The other Ontario lies in a broad valley about 35 miles east of Los Angeles, at the epicenter of what is known in real estate as California's Inland Empire region. A big townlittle city of about 175,000 people–about 50 square miles in all–expanded through the 1980s and 1990s as one of the fastest-growing cities in the country. Hyperbolic growth in such an opportune location revealed three big, and growing, problems. One simply was not enough housing; a second was an essentially agri-town's lack of economic diversity; and, last but not least, was, frankly, the stench of cow dung.
As the collision of agriculture and urban culture came–quite literally–to a head during the 1990s, Ontario city officials and the dairy farmers whose four-legged assets mooed amidst the hurriedly growing city hatched a plan that served both their interests. The farmers, who would have had to pour millions of dollars into new compliant dairy processing equipment on their farms within city limits, instead chose to monetize the value of their land holdings in town and reinvested in a new facility farther out.
In this way, the city came by about a 12.3 square-mile tract of land for housing and economic development, and the farmers came by a wad of cash that went toward the transfer of their dairy operations to greener pastures.
Ontario officials tagged the 8,200 acre industrial site "Sphere of Influence," as they concocted plans to shift the city's economic base away from agricultural and toward a "new economy" epicenter. They officially annexed the dairy farm land formerly referred to as the San Bernardino County Agricultural Preserve in 1999.
The city pursued a less-than-conventional developer arrangement that, in May of this year, began to bear fruit as one of the largest infill developments in the country. The land that used to serve as grazing ground for hundreds of cows is now Ontario's New Model Colony, a diverse, mixed-use residential, commercial, and recreational area. Projected to provide up to 31,000 homes over the next 20 years, current plans include parks, retail and entertainment centers, office space, health facilities, and educational uses for up to 120,000 residents.
Cohesive Strategy
Unlike land-strapped neighbors Orange County and Los Angeles County, California's Inland Empire contains large parcels of undeveloped property. And, since development had already moved beyond the dairy land, its desirability was underscored. "It was the hole in the donut," says Deveraux.
When general planning began, it was clear that the development community was interested in the infill possibilities of the vast brownfield site. Yet, it was tough to imagine a single master developer willing to bite off the massive infrastructure needs associated with the project. Instead, the city urged multiple developers to form a single legal entity to set a plan in motion.
Led by Lewis Community Developers, a 12-member consortium legally named New Model Colony Builders coalesced to negotiate the design of the backbone infrastructure and to create a construction agreement that detailed issues related to funding, impact fees, credits, and reimbursements, typically negotiated with a master developer.
"It's about bringing the health of the community to life," says Randall Lewis, executive vice president of Lewis Operating Corp. "Not only with the design and financing of underground infrastructure and 30 miles of roadway, but with details like circulation, amenities, and street lights."
As one can imagine, there are no shortage of challenges to integrate and synchronize a number of divergent master plans. Each of the dozen companies developed its own specific plans, worked with the city, and offered different business plans, disparate motivations, and financial considerations.
Still, Devereaux notes, this project would have been very difficult to do in a traditional sense, considering the number of builders, land owners, and developers involved. "If we had to negotiate separate agreements with all of them and rely on them to come together and figure out the infrastructure, it would be very hard."
The cooperative planning is beginning to manifest itself. Brookfield Homes and Standard Pacific Corp. are building 542 homes in five diverse neighborhoods as partners in Edenglen, the project's first residential community, which opened for sales in May. "The infrastructure intricacies would have choked any one of us up front," says Adrian Foley, president of Brookfield's Southland business group. "Despite the fact that we have 12 different opinions around the table, we have corralled our ideas and are embarking on the $150 million first phase of infrastructure."
"It all goes to the premise that we are an area that wants development. We are a city that understands we are a corporation. We may be a municipal corporation, but we area corporation, too. We want [developers] to be successful. Starting with that premise, drives a very different kind of working relationship." –Lisa Marquis Jackson
Can We All Just Get Along?
As administrative member of the New Model Colony Builders Coalition, Lewis Operating Corp. has been at ground zero of the negotiations between developers and the city of Ontario since general planning began in 1997. In addition to this consortium, executive vice president Randall Lewis has worked within three other groups, though none this large. Here he offers some tips for coalition success:
Choose Wisely: Understand that choosing coalition members is like choosing a business partner and requires the same due diligence. Ninety-eight percent of the time, projects get done without coalitions, so only do them if the stars all align.
Do Scenario Planning: Most of these arrangements form in good times, but as we've been reminded, market conditions change. Consider scenario planning to take into account the cyclical nature of our business.
Understand Each Other: Different partners have different long-term business strategies and different financing sources that need to be understood. One might be a "map and flipper" and one could be a "long-term holder." Each has a unique agenda.
Be Marketing Minded: Developing any large-scale community requires a strong market orientation and strategic marketing approach. Plan these issues as a group in advance to maximize benefits from public spaces to signage and merchandising.
Marry Public and Private: Public/private cooperation and, potentially, partnerships, provide opportunities to marry plans with city and county goals and to capture funding.
Communicate: Develop methods and protocols. Clearly, forming a consensus isn't about everyone agreeing on every point, but more about establishing trust so the project can move forward.
Learn more about markets featured in this article: Los Angeles, CA, Riverside, CA.
