Irvine Co. owns an 80,000-acre ranch that makes up one-fifth of Orange County, Calif. There the company has been building houses and factories grouped into developments that are remarkably successful examples of comprehensive urban planning. It must be put up for sale, however, because the James Irvine Foundation owns the controlling interest. Under federal tax law, the foundation cannot control an enterprise that aims at making a profit—and Irvine Co. not only tries to turn a profit but clears a rather tidy one. Mobil Oil Corp. offered $200 million in May, setting off a frantic bidding war. Since then, counteroffers have come from Cadillac Fairview, a Canadian land developer, and SMBH & Z, a Detroit investment firm. Mobil has made a second bid, and the price has been pushed up toward $300 million. Last week the foundation and a California court that must approve any sale began evaluating final bids.
What makes Irvine so desirable? TIME Correspondent John Quirt toured the ranch and discussed the impending takeover with Irvine executives and outsiders. His report:
On the neatly manicured lawns that surround Irvine-built factories and office buildings, workers toss Frisbees during their lunch hours or nap under the midday California sun. Many of them live within walking distance, in Irvine-designed homes adjacent to golf courses, swimming pools and lakes. Shopping centers and parks, all landscaped by Irvine, are less than ten minutes away. It is an idyllic work-live-play environment, carved out of beanfields and cow pastures south of Los Angeles. Irvine has built on only 10,000 acres, and plans to continue developing its land over the next 25 years with nearly $10 billion worth of houses and commercial and industrial complexes. When the expansion is completed, the ranch will have 400,000 residents and be the country's largest master-planned urban setting. Says an executive of one company that has been bidding for Irvine: "For the rest of the century, all we can see on those 80,000 debt-free acres is growth, growth, growth."
Homes by Lottery. So far it has been carefully managed growth. In a cyclical industry where developers often expand wildly in good times and cut back in bad, Irvine's management has stuck by a steady expansion plan through booms and recessions and increased its earnings an average of 12% each year since 1971. This year profits will rise at least that much above the $11.4 million earned in 1975 on sales of $104 million. During the 1973-74 recession, while most developers were retrenching, Irvine was preparing its most ambitious project: Woodbridge, a new community with $42 million in parks, lakes and other public facilities. When Woodbridge was ready for unveiling last June 20, more than 12,000 prospects turned up, and a lottery had to be held to choose buyers for an initial block of 350 homes priced at $50,000 to $95,000. Most jumped several thousand dollars in market value as soon as the buyers moved in.