Small-Town Feel, Big-Time Ambition on Great Park HomesREAL ESTATE: 720-unit first phase opens, next 1,000 in works Sunday, September 29, 2013
It’s taken nearly eight years to get to the starting point for home sales on the Irvine land that once held the El Toro Marine Corps Air Station.
Haddad—then the chief investment officer for Miami-based Lennar Corp.—led the $1 billion purchase of the land from the Navy in 2005.
He now oversees the project for FivePoint, which split off from Lennar in 2009. Lennar, which has three home collections for sale at Pavilion Park, remains a large investor in the project.
The project’s development has seen its share of challenges and delays stemming from the housing downturn and subsequent recession, most notably the 2008 bankruptcy of the project’s main financier, Lehman Brothers Holdings Inc.
Haddad oversaw a recapitalization of the project in late 2010. Investors now include Rockpoint Group LLC; Michael Dell’s MSD Capital LP, California State Teachers’ Retirement System, Stanford University, Oregon Public Employees’ Retirement Fund and New York State Teachers’ Retirement System.
“A lot of people didn’t think we’d make it to this point,” Haddad said. “This is a moment of transition from a base to a community—we’ve turned the page.”
The next chapter for FivePoint and Haddad appears to be working out an acceptable deal with the city of Irvine to fund development of the city’s 1,347-acre Orange County Great Park, which is largely surrounded by the Great Park Neighborhoods.
The city’s options for funding its portion of the former marine base dried up in 2011 when the state eliminated the state’s long-standing redevelopment agencies. That eliminated $1.4 billion in tax financing that Irvine officials planned to use to fund the most ambitious aspects of its Ken Smith-designed park.
FivePoint and the city have been in negotiations for much of the past year over scaled-down park plans and alternative funding options that would involve increased entitlement for housing development on the former base from about 5,000 homes to 9,600.
FivePoint’s latest proposal includes paying the city $174 million over a five-year period in return for the additional entitlements. The developer’s money would go toward a sports park, golf course, trails and other amenities on 688 acres of the city-owned land. FivePoint also has pledged to cover the operating costs of the facilities in case of a deficit.
The Irvine City Council took up the latest proposal this month and has a planning commission hearing slated for October.
The city’s politics are famously fractious, and the Great Park has been no exception. Haddad said the current best-case scenario would have the city approve FivePoints’ latest offer by Thanksgiving, and construction of the public amenities on the park land could begin in earnest early next year.
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