Real Estate: Thistles in the New Towns

By the time it turned five years old this spring, Sunset/Whitney Ranch was supposed to have grown into a thriving city-in-the-country, with a blend of homes, stores and factories and a population well on its way toward an ultimate 100,000. So far, the place has attracted only two plants and 1,200 inhabitants; lack of sales halted home building two years ago at the 12,000-acre site 25 miles northeast of Sac ramento, Calif. Now "For Sale" signs dot Sunset's vacant lots—also some of its occupied homes spotted here and there amid the expanse of thistles.

Despite a $25 million investment, Sunset has flopped—leaving Sunasco, the Los Angeles-based oil-finance-realty company that started the project, with a continuing debt of $1,500,000 a year. "We can't do anything with it," admits Sunasco President Bruce Rozet. "We can't even find a buyer to take it off our hands."

Similar woes afflict all too many of the nearly 300 large-scale planned communities and "new towns" that have sprung up across the U.S. Their troubles are a source of particular concern because architects and developers alike feel that the best of the projects could teach the whole country how to surround homes with a more pleasant environment. Moreover, planners consider new towns a promising antidote to the suburban sprawl. Such haphazard building, they say, could wreck the countryside as the U.S. doubles its stock of housing over the next 30 years.

Suspended Sales. Even though John Hancock Mutual Life Insurance Co. has just increased its underwriting from $7,000,000 to $14.5 million, construction has slowed to a near standstill at six-year-old El Dorado Hills, a 10,000-acre new town 25 miles east of Sacramento. Ross Cortese, one of the nation's foremost developers of self-contained retirement villages, was forced to suspend sales and refund some down payments recently at four of his "Leisure World" communities in Maryland, New Jersey and California. To reduce his heavy land-carrying costs, he is also trying to sell the developments. Despite brisk business (1,000 houses and 600 rental units in five years), Joppatowne, Md., a 1,400-acre community near Baltimore, ran out of cash this spring; and Developer Leon Panitz filed for a bankruptcy reorganization.

This month, misfortune of another kind hit Robert E. Simon Jr., the mild-mannered millionaire developer of Reston, Va., best-known and by far the most architecturally visionary of the new towns. In a corporate reshuffle, Gulf Oil Corp. took control of the financially ailing project, kicked Simon upstairs from president and chief executive officer to a consulting role as chairman of a newly formed subsidiary, Gulf-Reston Inc. As the new boss, the oil company named Robert H. Ryan, a Pittsburgh realty consultant and onetime vice president of Boston-based Cabot, Cabot & Forbes, itself the developer of the floundering new town of Laguna Niguel between Los Angeles and San Diego.