Real Estate: New Life for a Ghost Town

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Surrounded by prospering suburban developments, the partly completed subdivision 18 miles from downtown Los Angeles had sunk into dreary ruin. Some 275 families lived in Bellehurst, but among their luxurious (up to $55,000) ranch homes stood the vandal-and weather-ravaged remains of another 450 abandoned houses, many only half-built. During eight years of neglect, streets caved in; tumbleweed rolled across once well-kept lawns and against the legs of curious sightseers. Golfers at Bellehurst's Los Coyotes Country Club were forced to climb over rotting piles of lumber and weed-cracked concrete slabs when they tracked errant drives into the rough.

Now, the once-moribund development is losing its scars under the bold doctoring of Los Angeles-based R. A. Watt Co. Inc., a Boise Cascade Corp. subsidiary that ranks among the nation's five largest residential builders. Since taking over the place a year ago, Watt has renamed it New Bellehurst, refurbished many of its wrecked houses, redesigned others, sold 116 homes for $4,500,000. Having risked $21 million to buy the property out of receivership, Watt expects to wind up in a few years with a tidy profit and a stylish $48 million community of 2,000 homes, 400 apartments, a shopping center and industrial park.

Inflated Appraisals. The original Bellehurst fell victim to sales trouble, financial high jinks and a complex legal battle. Southern California Developer Cliff S. Jones paid $4,530,000 in 1956 for a hog farm on the border of Los Angeles and Orange Counties and laid grand plans for wrapping his 906-acre community around a 27-hole golf course. Los Coyotes Country Club was quickly completed, but a five-month plasterers' strike left Jones with house after unfinished house he could not sell. After the strike was settled, Jones was unable to resume construction. The Federal Home Loan Bank Board cut him off from further funds by seizing control of his money supply, the Long Beach Federal Savings & Loan Association. The S & L was accused of "unsafe and unsound" practices—notably a $17 million loan on Bellehurst. Litigation dragged on endlessly amid accusations of inflated appraisals, dubious sales contracts and an unrecorded loan.

Again and again, federal receivers tried to interest other builders in salvaging the property. Among the biggest home-building companies, such purchases of partly developed tracts have become increasingly enticing because building can start at once, and there is no need to tie up capital in land inventories. But one after another, builders looked at the wreckage of Bellehurst and declined—even after Long Beach Federal S & L settled its fight with the bank board. Finally, Watt hired a computer, made 31 separate runs over the possibilities of profit and cash return, and decided to take the gamble. Since then, the company has also announced plans to take over the unbuilt portion of a grandiose Middlesex County, N.J., project that went into receivership five years ago.