A New Engine of Growth in Orange County

South Orange County is undergoing an unprecedented housing and business boom, fueled in large part by the controversial network of toll roads now being built.

New housing tracts are rising up in picturesque hills and valleys, bulldozers and earthmovers are breaking ground for office buildings and hotels, and signs advertise new retail space for lease.

The highways--California’s first public toll roads--are tugging development toward them like magnets, helping transform the remote bedroom communities of the south county into a hub of activity.

An astonishing 102 residential projects, with plans for 11,642 new homes, were underway in the region in the second quarter, according to data compiled by Meyers Group, an Irvine consulting firm.

That’s not even counting the huge Talega community planned in San Clemente, which is to include 5,000 homes and offices, shops and two golf courses.

The toll roads also are greasing the wheels of economic growth, observers say, by better connecting existing businesses and shopping centers in the more established mid-county region with the young professionals who want to live in the south county.

Experts say the growth is spurred in part by the area’s improved access.

“You can’t use it if you can’t get to it,” said Louis Masotti, director of UC Irvine’s real estate management program.

Southern California’s highway system ushered in the region’s sprawl in the 1950s and ‘60s, paving the way for new communities and industries. Orange County owes its tremendous growth in large measure to the Santa Ana and San Diego freeways, which helped transform the area’s citrus groves and bean fields into suburbs and business parks.

Highways, in transportation jargon, are “facilitators” of growth. They don’t by themselves stimulate new development--if the region were in a recession, building new roads wouldn’t help. But as the economy improves, they are again helping to make expansion possible.

“It’s an added bonus, like the icing on the cake” of the county’s increasing prosperity, said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange.

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Nearly a year after its opening, the San Joaquin Hills Transportation Corridor continues to spark controversy. The 15-mile toll road, stretching from Newport Beach to Interstate 5 in San Juan Capistrano, was opposed by environmentalists and is now drawing criticism because of lower-than-expected use.

But the San Joaquin tollway--as well as the partly completed Foothill Transportation Corridor and the Eastern Corridor, due to open in about a year--is attracting businesses anyway.

Fluor Corp., for example, could have chosen just about anywhere to build new headquarters for the nearly 2,000 workers at its current offices in Irvine.

The engineering and construction giant picked a new development alongside the San Joaquin toll road in the sleepy enclave of Aliso Viejo for its planned 1999 relocation.

“The toll road was definitely a large, influential factor in our decision to choose the Aliso Viejo site,” said company spokeswoman Lisa Boyette.

At a new development of 1,200 homes in Aliso Viejo, “two things have been helping us sell homes: the improvement of the roadways and the good school system,” said Mike Rafferty, president of developer Koll Communities’ Hearthside Homes division.

“We see people coming from Huntington Beach, Newport Beach, Costa Mesa [who] normally wouldn’t have been looking down in this area,” he said.

Parker Properties’ big commercial development alongside the San Joaquin toll road in Aliso Viejo owes its existence to the new highway. The Summit will eventually include 1.7 million square feet of office space in 14 buildings, a health center, a day-care facility and restaurants.

The first two buildings are under construction, and they’ve already lured two major tenants: Remedy Temp, a fast-growing temporary-services agency now based in San Juan Capistrano, and Safeguard Health Plans, a managed- care company in Anaheim.

Parker Properties Chairman John B. Parker began planning the project a decade ago, in anticipation of the roadway’s construction. “We believe the Summit will become the office hub for South Orange County,” he said. “Without the tollway, that would never happen.”

To be sure, the economic awakening of South Orange County can be traced to many factors, not the least of them the county’s strong business climate. Development typically occurs when unemployment is low, companies are growing, and people are feeling upbeat about the economy.

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South County has long been considered ripe for growth, unlike the older and more congested northern part of the county. For years, developers have had their sights set on the area, with its large tracts of raw and relatively affordable land, but the recession of the early 1990s put a halt to most projects.

Now that the economy has begun to resurge, they are descending on the region.

However, many have concerns about how few residents have been using the toll roads.

Although use is gradually increasing, the San Joaquin tollway averaged just 53,304 vehicles a day in August, well below the forecast of 94,500.

Critics have blamed the price--it costs $2 each way, regardless of the time of day. Many observers believe that the simultaneous widening of the El Toro Y freeway interchange, along with Californians’ resistance to paying tolls, has also deterred drivers.

“It’s absolutely great, but atrociously priced,” said Kim Meyer, who works in accounts payable at Monitoring Automation Systems, a security software developer in Irvine. Even though the toll road cuts in half the 30-minute commute from her Laguna Niguel home, she takes it only on days when she’s especially pressed for time.

Paul Glaab, a spokesman for the Transportation Corridor Agencies, the quasi-public agency that operates the three new toll roads, said new pricing structures and other ways to boost usage are being studied.

Nonetheless, throughout the business community, the prevailing belief is that the roads are adding fuel to the accelerating economy.

In Laguna Niguel and Mission Viejo, the value of all types of projects under construction during the first eight months of the year surpassed the total for all of 1996, according to a new report by the county planning department.

In Aliso Viejo, several retailers have decided to open outlets near the San Joaquin tollway, including Barnes & Noble, Staples and PetsMart. Edwards Cinemas plans a 20-screen theater complex next to the road.

Some merchants at South Coast Plaza in Costa Mesa and Fashion Island in Newport Beach report increased traffic from South County residents since the San Joaquin road opened.

Retailers at the other end of the toll road say they’re also benefiting. Chris Wenham, director of operations at Decorative Arts Villa, an antiques and home decorating business in San Juan Capistrano, said the city’s upscale merchants are getting more customers from the Newport Beach area.

“Before, it was a real expedition” for clients from mid-county to shop and dine farther south, he said. Now “it’s a hassle-free day.”

Byron Roth, president of the Irvine investment firm Cruttenden Roth Inc., said the San Joaquin toll road has made it easier for his firm to do business with biomedical entrepreneurs springing up in South County and northern San Diego County. The improved access, he believes, will help the region in its effort to emulate Silicon Valley’s high-tech success.

As usage of the new toll roads grows--which transportation experts believe is inevitable--other economic benefits are expected to surface: Expanding businesses will draw employees from farther away. Shorter commuting times will boost productivity. The shipment of goods will be quicker and arrival times more predictable--a critical factor in industry’s shift to just-in-time manufacturing.

“In the business world, time is money,” Glaab said.

Some experts argue that new roads merely shift economic development one area to another.

“These highways, to the extent that they create economic development, probably do so at the expense of other areas,” said Marlon Boarnet, an assistant professor of urban and regional planning at UC Irvine.

It’s an issue that will probably receive greater attention in coming years, said David Forkenbrock, director of the Public Policy Center at the University of Iowa and a nationally recognized highway expert.

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Interest will be heightened, he believes, because state and federal gasoline revenues aren’t sufficient to pay for new construction. Most highways built in the future will be toll roads, which are often sold to a wary public in part with promises of economic benefits, Forkenbrock said.

Though a case can be made that new highways improve business efficiency, it’s not clear if the gains are sustained over the long term, he said. Adding to capacity typically induces new traffic, and in time congestion returns and savings disappear.

“Someone once said that relieving congestion by building more roads is like curing obesity by buying a bigger belt,” Forkenbrock said.

Even so, it’s hard to dissuade the developers and other optimists who are betting that the region’s new toll roads will rev up business.

“I think the impact of the [tollway] system is just going to give Orange County, particularly south Orange County, a real rebirth,” said Parker, the commercial developer.

“We’ve been waiting for it for a long time.”

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TOLLWAY DEVELOPMENT

Commercial and residential development is growing around two of Orange County’s three tollways.