Newhall Land and Farming Company
Encyclopedia
The Newhall Land and Farming Company is a land management
company based in Valencia, California
, United States
. The company is responsible for the master community planning of Valencia, as well as the management of farm land elsewhere in the state. In 2004, the company became a subsidiary of Lennar Corporation
, the United States' second largest home builder.
on July 1, 1883, by the five sons of Henry Newhall
(William, Edwin, Henry, Walter, and George), a businessman who had purchased a number of former Mexican land grants. Newhall had died the previous year and had instructed his sons not to sell the land. The company initially had 143,000 acre
s (579 km²) of land, ranging from Monterey
to Los Angeles
counties. Unfortunately, the income generated by ranching was not enough to support the families of all five sons in the comfortable lifestyle they had grown up with, and they began to sell off portions of their vast holdings in order to generate income.
Successive land sales allowed the Newhalls to maintain their lifestyle, but William (who was known by his middle name Mayo), a graduate of Yale University
, understood that they needed a better way to generate income. After a few more land sales, Mayo took the income and reinvested it into the land by developing agriculture
. The land around their headquarters, the former Rancho San Francisco
, was cleared for citrus
trees, and lima bean
s were planted in the Sacramento Valley
. The income from these crops allowed the company to grow in the 1920s. Additionally, one more land sale, a 38,000 acre (150 km²) parcel in 1922 to William Randolph Hearst
for $1 million (to be paid in installments over ten years) helped fill the company's coffers.
The collapse of the St. Francis Dam
in 1928 was devastating to the company. Its livestock, orchards, and buildings were all destroyed. Although the city of Los Angeles agreed to pay reparations for its role in the dam's construction, those payments would not be available for some time. Compounding the problem was the onset of the Great Depression
. George Newhall, who was the last surviving of Mayo's brothers and treasurer
of the company, died that year, and Mayo discovered that the company was bankrupt and on the brink of insolvency
.
At this point, Mayo was in his late seventies and growing increasingly frail. He turned the operation over to his son-in-law, Atholl McBean, a San Francisco
businessman who had held onto his entire savings during the Wall Street Crash
. With McBean's money, the company was able to hold on long enough for the reparations payments to come through. That, combined with the last of the Hearst payments, was enough for the company to climb out of debt. By his third year in charge, Newhall Land and Farming reported a profit of $25,000 and by 1935, they resumed dividend
payments, the first since 1930.
Henry Newhall had purchased Rancho San Francisco from some speculators
who had purchased it from Ygnacio del Valle
in the hopes of finding crude oil. Alex Mentry had discovered oil in 1876 just to the south of the rancho (which became the Pico Canyon Oilfield
), but the group of investors who sold to Newhall had had no such luck. McBean was convinced no oil was to be found on the land, which by now he had renamed Newhall Ranch, but he leased it to Barnscall Oil Company anyway. To his great astonishment, Barnscall struck oil in 1937 and there was so much oil that over the next few years, 44 oil well
s were producing millions of dollars of "black gold" for the company, which ended all of their cash flow
problems.
By the 1950s, urbanization
began to encroach on Newhall Ranch. The County of Los Angeles, hoping to encourage more residential development, changed its rules for property tax
es, taxing land at what its "best use" would be, regardless of its actual use. Newhall Ranch was assessed to be a residential zone, which substantially increased the tax burden of Newhall Land and Farming (the Williamson Act
would be enacted in 1965 to counteract this problem, but it came too late for Newhall Ranch). McBean understood that agriculture alone was not going to pay the taxes, and that if the land was to be designated for residential homes, the company might as well head in that direction.
Real estate developers made offers to buy the land, but family members did not want to sell pieces of the family homestead. Instead, McBean hired city planners and the company opted to create a brand new city, which would be called Valencia after the oranges
they had grown for so many years. Construction began in the early 1960s, the Master Plan adopted in 1965, and the first new homeowners moved in in 1967. McBean retired soon after, turning over the company to non-family members.
During the next two decades, the company continued to flourish. Valencia experienced steady growth and garnered praise as a planned city. During 1971 the city saw the opening of Magic Mountain
amusement park, which was sold to Six Flags
in 1979. In the 1980s, the company expanded its oil interests to seven states and Canada
, and found another revenue source in leasing its land for film and television show production. In 1994, the company submitted plans to the county for a new master-planned community to be named *Newhall Ranch
.
In 2004 the company was purchased by Lennar Corporation
and LNR Corporation for approximately $1 billion, leaving Newhall Land and Farming owned 50% by Lennar and 50% by LNR (a spinoff real estate investment trust
that manages commercial and industrial properties) through a new holding company called LandSource Communities Development LLC. In early 2007, by a further transaction, Lennar and LNR each sold 34% interests in LandSource Communities Development LLC to a new set of investors, including the California Public Employees Retirement System. In June 2008, LandSource Communities Development LLC, along with Newhall Land and Farming Company and other subsidiaries, filed for Chapter 11 bankruptcy protection with the US Bankruptcy Court for the District of Delaware. In July 2009, LandSource Communities Development LLC and its subsidiaries emerged from bankruptcy under a new control structure with a new set of owners.
Land management
Land management is the process of managing the use and development of land resources. Land resources are used for a variety of purposes which may include organic agriculture, reforestation, water resource management and eco-tourism projects.-See also:*Sustainable land management*Acreage...
company based in Valencia, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. The company is responsible for the master community planning of Valencia, as well as the management of farm land elsewhere in the state. In 2004, the company became a subsidiary of Lennar Corporation
Lennar Corporation
Lennar Corporation is a Fortune 500 company based in Miami, Florida, United States, in the Fountainbleau area. It was founded in 1954.In 2008, Lennar was the United States' second largest homebuilder, constructing homes in 17 different states throughout the United States, including Arizona,...
, the United States' second largest home builder.
Company history
The company was incorporatedIncorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...
on July 1, 1883, by the five sons of Henry Newhall
Henry Newhall
Henry Mayo Newhall was an American businessman, whose extensive land holdings became the current communities of Newhall, Saugus, Valencia, and the city of Santa Clarita, in Southern California.-Life:...
(William, Edwin, Henry, Walter, and George), a businessman who had purchased a number of former Mexican land grants. Newhall had died the previous year and had instructed his sons not to sell the land. The company initially had 143,000 acre
Acre
The acre is a unit of area in a number of different systems, including the imperial and U.S. customary systems. The most commonly used acres today are the international acre and, in the United States, the survey acre. The most common use of the acre is to measure tracts of land.The acre is related...
s (579 km²) of land, ranging from Monterey
Monterey County, California
Monterey County is a county located on the Pacific coast of the U.S. state of California, its northwestern section forming the southern half of Monterey Bay. The northern half of the bay is in Santa Cruz County. As of 2010, the population was 415,057. The county seat and largest city is Salinas...
to Los Angeles
Los Angeles County, California
Los Angeles County is a county in the U.S. state of California. As of 2010 U.S. Census, the county had a population of 9,818,605, making it the most populous county in the United States. Los Angeles County alone is more populous than 42 individual U.S. states...
counties. Unfortunately, the income generated by ranching was not enough to support the families of all five sons in the comfortable lifestyle they had grown up with, and they began to sell off portions of their vast holdings in order to generate income.
Successive land sales allowed the Newhalls to maintain their lifestyle, but William (who was known by his middle name Mayo), a graduate of Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
, understood that they needed a better way to generate income. After a few more land sales, Mayo took the income and reinvested it into the land by developing agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
. The land around their headquarters, the former Rancho San Francisco
Rancho San Francisco
Rancho San Francisco was a land grant in present day northwestern Los Angeles County and eastern Ventura County, California. It was of by Governor Juan B. Alvarado to Antonio del Valle, a Spanish army officer, in recognition for his service to the state of Alta California...
, was cleared for citrus
Citrus
Citrus is a common term and genus of flowering plants in the rue family, Rutaceae. Citrus is believed to have originated in the part of Southeast Asia bordered by Northeastern India, Myanmar and the Yunnan province of China...
trees, and lima bean
Lima bean
Phaseolus lunatus is a legume. It is grown for its seed, which is eaten as a vegetable. It is commonly known as the lima bean or butter bean.-Origin and uses:...
s were planted in the Sacramento Valley
Sacramento Valley
The Sacramento Valley is the portion of the California Central Valley that lies to the north of the San Joaquin-Sacramento Delta in the U.S. state of California. It encompasses all or parts of ten counties.-Geography:...
. The income from these crops allowed the company to grow in the 1920s. Additionally, one more land sale, a 38,000 acre (150 km²) parcel in 1922 to William Randolph Hearst
William Randolph Hearst
William Randolph Hearst was an American business magnate and leading newspaper publisher. Hearst entered the publishing business in 1887, after taking control of The San Francisco Examiner from his father...
for $1 million (to be paid in installments over ten years) helped fill the company's coffers.
The collapse of the St. Francis Dam
St. Francis Dam
The St. Francis Dam was a concrete gravity-arch dam, designed to create a reservoir as a storage point of the Los Angeles Aqueduct. It was located 40 miles northwest of Los Angeles, California, near the present city of Santa Clarita....
in 1928 was devastating to the company. Its livestock, orchards, and buildings were all destroyed. Although the city of Los Angeles agreed to pay reparations for its role in the dam's construction, those payments would not be available for some time. Compounding the problem was the onset of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
. George Newhall, who was the last surviving of Mayo's brothers and treasurer
Treasurer
A treasurer is the person responsible for running the treasury of an organization. The adjective for a treasurer is normally "tresorial". The adjective "treasurial" normally means pertaining to a treasury, rather than the treasurer.-Government:...
of the company, died that year, and Mayo discovered that the company was bankrupt and on the brink of insolvency
Insolvency
Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...
.
At this point, Mayo was in his late seventies and growing increasingly frail. He turned the operation over to his son-in-law, Atholl McBean, a San Francisco
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
businessman who had held onto his entire savings during the Wall Street Crash
Wall Street Crash of 1929
The Wall Street Crash of 1929 , also known as the Great Crash, and the Stock Market Crash of 1929, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout...
. With McBean's money, the company was able to hold on long enough for the reparations payments to come through. That, combined with the last of the Hearst payments, was enough for the company to climb out of debt. By his third year in charge, Newhall Land and Farming reported a profit of $25,000 and by 1935, they resumed dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
payments, the first since 1930.
Henry Newhall had purchased Rancho San Francisco from some speculators
Speculation
In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...
who had purchased it from Ygnacio del Valle
Ygnacio del Valle
Ygnacio Ramón de Jesus del Valle was a rancher and landowner in the eastern Santa Clara River Valley, California, United States, as well as an alcalde of Los Angeles. His estate, Rancho Camulos, is registered as a National Historic Landmark.- Early life :Del Valle was born in Jalisco, Mexico...
in the hopes of finding crude oil. Alex Mentry had discovered oil in 1876 just to the south of the rancho (which became the Pico Canyon Oilfield
Pico Canyon Oilfield
Well No. 4, Pico Canyon Oilfield, located about seven miles west of Newhall, California in the Santa Susana Mountains, was the first commercially successful oil well in the Western United States, and is considered the birthplace of California's oil industry...
), but the group of investors who sold to Newhall had had no such luck. McBean was convinced no oil was to be found on the land, which by now he had renamed Newhall Ranch, but he leased it to Barnscall Oil Company anyway. To his great astonishment, Barnscall struck oil in 1937 and there was so much oil that over the next few years, 44 oil well
Oil well
An oil well is a general term for any boring through the earth's surface that is designed to find and acquire petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well that is designed to produce mainly or only gas may be termed a gas well.-History:The earliest...
s were producing millions of dollars of "black gold" for the company, which ended all of their cash flow
Cash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...
problems.
By the 1950s, urbanization
Urbanization
Urbanization, urbanisation or urban drift is the physical growth of urban areas as a result of global change. The United Nations projected that half of the world's population would live in urban areas at the end of 2008....
began to encroach on Newhall Ranch. The County of Los Angeles, hoping to encourage more residential development, changed its rules for property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
es, taxing land at what its "best use" would be, regardless of its actual use. Newhall Ranch was assessed to be a residential zone, which substantially increased the tax burden of Newhall Land and Farming (the Williamson Act
Williamson Act
The Williamson Act of the US state of California is a California law that provides relief of property tax to owners of farmland and open-space land in exchange for a ten-year agreement that the land will not be developed or otherwise converted to another use...
would be enacted in 1965 to counteract this problem, but it came too late for Newhall Ranch). McBean understood that agriculture alone was not going to pay the taxes, and that if the land was to be designated for residential homes, the company might as well head in that direction.
Real estate developers made offers to buy the land, but family members did not want to sell pieces of the family homestead. Instead, McBean hired city planners and the company opted to create a brand new city, which would be called Valencia after the oranges
Valencia orange
The Valencia Orange is a sweet orange first hybridized by California pioneer agronomist and land developer William Wolfskill, on his farm in Santa Ana in southern California in the United States. -History:...
they had grown for so many years. Construction began in the early 1960s, the Master Plan adopted in 1965, and the first new homeowners moved in in 1967. McBean retired soon after, turning over the company to non-family members.
During the next two decades, the company continued to flourish. Valencia experienced steady growth and garnered praise as a planned city. During 1971 the city saw the opening of Magic Mountain
Six Flags Magic Mountain
Six Flags Magic Mountain is a theme park located in Valencia, California north of Los Angeles. It opened on Memorial Day weekend on May 30, 1971 as Magic Mountain, by the Newhall Land and Farming Company. In 1979, Six Flags purchased the park and added the name Six Flags to the park's title. In...
amusement park, which was sold to Six Flags
Six Flags
Six Flags Entertainment Corp. is the world's largest amusement park corporation based on quantity of properties and the fifth most popular in terms of attendance. The company maintains 14 properties located throughout North America, including theme parks, thrill parks, water parks and family...
in 1979. In the 1980s, the company expanded its oil interests to seven states and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, and found another revenue source in leasing its land for film and television show production. In 1994, the company submitted plans to the county for a new master-planned community to be named *Newhall Ranch
Newhall Ranch in Valencia, California
Newhall Ranch is a proposed large scale master-planned community, by Lennar Corporation, a national home builder. The land proposed to be developed is located west of Santa Clarita, California, adjacent to the Six Flags Magic Mountain theme park on currently rugged open space land along the Santa...
.
In 2004 the company was purchased by Lennar Corporation
Lennar Corporation
Lennar Corporation is a Fortune 500 company based in Miami, Florida, United States, in the Fountainbleau area. It was founded in 1954.In 2008, Lennar was the United States' second largest homebuilder, constructing homes in 17 different states throughout the United States, including Arizona,...
and LNR Corporation for approximately $1 billion, leaving Newhall Land and Farming owned 50% by Lennar and 50% by LNR (a spinoff real estate investment trust
Real estate investment trust
A real estate investment trust or REIT is a tax designation for a corporate entity investing in real estate. The purpose of this designation is to reduce or eliminate corporate tax. In return, REITs are required to distribute 90% of their taxable income into the hands of investors...
that manages commercial and industrial properties) through a new holding company called LandSource Communities Development LLC. In early 2007, by a further transaction, Lennar and LNR each sold 34% interests in LandSource Communities Development LLC to a new set of investors, including the California Public Employees Retirement System. In June 2008, LandSource Communities Development LLC, along with Newhall Land and Farming Company and other subsidiaries, filed for Chapter 11 bankruptcy protection with the US Bankruptcy Court for the District of Delaware. In July 2009, LandSource Communities Development LLC and its subsidiaries emerged from bankruptcy under a new control structure with a new set of owners.