Palmdale Housing Project Revived

Ontario developer Jim Previti said Tuesday that he agreed to purchase the long-delayed City Ranch project -- a nearly 2,000-acre, master-planned community in Palmdale -- from KB Home Corp. for an estimated $30 million. The deal could trigger the return of large-scale home building to the Antelope Valley.

Previti, chairman of Empire Cos., said the land development arm of his company plans to start work early next year on the first phase of 1,400 single-family home lots that will be sold to other builders, including Los Angeles-based KB Home.

The project, which will be renamed Anaverde, eventually will include about 5,000 homes and rank as one of the largest master-planned communities in Los Angeles County.

“We thought the time was right ... and the demand is there,” said Previti, who has been involved in the development of about 20,000 homes during his nearly 30-year career.

Real estate observers said the City Ranch deal could attract other developers to Palmdale and the surrounding Antelope Valley, where home building has been limited to smaller projects as the region has recovered slowly from the recession and real estate bust of the early 1990s. It was only this last June that the median sales price of a home in Palmdale surpassed the previous record high of $145,000 set in 1990, according to DataQuick Information Systems. (Prices bottomed out at $82,000 in 1997.)

“This will be the largest single development that the Antelope Valley has seen in a long, long time,” said Albert Praw, senior vice president of asset management for KB Home.

Under the deal, KB Home will receive $15 million in cash and a 49% stake in a joint venture -- Anaverde -- valued at an additional $15 million, according to company officials. KB Home officials said the sale will not affect earnings in the near term but that the company expects to start recording revenue from lot sales early next year and from the sale of homes in 2004.

KB Home said it has agreed to build homes on 400 lots in the first phase of the development, which is located in southwest Palmdale. Prices will start around $250,000.

KB Home has struggled to develop the project for more than a decade after the real estate bust of the early 1990s wiped out demand for new homes. The company has spent several years looking for a partner to carry out the project after KB Home abandoned the development business to focus strictly on home building. In September 2000, Newhall Land & Farming Co., the developer of Valencia, pulled out of a joint venture to develop City Ranch to focus its financial resources on repurchasing its own stock.

Previti has the experience and financial resources needed to prepare the property for development over a long period of time, say real estate industry observers. Late last year, Previti agreed to sell his entry-level home business, known as the Forecast Group, to home builder Hovnanian Enterprises for about $225 million.

“Previti will pull this off,” land broker Craig Atkins said. “It’s a great move for Empire.”