Tejon Ranch, the largest privately owned land in California, is seeking to expand its commercial center through a $61.6 million municipal bond issuance. This expansion project aims to more than double the size of the Tejon Ranch Commerce Center, which currently houses distribution centers for major retail brands like IKEA, Caterpillar, and L’Oreal. The Tejon Ranch Public Facilities Financing Authority is expected to issue the bonds for the center, with proceeds going towards a 20 million-square-foot development according to bond documents.
The expansion comes amid a backdrop of environmental concerns and controversies surrounding the Tejon Ranch. The property, spanning 270,000 acres, has been at the center of debates over wildfires and urban sprawl. The recent wildfire within the ranch raised questions about the impact of development on the surrounding ecosystem and wildlife habitat. A 2019 lawsuit challenging the Centennial project, a planned community within the ranch, highlighted the need for additional environmental impact analysis and revisions to the development plans.
California’s ongoing housing crisis, exacerbated by heat waves, droughts, and wildfires, has put developers and environmentalists at odds. The expansion of the Tejon Ranch Commerce Center and the Centennial project reflect the company’s vision to develop real estate throughout its private land. However, the need to balance development with environmental conservation and wildfire risk remains a challenge. The initial conception of these projects over two decades ago did not fully consider the environmental impacts and risks associated with building in these areas.
Despite the controversies and environmental concerns, the expansion of the Tejon Ranch Commerce Center has attracted investor interest. Muni investors, hungry for high yields in a low-issuance environment, are expected to show strong demand for the municipal bonds being issued for the project. The strategic location of the property, situated on both sides of Interstate 5, a major north-south route on the coast, offers a prime opportunity for commerce and development. David Spier, an equity investor in Tejon, emphasized the attractiveness of the investment given the property’s strategic location and potential for capitalizing on demand in the area.
Tejon Ranch’s historical roots date back to Mexican land grants in the 1800s, where it was primarily used for raising sheep and cattle. Today, the property still functions as a working ranch, with farms and vineyards occupying a small percentage of its vast acreage. The current expansion and development plans signify a shift towards a more diversified land use, incorporating commercial real estate and housing units within the private land. The upcoming bond issuance, set to be underwritten by Stifel Financial Corp., reflects the company’s ambitious growth initiatives and long-term vision for the Tejon Ranch.