October 1, 2003 - From the October, 2003 issue

Tejon Ranch Master Plans Emerging From EIR Public Review

The obstacles faced by those trying to develop Ahmanson Ranch, culminating in the state's acquisition of that property, are indicative of the difficulties of developing large master planned communities on open space. The Tejon Ranch Co., however, seems finally to be moving forward expeditiously and smoothly with their development. TPR is pleased to present this interview with Bob Stine, CEO of Tejon Ranch Corp. in which he discusses his company's conservation activity, the next phase of development at Tejon, and the timeline for growth over the next ten years.

Robert Stine

Please update our readers and share your vision for Tejon Ranch's three-phase, master planned development on the Kern and northern LA County boundary.

Our principal vision is centered in conservation and stewardship of the ranch. Last May, we announced that we are working with the Trust for Public Land to conserve up to 100,000 acres of ranch lands in perpetuity. Beyond that, we are working on several development concepts that are much smaller in size than the area set aside for conservation.

We have a 1500-acre industrial park at the base of the Grapevine. We've just been entitled for the second phase of that project, about 1100 acres. We are just starting to get out the first public notifications on our new master planned community, Centennial, in L.A. County, at the Kern County border. Planned for 23,000 homes over 25 years, Centennial will start the EIR public review process early next year. That's a major endeavor for us on about 12,000 acres at the southern end of the ranch The third development component, and still in conception is in the mountainous area of the ranch, where we are in the final stages of our feasibility analysis for a destination resort/second home and vacation community type of development. If our feasibility analyses are concluded in a favorable way-and we believe they will be-that will be our third and final development area and we probably will be moving forward on that sometime next year.

What's the market for each of the three phased developments? Who are you anticipating being the owners, tenants, and/or occupants of the industrial, and residential phased developments?

For our business and industrial park, the market is the ever-growing Southern California market. There's very little entitled or zoned land available in Southern California to handle the growing distribution and manufacturing activities. This market is largely growing out of the Southern California market. Likewise, new users also need a major distribution area that can serve all of California from one central location. With our strategic location just north of the Grapevine, users have the ability to access to all parts of the state, as well as Nevada and Arizona, with relative ease.

Centennial is intended to be a master planned, mixed-use community with a balance of jobs and housing-it is not intended to be a bedroom or commuter community for Los Angeles. We are employing the latest planning principles to create a sense of place and a sustainable community with a series of walkable villages. Southern California has a huge shortfall in new housing. Along with more urban infill development, Centennial will be a key component in meeting housing demand for the next two decades.

The third element, our mountain resort community, is intended to attract and appeal to the more affluent market of greater Southern California. The plan is provide people with a real ranch experience without having to go to Colorado, Montana, or Wyoming.

What are the physical and resource infrastructure challenges faced by Tejon's development plans?

There are relatively minor infrastructure challenges on the industrial park because we have plenty of water and power available in the immediate area. The industrial park literally surrounds the California aqueduct. Probably the greatest infrastructure challenge for the industrial park will be expanding or reconfiguring the freeway interchange in cooperation with CalTrans and the Federal Highway Authority.

At Centennial, the water strategy still is being fine-tuned. We're going to adopt a strategy of multiple sources-State Water Project, ground water resources, and other potential sources -to ensure an ample water supply for the community. The analysis is well underway.

Infrastructure for the mountain area is in final stages of verification. To do it right and in an environmentally sound way will be expensive; but we're going to do it right.

There must be some financial trepidation for anyone in your position as other large-scale master-planned efforts, from Playa Vista to Ahmanson, stumble. What's the political cost of being high profile and for trying to be the master planner of communities like Centennial?


There are certainly going to be those who oppose or don't care for what we are planning. But, unlike some other areas that want to develop large percentages of their land, such as Ahmanson, our plans for the next generation are to develop a very small amount of the total ranch lands and to reserve a large portion of land for permanent conservation. We have a sufficient land base, so we can accommodate some of the demand for housing in California, the business needs and the recreational needs of Californians and do it in an environmentally sensitive way.

What is the expected timeline for development of Centennial?

Centennial will be rolled out through the notice of preparation and scoping meetings in the next month or two, and with the EIR out for review in mid-2004. We would like to get to the L.A. County Planning Commission in 2004.

Let's step back and consider your business plan. If one were looking at growth in Southern California, clearly the Tejon Ranch is the logical exit from the LA basin into the expanse of the Central Valley. What's your read of the future market? Why is the time now ripe for development of the ranch?

There are several factors. First off, it takes great deal of money and effort and time to properly plan and entitle land for development. So, while infill development is something we certainly support and endorse-and I'm sure that a good percentage of needed housing in the greater LA area can and should and will come from various infill developments-there is just no way that we can supply the amount of housing needed for the growing population without looking at expanding new areas.

With Interstate-5 being a major transportation corridor, we're the next logical area after leaving the Los Padres National Forest, coming north. When you leave Castaic and come north, you travel through the Angeles and Los Padres National Forest for about 30 miles, and then you come back to private land where there is potential, and very desirable areas, for development. It's very similar to driving through Camp Pendleton. There is development in Orange County, then you have a large plot of government land, and then there's development in San Diego County. So it's a natural out-growth.

There's very little land left along the coast. The elevation at Centennial is plus-or-minus 3,500-feet above sea level; you get a four-season climate; you get great topography; clean air. Plus, you are adjacent to a great transportation corridor. We think it's ideal for a new community. The same principles are true for our Tejon Industrial Complex ("TIC") at the base of the Grapevine and our planned recreational community in the mountain area.

When you look ten years out what do you see re the Ranch and build-out?

I see Centennial well under way as a new town with several thousand homes and many schools, community centers, churches-a great model for a new community in California to accommodate our growing population. I see a highly successful business and employment center at TIC contributing to the needed economic diversity of the central valley. Finally, I see a world-class resort and recreational community near Tejon Lake. Tejon Ranch is preserving California's legacy.

How is it that the ownership of Tejon can be so patient? How are you able to avoid the typical pressures of time and money that drive most projects?

We are fortunate to have a shareholder base with a great deal of patience. They are a group of investors committed to the long-term vision as opposed to short-term appreciation. They recognize the real value of what's going to be created for the shareholders is going to come with entitled land and a very careful and well thought out long-term plan for the ranch rather than just dividing it up in a cookie-cutter fashion and selling off the parcels. We're fortunate that those are the kinds of people who have invested in the company. If you're looking for a quarterly dividend, you buy Exxon or General Electric. If you're looking for a value stock, and believe in the future of California, Tejon Ranch is a prime candidate.


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