According to Lisa Ross, writing in the Carmel Valley News, "The good news is...the city is in control of these former Baldwin properties. The bad news is that the city taxpayers are stuck with a bill...that was the responsibility of [Baldwin]. But more significantly, Baldwin also ran out on their obligation to bring half of a ten-acre linear park under the SDG&E power lines up to a standard that would allow the city to take ownership. At current costs for developing parks, that means a million dollars or more for grading, irrigation, and environmental mitigation is necessary before the area can qualify for park development funds. Unpaid subcontractors are seemingly everywhere."
Baldwin companies have always been a family operation. Starting out on a chicken ranch in Temple City in 1956, Al and James Baldwin built their first house after their father converted their chicken ranch into a subdivision. The brothers, still teenagers, literally built the house with shovels and pickaxes.
As the company grew and the boys took over, they moved their operations to Orange County, becoming one of the largest builders in Southern California and San Diego. Real estate booms and busts of the 1970s and 1980s may have taken their toll on other privately held builders, but Baldwin held on, helped by a $150 million junk-bond deal it offered in 1993.
More than 75 percent of that money went to pay existing debts, draining more than half of the company's cash flow to repay the high-interest loans, says the Los Angeles Times. Despite the fiscal turmoil, the Times reported the brothers maintained their "lavish," high-adventure lifestyle.
By 1995, the dominoes started to fall, with Baldwin defaulting on multimillion-dollar pieces of property all over Southern California and finally entering bankruptcy, where the brothers lost control of at least part of the company. But they did keep control of much of the land at Otay Ranch.
When Baldwin acquired the 23,000-acre project in 1989, the Baldwin brothers claimed everything was just fine with their company. The owners of Otay Ranch carried a $70 million mortgage for the Baldwin company even as Baldwin was defaulting on other obligations in Carmel Valley and other places. Baldwin would default on that obligation as well. The Baldwin brothers may have lost control of their homebuilding company in bankruptcy, but they retained an interest in the company that bought the property at Otay Ranch, the same company that agreed to set aside thousands of acres of open space for habitat. The same company that now doesn't want to keep that promise.
The Baldwin-controlled company says that because it got rid of the land, it would be too difficult to reacquire (although Baldwin did have an option to purchase the land, it allowed the deadline to pass without completing a sale). Baldwin wants to contribute open space that is much less vibrant and is more than three miles away.
The Baldwin brothers who used to run the Baldwin Company and who now control much of the land at Otay Ranch say they should not be held accountable for the actions of their former company -- even though the same people control this company.
Environmentalists say a lot more is at stake here than just the Baldwins and their controversial companies. If the Baldwins are allowed to change the deal so late in the game, this decision will be a blueprint for other landowners to do the same thing all over San Diego.
"The decision to build homes on some of the finest open space in San Diego was not arrived at casually," says one open-space advocate. "But many people supported this plan only because it included provisions for open space and the conservation program. These plans that are now being thrown away because a property owner is hoping local politicians will not hold them to its promises -- promises other property owners in the county keep as a matter of honor. Promises Baldwin breaks as a matter of routine."
The 5000 homeowners at Otay Ranch pay a monthly fee that includes money for open-space preservation and maintenance. The 1250 acres that Baldwin wants to shed are part of that agreement.
Also part of the original agreement was a plan to give a toll-road company the right-of-way at no cost through part of the 1250 acres necessary to complete Highway 125, a crucial east-west link in the South Bay. But if the county undoes the deal, the toll company will have to spend millions to acquire the right of way -- threatening to undo another deal that everyone -- except Baldwin -- thought was signed, sealed, and delivered forever.