New Life for a Ghost Town

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.

Spreading Out. After 19 years of building almost entirely in Southern California (20,000 homes, 5,000 apartments, 52 mobile home parks), Watt has expanded swiftly since joining Boise Cascade in 1966. President Ray A. Watt, 48, a former Douglas Aircraft plant official, has doubled his executive team to a total of 16 men, started several new projects in Northern California, and spread out to Seattle. Next year, he expects to begin building more homes in Chicago and Washington. Watt thus joins the small but growing group of big-volume builders whose ties with capital-rich corporations are enabling them to spread out their Operations to wider areas.

Last week, for example, the Weyerhaeuser Co. teamed up with the Palo Alto, Calif., home-building firm of Brown & Kauffmann to start an $18 million residential community on the San Francisco peninsula at Los Gatos. Weyerhaeuser will invest more than $3,000,000 in its first venture in home building, and split profits with Brown & Kauffmann. Most of the money is to be borrowed from Metropolitan Life Insurance Co. at a rate (71%) well below that which the home-building firm might itself have had to pay. Though small companies still dominate the housing business, the trend is running clearly in the other direction.

This file is automatically generated by a robot program, so reader's discretion is required.