Setting Their Sites
A group of developers is hoping to build as many as 1,100 homes in the hills above San Clemente, making it one of the largest residential projects in years targeted for this seaside community.
The Irvine-based partnership, which includes Laing Homes, Institutional Housing Partners (IHP) and New West Properties, has signed a letter of intent to purchase about 875 acres. The property is being sold by Westinghouse Credit Corp. in the Forster Ranch area.
“We’ve been convinced that South County is a generally undervalued phenomenon,” said Doug Neff, a partner in IHP.
If Laing and IHP can draft a new development agreement with the city and close the land acquisition as scheduled at the first of the year, grading could begin a year from now, Neff said.
Once again, San Clemente has become desirable to builders. Not only is residential land scarce in other parts of the county, but the newly opened San Joaquin Hills toll road has eased the commute between John Wayne Airport and South County.
Other projects in San Clemente’s development pipeline include:
* The 3,500-acre Talega planned golf course community, which is in escrow to Greenwich, Conn.-based real estate investment firm Starwood Capital Group. That purchase is expected to be completed by year’s end.
* Plaza Pacifica residential project off Avenida Pico. The project, owned by Ramser Cos., will sell land to several builders next year to construct more than 200 homes.
* Marblehead, a high-end coastal development of 500 homes planned by Lusk Co. near Avenida Pico and Interstate 5.
Forster Ranch is east of the freeway near the end of Camino de los Mares. Development of the property was started in the early 1980s by Estrella Properties Ltd.
After Estrella underwent a stormy relationship with the city over its slow-growth initiative, the parcel was sold in 1989 to Dallas-based home builder and developer Centex Development Corp. with a $50-million loan from Westinghouse.
Since that time, Centex has built 579 homes there, less than a third of the 2,000 homes originally planned for the site, according to San Clemente officials.
However, high debt service, expensive park and transportation improvements, and the sluggish real estate market combined to force Centex out of the project last year, a company spokesperson said.
On Tuesday, the company turned over its interest in the property to Westinghouse, the company said.
However, Centex is still on the hook for some city fees related to the project. A suit was filed earlier this year by San Clemente seeking ownership of the land as compensation for $628,000 in sewage district assessments the city claims Centex defaulted on.
These assessments would probably have to be taken on by the new buyer of the property, according to James Holloway, San Clemente community development director.
The property also faces many expensive improvements including the extending of roads to the new development and the building of a community park.
Holloway said it was the “tens of millions of dollars “ associated with these transportation improvements that caused the development to shut down.
This level of building buzz is more than San Clemente has seen since the late 1980s. Real estate consultant Ken Agid said the development of the San Joaquin Hills Transportation Corridor combined with the high prices for Irvine Ranch land has prompted developers to consider larger, more complex deals like Forster Ranch and Talega.
“There is going to be a dramatic shortfall of venues for conventionally built housing projects in Orange County,” Agid said. He also noted that the large parcels are attractive to home builders because of the lack of competition they would face selling homes there.
Still Neff admits that the large front-end costs associated with large projects like Forster Ranch and Talega make it hard for builders to turn a profit or to make the homes competitive with others in the market.
But these deals are something that industry sources say developers will soon not be able to afford to pass up. If the market continues its upswing, one of these large parcels could become the next Coto de Caza.
“If you believe in the long term that Orange County is a good place to be, any of these properties are worth looking at,” said Larry Webb, president of Laing Homes.
