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politics

California Forever: Why plans to build a new city from scratch are a definite ‘maybe’


There are obvious challenges. Chief among them is that California Forever would violate the county’s longtime voter-approved General Plan and Orderly Growth Initiative, which limits new development to existing towns and reserves most of Flannery’s 60,000 acres to agriculture and open spaces. Changing the designation requires voter approval, which the company hopes to get on the November ballot.

This is going to be a tough sell. Public reaction was harsh during a series of public hearings held by the company. People are deeply skeptical, wondering whether California Forever will be able to find enough water, pay its fair share for costly highway upgrades, and whether homes will be as affordable as promised. Many in Solano County are receptive to the need for more housing but wary of the whole enterprise.

But it’s still early. Much will depend on what happens after backers release project details in January. There are reasons to doubt their prospects – and reasons to think they might succeed. Here’s a look at three ways they had such a complicated launch and three things they seemed to do right.

Three missteps

1. A secret land buying frenzy

It is the original sin that haunts California Forever.

Investors behind the project began buying farmland at above-market prices in Solano County, about 50 miles from San Francisco, in 2018, identifying themselves only as Flannery LLC, based in Delaware. They spent, according to court records, more than $800 million on 140 properties, totaling more than 60,000 acres. They became the largest landowner in the county – and caused considerable friction along the way. Landowners say Flannery divided his neighbors using high-pressure tactics, offering inflated prices to families who had owned the property for generations and were reluctant to sell it. The company, for its part, accuses owners of conspiring to raise prices — and has filed a federal lawsuit seeking $170 million it claims it overpaid.

Flannery was so secretive that authorities launched an investigation into whether a foreign entity was planning to acquire land adjacent to the strategic Travis Air Force Base. Democratic Reps. John Garamendi and Mike Thompson, whose districts include the region, have asked the Treasury Department’s Foreign Investment Committee to investigate. Only then did the company and its backers emerge from their shroud.

Suspicions persist. “My thoughts (on the project) are really informed by four years of absolute secrecy and refusal to provide any information about who they are and what their intentions were,” Garmendi said.

2. Being from Silicon Valley

Silicon Valley and its people are not universally loved. Many people blame the lucrative sector and its notoriously high wages for driving up real estate prices, forcing people to flee the Bay Area and beyond in search of affordable housing. This hostility gives rise to some opposition to California Forever.

“Are you hoping to populate the city with a bunch of techies who will cause the cost of living to skyrocket?” » a man told CEO Jan Sramek at a recent hearing in the small town of Rio Vista.

Critics also derided the proposal as an unattainable, technology-inspired “utopia,” an idea that Sramek sought to dispel.

The CEO, born and raised in the Czech Republic, attempted to counter the tech titan’s narrative by touting his blue-collar roots as the son of a teacher and a mechanic. After leaving Goldman Sachs, he founded online and social media companies before starting California Forever and has since settled in Fairfield, Solano County, with his family.

California Forever is inextricably linked to Silicon Valley. Backers include Michael Moritz, president of Sequoia Capital; Reid Hoffman, co-founder of LinkedIn; Laurene Powell Jobs, founder of the Emerson Collective and widow of the late Apple CEO Steve Jobs; Patrick and John Collison, co-founders of Stripe; and Marc Andreessen, an investor and co-founder of Netscape who reportedly opposed multifamily housing in his own city.

3. Trying to do a big project in California

California Forever’s specific challenges aside, it’s a state where it’s notoriously difficult to build anything new. From environmental review to construction, many single-family housing projects take 5 to 7 years in Southern California, according to a UCLA report. More complex efforts can be so daunting that Gov. Gavin Newsom pushed legislation this year to streamline environmental assessment of major infrastructure linked to climate goals.

Sramek seems optimistic. “Best case scenario, we are a few years away from starting work,” he said.

But California Forever would require new roads, water and other necessities as well as permits from local, state and federal authorities. The company’s land includes an active wind farm, with dozens of windmills, as well as gas wells and habitat for protected species such as the California tiger salamander, Swainson’s hawk and burrowing owl . They also have to contend with proximity to Travis Air Force Base, the county’s largest employer.

“There is no legitimate developer in California, which is not an easy place to develop, that would ever be able to launch a development project in the manner that they do,” Garamendi said.

The story is not on the company’s side. Mountain House, approved in 1994 with a similar commitment to creating a walkable community, was the last effort to launch a new city in the Bay Area and failed to achieve its goals. The community only got its first supermarket last year.

Three things California Forever got right

1. Seize the housing crisis

A new city in Northern California would not only satisfy billionaires’ desire for a lasting utopia, it could also bring much-needed housing to the state.

California’s per capita housing supply is consistently among the lowest in the country. Over the past decade, the state has added 3.2 people for every new housing unit, driving up demand and sending prices skyrocketing.

As the pandemic ushered in the era of remote work, wealthy coastal residents retreated inland, snapping up properties and driving up the value of their homes even higher. The price of an average home in Solano County soared more than 90 percent, to about $600,000, between 2010 and 2020, according to some estimates.

A new city is unlikely to solve this problem, even if California Forever’s investors manage to reach their projected population of 50,000. But focusing on housing is politically appealing. Californians agree that housing affordability is a big problem, and this concern is especially prevalent among Bay Area residents.

2. Call on local experts

California Forever will need help getting on the Solano County ballot and winning the election. After that, the real work begins.

The group faces an uphill battle to pass the critical ballot measure, which will allow it to rezone the land for development purposes. The local government, after years of being blocked from obtaining more information, is wary of his intentions. And residents, skeptical of the idea of ​​wealthy foreigners pursuing farm owners for access to their land, encourage each other to resist.

California Forever will need to engage with all levels of government to complete the project and, as POLITICO first reported earlier this month, has hired some of California’s most experienced consultants and strategists to do so.

The team includes several alumni of the Newsom administration, including his former cabinet secretary Ana Matosantos and former legislative affairs secretary Angie Wei. Longtime Los Angeles-based national Republican consultant Mike Murphy is also involved.

Both are highly respected figures with ties to key union players and a history of leading major projects. It doesn’t hurt that they’re lifelong Californians, which could help bridge the gap between local voters and out-of-state billionaires.

Winning the election is key — Sramek said the company would seek to develop about 800 acres in Rio Vista, a town of about 10,000 in the eastern part of the county, if it loses. It’s unclear whether they will lean on Newsom for support — a spokesperson for the governor said he has yet to meet with California Forever supporters.

3. Build a War Chest

This project will not be cheap. But even after spending nearly $1 billion on land purchases, California Forever has money to spend.

This effort is, of course, also funded by several billionaires who, as Sramek said, have the determination and funds to see it through.

Skepticism about Silicon Valley may be abundant, but the flip side is a cohort of ultra-wealthy investors with a track record of major projects and managing a staggering amount of capital.

“They have so much firepower,” said Duane Kromm, a former Solano County supervisor. “It’s not David versus Goliath, it’s David versus an aircraft carrier.”

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