Image

Cover Story: The Road Goes On

  • Image

    http://www.builderonline.com/Images/tmp97D%2Etmp_tcm138-1005886.jpg?width=300

    true

    300

    Image

  • http://www.builderonline.com/Images/tmp97F%2Etmp_tcm138-1005888.jpg?width=600

    true

    600

    Image

  • http://www.builderonline.com/Images/tmp981%2Etmp_tcm138-1005890.jpg?width=300

    true

    300

    Image

  • http://www.builderonline.com/Images/tmp982%2Etmp_tcm138-1005891.jpg?width=939

    true

    939

    Image

  • http://www.builderonline.com/Images/tmp97E%2Etmp_tcm138-1005887.jpg?width=300

    true

    300

    Image

  • http://www.builderonline.com/Images/tmp980%2Etmp_tcm138-1005889.jpg?width=602

    true

    602

    Image

Photo: Ed Caldwell

One doesn't typically think of mowing the lawn as an act of defiance. But it can be. In the ZIP code of 95391, Mountain House, about 60 miles east of San Francisco in Northern California's Central Valley, the putt-putt-putt of Lawn Boys and Toros on a sunny afternoon signified a literal grassroots local movement that defied a national stigma and quite possibly saved an under-10- year-old town from years of middle-ofnowhere languor, or worse.

In 2008, at the point where the subprime mortgage meltdown had morphed into a foreclosure flood, The New York Times branded the masterplanned community as the most underwater community in America. True, values had gone off the cliff faster than anyone would have expected. And yes, there were far too many foreclosed properties for anyone's liking freckling the once-thriving streetscapes of the community's nascent villages, which had just gotten their start in 2003.

What neither The New York Times article nor First American CoreLogic foreclosure data could capture, however, was the emotional value the community retained for its residents even as the dollar values attached to their homes eroded. All it took were spiritwithering images and descriptions of a town drowning in debt, replete with foreclosure signs, deteriorating exteriors, and depressing streetscapes, to start circulating before the people in the community cranked up the lawn mowers.

It didn't matter whether the homes were foreclosures, short sales, or just abandoned, residents mowed the neglected lawns, at once desperate and defiant. But it was this insuppressible, notgoing- to-take-it-lying-down community spirit that convinced pension fund giant CalPERS to double down on its investment in Mountain House against all odds. As the owner and developer of nearly 4,000 lots in the community, the pension fund had seen its $1.12 billion investment in Mountain House shrivel in value by more than 80 percent over a mere handful of years, according to analysis by the The Modesto Bee.

Photo: Ed Caldwell

But CalPERS' strategy to stay the course is beginning to show early signs of paying off , even if its rightsized expectations of returns are nowhere near as quick or as fat as they had been penciled a real estate downturn ago. Today, the sounds of lawn mowers are hardly audible over the rumble of the clack of hammers as building is under way in the community's newest village, Questa. A lone food truck circling the block, ready to provide a lunchtime fix for the laborers, is a reminder there is a hunger for this type of community, where value can be measured as much by pride as price.

COMMUNITY CPR

When Geoff Le Plastrier got his first look at Mountain House in 2007, it was clear putting this broken project back together wasn't going to be easy. As the president of LDC Advisors, Le Plastrier is leading the team tasked with resuscitating CalPERS' interest in the community. First, there was the foreclosure issue. Even as foreclosure rates subsided, the community's reputation had been tarnished and its appeal tainted by the negative press. But there were other problems, ones that couldn't be fixed by time or a dazzling public relations makeover.