Los Angeles Weighs in on Aera Development

Jan 01 2005

Aera Energy is a subsidiary of Shell-Mobil Oil Company and is pursuing a master-planned housing and commercial development of approximately 3,600 homes, commercial center, golf course, and parks.
The land is approximately 70% within Los Angeles County and 30% within Orange County. The site, often referred to as the “missing middle," is important as it is in the heart of land already preserved for open space.  The Aera site has an extremely important overlay in Los Angeles County that creates a thorough review process for any development to occur. Much of the Aera property has an overlay that is called a Significant Ecological Area, resulting in the acronym SEA. That means the area proposed for development has biological and habitat features that are uncommon and would be nearly impossible to replace. For example, the area has rare oak and walnut woodlands, coastal sage scrub, and natural habitat for large mammals such as deer, foxes, bobcats, coyotes as well as smaller creatures. The SEA concept is so important to Los Angeles County that the County created an oversight entity called the Technical Advisory Committee. This committee is referred to as the SEATAC (sorry, but government oversight thrives on acronyms). This group looked at the Aera proposed development plan, together with all of the technical reports on biology and habitat for the area, and decided it did not meet the requirements set forth for this SEA. This conclusion will be provided to the Los Angeles County Planning Commission. Aera now must choose to proceed to the Los Angeles County Planning Commission with a County staff report that states the conclusion of the SEATAC work, which essentially says the project does not conform to the County General Plan, or to revise the project to meet the requirements of the SEA.

It is important to note Aera purports that 50% of the land area within the project is set aside as open space. Much of the open space proposed is in manufactured landscaped slopes, street medians, parks etc., or open space in areas which do not allow this sensitive area to exist in accordance with SEA. This was a major flaw in the development plan and SEATAC concluded that it did not pass the threshold test. The Los Angeles County approach to designating these Significant Environmental Areas was brought about for protection purposes, and the process of evaluation is key to any analysis of the development opportunities and constraints for this site. The next step for Aera is to consider its options given the negative report issued by SEATAC.

Preservation and Land Values
There are options for land preservation that also "preserve" property values. Oil uses have been on site for many years and continue today. As a private property owner, oil companies look at their land holdings as real estate assets. As land values rise, as they have recently, property owners evaluate their land assets for development. Although the housing market has certainly cooled during the past six months, a plan had been drafted by Aera to develop the site, principally for housing while retaining many of the more active oil wells. Much like the housing market, the oil market has also jumped in value. Oil prices are now over $75 a barrel, which obviously places new importance on oil extraction in this area.

These competing interests are sometimes resolved through two approaches. One approach is tp present a development plan that is sensitive to the ecosystem and consistent with local zoning/general plan principles and geotechnical issues, while allowing operating oil wells to exist in place. A second option is to leave all oil operations in place while selling a “preservation easement” or other sale of the land that yields real estate value for the oil company yet preserves the land for open space. These two approaches have worked well depending on the interests of the property owner.