Newhall Land and Farming Company

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Newhall Land and Farming Company
Type subsidiary
Industry Real estate
Founded 1883
Founder(s) Newhall family
Headquarters Valencia, California, USA
Parent Lennar Corporation
Website http://www.valencia.com/
Newhall Land headquarters in Valencia

The Newhall Land and Farming Company is a land management company based in Valencia, California, United States. The company is responsible for the master community planning of Valencia, as well as the management of farm land elsewhere in the state. In 2004, the company became a subsidiary of Lennar Corporation, the United States' second largest home builder.[1]

Company history[edit]

The company was incorporated on July 1, 1883, by the five sons of Henry Newhall (William, Edwin, Henry, Walter, and George), a businessman who had purchased a number of former Mexican land grants. Newhall had died the previous year and had instructed his sons not to sell the land.[2] The company initially had 143,000 acres (579 km²) of land, ranging from Monterey to Los Angeles counties. Unfortunately, the income generated by ranching was not enough to support the families of all five sons in the comfortable lifestyle they had grown up with,[3] and they began to sell off portions of their vast holdings in order to generate income.

Successive land sales allowed the Newhalls to maintain their lifestyle, but William (who was known by his middle name Mayo), a graduate of Yale University, understood that they needed a better way to generate income. After a few more land sales, Mayo took the income and reinvested it into the land by developing agriculture. The land around their headquarters, the former Rancho San Francisco, was cleared for citrus trees, and lima beans were planted in the Sacramento Valley. The income from these crops allowed the company to grow in the 1920s. Additionally, one more land sale, a 38,000 acre (150 km²) parcel in 1922 to William Randolph Hearst for $1 million (to be paid in installments over ten years) helped fill the company's coffers.

The collapse of the St. Francis Dam in 1928 was devastating to the company. Much of its livestock, orchards, and buildings were destroyed. Although the city of Los Angeles agreed to pay reparations for its role in the dam's construction, those payments would not be available for some time. Compounding the problem was the onset of the Great Depression. George Newhall, who was the last surviving of Mayo's brothers and treasurer of the company, died that year, and Mayo discovered that the company was bankrupt and on the brink of insolvency.

At this point, Mayo was in his late seventies and growing increasingly frail. He turned the operation over to his son-in-law, Atholl McBean, a San Francisco businessman who had held onto his entire savings during the Wall Street Crash. With McBean's money, the company was able to hold on long enough for the reparations payments to come through. That, combined with the last of the Hearst payments, was enough for the company to climb out of debt. By his third year in charge, Newhall Land and Farming reported a profit of $25,000[3] and by 1935, they resumed dividend payments, the first since 1930.

Henry Newhall had purchased Rancho San Francisco from speculators who had purchased it from Ygnacio del Valle in the hopes of finding crude oil. Alex Mentry had discovered oil in 1876 just to the south of the rancho (which became the Pico Canyon Oilfield), but the group of investors who sold to Newhall had had no such luck. McBean was convinced no oil was to be found on the land, which by now he had renamed Newhall Ranch, but he leased it to Barnscall Oil Company anyway. To his great astonishment, Barnscall struck oil in 1937 and there was so much oil that over the next few years, 44 oil wells were producing millions of dollars of "black gold" for the company,[3] which ended all of their cash flow problems.

By the 1950s, urbanization began to encroach on Newhall Ranch. The County of Los Angeles, hoping to encourage more residential development, changed its rules for property taxes, taxing land at what its "best use" would be, regardless of its actual use. Newhall Ranch was assessed to be a residential zone,[4] which substantially increased the tax burden of Newhall Land and Farming (the Williamson Act would be enacted in 1965 to counteract this problem, but it came too late for Newhall Ranch). McBean understood that agriculture alone was not going to pay the taxes, and that if the land was to be designated for residential homes, the company might as well head in that direction.

Real estate developers made offers to buy the land, but family members did not want to sell pieces of the family homestead. Instead, McBean hired city planners and the company opted to create a brand new city, which would be called Valencia after the oranges they had grown for so many years. Construction began in the early 1960s, the Master Plan adopted in 1965, and the first new homeowners moved in in 1967. McBean retired soon after, turning over the company to non-family members.

During the next two decades, the company continued to flourish. Valencia experienced steady growth and garnered praise as a planned city. During 1971 the city saw the opening of Magic Mountain amusement park, which was sold to Six Flags in 1979. In the 1980s, the company expanded its oil interests to seven states and Canada, and found another revenue source in leasing its land for film and television show production. In 1994, the company submitted plans to the county for a new master-planned community to be named *Newhall Ranch. In 2004 the company was purchased by Lennar Corporation and LNR Corporation for approximately $1 billion, leaving Newhall Land and Farming owned 50% by Lennar and 50% by LNR (a spinoff real estate investment trust that manages commercial and industrial properties) through a new holding company called LandSource Communities Development LLC. In early 2007, by a further transaction, Lennar and LNR each sold 34% interests in LandSource Communities Development LLC to a new set of investors, including the California Public Employees Retirement System. In June 2008, LandSource Communities Development LLC, along with Newhall Land and Farming Company and other subsidiaries, filed for Chapter 11 bankruptcy protection with the US Bankruptcy Court for the District of Delaware. In July 2009, LandSource Communities Development LLC and its subsidiaries emerged from bankruptcy under a new control structure with a new set of owners.

References[edit]

  1. ^ http://www.scvhistory.com/scvhistory/sg012804.htm
  2. ^ "Company History". Newhall Land and Farming Company. Archived from the original on 2007-02-22. Retrieved 2007-04-20. 
  3. ^ a b c "The Newhall Land and Farming Company". Encyclopedia of Company Histories. The Gale Group. Retrieved 2007-04-20. 
  4. ^ Worden, Leon (February 19, 1997). "Postwar growth of the Santa Clarita Valley". Santa Clarita Valley Historical Society. Retrieved 2007-04-20. 

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