Bait and switch?

When Erik and Carlene DeMarco put a down payment on their house in April of 2005, they envisioned an elementary school and a park directly across the street from their Terrace Park home. They vividly remember seeing the display case in the Terrace Park sales office.

“We looked at their big, beautiful board, and it had this future school and future park. … And you select your lot accordingly, and people did. And they expected to have their children go to school immediately nearby,” recalls Erik DeMarco. The day they signed the closure papers for their home at the end of July, they were told the school would no longer be built.

Almost 11 acres of the piece of property known as Terrace Park in Natomas were designated for an elementary school, based on the community plan that was developed for the area.

To this day, the Natomas-area map, produced by the Chamber of Commerce and the Natomas Journal, displaying a school and a park at Terrace Park, published on December 16, 2005, has continued to be used by numerous Realtors in the Natomas area to sell homes. The DeMarcos, as well as some other members of the Terrace Park community, feel that the school was used as a “selling device” for the subdivision.

However, when developer D.R. Horton Inc., which currently owns the 10.8 acres of Terrace Park, approached the school district with a hefty price for the land, the school district was unable to meet its cost.

So, Horton has proposed building a 65-lot subdivision on the property instead.

Infuriated with Horton’s new proposal, members of the community have formed the Terrace Park Neighborhood Association, a collective neighborhood group spearheaded by the DeMarcos.

“People are furious,” says Erik. “We have a granddaughter who lives right nearby who would have access to a school. The level of emotion is very, very high.”

The DeMarcos say they now have 146 households listed in their database as residents concerned with Horton’s management of the Terrace Park development. And they believe that the Terrace Park neighbors are the reason Horton has gone back to the negotiating table with the Rio Linda Union School District.

But representatives from Horton say they’ve done nothing wrong. “The district told us they didn’t want to buy that site,” said Horton vice president of forward planning, Fred Holz.

Indeed, in a letter submitted to the city and Horton written in May 2005, the school district indicated that it no longer wished to purchase Terrace Park “due to the high cost of the land and the inability of the District to afford purchasing the D.R. Horton property and build a new school.” The letter also stated that the existing Regency Park Elementary School could accommodate the current number of students.

It was only after plans for more development nearby began to gel, and after the neighbors expressed their alarm over dropping the school, that the district approached Horton again.

Now, Rio Linda Superintendent Frank Porter says that the school district would like to build the school, especially because “there is a strong will from the community to have [it] built.”

As of March 2, at a meeting between Horton and representatives of the city staff, Porter said the developer was still asking for $800,000 per acre. In comparison, Porter said the school district paid $175,000 per acre for the nearby 10-acre site that is now Regency Park Elementary School about three years ago.

“They’re, what, about two to three miles apart? This gives an idea of the sort of problem we’re dealing with,” said Porter.

Porter said he hopes that the school district and Horton representatives can negotiate a reasonable cost by the end of June, at which time he plans to propose an approximately $36.5 million local bond to the board of trustees to place on the November 2006 ballot. If the bond passes, a portion would be used to build the new school. With a negotiated price and the passage of the bond, along with supplemental developer fees and joint-use state funding to help offset the cost, Porter says that the school district will be willing to build the school at Terrace Park.

Holz said Horton is ready to negotiate. “We don’t intend to tread on anybody’s rights or expectations.” At the same time, he said, “from our perspective they don’t want to pay fair market value.”

If the district and Horton can’t settle on a price, the developer may have a tough time getting their luxury-home plan through the city council. “We’re not going away,” said Erik.

Until then, the school district and the neighbors have learned a lesson in the volatility of Natomas land prices. “If they would have bought it two years ago, they would have gotten a much better price,” said Holz.