A Brief History of Naples Development

 

1887                 John William, a real estate developer from the east, was inspired by the view of the Gaviota Coast from offshore during a passage to San Francisco.  It reminded him of Naples, Italy.  He purchased Dos Pueblos Ranch.

 

1888                 William recorded the “Plan of Naples Township” with the County Recorder.  The entire Township encompasses about 900 acres.  A delay in completion of the railroad led to failure of the development.

 

1917                 Herbert Wylie purchased Dos Pueblos Ranch from William’s widow, abolished the name of Naples, and tore down the “ramshackle wooden buildings.”   The name Dos Pueblos was reinstated and the Naples Township became a walnut orchard.

 

1943                 Agriculturist Sam Mosher purchased Dos Pueblos Rancho from Wylie, building it into a successful agricultural property.

 

1977                 Ninety years after the Naples Township scheme failed and seven years after Mosher’s death, the Morehart Land Company, a California corporation, purchased most of what was the Naples Township and portions of the Dos Pueblos Ranch from Signal Oil Company.  Zoning at that time was unlimited agriculture with 10 acre minimum lot size.

                Morehart Land Company then sold the bulk of the ranch and portions of the Naples Township.  Morehart created a checkerboard of family ownership, which according to County Counsel, Shane Stark, was specifically designed to undermine county zoning laws.

 

1982                 Naples down-zoned to Ag-II-100 after adoption of the Local Coastal Plan. LCP Policy 2-13 requires the County to “discourage residential development” and “encourage and assist the property owners in transferring development” to an urban area.

 

1984                 The County adopted antiquated subdivision regulations, recognizing subdivisions recorded prior to the Map Act of 1893, but required merger of substandard lots as a condition of development.  

               Morehart sued the county over those regulations.

 

1994                 The California Supreme Court held that the Map Act preempted County’s  regulations requiring merger of lots as a condition of development. 

 

1995                 Without challenging the legal validity of the Naples lots, the County approved an Official Map of the Naples Township, recognizing 274 legal lots.  While the Supreme Court held that the county could not require merger of substandard lots as a condition of development, it did not reach a decision about whether the lots created in 1888 were valid.  It was the adoption of the official map which created the present legal landscape. The development potential for these lots could not be determined until the completion of environmental and policy consistency review for the property.

 

1999                   Morehart sold an option to Vintage to purchase 485 acres of their holdings at Naples.

 

2000                The County entered into an MOU (Memorandum of Understanding) with Morehart and Vintage Communities of Orange County,  staying lawsuits and providing for a comprehensive review of applications for development.  Under this first MOU, the County agreed to review a proposal for 88 houses north of Highway 101 in return for a commitment by Vintage to sell the majority of the property south of the highway to a land trust or a public entity.

                Negotiations between Vintage and the Trust for Public Land failed, and the deal put together with the Malibu Nature Trust failed to obtain County approval.  As a result the MOU was terminated by County.

                Gaviota Coast Conservancy (GCC) began discussions with the developer, Matt Osgood of Vintage Communities, and County staff.

 

2002                 The Naples Coalition is formed.  (GCC, Sierra Club, Surfrider Foundation, Audubon Society, League of Women Voters, Citizens Planning Association).

                The 2002 Naples MOU is approved by County with new conditions allowing development south of Highway 101, and removing provision requiring sale to a conservation entity.  It also treated that part of the property outside the coastal zone differently than that which was within it. This MOU addressed acreage owned by Santa Barbara Ranch and did not include Dos Pueblos Ranch.

 

2003                 The Naples Coalition begins discussions with Matt Osgood of Vintage Communities and his consultant, Mark Lloyd.  Those discussions break down when county cites Osgood for zoning violations at Naples.

                Osgood agrees to consolidate inland and coastal zone properties for environmental review after the Naples Coalition and Surfrider Foundation raise CEQA (California Environmental Quality Act) issues.

      Osgood files an application for development with the County in November under the terms of the 2002 MOU.

 

2004                 Meetings between Osgood and Coalition are renewed.

                Application deemed complete in September 2004.

         

2005                Coalition submits details of its alternatives and suggests concepts to be included within the new zone district language.

                Scoping hearings for Draft Environmental Impact Report (DEIR) held in January.

 

2006         In June the application was modified to add “Alternative 1” which expanded the project site to include the Dos Pueblos Ranch. The number of proposed houses expanded from 54 to 72.

                County released the Draft EIR on June 30, 2006. This Draft EIR had a myriad of defects including; a vague and incomplete project description, inadequate baseline studies, incomplete and misleading impact assessment, inadequate policy consistency analysis, flawed alternatives analysis and other legal technical and policy concerns. The County decided to revise and recirculate the Draft EIR.

 

2007         A revised Draft EIR was released in November 2007. The County received more than 1000 comments from the public.

 

2008                The County Planning Commission held a series of public “workshops” on the project from April to June 2008. At the May 29 workshop the applicants proposed yet another revised project, “Alternative 1B”. This alternative decreased lot sizes in the Dos Pueblos Ranch subdivision area from 10A to 5A and moved 14 proposed parcels outside the Coastal Zone.

                The Proposed Final EIR was made available on June 13, 2008.

                On June 16, 2008 the owners of Dos Pueblos Ranch transmitted a letter to the County stating that they reserve the right to withdraw from the project if any conditions are imposed to allow for public access on the Ranch’s coastal land or any obligations are created to restore Dos Pueblos Creek.

                The proposed Final EIR with Alternative 1B was presented to the County Planning Commission in a series of public hearings from June to August 2008. The County declined to recirculate the document despite the significant changes in the project associated with Alternative 1B.

                On August 20 the Planning Commission recommended that the Board of Supervisors certify the Final EIR and approve Alternative 1B.

                On October 7, 2008, in closed session, the Board of Supervisors voted 3-2 to amend the MOU to delete the requirement that the rezone for the inland portion of the property would not become effective unless the coastal portion received final approvals from both the County and the Coastal Commission.

                On October 8, 2008 the development partners and the County revealed yet another modification to the project; “Staged Alternative 1B”, which would allow portions of the development to occur without required mitigation measures previously attributed to the entire project and before Coastal Commission review of the LCP Amendment, rezone, and Coastal Development Permits.

                The plan of October 8 was released to the public on October 9, only 1 business day before the Board of Supervisors hearing on October 13.

                At the October 13, 2008 hearing the public testified for more than four hours with not a single member of the public that was unassociated with the developer speaking in favor of the project.

                The Board continued the October 13 hearing to October 21, 2008 where they heard rebuttal testimony from the applicant and then deliberated for less than 2 hours before voting 3-2 to certify the EIR and approve Staged Alternative 1B Project.

                 On November 20, 2008 the Coalition, Surfrider, and EDC filed a law suit against the County claiming that the County violated several important environmental protection laws, including the California Environmental Quality Act (CEQA), the California Coastal Act, State Planning and Zoning Law, and the California Land Conservation Act (better known as the “Williamson Act”).

 

2009        On January 5 the Coalition, Surfrider, and EDC filed a demand to cure the Brown Act violation arising from the Board’s October 7, 2008 closed session decision concerning the Santa Barbara Ranch Project.

                On January 6, 2009 the Coastal Commission rejected the County’s Local Coastal Plan Amendments for Naples as inadequate. The Commission also rejected other County submittals for the third time.

                The Board of Supervisors on January 27, 2009 voted to cure the Brown Act Violation, agreeing to take up the October 7, 2008 MOU amendment in a public hearing.

                On February 5, 2009 Osgood terminated his participation in the MOU. In a letter sent by his lawyer, Osgood rejected the County's approval of the coastal approvals, opening the door for lot-by-lot grid development, but sought to retain approval of the 50 house inland subdivision and the five houses sought by Dos Pueblos Ranch. 

                March 3, 2009 the Board of Supervisors, in an open hearing, voted to reject the amendment to the second MOU that they initially adopted in closed session on October 7, 2008. 

                On March 27, 2009, Osgood’s lawyer filed a demand to cure letter alleging the Board violated the Brown Act in rescinding their October 7, 2008 closed session amendment of the MOU on grounds that the Brown Act prohibited the Board from curing the Brown Act violation after Osgood had relied on the amendment.  One month later Osgood filed a Brown Act lawsuit against the County.  The lawsuit also requests declaratory relief to establish that the provision in the MOU linking the coastal and inland projects is of no force or effect.

                A letter to the Board from Osgood’s lawyer dated June 18, 2009, stated that although Osgood continues to maintain that the MOU has terminated, he would continue to fund the County’s processing of the project approvals to the Coastal Commission. 

                On June 23, 2009 the Board of Supervisors held a public hearing to receive a report on the Project’s status and to give Staff direction on the Coastal Commission deficiency notices.  The Board struggled to understand the current status of the project, including whether processing of the coastal project approvals could or should continue after Osgood rejected those approvals.  The Board requested additional information regarding Osgood’s financial commitment, and suspended any action on the Coastal Commission deficiency notices until the Project’s current status is understood. 

                On October 20, 2009, exactly one year after approval, the Board of Supervisors voted to rescind the Development Agreement for the coastal portion of the project. The rescission was approved on a 3-2 vote and while not affecting the project approval it demonstrates that the developer has no plans to deliver the few purported public benefits associated with the project. Supervisors Farr was critical of the unusually long 20 year “lock-in” that the agreement provided the developer. Additionally, the board majority directed Staff to further investigate the status of the project description and to then send a single revised Notice of Final Action to the Coastal Commission for review.

          On October 27, 2009 the Board of Supervisors agenda listed the “second reading” of their October 20, 2009 action, making that action final. At the 10/27 meeting however, Staff announced that the California Department of Conservation had delivered to the County their approval of the substitution of an agricultural easement across 2500 acres of Dos Pueblos Ranch for the Williamson Act contract on the ranch. Staff claimed that this action precluded the enactment of the Supervisors rescission of the development agreement for the inland portion of the project.  As a consequence, the Board only acted to rescind the development agreement for the coastal portion, taking the first reading of an amended ordinance rescinding only that agreement.  The Board took the second reading on November 3, 2009, finalizing their recession of the coastal development agreement. Although the Board’s approval for development on 16 lots on the coastal portion stands notwithstanding the development agreement recession, there is no development pending and significant issues remain unresolved at the California Coastal Commission regarding the coastal development.

On December 10, 2009, a Notice of Default filed by First Bank, revealed that the Naples property is in foreclosure because Osgood failed to make over 3 million dollars of interest payments in May of 2009 on the 63 million dollar First Bank mortgage.  The First Bank mortgage was secured by the majority of the Naples property, or approximately 1,035 acres.

 

2010             On April 12, 2010 a Notice of Unified Trustee’s Sale announced that the 1,035 acre property would be sold at auction on May 13, 2010.  The total amount owed by Osgood on the First Bank mortgage exceeded 78 million dollars.   Osgood maintained publicly that he was working out an alternative arrangement and that the foreclosure sale would not happen.

          The foreclosure sale scheduled for May 13, 2010 began as scheduled at 1:00 PM on the Santa Barbara Courthouse steps.  Matt Osgood was in attendance, along with members and supporters of the Naples Coalition, EDC and Surfrider.  Bidding opened at 50 million dollars, and when no one bid on the property, ownership passed to First Bank at 1:04 PM.  In media interviews, Osgood stated that he reached an agreement with First Bank and may gain back ownership of the property at some unspecified future time.  

          Osgood filed a lawsuit for breach of contract and related claims on July 27, 2010, naming First Bank, SBRHC, Inc. (a First Bank affiliated holding company and current owner of the property), and Alan G. Rye, Executive Vice President of First Bank, as defendants.  The lawsuit alleges that the defendants breached an agreement with Osgood that gave him a right of first refusal and option to buy back the property until November 12, 2010, by actively seeking out potential purchasers without informing them of Osgood’s option and right of first refusal.  Osgood seeks, among other things, damages and an injunction prohibiting First Bank and SBRHC from marketing or selling the property without informing the potential buyer of Osgood’s rights.  This lawsuit is currently pending before Judge Anderle, with the first case management conference scheduled for November 30, 2010. 

On August 3, 2010 the Naples Coalition, EDC and Surfrider filed a second amended petition adding SBRHC as a “real party in interest” to the lawsuit challenging the County’s approval of the Santa Barbara Ranch Project.  SBRHC, Inc. was served with the lawsuit on August 16th.  The lawsuit is expected to enter the briefing stage before years end.