founded: August, 1986

President and chief executive: Julie Newcomb Hill

Land holdings: 500 lots

Employees: 30

Projected 1994 revenue: $27.4 million

Homes Sold:

1994*: 177

Revenue (in millions of dollars):