Ruling on Bolsa Chica Seen Lowering Project’s Value 60%

A state agency’s decision to curb the long-controversial home-building project on a mesa off the Bolsa Chica wetlands could cut the development’s value by more than 60%, an expert said Friday.

The panel’s decision, rendered late Thursday, leaves California Coastal Communities Inc., parent company of developer Hearthside Homes, with a project worth less than $50 million, said Eric van der Porten, an analyst at Leeward Investments in San Carlos, Calif. The Irvine developer had valued the site at $140 million.

The ruling by the California Coastal Commission reduces the land available for housing to 65 acres from 183, cutting the number of homes that can be built on the site, now called “Warner Mesa.” Conservationists cheered the decision to limit growth near the environmentally sensitive wetlands.

But analyst Van der Porten said, “It’s a significant setback.” His company sold its stake last year in California Coastal. “It could still be an attractive community, but it won’t be as big as they were hoping for.”

On Friday, the company’s stock hit a 52-week low of $4.94 a share during trading on Nasdaq. It closed at $5 a share, down 75 cents.

The company hasn’t decided on its next move, said Raymond Pacini, its chief executive.

“We’re going to develop a detailed plan for the project and determine what product mix and density is appropriate,” Pacini said. Based on that analysis, he said, the company will determine the project’s new value. Real estate analysts said they anticipate the company will build on the site.

“They may take some time to reevaluate the number of units and the types of product they will build,” said David Chapman, principal at Pierpoint Advisors, a real estate advisory firm in Newport Beach.

Chapman figures the company may build more attached homes than originally planned for what would have been a predominantly single-family housing project.

John Burns, an analyst at the Meyers Group, an Irvine housing research firm, cautioned that the robust economy may have turned by the time builders finally get started.

Neither Chapman nor Van der Porten expect the latest setback in the long-fought effort to build on the mesa will cause the company serious financial problems.

California Coastal lost $144 million over the past five years but has been profitable in the first three quarters this year, earning $2.5 million, or 25 cents per share. The company had $6.8 million in cash at the end of September, according to documents filed with the Securities and Exchange Commission.

Pacini said he expects to write off the lower value of the mesa property by next March.

“Other than reducing our net worth,” he said, “I don’t see an impact. There will be a loss, but at the end of the day, we still have a valuable asset.”

The company’s net worth is about $137 million. Pacini maintains that California Coastal will thrive. The company’s other home-building sites in Orange and San Diego counties are enjoying strong sales and should generate an additional $20 million over the next 15 months, he said.

Bolsa Chica, with 1,600 acres, is one of the largest remaining undeveloped coastal properties in Southern California. For nearly three decades, the site has been a battleground between developers who have wanted to build thousands of homes and environmentalists who have tried to save the delicate ecosystem.

One of the most ambitious proposals for the property consisted of a marina, a hotel and 5,700 homes. But that was diminished over the years by court rulings and other actions.