Marlee Lauffer
Vice President, Marketing & Communications
The Newhall Land and Farming Co.

Interview by Leon Worden
Signal City Editor

Sunday, May 23, 2004

[WATCH the television interview conducted May 18, 2004]

Marlee Lauffer

    "Newsmaker of the Week" is presented by the SCV Press Club and Comcast, and hosted by Signal City Editor Leon Worden. The half-hour program premieres every Wednesday at 9:30 p.m. on SCVTV Channel 20, repeating Sundays at 8:30 a.m.
    This week's newsmaker is Marlee Lauffer, vice president of marketing and communications for The Newhall Land and Farming Co. The following interview was conducted May 18. Questions are paraphrased and answers may be abbreviated for length.

Signal: Are you still vice president of corporate communications for Newhall Land?

Lauffer: Vice president of marketing and communications is my exact title. But as you know, I go by spokesperson, dry-clean queen, you name it.

Signal: John Boston gave you that last one. So you've had a title change? Is Newhall Land still a California corporation unto itself?

Lauffer: To clarify the title change, I've been (vice president of) marketing and communications for five or six years now, so that's old news. But we are no longer a publicly traded company by ourselves. We are owned by an entity that is half Lennar Corp. and half LNR (Property Corp.), two separate publicly traded companies that have set up a limited partnership to own Newhall Land. We still go by the Newhall Land name, and everything is basically still the same. But our new owners, instead of being Wall Street owners all across the country, are real estate owners.

Signal: Lennar builds homes and LNR is a Lennar spin-off that manages commercial property, so couldn't you say Newhall Land is owned by Lennar?

Lauffer: Well, they are two separately traded public companies. They are very separate companies, separate financial reporting, so they are technically two separate companies. I think you could call them sister companies. They have some affiliations, but they are two separate companies. A lot of people will just say Lennar, because that is a name that is much better known than LNR, but we are owned by two separate companies, Lennar and LNR.

Signal: Newhall Land is the big fish in Santa Clarita, but compared to a company like Lennar, Newhall Land is really just a little blip, isn't it?

Lauffer: Well, Lennar is one of the nation's largest home builders. They are an amazing success story. (They) started in the 1950s. They build in almost every state in the country. They have, I believe, over 10,000 employees. So while Newhall Land is quite a presence here in the Santa Clarita Valley, like you say, we are just part of the Lennar and LNR organization.

Signal: Who does Marlee Lauffer answer to?

Lauffer: Marlee Lauffer answers to Gary Cusumano.

Signal: He is president of what?

Lauffer: Of the Newhall Land division of Lennar and LNR. And then we also have a new president — Gary is actually chairman, and we have a new president — Greg McWilliams, who has been with the Lennar organization for a number of years. He is also in our building, and very much a part of our day-to-day team. But the day-to-day management of Newhall Land is basically the same as it was prior to the acquisition.

Signal: Who's got the highest authority in the building?

Lauffer: We're a small company, so we don't really have an organizational chart like a lot of companies have. ... We are managed on a day-to-day basis by Gary Cusumano, who is our chairman, (and) Greg McWilliams, who is our president — very akin to the days when Tom Lee and Gary Cusumano ran the company. Tom Lee was chairman, Gary was president — chairman more of the long-term vision, president more of the day-to-day operations. And then the rest of the management team is basically the same.

Signal: The Lennar people who handle Stevenson Ranch have moved into the Newhall Land building on Valencia Boulevard, right?

Lauffer: Correct. Lennar had a presence of folks who were primarily responsible for Stevenson Ranch and a couple of other properties that they were active in, in the San Fernando Valley area. ... Stevenson Ranch is basically complete, with the exception of Phase 5, where there is still a lot of long-term planning left to be done. Many of those folks from the Stevenson Ranch operation have moved into our building, still continuing some of the jobs that they've done before, but also transitioning to assist with some Valencia-Newhall Ranch projects as well.

Signal: Are you also Lennar's spokesperson for Stevenson Ranch?

Lauffer: Well, like I say, we're a small company, so we all kind of pitch in and do what we need to do. The main focus — because there is not much activity at Stevenson Ranch now; it's primarily built out at this point — is Newhall Ranch and the Valencia area.

Signal: When did the purchase go through?

Lauffer: We announced it in July, and then Lennar and LNR had a period of time to do due diligence to determine if indeed they were going to go forward. Then once that due diligence closed, then Lennar and LNR had to go through various steps, including getting PUC approval to transfer control of the water company, Valencia Water Co., to Lennar-LNR, this new joint venture. All of that concluded (at) the end of January, so the transaction closed the end of January.

Signal: One thing Lennar said was attractive about Newhall Land was the management.

Lauffer: Absolutely. What's been so wonderful about Lennar and LNR is, in addition to acquiring us for our vision of what's left in Valencia and what we're going to do at Newhall Ranch — and the skills that we've got to implement that vision — they also see that we've got a pool of very talented employees. They are very committed to making sure that all of our employees continue on, either doing what we've been doing, where that makes sense, and where it may not, finding other opportunities. So they very much recognize that we've got a lot of talented employees, and that's very much an important part of their purchase. Of course, from an employee's standpoint, that has been wonderful to hear.

Signal: Critics say the shots are being called from Lennar's headquarters in Florida now. Is that the case?

Lauffer: Nope. That is absolutely not the case. We are, as I said, owned by half Lennar, half LNR, and we report on a quarterly basis what's happening with the Newhall Land division. But we have a business plan that we work off of, and it's very similar to how we operated prior to any of this transaction. We're very focused on completing Valencia and getting Newhall Ranch up and running, and then looking for other opportunities for this division, as well.

Signal: What does the completion of Valencia entail?

Lauffer: Valencia, as you know, is a 15,000-acre master plan, and we have probably completed about two-thirds of Valencia. Some of the remaining areas that we have left (are): finishing out Westridge, which is basically complete, with a few more builders that are completing their sales there. We have our Riverpark community, which old timers might remember as the panhandle — it's right in the middle of the city — (which is) currently before the City Council and the Planning Commission. Then we have what's called West Creek, which is in the north part of Valencia up near Copper Hill (Drive) and McBean (Parkway). And that (is) before the county planing commission. Those are really the remaining areas. We've built roughly 17,000 homes in Valencia. When we're complete, we'll be somewhere around 23,000 homes.

Signal: When you say "we build," Newhall Land doesn't actually build anything any more.

Lauffer: True. We're a master developer. In the late '80s, we transitioned from being an actual home builder ourselves, (which we were) throughout much of the '80s, back into being a master developer, which is how we started out our life cycle in the late '60s.
    What we do is, we do all of the entitlements, which is getting the governmental approvals; we do the infrastructure, the landscaping, the land planning; we determine what type of homes should go where, where a business park should be, where a shopping center should be; and then we'll sell the lots, or finished home sites, to various builders who actually build the homes for people to live in.

Signal: So you'll take Riverpark and West Creek through the entitlement process, then you'll sell them.

Lauffer: We'll sell the lots. We'll still be responsible for doing the infrastructure, the community landscaping, the recreation centers, perhaps the parks, depending on what the various agreements are. We'll still be very involved in completing those communities.
    We just learned in the late '80s that for the number of homes that our company built versus a Lennar or a Centex or a Richmond American, they were much more attuned to the different marketing needs and the trends and what consumers were looking for. We found it was a much better way to segment the market, to bring the latest and greatest in different home construction in, by having a variety of different builders.
    So we'll still be involved in Valencia for the next several years, obviously still involved in looking to expand the regional shopping mall, bringing more jobs to the Valencia Industrial Center and Valencia Commerce Center. But in terms of entitlement focus, after the next several years, it'll be mostly in Newhall Ranch.

Signal: With the entitlement process, it's the political entities that Newhall Land deals with, so will we still see the kind of political involvement and campaign donations we've seen in the past?

Lauffer: To a certain extent, sure. I mean, we all live here. This is a very important part of our community, so we want to be very supportive of those people in the Santa Clarita Valley and Los Angeles county who are pro-business.
    I think a lot of people think that the company is extremely politically active. We like to think that we've got good relationships. People know us. If we say we're going to do something, we do it. We try to personally be before the county planning commission or the Board of Supervisors or the City Council so that they know they're hearing from principals of the company.
    We've never been super politically active in terms of campaigns here in the Santa Clarita Valley. But we definitely have been involved from a community standpoint, supporting a lot of the nonprofits, being involved in causes that people in the community are concerned about. Because it's our home, too.

Signal: You used to say that employees of Newhall Land served on nearly every major nonprofit board in town. Tom Lee and Gary Cusumano had very different management styles; will we still see Newhall Land giving money and time?

Lauffer: Sure. Tom lee left in 2001, and Gary is absolutely as committed as Tom was to community involvement. Gary, as you know, is chairing the hospital's capital campaign for the emergency room (expansion) and has been very involved in the hospital for a number of years. And certainly both Lennar and LNR themselves have long records of goodwill and community support in places where they've done business, and very much will encourage us to focus on our business plan, which includes a lot of community support and charitable contributions.
    I think the local nonprofits have seen that we are there the same way we were there last year and five years ago and 10 years ago.

Signal: What was it that made Lennar's offer enticing to Newhall Land's board of directors? Because the buyout deal was something the board had to sell to Newhall Land's unitholders and ultimately to the community. Why was Lennar a good fit?

Lauffer: First off, just to remind you, we were a publicly traded company. A lot of people think that Newhall Land was a local company and that (it was a) "loss-of-a-local-company" sort of thing. But we were in fact a New York Stock Exchange, publicly traded company since 1969, with owners all across the country. It was an obligation that our board had, to present viable offers to our unitholders.
    I think what was so exciting about Lennar is that they felt very strongly that the vision that we had for Valencia, and that we want to implement for Newhall Ranch, was the right vision. That was kind of a win for our company. For our unitholders, we feel that the price that they were offering was a very fair price, so that was a win for our unitholders — many who have been with us up and down in real estate cycles for many, many years.
    And for our employees, Lennar and LNR stated from the very beginning, and stuck to it, that they are very committed to utilizing our employee base, keeping them in place or expanding opportunities for them. So it was a win for employees. So I think from a company-community-employee and unitholder standpoint, it was a win-win-win-win, if that's the right phrase.

Signal: After World War II, Newhall Land decided to develop much of its old farmland for housing. In 1971 Newhall Land built and opened Magic Mountain and really started marketing Valencia and recruiting people to buy homes here. Subsequently, some people believe Newhall Land should provide amenities for this valley out of the goodness of its heart. Where does Newhall Land see its ultimate responsibility? In doing good works for the community, or in boosting shareholder value?

Lauffer: There is absolutely no question that we are a business. A business has a responsibility to its owners (and) it has a responsibility to its employees to make sure that it's making a profit, that it can meet payroll, that it can provide all those things that a business is supposed to provide. At the same time, we can still benefit the community, give back to the community, and leave this valley a much better place than it was in the early days.
    I think when you look back at what Valencia has done for the Santa Clarita Valley though Newhall Land — we were responsible for getting (California Institute of the Arts) here. For getting College of the Canyons here. For building the hospital. We've led the capital campaigns for most every major nonprofit, whether it was the Boys and Girls (Club) facility in Newhall or (the) Child and Family (Center) in Canyon Country, their new facility — or the new Boys and Girls Club facility in Canyon Country, for that matter, with Tom Dierckman's leadership. The University Center that Tom Lee is currently leading. The hospital expansion program.
    I think that our company has been able to both be profitable, employ a lot of people here in the Santa Clarita Valley, give back to the community in terms of nonprofit donations, and look at some long-term visionary things with capital campaigns and institutions that benefit the valley. I think we've managed to meet all those masters by doing that.

Signal: Newhall Land was involved in a development in Scottsdale, Ariz., in the early 1990s, and by 2000 it had property interests in Colorado, Texas, and Palmdale. It looked like Newhall Land was trying to figure out what to do next. Then, suddenly, all of that stopped. Now, it seems, Valencia is almost complete, Newhall Ranch will be sold off to merchant builders, and then Newhall Land is done. Is that correct?

Marlee Lauffer Lauffer: No. We've got a long time here in the Santa Clarita Valley with Newhall Ranch.
    Just looking at Valencia — and Valencia we started back in 1965 — now, granted, it took a long time to reach a critical mass, that we reached maybe 10 years ago, which expedited things a little bit — but we think we've got a good 20 (or) 25 years of work at Newhall Ranch, both in various entitlements, the land development that we're responsible for, the infrastructure, the community amenities, and then also in continuing to grow our job base at Valencia Commerce Center and Valencia Industrial Center and some of the business parks that are within Newhall Ranch.
    But that's not to say that we aren't also looking at other opportunities. We saw, in the early 1990s, wonderful success with branching out to Scottsdale at a time when California was mired in a very deep and very dark recession. It was a great business move to go to Scottsdale as they were coming out of their recession. The community was very well received. It has been very successful.
    We saw an opportunity to perhaps duplicate that, and we did indeed look at property in Austin, Tex. We never moved forward with anything there, but we looked at it. We optioned a piece in Colorado that we ended up selling. We even looked in the Palmdale market, at City Ranch, around that time.
    But then, as we were doing all of that in the late '90s, we also came to the realization that the entitlement process for Newhall Ranch was one that required full-time focus, particularly getting the Specific Plan approved. It's a very complex, very contentious process. We determined that it was in the best interest of our unitholders to put some of those expansion plans on hold while we just really focused on Newhall Ranch.
    At the same time we also felt that our units were undervalued. You might recall, we started a very aggressive buyback program, where we bought back much of our stock. That was really a very strategic focus of the company. We're still very focused on getting Newhall Ranch up and running and moving forward with that, and then I think we're also keeping our ears open for other opportunities in the Southern or Central California area that might make some sense for us.

Signal: With 210 employees in the late 1990s, it seemed the company thought it cold do both — Newhall Ranch, and pursue other markets. But you were down to 120 employees at the time of the sale. How many folks work for Newhall Land now?

Lauffer: Probably in that (range) — with some of the new folks that have come over, about 130 (or) 140 folks.

Signal: So what prompted the decision to change course?

Lauffer: It really was the fact that the market in California was getting much stronger, and the fact that our stock was still undervalued. We weren't seeing any response from Wall Street on the fact that California was really starting to boom. And Newhall Ranch was getting more and more complex and contentious. So it was really what I just told you — a strategic decision to focus our attention here at home.

Signal: Today, every time you turn around, you're fighting off allegations of some environmental crime. You've been accused in recent years of using hazing machines to chase off the least bell's vireo, a bird; wiping out the San Fernando Valley spineflower ha habitat on the Newhall Ranch; overlooking western spadefoot toads at West Creek; asking the federal government not to designate a critical habitat for the southwest arroyo toad along the riverbeds. Is Newhall Land this environmental ogre? Will we continue to see one thing after another after another?

Lauffer: I think all those examples — we certainly get quite frustrated with some of the publicity and the spin that our opponents put on things.
    In all those cases, we were the ones who discovered the various environmental finds. We found the spineflower, notified the state that it was on our property, notified that we would do the surveys as we got closer to development, etc. We found the spadefoot toad up in West Creek, notified the county, got our hearing delayed so that we could determine what the appropriate thing to do was. (At) Riverpark, (the California Department of) Fish and Game suggested that we go back and do additional surveys; we went back and did additional surveys and indeed found a spadefoot toad.
    It's a very complex process, and we are constantly doing all of the things that we are supposed to be doing as stewards of the land in terms of surveying, looking at what is there, following all of the environmental regulations. The reality is that there are a variety of different issues on everybody's property, whether it's private property, property to be developed, another developer's property, and it's incumbent upon anybody going through the public process to do a variety of different things including all these surveys and analysis. And as you go through that process, whatever you find, it's all public information, and you mitigate for it. None of this is insurmountable.
    I think the opponents like to think that, "Aha! This is here, so therefore (no development) can occur," but the reality is that all of it is something that can be mitigated. And it's our job, along with the city or the county, depending on where the community is located, to figure out the best way to balance environmental concerns with private property rights and the need for housing and jobs.
    In Southern California there is a dramatic housing crisis, and it's not people moving into the area. It's births over deaths. It's people like you and I having families that, those kids are going to want to live here in the Santa Clarita Valley, or Southern California. Seventy percent of the growth that's occurring is what is called natural growth, births over deaths.
    We think that you absolutely can balance the environment — and that it's very important to protect the environment — but you absolutely can balance the environment with development. We think we've shown great examples of that in Valencia, and we think Newhall Ranch will be a sterling example of that.

Signal: The hot project with the environmental community right now is Riverpark. You say everything can be mitigated, but how do you mitigate for the loss of the last toad? Or the last oak tree?

Lauffer: Well, neither of those are going to occur on that property. That's some of the hyperbole that we hear from a lot of our opponents.
    Riverpark is a great example. It is an infill project. It is surrounded by urban development all around it. It is going to help to build the east-west corridor, which is a critically needed road here in the Santa Clarita Valley.
    Of the roughly 800 acres for Riverpark, over 60 percent of it is going to be permanent open space, including deeding over the river — which we own — to the city, and doing river trails so that the public can enjoy it and it can connect from Canyon Country to Valencia. There's significant parkland space that will be part of Riverpark.
    Environmental species can be mitigated. Again, that's part of what you do as you go through all this process and all the reports: You determine what needs to be mitigated. In some cases, it may be moving or relocating some species. In terms of oak trees, I think that there (are) 12 that need to be relocated on Riverpark. There (are) 87 beautiful oak trees on Riverpark, and we're saving the vast majority and relocating 12.

Signal: Riverpark is a little over 1,100 units. Many of them will be multi-family. It never used to be that way. Why is Newhall Land doing so much multi-family housing these days?

Lauffer: I think when you look at the high cost of housing in southern California — everywhere, not just in the Santa Clarita Valley — and you look at trying to provide housing for people getting into the entry-level market, the only way to do it is through higher density. It's the apartments and the townhomes and the condominiums that help people get their first home.
    Here in the Santa Clarita Valley, it is something like $85,000 in governmental fees and permit fees before you even turn a spade of dirt or factor in the cost of construction. It's very difficult to provide affordable housing unless you're able to do something with apartments or condominiums.

Signal: Isn't it also true that the profit margin is better on multi-family?

Lauffer: No, that's not necessarily true, when you look at some of the construction issues that are related. It really is a matter of trying to segment the market and make sure that we've got a variety of different product for different people.

    See this interview in its entirety today at 8:30 a.m., and watch for another "Newsmaker of the Week" on Wednesday at 9:30 p.m. on SCVTV Channel 20, available to Comcast and Time Warner Cable subscribers throughout the Santa Clarita Valley.

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