Tejon Ranch takes long view on master-planned communities

Tejon Ranch Company, one of California’s largest private landowners, is determined to develop three long-gestating master-planned communities straddling the border of Kern and Los Angeles counties, but it might take 25 years, the company noted in its quarterly filing with the Securities & Exchange Commission.

The publicly traded company made the statement with the March 8 release of its 2022 annual and fourth-quarter report. Adjusted EBITA was $7.2 million for the quarter that ended Dec. 31, a decrease compared to $9.2 million in EBITA announced for the fourth quarter in 2021.

Tejon Ranch vowed to complete construction on mixed-use master planned communities, which are named Mountain Village at Tejon Ranch, Centennial at Tejon Ranch and Grapevine at Tejon Ranch. Construction of these city-sized developments, which together would entail more than 35,000 housing units, was halted in April 2021, when a judge rejected Los Angeles County’s approval of the project’s environmental impact report. 

Superior Court Judge Michael Beckloff wanted the EIR to reassess wildfire risk as well as greenhouse gasses caused by vehicles. This comes after an agreement brokered with environmental groups in 2008 to preserve 240,000 acres of undeveloped land which is the home to the endangered California condor.

“We understand that it can take up to 25 years, or longer, to complete from commencement of construction,” Tejon Ranch said in a statement. “The entitlement process for development of property in California is complex, lengthy (spanning multiple years) and costly, involving numerous federal, state, and county regulatory approvals. We are unable to determine anticipated completion dates for our real estate development projects with certainty because the time for completion is heavily dependent on the regulatory approvals necessary.”

The company also noted economic conditions as another factor in its decision to take the long view. 

“As a developer, one would be at an economic disadvantage to bring product to market with no willing or able buyers. This ebb and flow of the economy also plays into the timing of our completion date,” the statement said. “Costs will also fluctuate over the life of these projects because of the cost of labor and raw materials and the timing of approvals.”

All of the company’s residential projects are currently in litigation or permitting periods.

The company would not forecast when it would complete its developments.  It also noted that it had made plans to reduce carbon emissions, which include encouraging use of electric vehicles and installing 30,000 EV chargers in the residential and commercial side of its projects. The company also forecast that at least half of the energy used at the Centennial and Grapevine projects would come from renewable sources. 

Meanwhile, Tejon Ranch will continue to develop industrial and commercial projects, which will compete with Los Angeles’ massive port markets and with the Inland Empire. In 2014, Outlets at Tejon retail center opened on Tejon Ranch property. The 320,000-square-foot outlet center is the address for 70 shops for retailers including Adidas, Gap and Forever 21.