Los Angeles—Newhall Ranch is the largest master planned community in California, with 12,000 acres that will eventually house 60,000 people, but it has faced many obstacles including entitlement and project planning. Real estate attorney Steven Zimmer, who was head of the Newhall Ranch Specific Plan, talks to MHN about the controversial development project, his new position at law firm Gilchrist & Rutter and the difficulties of being both an attorney and a real estate developer.
MHN: Congratulations on your new venture. What will you be doing there?
Zimmer: I’ll be working with the firm of Gilchrist & Rutter. I know a number of the people that are there already, and I’ll be working with them on business development, helping to serve the clients that they have or they would like to get in the real estate development business—that’s what I’ve been involved in in most of my life. I’ve either been involved in it on the builder side, whether it be private builder or public builder, and master plan builders as well, for over 30 years, and I’ve also been involved as a public agency attorney, both as city attorney and county council, so I’ve been on both sides of the table—getting project rules, taking projects through the building process, so what I hope to bring to the table is my experience in the real estate development business. Being an attorney, I’ve had my own law office and practice before, being able to bring all the legal aspects to the table because these days there are more rules, laws, statutes, regulations than there’s been before.
MHN: Let’s talk about Newhall Ranch. What was your involvement?
Zimmer: When I had my own law office, I was actually doing legal work for Newhall and advising them on school mitigation agreements. When my predecessor left, I ended up coming up and replacing him. He was about to get the Newhall project approved; it was litigated, but several of the issues needed to be done—the environmental issues—so I took on that responsibility for that specific plan and environmental document and redid what was necessary after the court decision. I got the Newhall Ranch-specific plan and document reapproved in 2003, and then I oversaw getting all the state and federal permits that were necessary for the project to move forward. We just got the state permits at the end of 2010; those are being litigated now, and then we got the federal permits in August, and we just had project approval of the first two subdivisions for Newhall Ranch during the month of October. The last 12 months have been very positive for Newhall Ranch.
MHN: What were some of the controversies surrounding that development?
Zimmer: It’s controversial in that it’s a 12,000-acre-specific plan, so it’s a large property. We were looking at over 20,000 housing units and over 5 million square feet of commercial, office, retail and industrial.
The Newhall Land and Farming did the master plan community of Valencia. That started in 1965, and it’s still going today well over 40 years later. It had in it about 20,000 homes as well, so what I think people think is that because that specific plan for Newhall Ranch was approved, they’re going to get all the homes just coming right away. But instead, it’s a long master plan, which, to me [if I were a] resident, is a better way to do it because now they know where the schools are going to go, where the parks are going to go, how all the infrastructures are going to be put in place, where the open space is going to be, where the shopping is going to be. Everything is laid out so you know where it is. It’s not done in a piecemeal fashion, where one by one each individual developer may say, “Well, I just want to put 250 homes here, but I can’t afford to build a whole shopping center because I don’t have much land.” So, when you have a master plan you’re able to plan where the libraries go, where the sheriff’s station will go, where the fire stations are going to go, so that’s why I think it’s a positive thing. The negative side of that is the public tends to think it’s all going to happen overnight, which it isn’t, of course.
MHN: Is it going to be mostly multifamily or single-family?
Zimmer: The trend today is to go toward more multifamily. I would expect more than half of that community to end up being multifamily. There is a requirement on Newhall land that 10 percent of the homes in the community be affordable to very low- to moderate-income individuals, so that’s going to be a part of the process. Many of those will end up being multifamily. There’s also a great need for apartments in the area, and the lifestyle changes indicate there’s going to be a lot more need, because of affordability and other reasons, for condominiums, cluster housing and townhome housing, so I think more than a majority will end up being multifamily.
MHN: When will people be able to move in?
Zimmer: I’d say several years from now you’ll start seeing homes being built out there. You tell me what the economy is going to be and I can tell you that more easily. That’s the wild card; you just don’t know what the market is going to be these days. It’s a tough time out there right now, but there is a time to get all the infrastructure plans approved, and then you have to get the sites ready and once you get that done, the homebuilders can come in and start building the homes, so it’ll still be a few years yet before you start seeing homes come up.
MHN: Do you find it’s useful to be both a lawyer and a real estate developer?
Zimmer: It’s not just useful—it’s almost imperative these days to be able to do that because when you go to a public agency, or a state agency, or a federal agency and you’re seeking permits and approvals, it’s good to be able to sit there and know what they’re thinking and what they have to do, the types of requirements they have to meet themselves, because I’ve been there. I’ve been advising a planning commissioner, a city councilor, a board of supervisors, so I’ve been there, advising them on projects that are in front of them. And I’ve been on the other side of the table when you’re proposing a project, you understand what is necessary from the public agency side, and I’ve been able to share my background with them. They know that I know what they’re going through, and what they need, just as well as they do. It’s always worked out very, very well, and personally I think it’s very important today to be able to see the situation from both sides of the table.
MHN: What are some of the challenges?
Zimmer: To me, I don’t find many of them, but one challenge is that when you’re a real estate developer you’re ready to just go forward and make sure that project goes along. When you’re an attorney as well, you’re looking at all of the legal issues that go along with it. That could be both positive and negative because when you look at all of the legal issues, then you start saying, “Wow, I don’t know if we’ll ever be able to get this through.” Just being a real estate developer you say, “We’ll absolutely be able to get this through.” So sometimes your outlook as an attorney would be looking at a lot more of the pragmatic legal issues that are facing a project. A developer will be looking at more of the infrastructure and the costs and the market demand. Bringing the two together works well because not only do you have to know if a real estate project could be done and make money, you need to know how to get it approved as well.
I’m able to see a lot of the legal issues that are going to be faced and the regulatory issues earlier on in the process and therefore try to get them out of the way a lot earlier. Sometimes people that get involved start the process and then say, “I didn’t know I had to go out and get a permit,” and that will slow them down immensely. If you know all of those regulatory rules and impediments, you’re able to deal with them earlier on in the process, which could be a benefit in the long run.