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Michael Moritz, Reed Hoffman and other Silicon Valley giants say they are behind the mysterious land deals

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In 2017, billionaire venture capitalist Michael Moretz sent a note to a potential investor about what he described as an extraordinary opportunity: an opportunity to invest in a new city in California.

The site was in a corner of the San Francisco Bay Area where land was cheap. Mr. Moritz and others dreamed of turning tens of thousands of acres into a bustling metropolis that, according to the show, could generate thousands of jobs and be as walkable as Paris or New York’s West Village.

He painted a kind of blank urban canvas in which everything from design to building methods and new forms of government could be rethought. And all of this will be a short distance from San Francisco and Silicon Valley. “Let me know if this strikes your fancy,” he said in the memo, a copy of which was seen by The New York Times.

Since then, a company called Flannery Associates has purchased large parcels of land in a largely agricultural area about 60 miles northeast of San Francisco. Court documents show that the company, which has little public information about its operations, set aside more than $800 million to secure thousands of acres of farmland. Parcel after parcel, Flannery made offers to each landowner for miles, paying many times the market price, whether the land was for sale or not.

The purchases made by a company that no one had heard of in the region and whose business was obscure, became the subject of much speculation and development. News storiesThis infuriated landowners, local supervisors, a nearby Air Force base, and members of Congress. Did Disney buy it for a new theme park? Can purchases be linked to China? deep water port?

Flannery is the brainchild of Jan Sramek, 36, a former trader at Goldman Sachs who has quietly courted some of the tech industry’s biggest names as investors, according to Pitch and people familiar with the matter. The company’s ambitions expand in 2017: take a barren patch of brown hills cut by a two-lane highway between suburban and rural land, and turn it into a community with tens of thousands of residents, clean energy, public transportation and population density. urban life.

The company’s investors, whose identities were not previously disclosed, are from Silicon Valley, according to three people not authorized to speak publicly about the plans.

among them Mr. Moritz; Reid Hoffman, LinkedIn Co-Founder, Venture Capitalist and Democratic Donor; Marc Andreessen and Chris Dixon, investors at Andreessen Horowitz Venture Capital; Patrick and John Collison, co-founders of payments company Stripe; Lauren Powell Jobs, founder of the Emerson Group; and Nat Friedman and Daniel Gross, entrepreneurs-turned-investors. Andreessen Horowitz is also a supporter. It was not clear how much each of them had invested.

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Brian Brokaw, a representative of the investor group, said in a statement that the group is made up of “California residents who believe that the best days of Solano County and California are ahead.” He said the group plans to begin working with Solano County residents and elected officials, as well as with Travis Air Force Base, next week.

In California, housing has long been an intractable problem, and Silicon Valley moguls have long been frustrated by the Bay Area’s real estate shortage and the general difficulty of building in California, with their bloated workforce. Companies like Google have clashed with cities like Palo Alto and Mountain View over expanding their headquarters, while their CEOs have bankrolled pro-development politicians and “yes in my back yard” activists who have pressed for looser development and zoning laws in the hope of making it happen. Easier to build faster and taller.

The practical need for more space has sometimes turned into lofty visions of building entire cities from scratch. Several years ago, Y Combinator, a startup incubator, announced an initiative that dreams of turning empty lands into a new economy and society. Years earlier, Peter Thiel, co-founder of PayPal and billionaire investor in Facebook, had invested in… Seas Institutean attempt to build a new society on lily pad-like structures in the open ocean exempt from law and taxation.

But though these ideas garnered much attention and curiosity—praised in some corners for vision and ridiculed in others for arrogance—they were nothing more than rhetoric.

When Flannery began looking for real estate, she bought lots of land, very quickly, to the consternation of the locals who had no idea who the buyer was or what plans they had in mind. Catherine Moy, the mayor of Fairfield, California, began posting about the project on Facebook several years ago after receiving a phone call from a farmer about a mysterious buyer bidding around the county. In an interview, Ms. Moy said she went to the county assessor’s office and found that Flannery had bought tens of thousands of acres.

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John Garamendi, a Democrat who along with Mike ThompsonAnother Democrat, who represents the surrounding district in Congress, said he had been trying to learn the identity of the company for four years.

“I couldn’t find out anything,” he said.

On Friday, he said, that suddenly changed. This week, Flannery’s representatives reached out to him and other elected officials and requested meetings about their plans. He added that a date is now being set for this meeting.

“This is their first attempt ever to speak with any of the local actors, including myself,” he said.

The land Flannery was buying is not intended for residential use, and even in his 2017 bid, Mr. Moritz conceded that rezoning could be “obviously difficult” — a reference to California’s difficult and contentious development process.

To get the project done, the company would certainly have to use the state’s initiative system to get Solano County residents to vote on it. The hope is that voters will be lured in by promises of thousands of local jobs, increased tax revenue and investments in infrastructure such as parks, a performing arts center, shopping, restaurants and a trade school.

Mr. Moritz said in his 2017 speech that the financial payoff could be huge. He estimated that the return could be many times the initial investment from just rezoning, and much more if they start building.

“If the plans materialize anywhere near as contemplated, this should be an amazing investment,” Moritz wrote.

The Bay Area is among the most expensive in the country, even after the post-pandemic drop in rental and home prices. For decades, economists and housing experts have blamed a long-running housing shortage and California’s inability to build enough to meet demand.

Mr. Moritz nodded to this in an email to the investor, saying that “this effort should relieve some of the stresses we’re all feeling in Silicon Valley — rising house prices, homelessness, congestion, etc.” He added that his group acquired about 1,400 acres for less than $5,000 an acre. The price per acre has escalated since then, and the company’s most recent purchase was close to $20,000 an acre, according to court documents and people familiar with the matter.

The purchases came into the open this spring when Flannery’s attorneys filed a lawsuit in US District Court, accusing the landowners of colluding to inflate prices.

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The group focused on Gibson Prairie and Montezuma Hills, an agricultural area in eastern Solano County between the cities of Fairfield and Rio Vista, according to the lawsuit. This area is mostly uninhabited and covered with farms, windmills and power lines.

In November 2018, the company sent offers to “most landowners in this area,” the lawsuit said, and included incentives such as allowing sellers to keep income from wind turbines, as well as staying in the properties rent-free under a long-term lease. Return agreements. Over the five years, the lawsuit said, the company purchased about 140 properties from 400 owners.

This month, a lawyer representing the landowners filed a joint motion to dismiss the case. In July, three of the landowners said they had reached a possible settlement with Flannery. Other owners could not be reached for comment this week, or declined to do so.

As bids continued and prices soared, Solano County landowners started talking about who would buy so much land for so much money.

“They were coming up with four or five times the market price at that time,” Ms. Moi said. “They were deals they couldn’t miss.”

Flannery’s offerings have been creating millionaires all over the county, but no one seems to know what the mysterious company intends to do with the land that is now much of the whole county.

That changed last week, when residents began receiving text messages and emails with a survey measuring their opinions on a number of questions. One asked them to rate the preference of several names, including Joe Biden, Donald Trump and Flannery Associates. Another question began describing a potential ballot for a project that “would include a new city with tens of thousands of new homes, a large solar farm, orchards with over a million new trees, and over 10,000 acres of new parks and open space.”

Ms. Moi cited poor infrastructure, including the two-lane highway that bisects the area which she said was already congested due to super commuters driving to and from the fringes of the Bay Area. The region is also subject to regular droughts and is at a high risk of wildfires.

“It’s like pie in the sky,” she said.

Sheilagh MacNeil Contributed to research. Yuen Lu Contributed to reports.

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