By Peter Jacklin
As The Trails at Santiago Creek project reaches its destiny before the Orange City Council in a few weeks, it’s important to review the advertised public benefits of the project. A thorough reading of the Development Agreement between Milan Capital and the city takes the guesswork out of the marketing material and makes the project clearer.
You may not live to see it
All the benefits are loaded to the back end of the project, and are tied to houses ready to be occupied. For example, the landowner has 10 years to finish the development – but can request a five-year extension. That’s a 15-year timeframe, and that can be extended indefinitely in the event of natural disasters, litigation, foreclosures, other matters, or the perfidy of a future city council.
Milan declines to commit to a development schedule and major milestones in every case where it can. It is all open-ended. The current waste concrete crushing is allowed to continue until the landowner wants it to stop. It can continue for the next 15 years -- or longer. The neighbors must be jubilant to hear that they are on pins and needles for eternity.
A casual reading of the Development Agreement would make one think that the project is limited to 128 homes. A more observant reading finds that “either party may propose an amendment to this Agreement … (or) to enter into … (a) modification of this Agreement … ” The requested zone change will allow 240 homes. This clause in the Agreement will let Milan build that many, as long as the city council agrees.
The even greater fool
The "greater fool theory" states that the price of an object is determined not by its intrinsic value, but rather by the irrational beliefs and expectations of market participants. In the real estate game, the greater fool theory can drive investments, with the expectation that prices always rise.
A few years ago, this greater fool got stuck with more than 100 acres of mining property. However, Milan can sell all, or part, of the property at any time. The Development Agreement allows an even greater fool to come along and buy it.
The even greater fool is stuck with the few limitations from the agreement and the “wiggle room” that the agreement provides. It’s easy to conceive that, under the right circumstances, 240 homes may not make the even greater fool happy.
The greenway has no green!
The landowner is willing to provide the city with $4.1 million for “greenway improvements.” This money will show up in the city’s coffers after the 60th house is ready for occupancy. The thorny problem is -- who owns the greenway and maintains it after it’s improved? The answer is “no one knows.” The County of Orange has refused the deal.
The landowner is peddling this to anyone who will listen, and no one is biting. Maybe the greater fool theory has an exception. Beware, taxpayer -- it’s always us taking up the slack.
Don’t tee up yet
The agreement reads that Milan will determine, in an undescribed manner, the fair market value of the Ridgeline property. Milan then “shall provide the City with funds equal to said fair market value to fund the City’s acquisition …” Sounds like a white elephant deal to me. This is designed to happen no sooner than when the first house is ready for occupancy.
By the way, there is no contractual obligation by the city as to how the Ridgeline property will be used, and who will maintain it.
There is no explicit language as to the donation of the current horse arena to anyone. Milan proposes to provide $2 million “for equestrian and recreational purposes in the East Orange Area as determined by the City …” Once again, this happens when the first house is ready for occupancy.
If the city chooses to buy the current arena for $2 million and the landowner agrees, Milan is out not one penny. If the city chooses to spend the money elsewhere, you can expect six houses on the current arena site as soon as possible.
Good for taxpayers
The project requires infrastructure improvements, traffic and signal improvements, library fees, grading improvements, drainage, sewer and water improvements, and school mitigation fees. Milan is requesting that the “City shall cause a Financing District to be formed … for the purpose … of funding the … public improvements required … (for) the Project to proceed.” In other words, dig a little deeper into your pockets so Milan can kill its white elephant.
We stand weeks away from a decision by our city council on a project that is ill-conceived, gives significant and unworthy rewards to the landowner, places more burdens on an over-taxed taxpayer, continues the landowner’s harassment of residents near the development site, places future residents in harm’s way and bails out the greater fool. Contact each city councilperson to tell her or him “No Trails at Santiago Creek!”
Peter Jacklin is an OPA resident. The information in this editorial is derived from the Development Agreement, available on the City of Orange’s website.