Billionaires’ secretive plan to build a new city is backfiring

Technology

The project is backed by Mike Moritz and other tech billionaires, but a local mayor has been lining up opposition among locals.

Loren Elliott
Fairfield Mayor Catherine Moy is lining up support against an attempt to build a utopian city on local farmland. Bloomberg photo by Loren Elliott

A secret plan backed by tech billionaires to create a new city northeast of San Francisco is running into resistance — an indication of the long road ahead in a state where it’s hard to build almost anything.

Catherine Moy, the mayor of Fairfield, has been lining up opposition to the group of Silicon Valley moguls after learning last week that they were behind the purchase of at least 52,000 acres of farmland in Solano County, a buying spree done extremely discreetly over several years.

The purchases — with backing from former Sequoia Capital Chairman Mike Moritz, LinkedIn co-founder Reid Hoffman and venture capitalist Marc Andreessen, among others — were part of a plan to build a city that’s self-sufficient and sustainable. They aim to address the Bay Area’s dire housing shortage, while bringing jobs and economic growth to the lowest-income county in the region.

But California laws make it challenging for the developers to move forward, especially without strong support from the local community.

“This is no way to go about any kind of development,” said Moy, whose city is the administrative seat of Solano County. “We’re going to do everything we can to stop this.”

Over the past five years, Delaware-registered Flannery Associates, spearheaded by Jan Sramek, a former Goldman Sachs trader, mysteriously snapped up $800 million worth of land in an unincorporated part of the county, becoming the area’s biggest landowner. The investors often paid well above market rates – up to five times more – and kept their plans hidden from local officials.

It wasn’t until a week ago that the community became aware that the group of prominent Silicon Valley investors were involved, following coverage by the New York Times and other media outlets.

Mike Thompson, a Democratic congressman who represents a part of Solano County, said on social media that he met with the founder of Flannery on Wednesday evening, without identifying the person.

“The secrecy under which they operated caused consternation and concern from residents, local elected officials and federal agencies,” he said. “Honesty is the best policy and they need to begin to work with our community and local leaders if they want to advance their ideas.”

Rural land in Solano County, California, is being bought up by Silicon Valley tech interests. – AP

On Thursday, California Forever, the parent company of Flannery, unveiled a splashy website featuring the first renderings of the planned development.

It showcased a walkable community with a focus on energy, transportation and water infrastructure, as well as wildfire protection. Some of the images depicted a city reminiscent of Italy’s Tuscan countryside, albeit with wind turbines in the background.

The group said that it had operated in “stealth mode” for so long to avoid “reckless” short-term land speculation while it acquired the properties. They are now starting to engage with public officials and plan to establish a community advisory board, according to the website.

“To date, our company has been quiet about our activities. This has, understandably, created interest, concern, and speculation. Now that we’re no longer limited by our confidentiality, we are eager to begin a conversation about the future of Solano County,” the website reads. “Like much of our state, Solano County faces many challenges – but also presents countless opportunities.”

Flannery faces an uphill battle on many fronts. Rezoning agricultural land for residential and commercial use will be no easy task and could take years. Local residents and leaders also say the project poses a national security risk because of its proximity to Travis Air Force Base and that it threatens the livelihoods of farmers.

The land mass borders three sides of the Travis facility, the busiest transit base in the U.S. and a major economic driver. It’s the single largest employer in Solano County, with more than 26,000 people living or working there, generating $1.6 billion in economic activity for the region.

John Carli, mayor of Vacaville, which is also in Solano County, said preserving the base is crucial to the region. Travis is known as the military’s “Gateway to the Pacific,” since its airplanes carry the largest share of U.S. cargo of any military air terminal. Encircling the base with new residences could put it in jeopardy of closing, Carli said.

“I’m not opposed to development, but I also am looking out for the best interest of our city and for the residents of our county,” he said.

California has long been a battleground for housing development and faces a chronic shortage of homes. While the state needs to consider bold solutions to addressing this crisis, Flannery’s proposal isn’t the right option, Carli said.

“The answer isn’t necessarily to just build a brand new city without consideration for all the impacts that you’re creating,” he said.

The California Forever website says the development, which will require voter approval, would create thousands of jobs, and feature homes, shops, restaurants and schools, located within walking distance. The project may also include a new large solar farm, major upgrades to an aqueduct that will deliver cleaner water to more than 400,000 people, and safeguards to respect the boundaries of the air base.

State Senator Melissa Hurtado, a Democrat representing the Central Valley, singled out Flannery’s land purchases as an example of the threats facing California’s nearly $50 billion agriculture industry and roughly 70,000 farms and ranches. “You can’t just buy up large amounts of land for some new city or energy production,” Hurtado said in an interview. “You have to think about the food system as a whole.”

“We’ve got a long way to go with this yet,” said Ken Rosen, chairman of the Berkeley Haas Fisher Center for Real Estate and Urban Economics. “The worst case is they own some farmland at a nice price.”

Many locals believe the lack of existing infrastructure will make it too difficult to build the development.

“It’s a terrible place to put a new city,” said Arvin Chaudhary, 58, a Solano County resident who has lived northeast of the air base for 12 years. “People are going to spend a lot of time and money, and it’s probably never going to happen.”

Whether or not the development succeeds, locals worry it will distract from the investment that’s needed to support current residents.

“Many residents have been waiting decades for infrastructure improvements,” said Nora Dizon, who lives in Fairfield. “It would be an insult to leapfrog the residents who have patiently waited for promised changes.”

Ron Kott, mayor of Solano County’s Rio Vista, has raised concerns about traffic congestion on Highway 12 – a two-way road that cuts through the region that’s so dangerous it’s dubbed “blood alley” by locals. “Whatever this project is, it will influence the future of our city,” he said.

Then there are the environmental concerns. The Greenbelt Alliance, a Bay Area nonprofit focused on climate-change resiliency, opposes the development because it’s in a high-risk location for wildfires, extreme heat and flooding. Laying a nonpermeable surface atop the virgin land further increases those risks, according to Executive Director Amanda Brown-Stevens.

“This doesn’t make sense from an open space or a climate perspective,” she said.

But some residents are eager for a new development and say the proposed project could boost economic activity to the county.

“I personally think this will be amazing for the community,” said Drew Townsend, a 44-year-old Fairfield resident. “I’m sure there will be a ton of ‘not in my backyard’ people, but I don’t think they understand the economic and social impact this could have for generations.”

Flannery has leveled its own accusations about unfair dealings. The firm filed a lawsuit in May alleging that landowners colluded to fix real estate prices; a charge they deny.

Representative John Garamendi, a Democrat, descends from a long line of California ranchers and represents the Fairfield area, including the air base. At a state Senate committee hearing on Tuesday, he accused Flannery of “using secrecy, bullying and mobster tactics to force generational farm families to sell.”

“If these investors plan to convince Solano residents and their elected representatives that building a new city on productive agricultural land is a wise scheme, they are off to a terrible start at earning the community’s trust,” Garamendi said.

Bloomberg’s Dave Merrill, Jason Leopold and Kara Wetzel contributed to this report.


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