51.5 F
Laguna Hills
Thursday, Mar 28, 2024
-Advertisement-

San Clemente Becomes Builders’ Paradise

Laing Forster Ranch LLC is developing land for 1,000 homes. That would be considered a major project in most OC cities.

But in San Clemente, it’s not.

“If we were here by ourselves, we’d be looked at as a big builder,” said Ken Nishikawa, a VP at Laing Forster. “Talega has over 4,000 homes. Marblehead has about 430 homes, but they have 60 acres of major commercial. We’re just like the third wheel.”

This is the same San Clemente that was a hotbed of the slow-growth movement in the 1980s, when it passed two initiatives to limit development. It’s sometimes known as the Spanish village by the sea, but soon it may become the Spanish city by the sea.

The city is encouraging the growth as a way to generate tax revenue. The San Joaquin (73) Toll Road helps cut the commute to other areas of the county. And builders are in San Clemente because there are few other options in Orange County.

“Most of South Orange County is built out,” said Jim Costanzo, a partner in Pacific Development Group of Newport. “The east side of San Clemente is one of the few remaining tracts that one can build on.”

“I think San Clemente is a great place to be for a builder. Everyone wants to have a presence here,” Nishikawa said.

When the 5,500 houses are completed at the Talega, Marblehead and Forster Ranch projects, they will total an estimated $1.9 billion in sales. And then there’s the planned expansion in retail commercial space, which is expected to grow by 80% in the next decade.

Projects in the Works

Among the projects either under way or under consideration are:

n Irvine-based Lusk Co., which has owned the Marblehead Coastal site since 1975, won approval on March 1 from the City Council for a 250-acre project that includes 424 homes and nearly 700,000 square feet of commercial space containing factory retail stores, an entertainment complex and possibly a 150-room hotel. Once the permits are in place, Lusk will sell the 60-acre commercial site to Steve Craig and Joe Stiez.

n The 50-acre Plaza Pacifica eventually will be a 423,000-square-foot retail complex. It already has a Wal-Mart up and running, along with a few fast-food restaurants. It also will include Lowe’s Home Improvement, Albertson’s, Michaels Arts & Crafts and other stores. It’s being built by the Pacific Development Group, which has sold 175 new homes on nearby parcels.

n The 4,500-home Talega project is being developed by Standard Pacific Corp., Catellus Residential Group and Star-wood Capital Group. Homes have started selling and building is expected to last several years.

n Originally, the Forster Ranch was being developed by Estrella Properties, which ran into the slow-growth movement in the 1980s and sold its interest to the Centex Development Co., one of the nation’s largest homebuilders. Centex built less than a third of the planned 2,000 homes before it sold its interest to Irvine-based John Laing Homes and Newport Beach Institutional Housing Partners. The project has permits for 1,000 new homes; grading and infrastructure is under way for 618 of them. Several of these portions have been sold off to other builders such as Shea and William Lyon Homes. The models will be available this summer, with the first closing in the fall.

n Earlier this decade, the Rancho San Clemente Business Park had a 30% vacancy rate, but it’s now approximately 2%, and that includes the addition of 550,000 square feet in the past three years. Its 300 gross acres (200 net developable) are nearly 90% built out.

n San Clemente is trying to woo the Festival of the Arts from its base in Laguna Beach. The city is proposing a 15-acre site that the festival could use for a 3,000-seat theater with a moveable roof, a 500-seat indoor theater and parking for 2,000 vehicles. The project cost would be about $30 million. A deadline of May 1 has been set for a deal to be reached.

n The local Cornet supermarket has been purchased and is being renovated into a 14,000-square-foot restaurant complex with a Spanish colonial theme.

n The city and a nonprofit organization are renovating Casa Romantica, the palatial mansion built in 1928 by city founder Ole Hanson, into a cultural arts center. Already, $1 million has been donated for the project.

n San Clemente is expected to spend in the range of $5 million to $10 million to improve the aesthetics of its downtown area with new landscaping and lights and by putting overhead wires underground.

n The city has spent $1.4 million to expand and renovate its municipal pier and another $2.5 million to revitalize its light-industrial area known as Los Molinos.

There are more projects that long have been discussed but are moving slowly, such as a 100-room new hotel at the site of the Beachcomber Hotel near the pier and the Foothill Corridor South Toll Road from the Interstate 5 to Mission Viejo, which the City Council supports if it is routed through the outskirts of San Clemente rather than the center of town.

San Clemente’s progressive building climate is a contrast to the no-growth movement that’s slowing projects elsewhere in OC,witness the recent passage of anti-El Toro airport Measure F countywide, the proposed Greenlight initiative in Newport Beach and the long-standing battle against development of the Headlands in Dana Point. While a proposed Wal-Mart in Huntington Beach was hauled before the voters and narrowly approved in March, San Clemente’s Wal-Mart is up and running.

It wasn’t always this way in San Clemente. Builders formerly had constant run-ins with city officials over matters such as sewage assessments and road improvements. A voter-approved initiative from the 1980s allows the city to grant only 500 permits annually for new houses.

However, these permits can be rolled over into future years; hence, the homes that were not built in the early-1990s recession are being built now.

Tax Revenue Sought

Another reason for the change is the city’s need to increase its tax base. In the early 1990s, the city’s general-fund budget began to decline. Every year in the past decade, the city downsized its workforce, through a series of layoffs and privatization of services, from 318 in 1990 to 135 in 1999. But now, the general fund is slowly going back up. The city plans to hire this year and bring the full-time total up to 142.

“We figured out some time ago that we’re exporting our retail dollars to other cities. We don’t have a sufficient retail base,” said Dave Lund, the city’s director of public works and economic development.

This year alone, San Clemente is expecting its sales tax revenue to increase 8% to $4.17 million, due primarily to the recently opened Wal-Mart and Staples stores. The sales tax is the city’s second-largest source of revenue, following the property tax, which is expected to generate $7.32 million this year. Property tax is on a growth spurt, although city officials haven’t officially estimated yet how much it will generate in future revenue.

San Clemente’s population grew 17% to 48,000 from 1990 to 1998. When San Clemente is built out, which is expected within the next 10 years, its population will be a third larger.

Environmental Consideration

But both developers and city officials are careful to say that they are building in an environmentally friendly way.

Although the Marblehead plan was approved by the City Council, Lusk still has to obtain permits through the California Coastal Commission.

“It is a tough deal going through the Coastal Commission,” said Lusk CEO Jim Johnson. “I think we got several things the Coastal Commission might look favorably on, such as a our water drainage system.”

Under the most optimistic scenario, Johnson is hoping to start moving dirt by October. n

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-