May 12, 2009 - DMB Associates - El Rancho San Benito, Santa Clara County CA

Plan for new city on Santa Clara County's southern border withdrawn

A plan to build a new city on Santa Clara County's southern border — with 6,800 homes, and schools, parks, a fire station and shops — has been shelved, the latest casualty of the nation's housing bust.

Plan for new city on Santa Clara County's southern border withdrawn

Farmland known as Rancho San Benito, where 6,800 homes were to have been built, sits empty since the plans were scrapped because of the collapsed housing market, on the border of Santa Clara County and San Benito County Monday May 11, 2009. The new city was to have been half the size of neighboring Gilroy. The land sits between the Pajaro River and Shore Rd. off Highway 25 near Interstate 101.

A plan to build a new city on Santa Clara County's southern border — with 6,800 homes, and schools, parks, a fire station and shops — has been shelved, the latest casualty of the nation's housing bust.

Located on a panoramic expanse of meadows and ranchlands between Gilroy and Hollister just east of Highway 101, El Rancho San Benito was believed to be larger than any pending development proposal in the Bay Area.

Planned for up to 20,000 residents, it had become a flash point among environmental groups who have worked over the past decade to limit sprawl in San Benito County as Silicon Valley commuters crept increasingly south in search of cheaper homes.

Now, what environmentalists could not accomplish, the housing crisis has.

Late last week, after working to build community support since 2005, developer DMB Associates of Scottsdale, Ariz., announced it was pulling its development proposal.

"We withdrew our application because of the status of the economy nationwide," said Mike Roberts, vice president for DMB, on Monday. "We are all well aware of the state of the economy. It is one of the most severe economic downturns we have seen in years."

The 5,792-acre site, framed by the Pajaro River to the west and Highway 25 on the north, will remain for cattle grazing and hay farming. Roberts said DMB has not ruled out a future proposal for the land, of which it owns part and holds options for other sections. Roberts Advertisement said the state budget was also a factor in the decision because California cannot afford to widen Highway 101 and Highway 25, or rebuild interchanges needed to make the project work.

Environmentalists reacted like boxing fans watching a rival's knees buckle.

"We're very pleased. It was leapfrog development. It was going to have all kinds of sprawl effects," said Melissa Hippard, director of the Sierra Club's Loma Prieta Chapter, in Palo Alto.

Hippard said the project would have dramatically increased traffic and smog, and broken up wildlife corridors. The Sierra Club and the Committee for Green Foothills in recent weeks formally opposed the plan, and the Nature Conservancy and Audubon California had written letters to San Benito County planners raising concerns.

Hippard said her group supports more development around Gilroy, Morgan Hill, Hollister and other areas south of San Jose where ranchlands and row crops still dominate the economy — but only if it's adjacent to existing cities, which El Rancho San Benito was not.

"The greatest fear is this steady march of Silicon Valley, creating urban sprawl all the way down 101. I don't think we have to do that," Hippard said.

Environmentalists weren't the only ones raising concerns. Santa Clara County's top administrators also had doubts.

"The county of Santa Clara has major concerns regarding the potential impacts upon our resources, facilities and residents," wrote Gary Graves, acting Santa Clara County executive, in a Jan. 30 letter to the San Benito County planning department.

He cited traffic, over pumping groundwater basins that overlap both counties, and increased pressure to develop nearby large open ranches, such as Sargent Ranch in Santa Clara County.

San Benito County in many ways is like Santa Clara County, only 100 years removed.

The county's population is 59,000 — about what Santa Clara County's was in 1900. With roughly the same land mass as its neighbor to the north, San Benito still has agriculture as its leading industry, with lettuce, cattle, bell peppers and poultry dominating the economy rather than computer chips or software.

But because of the steady increase in Bay Area housing prices during the 1990s, Silicon Valley commuters began moving there in large numbers, changing the area's character.

From 1990 to 2000, San Benito was the fastest-growing county in California, with population growth of 45 percent. Half of its working residents commute out of the county — with most driving north along Highway 101 early every morning 40 miles into Silicon Valley.

Silicon Valley environmentalists have had mixed success slowing the growth. In 2004, voters defeated an environmentalist-backed measure that would have sharply limited development on rural land in San Benito County. But two years later, voters also rejected a massive, 4,000-home retirement development that would have gone in near the Hollister Airport.

Now, the area has been particularly hard hit by the housing bust. San Benito County lost 56 homes per 1,000 to foreclosure for the year ending March 31, double the statewide rate, and nearly four times the rate of neighboring Santa Clara and Santa Cruz counties, said Andrew LePage, an analyst with MWD DataQuick.

San Benito County Supervisor Anthony Botelho said most locals don't want it to be a bedroom community to Silicon Valley, and that area politicians are trying to lure new businesses while protecting farmland.

"There's no connection made between the commuter and the hometown. It is tragic that people have to do that," he said. "Maybe this economic cycle will change so things are more homegrown."

Original Story - Mercury News

Letter Posted on DMB Website Below:

May 7, 2009

Dear Neighbors:

As you know, our Nation is in the midst of the most severe and protracted economic downturn since the "Great Depression". This is a very difficult time for the broader economy and the real estate industry more specifically.

Unfortunately, El Rancho San Benito (ERSB) has been particularly impacted by an extraordinary confluence of economic factors. Among several other project specific issues, the State's budget woes are anticipated to significantly reduce state and county transportation improvement resources that are essential for ERSB to move forward.

These unprecedented economic times have caused the ERSB team to reassess the possibilities and business strategy for the property. At this time, we have decided to withdraw our existing project application from San Benito County and will be entering a period of reevaluation of the plan for the property. In the coming weeks, we will be thoughtfully managing our operations in Hollister as we prepare for decreased activity related to our project. In the meantime, the land will continue to operate in its current agricultural capacities.

For nearly four years the El Rancho San Benito team has been seeking input from the community through community meetings, open houses, topical forums and public workshops to ensure that the plan for ERSB reflected the needs of San Benito County residents. That makes today's reality extraordinarily difficult.

We are extremely disappointed to inform you that we will not be proceeding with the project plan at this time. We would like to take this opportunity to express our gratitude to the hundreds of you who gave of your time to participate in our outreach and community planning process. We sincerely thank you for your invaluable input and support, and regret that the plan you helped to develop has been impacted by these adverse market conditions. We look forward to a time when economic conditions recover to a point where we can again consider a project on the property.

We understand that many of you will have questions, and we encourage you to contact our team in the Hollister office at 831-635-5900.

Sincerely, Mike Roberts