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Despite obstacles, Barratt to prevail with Fanita Ranch

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The Fanita Ranch project in Santee is the major development project currently in the pipeline for the East County. It is also troubled developer Barratt American's most prized real estate asset, comprising about 25 percent of the city of Santee's area.

The parcel of land, which sits on Santee's northern boundary between Fanita Parkway and Cuyamaca, includes nearly 2,500 acres, of which 1,400 acres have been designated for nature and open space and an additional 250 acres have been reserved for recreation purposes. The plan calls for building about 1,395 single family homes for move-up housing for Santee's residents, who have, to date, had to move away from the city when trading up from starter homes.

The homes will sit on lots ranging in size from 6,000 square feet to 20,000 square feet, with a price range of $600,000 to $1 million. While plans to break ground are on hold for now, over 4,000 people have signed up for the interest list.

The Fanita Ranch project has faced obstacles over the last two decades. It has changed hands several times and encountered vociferous objections from environmental groups. Barratt bought it in July 2003 and then fought a city referendum brought by the environmental group Preserve Wild Santee.

"Various development companies looked at buying Fanita Ranch, but were hesitant given the volatile nature of the concerns of the group. We felt good about our chances of winning the entitlement. We knew it would eventually be developed, since it consumed 25 percent of Santee's area and no city could afford to ignore that much land," said Michael Pattinson, president and CEO of Barratt American.

Fanita Ranch, despite delays and obstacles, has the chance to become the “crown jewel of Santee,” according to Michael Pattinson, president and CEO of Barratt American.

Barratt conducted focus groups with Santee residents and sought their input in deciding on the kind of amenities and recreation facilities to be incorporated into the plan. As a result, Santee residents voted against Proposition X, which attempted to block the project.

Santee Mayor Randy Voepel and the City Council also supported Barratt, because of its efforts to communicate with residents and the company's willingness to work with the 16 guiding principles for design stipulated by the city. Barratt's plans received approval in December 2007.

But there are no immediate plans to break ground, said the developer, citing the downturn in the economy and financing issues as the major reasons for the delay.

"Things have definitely slowed down. Financing is important for a major development of this size. The momentum will pick up when the credit crunch eases. Lenders won't lend for a project of this magnitude unless market conditions improve," Pattinson said.

Despite Voepel's recent statement that the project is in jeopardy during a roundtable discussion conducted by The Daily Transcript, Pattinson insisted that Barratt would follow through with the Fanita Ranch project. Barratt has significant money and efforts tied up in the project, in terms of infrastructure improvements and fighting lawsuits.

The company has contributed $1 million toward improvements for the 52 freeway, which the San Diego Association of Governments (SANDAG) is working on.

"Santee missed out in previous years when road improvements were considered, but this time it had all the design and engineering (elements) in place. The people of Santee believe that our contribution has had a major impact (in expediting the 52 freeway expansion)," said Pattinson.

The Fanita Ranch project calls for about 1,395 single-family homes.

Barratt is currently defending a California Environmental Quality Act lawsuit brought by Preserve Wild Santee, which is headed by Van Collingsworth. Pattinson said the suit has slowed down preparations for the development, even though the company had anticipated it and it came as no surprise.

The firm is also finalizing the processing of paperwork and compliance for other regulations and contending with the usual red tape. Barratt pursued the Fanita Ranch project despite the roadblocks for several reasons: Santee is well connected to the freeways and the trolley system; it is only about 20 minutes away from downtown as well as La Jolla; and Fanita Ranch is prime property in what Pattinson claimed is one of the last master-planned communities in San Diego.

It would have been developed by now, if not for the lawsuits and complications that stifled progress, according to Pattinson.

"We consider ourselves lucky to have this opportunity. Santee's City Council is developer-friendly and pro-growth. The city has been very accommodating. They realize they need (Fanita Ranch) to be developed in order to attract and retain the upwardly mobile population," he said.

Pattinson opined that in California, 90 percent of city councils charge developers unnecessarily high fees, which they then have to pass on to the homeowners.

"Look what it's done in California -- it has stifled growth, which the industry needed. New home owners are 1 percent of the population but they bear costs for infrastructure that is used by 99 percent of the population," he said.

"There are only about 3,000 new homes being built today in San Diego," he added. "It's not just the sub-prime loans or the economy, in many cases. The fees alone can be $100,000 per house, and when it gets so expensive, growth slows down. Job losses happen."

Barratt had to lay off 100 employees out of 140, according to recent news reports.

But Santee's regulations and fees stand up to scrutiny far better than others, Pattinson said. "Santee is an exception in that they are very reasonable; their political leaders were very supportive of us when we fought the referendum in 2003."

Under the leadership of Mayor Voepel and the City Council, Santee is working on transforming itself to a more urban city, with good schools, improved test scores and access to public transportation.

"The missing piece is Fanita Ranch, and this will complete the puzzle. I think it is going to be the crown jewel of Santee," Pattinson said.

He did not specify when the company would break ground other than to say, "When we see the market recover, we will begin."

Nagappan is a San Diego-based freelance business writer.

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