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Water, Money Troubles Strike Fast-Growing 'Pass' Region

The Interstate10 corridor southeast of San Bernardino has served as a relief valve for Los Angeles metropolitan growth during recent years. But the recent real esate slowdown has hit the Beaumont-Calimesa-Yucaipa area hard, partly because of developer bankruptcies and other financial troubles, and partly because of questions about water.

In the City of Beaumont, which has more than 20,000 housing units on the books in approved master plans and specific plans, residential construction has dropped by two-thirds since 2006, according to Community Development Director Ernest Egger. In Calimesa, two projects with a combined 7,000 units halted, and the developer of one of those projects has gone bankrupt. In Yucaipa, completion of a 1,200-acre specific plan has slowed partly because the local water district has withdrawn a water supply guarantee. And in the unincorporated Cherry Valley, locals continue to fight most any growth proposal.

For decades, the dusty towns along I-10 between Redlands and Palm Springs offered little besides large lots, mobile home parks, freeway gas stations and expansive views of the San Bernardino and San Jacinto mountains. With the housing boom of the late-1990s, however, came growth pressure. Beaumont and, to the east, Banning (which has a large Del Webb retirement community), have welcomed growth, and Calimesa has sought to get its share as well. In Yucaipa, politics have leaned toward slow growth, but the pressure may be greatest because of its location nearest to the San Bernardino urban area.

According to a study by Forbes magazine, Beaumont was the sixth fastest-growing suburb in the country from 2000 to 2006, when its population rose from 11,549 to 26,625. Only the Sacramento suburb of Lincoln grew faster in California. Now, the housing market has slowed dramatically in Beaumont. In addition, developer SunCal has a number of large holdings in Beaumont, and SunCal's projects have stalled before they even got started on the ground, Egger said. When those projects and others in master-planned areas might break ground is unknown.

"The planning process is still going on for a number of things," Egger said, noting that construction of one large commercial center is starting, and two other retail projects are in the entitlement process. "We've all seen these market cycles. We're prepared to ride it out."

Calimesa has little choice but to ride things out, too, although the ride might be longer and bumpier. Oak Mesa Investors and Buffalo Land Developments, which together have entitlements for nearly 3,500 residential units on 1,500 acres in Oak Valley, have declared bankruptcy. SunCal, which, as Egger noted, is not moving on much these days, is another major player in Oak Valley.

Oak Valley is Calimesa's major growth area. Just across I-10 from most of the existing town, Oak Valley is planned to have roughly 10,000 housing units and a new mixed-use town center. (Another 3,000 units are planned in the Beaumont and unincorporated Riverside County portions of Oak Valley.) Calimesa has big hopes for Oak Valley and has conducted thoughtful planning, Community Developer Director Gustavo Romo told CP&DR in late 2007.

"We hope that when things all get done, people point to Calimesa like they do Irvine, because of our trails and open space and wildlife corridors," Romo said.

In the meantime, though, the city is wrestling with a major budget shortfall caused partly by building permit and planning fee revenues that are $350,000 less than expected.

Calimesa is also impacted by the Yucaipa Valley Water District's re-evaluation of the way it manages water resources. Officials for the district, which serves Calimesa and Yucaipa, are working on a water sustainability program that could be reviewed by the board of directors as soon as this month.

"Last summer, we were telling customers conserve, conserve, conserve. At the same time, we were saying there's water for new development," said YVWD General Manager Joseph Zoba, who was struck by the incongruity. When a judge's order temporarily silenced State Water Project pumps in the Bay Delta last summer, the district decided to start planning more aggressively, as the SWP supplies part of the district's water. The district rescinded water supply assessments, including one for Yucaipa's 1,234-acre freeway corridor specific plan.

The water sustainability program will contain concepts ranging from conservation guidelines to requiring dual plumbing so that new homes irrigate landscaping with recycled water, Zoba said. The program may also require that development proponents pay up front for 50 years worth of SWP water delivery and provide assurance the water will actually materialize a requirement that could apply to a project of any size.

"It's going to stifle development in the short-term. The trade-off is that we provide a road map for the long-term," Zoba said. "There are scenarios where the Delta could be down for 18 months, 3 years. No other water district is prepared for that."

The water district's move should not have been a surprise. In 2005, the San Timoteo Watershed Management Authority, composed of YVWD, the Beaumont-Cherry Valley Water District, the South Mesa Water Company and the City of Beaumont, reported that "research revealed daunting water resource management challenges and opportunities."

"Currently, the proven local water supplies for the area are about 32,000 acre-feet per year, and ultimate demand will be about 99,000 acre-feet per year," the authority reported in its Integrated Regional Water Management Program. The program recommends capturing surface water, better managing groundwater, water recycling and other steps that could cost $200 million to $300 million to implement.

Still, the YVWD rescission of the water supply assessment has complicated what was already a controversial specific plan effort in Yucaipa. City officials see the freeway frontage as the last chance for development of commercial centers that could stem sales tax leakage, said John McMains, Yucaipa community development director.

After public protest against more intensive alternatives, the city has pretty much settled on a plan for about 1,500 housing units, 160 acres for regional commercial development, 15 acres of community commercial and a 40-acre business park. More than 500 acres would remain open space. The city is considering designating additional land in the specific plan area for 900 units of high-density housing to meet regional fair-share requirements. Plan and EIR revisions are underway, said McMains, who is closely monitoring the water district's program.

Meanwhile, Cherry Valley, a slice of unincorporated Riverside County adjacent to both Calimesa and Beaumont, remains the growth holdout. Residents have fought growth since the 1970s and continue to battle annexations and county redevelopment overtures.

Contacts:
John McMains, City of Yucaipa, (909) 797-2489, ext. 231
Gustavo Romo, City of Calimesa, (909) 795-9801, ext. 229
Ernest Egger, City of Beaumont, (951) 769-8520, ext. 327.
Joseph Zoba, Yucaipa Valley Water District, (909) 797-5119.
San Timoteo Watershed Management Authority: www.stwma.org