Developer Planning 1,450 Homes, Retail on Former Aerospace Complex
Bruce Elieff and Larry Lazar hope to build the future by going back to the past. The executives of Anaheim-based SunCal Cos., one of the most active land development firms in Southern California, are heading up the planning for the 293-acre Amerige Heights masterplanned community in Fullerton, a massive redevelopment taking place on the city’s former Hughes Aircraft Co. complex. Plans envision a community reminiscent of the 1930s, with more than half of the planned 1,250 single-family homes offering porches in the front and garages in the back. Blueprints call for “a diversity of architectural styles,” small streets and roundabouts, all in an effort to “make neighborhoods rather than subdivisions,” Lazar said. But Amerige Heights, located on the northeast corner of Gilbert Street and Malvern Avenue, represents more than simply another Orange County masterplanned community. The project is located on a sprawling tract where for some four decades Hughes Aircraft provided a major boost to the local economy before it started scaling down in the 1990s. Today, Raytheon Co., which bought the defense arm of Hughes in 1997, still operates on a small part of the sprawling complex. Amerige Heights represents the most advanced defense-era conversion effort in Orange County so far. While the Tustin Marine complex slowly winds its way through the planning process and the battle over what to do with El Toro rages, Fullerton officials have quietly gone about working with developers to fashion a vision for the 293-acre site. Unlike the county’s military bases, redeveloping the Hughes site hasn’t involved a lot of government red tape. “We think this represents a prime example of how to plan and process and ultimately execute on the development of sites like this,” Elieff said. Amerige Heights is “the first, but hopefully not the last” defense conversion site SunCal is undertaking, Elieff said. “We think there’s great opportunities throughout the state of California for dealing with similar projects such as Amerige Heights.” SunCal is the lead developer of Amerige Heights despite having lost out in the initial bidding process to Brookfield Homes, which won the right to buy the property from Raytheon. In assuming Brookfield Homes’ position in the deal, SunCal paid roughly $65 million for the property. In exchange, Brookfield maintains “a small financial interest in the property” that is under 5%, Elieff said. Additionally, Brookfield Homes acquired the right to buy up to 300 lots at Amerige Heights at pre-negotiated prices. Since acquiring the site, SunCal has worked closely with city officials and, despite competing interests and minor squabbles, have hammered out a comprehensive redevelopment plan for the site. The plan that has emerged calls for construction of 1,250 single-family homes, an 85-acre retail center, a 10-acre elementary school site and possibly up to 200 apartments.
When complete, developers predict the new community will generate up to $1 million annually for the city and create 3,800 new jobs, an impressive number. But it’s still a far cry from the roughly 13,000 employees who worked at the old Hughes facility during its heyday. Elieff and Lazar have set up an office in Fullerton’s historic Villa Del Sol office and retail complex, which was constructed in 1910. Elieff, a Dennis Miller look-alike, is a principal with SunCal. Lazar, a vice president, is in charge of the Amerige Heights community and has regularly carried many of the project’s marketing brochures and renderings down to the nearby Fullerton Market open-air street fair where he has answered questions from the public and tried to drum up support for the development. Since taking over the marketing for the project, Lazar has set up shop at the street fair “every Thursday night for 26 Thursday nights for two years,” he said. The single-family homes will feature seven different architectural styles: Spanish Colonial, Craftsman, Prairie, French Country, American Farmhouse and traditional. The goal, Elieff says only half jokingly, is to create a place “kind of like what Ricky and David Nelson grew up in” on the “The Adventures of Ozzie & Harriet” show. Amerige Heights is set to target a broad section of the Southern California market, from entry-level homes starting from the low $200,000 range to move-up housing and luxury homes priced at $800,000 and up. Despite little marketing, Lazar said SunCal officials already have amassed an interest list in excess of 350 names, though the seriousness and intentions of the people on the list is hard to judge. (Homebuilders regularly build up impressive lists as an indication of interest. Not all of that interest, however, translates to actual sales.) While a new community,especially one that has attracted as much positive and negative press as Amerige Heights while developers have sought the various approvals from governmental agencies,naturally draws a certain number of inquiries. But Amerige Heights could be situated to take advantage of a still-strong OC housing market. This is especially so in North County, according to a recent study completed by The Concord Group, a Newport Beach-based real estate advisory firm. The study,based on an analysis of income levels and the distribution of home resales over a one-year period,concluded that the lack of high-end homes in North OC is forcing some people who can otherwise afford luxury homes to buy down. It also pointed to an overall shortage of new homes in that part of the county, given the strong demand.
The information is not necessarily all that surprising for Elieff and SunCal officials, who, in addition to the $65 million price tag for the Amerige Heights land, are sinking another $50 million into development costs. Dallas-based Lonestar, an opportunity fund involved with SunCal on other projects, is providing most of the equity funding for the project.) “Supply is so limited in North Orange County and demand is very strong,” Elieff said. Negotiations for Amerige Heights lot sales to merchant builders are under way, with the first model homes set to be completed by the end of next year. Sales to the public could begin shortly after that. Elieff said he expects lot sales to merchant builders to be done quickly. Recently, SunCal sold 662 lots to builders in its Olinda Heights planned community in Brea. Eager builders, despite oil remediation issues that were associated with the property, quickly snapped up those lots. The 200 Amerige Heights apartments, as currently envisioned, are planned to be built on top of retail shops, along the lines of Brea Promenade. One of the major carrots developers use to entice plan approval from city officials is the prospect of tax dollars flowing into city coffers. Given that Fullerton, according to Lazar, is “an exporter of sales tax”,meaning its residents do more shopping in surrounding cities than they do within the city,it’s not surprising a commercial component to Amerige Heights was given such priority by both sides. Plans call for construction of 400,000 square feet of retail space. Already, Target Greatland and Albertson’s supermarket have signed on as anchors. Negotiations continue with more than a dozen other retail stores such as Trader Joe’s, Barnes & Noble Booksellers and Pier 1. Restaurants such as Macaroni Grill have also expressed interest, according to SunCal. Among the perceived advantages of Amerige Heights are its planned small-town flavor and its off-the-beaten-path location in the northwest corner of Fullerton. The project is surrounded by homes on three sides and industrial space to the south. The nearest freeways are a couple of miles away. While the location may be attractive to homebuyers, potential retailers could see it as a negative, Elieff said. “Retailers’ mentality is to be at a major intersection,” he said. Construction of the retail component is scheduled to begin in February, with Target Greatland officials eyeing Nov. 1 as their grand opening date to take advantage of next year’s holiday season. n
