[This is our second installment of Rogers’ 7th Chapter, which is entitled “Heavy Hitters” – a catalogue of the powerful players who influenced Orange County politics and policies from 1960 to 2000. Here’s the beginning of “Heavy Hitters;” this portion looks at the Mission Viejo Company. And of course “Heavy Hitters” is the 7th chapter of Tom Rogers’ masterpiece on OC political corruption, Agents’ Orange.]

The Mission Viejo Company

The Mission Viejo Ranch dates back many years and was owned by the O’Neill family. It was historically a cattle and agricultural enterprise in southern Orange County, with acreage on both sides of what is now the Ortega Highway.

The first division of the original ranch occurred in 1941, when the US government took 121,999 acres to build Camp Pendleton, a Marine Corps training facility. The price was $35 an acre.

In 1963 a 6000-acre portion of the ranch was developed by Macco Corporation, a firm owned by John McCleod. The development, called Coto de Caza, featured large parcels and equestrian facilities. McCleod offered the O’Neill family $3000 per acre for the purchase of an additional 11,000 acres. This offer was to be superseded by a bid for the same acreage of $7000 per acre, and included a minority-partner interest in the development of the land for the O’Neills.

The successful high bidder was a partnership, with Donald Bren of Newport Construction Company having a 40% interest, Geo. Fuller Inc. of Texas having another 40%, and the O’Neill family the remaining 20%.

The purpose of this acquisition was to develop a planned community in the 11,000 acres consisting of homes, shopping centers, recreational facilities, and other amenities.

Bren’s Newport Construction Company was a relatively modest enterprise at the time with offices located in a small building in Newport Beach. In the same building was Karam’s, an exclusive restaurant, which numbered amongst its impressive customer list Senator Barry Goldwater and his wife Peggy, Frank Sinatra and a wealthy clientele from adjacent Lido Island.

The unforgivable sin at Karam’s was for a customer to be caught checking their tab. Jim Karam took great offense at this perceived assault, and if he noticed a customer trying to add up their bill, he or she would be thrown out with instructions to never return. Many of Bren’s decisions in those early days were said to have been made at Karam’s, a practice that must be considered a testament to the developer’s good taste and manners.

.It’s interesting to note that contained in the original offer to purchase the O’Neill property, Don Bren put up a check for $100,000 to be “held for safekeeping” and deposited only after the transaction was completed.

Bren’s company reported sales of $480,000 in 1958, and in the first half of 1963 reported sales of nearly $11 million, which gives some idea of the explosive growth and profit potential for builders, even in the early days of the South County’s building boom.

Don Bren got it right from the very beginning, when in an early document he accepts the fact that there will be “many legal and political facets of initial development.” As his enterprises grew, the necessity to obtain favorable treatment from every level of government became an integral part of corporate activity.

The concept of forming private utilities to help fuel the growth was rejected reluctantly on the basis that while forming public districts did not offer any “profit potential,” there was simply not sufficient capital to finance private utility delivery systems. It was an economic fact of life that the utilities would add even more to their profitable building enterprise. That unremarkable decision would evolve into a policy, which would have immense influence on the politics of Orante County as well as on the state and nation.

As for building homes, they discerned that “it may be necessary to seek new ordinances,” obviously referring to cooperation from the Board of Supervisors, and they engaged the prestigious law firm of Rutan and Tucker to assist them with their government relations.

The Mission Viejo Company continued to build the planned communities with Executive Vice President Phil Reilly taking on duties that included public relations. Reilly was a pleasant person and willingly participated in local community affairs, including political liaison.

In 1970 the PHILIP MORRIS COMPANY acquired the Mission Viejo Company, completing the takeover in 1972. Bren was out, but Reilly stayed on as CEO and he did reflect the corporate philosophy of the tobacco giant.

One of Reilly’s most revealing statements of corporate policy was contained in a speech he made before the Home Builders Association in 1983: “We don’t have a philanthropic bone in our body.”

The chairman of the board of Philip Morris, Joseph F. Cullman III, put it almost as succinctly: “There is one primary reason why Mission Viejo does what it does – that reason – that motive – is to make a profit. That was the motive 20 years ago, and that’s the motive today.”

Little wonder then that in a world-class sales brochure designed to sell homes, a double spread showed the Philip Morris product line on the left-hand page, while the facing page read: “The keystone of Philip Morris is still tobacco with Marboro cigarettes the fastest-growing major brand on a world-wide scale; other brands are Benson and Hedges 1000, Virgina Slims, and Parliament Multi-Filters.”

In other words, the building of houses was just another product like to be promoted along with Miller beer, Personna razor blades and Clark chewing gum.

Philip Morris did acknowledge certain social and environmental factors, but only as part of a saleable package. It was for purely practical economic considerations that its various projects had some redeeming natural features, but as in the case of Lake Mission Viejo, the financial rewards exceeded the cost of providing a man-made reservoir.

.The Mission Viejo board of directors included six executives from Philip Morris. It was contended that the high-volume sales program that had made Philip Morris a household name could do wonders for Orange County, building and marketing houses like so many packs of cigarettes. In 1972 the Mission Viejo Co. purchased an additional 6600 acres from the MOULTONS who had ranched on their property to the west of and across the I-5 freeway from Mission Viejo. This property now includes Aliso Viejo and Nellie Gail Ranch subdivisions.

The Moulton property had been limited as to areas in which homes could be built by a sound study that showed some adverse noise conditions emanating from the El Toro air base. The noise problem on the Moulton property was of concern to the owners, since at best, it meant delays and more studies in order to build the parcel out to its economic capacity.

Of course by this time, the Mission Viejo Company had come to know the county planning requirements quite thoroughly, and some even accused certain members on the Board of Supervisors of acting as Company employees instead of representatives of the people. It was no surprise that after the tobacco company purchased the Moulton Ranch, it got pretty much whatever it requested in terms of density allowances and building permits, noise abatement requirements notwithstanding. Just as expected, the company was able to remove any restrictions on homebuilding within the newly acquired parcel, and proceeded with plans to build an upscale community with equestrian trails and other amenities.

In 1988, Mission Viejo incorporated as a city with over 60,000 residents. Achieving cityhood was in the Philip Morris Company’s best interest, since it had either built out, or had obtained all entitlements possible. It certainly appeared that the company had wrung every last dollar out of the enterprise, and it was time to move on. It still had some contractual obligations to maintain and service some facilities, but autonomy for one of its discontinued product lines was tantamount to having a dependent child reaching the legal age of 21. The company had realized about as much return on its investment as possible and was ready to bail out.

.It’s interesting to note that one of the company’s projects turned out to be a financial flop. The Mission Viejo Mall was planned to be one of the pre-eminent shopping centers in South OC, but it attracted less business than the forecasts had indicated. Despite the fact that the Mission Viejo Company had bolstered the surrounding areas with high-density developments, the mall did not attract a large customer base, and had been plagued with tenants moving out, and a high percentage of vacant stores.

This was not to be the only time that a less-than-profitable investment would adversely affect the neighboring communities. It would happen again with the Fashion Island Mall in Newport Beach. However, the Philip Morris Company avoided any large-scale financial losses associated with the Mission Viejo Mall as it had sold it early on to the DeBartolos, who owned malls in other states but were best known for their ownership of the NFL franchise the San Francisco 49ers. (The Mall underwent a massive makeover in 1998-9.)

In 1997 the Mission Viejo Company sold out entirely to J. F. Shea Inc. Home Builders, a company with roots going back many years, and moved on to greener pastures in Colorado to develop a project outside of Denver called Highlands Ranch. This property was included in the sale to Shea Homes.

Next: Birth of the Irvine Company!

*****************

The Series so far:

1. Introduction, Readers’ Guide, Bio of Tom.

2. OC Becomes a Conservative Powerhouse, 1920-80

3. Partisan Political Volunteers in the OC, 1960-2000

4. NON-Partisan Volunteers in the OC, 1960-2000

(I skipped doing chapters 5-6 for now – Vern)

7. The Heavy Hitters!

8. Heavy Hitters b) The Mission Viejo Company.

9. Heavy Hitters c) The Irvine Company.

10. Heavy Hitters d) George Argyros & the Minor-League.

MUCH MORE TO COME!

. . . .

. . . .

. . . .

. . . .

. . . .