Thesis Driven dives deep into emerging themes and real estate operating models. Today’s letter discusses California Forever, the group behind a proposed new city in Solano County, California.
Last week, the New York Times broke the story of Flannery Associates, a secretive group that has spent over $800 million buying over 50,000 acres in Solano County, California. The Times revealed that Flannery is an affiliate of California Forever, a group backed by tech leaders including Marc Andreessen, Michael Moritz, and the Collison brothers, and it plans to build a new city on a scale not attempted in California since Donald Bren built Irvine.
We’ve covered new cities in the past at Thesis Driven. Unlike many in the real estate industry, we are not wholly bearish on the idea. There have been multiple successful attempts at new cities in the United States over the past few decades from New York’s Kiryas Joel to Florida’s Seaside and The Villages. And rising frustration with zoning and land use ossification as well as remote work have combined to make starting a new city slightly less of an uphill battle.
Today’s letter will evaluate what we know today about California Forever’s proposed new city in Solano County, including:
The fundamentals: the location, the land, and California Forever’s team;
The process they’ll face going forward;
The good, the bad, and the ugly from what we’ve seen to date;
How the project might move forward and thoughts about what it means for new cities.
I don’t have any inside intel here, and I’m not going to reveal any facts that aren’t already public. Rather, we’ll focus on putting California Forever in the context of other city-building projects and providing an assessment of where it stands and how it might proceed from here.
So what do we know?
Before we evaluate anything, let’s start with the facts.
Over the past six years, a group led by a guy named Jan Sramek and backed by some major Silicon Valley names—Marc Andreessen, Michael Moritz, Chris Dixon, Laurene Powell Jobs, Reid Hoffman, and the Collison brothers—have purchased approximately 52,000 acres worth of land across 300 or so parcels for $800 million. They made these purchases via an entity, Flannery Associates, that maintained tight secrecy, buying land while avoiding transparent engagement with local elected officials and the nearby Travis Air Force Base.
That all changed two weeks ago, when—according to the New York Times—Flannery representatives began reaching out to local officials requesting to meet. They also published a website introducing California Forever, Flannery’s parent company. It combines talk of jobs, walkability, and solar farms with what appear to be Midjourney-generated renderings of a New Urbanist-style city.
The response among those officials has since been broadly negative, a mix of frustration about Flannery’s secrecy and lack of engagement to date, concerns about infrastructure and maintaining the area’s current quasi-rural identity, and fear that the development will spook Travis AFB into relocating.
Before we dig into the process Flannery Associates will face to win approval to build anything, let’s spend some time on the location they chose and the land they purchased.
While the 52,000 acres purchased by Flannery stretch across a 15 mile span between the Sacramento River and Travis Air Force Base, the "center" of their holdings appear to be near the intersection of CA-12 and CA-113 in unincorporated Solano County. Without traffic, this intersection is an hour’s drive from downtown San Francisco. Alternatively, it’s a 20 minute drive from the Fairfield/Suisun Amtrak station and 50 minutes from downtown Sacramento.
Studying the location allows us to back into the likely selection criteria:
Within a 1.5 hour commute of San Francisco;
Not extremely hilly;
Not a swamp (or farmland that was formerly a swamp);
Not in a regional preserve or other protected area;
Not already developed.
I do not believe there are any other sites that meet all these criteria at any substantial scale. This is it. While it might be possible to craft a similar assemblage in northern Marin / western Sonoma counties—south of the Russian River, north of Tomales Bay—the locals there are wealthier and likely farless amenable to large-scale development, making the Solano County location preferable. Organizations like the Marin Agricultural Land Trust also block development in agricultural Marin County by placing large swathes of land under permanent deed restriction forbidding development.
Flannery clearly picked a location with economic drivers already in place; despite recent struggles, the Bay Area is still a massive economic engine with tremendous wealth and demand for housing. For most cities, 60 miles would be on the commuting fringe. For the San Francisco Bay Area—with service workers commuting in from Stockton, a full 30 minutes further away—it’s sadly acceptable.
It’s also important to note that the location was likely chosen five to seven years ago at the peak of optimism regarding autonomous vehicles. If you polled venture capitalists in 2017, the majority would likely have said we’d have widespread Level 4 if not Level 5 autonomy, making that hour-plus commute far more palatable. Since then, AVs have gone through the trough of despair only to re-emerge recently as Cruise and Waymo autonomous taxis show increasingly reliable performance. And there has been one unexpected tailwind: a 90-minute commute is far more tolerable if one is only going into the office 2 or 3 days per week, a trend that would’ve been difficult to anticipate six years ago.
Solano County itself is home to approximately 450,000 people. The population is concentrated into three mid-sized cities along the I-80 corridor between Oakland and Sacramento: Vallejo, Fairfield, and Vacaville. The county’s demographics are typical of the region—approximately a third white, a third Hispanic, and the remainder split between AAPI and African-American. The county’s median household income is $89,000, slightly higher than the median for California as a whole. Travis Air Force Base is among the county’s largest employers—an important angle in the Flannery Associates story.
52,000 acres is a lot of land. By comparison, San Francisco is only 30,000 acres, and Manhattan sits on merely 14,600. While Flannery’s 52,000 acres aren’t contiguous—see below—the company does have several contiguous parcels that big enough for a medium-sized city themselves. They also claim that some parcels they don’t own are subject to agreements with the landowners, so the actual amount of land they control may be significantly larger.
I’m going to take at face value that Flannery spent $800 million for this land, or approximately $15,400 per acre. That’s 2 to 4 times what I’d normally expect un-entitled ranch land outside a major city like San Francisco to trade for, but Flannery was clearly making unsolicited offers-you-can’t-refuse to landowners, driving prices up. And it’s worth noting that by comparison, an acre of undeveloped land in San Francisco goes for $3 million on the fringes to $25 million in the downtown core, so there’s still a lot of money left on the table if Flannery can pull this off. Even in nearby Vacaville land is $75,000 per acre, so there is upside to be had.
As I noted, the land today is primarily un-entitled ranch land with the gently rolling hills common in that part of the Bay Area. Windmills of the Shiloh Wind Power Plant are spread across in the southern part of the holding, as are steeper hills that may make development more challenging. The hills smooth as you go north, and the windmills disappear north of CA-12.
Sheep and windmills. This picture from Google Street View was taken in March when the grass is typically green.
I’m not going to spend a lot of time talking about the infrastructure currently available on Flannery’s land. It’s safe to say that Flannery and its backers will have to build almost all of it from scratch, and the infrastructure that actually gets built will be a complex negotiation with local officials, which we’ll discuss later in the letter.
I will note that the site’s presence on the Sacramento river lends itself to water-based transportation to San Francisco via ferry. While ferries are low-volume transit solutions in comparison to (say) light rail or subway and thus generally not appropriate for dense places like New York City, they may make sense at the density that Flannery is proposing here.
Much has been said about California Forever’s backers, a who’s-who roster of Silicon Valley luminaries. But it’s unlikely any of them are operationally involved in this project, and far less has been written about California Forever’s actual team.
California Forever CEO Jan Sramek certainly does not have the CV you’d expect from an aspiring city builder. New York Mag did a brief profile of him in 2009 when he was a trader at Goldman Sachs. He then launched a couple startups—I couldn’t find out much about them—before disappearing in 2017 to start work on California Forever. Despite their best efforts to write a hit piece, the Daily Beast only succeeded at nailing Sramek for having a milquetoast finance background and liking Peter Thiel at one point.
California Forever has since brought on several city planning and land use experts, including Gabriel Metcalf, a 20-year veteran and former CEO of Bay Area planning organization SPUR, and B. H. Bronson Johnson, infrastructure specialist and Sidewalk Labs veteran. They’ve also retained design agency AKQA, who I assume is responsible for California Forever’s Midjourney renderings, as well as a handful of other advisors covering architecture, infrastructure, engineering, and land use law.
Not a lot is known about California Forever’s plans, and it’s possible those plans don’t even exist yet. But based on the renderings they’ve released and the language they’re using, they’re likely pursuing a New Urbanist approach similar to Seaside, Florida or Bozeman’s Blackwood Groves with an emphasis on walkability, mixed-use, and "gentle density."
The densities portrayed on their site are likely in the range of 5,000 to 12,000 people per square mile, similar to Pasadena or Milton Keynes at the low end or Santa Monica at the high end. (See a prior letter we did on inferring population density here). Based on the team they picked and the renderings they chose, their designs are likely influenced by writers like Donald Shoup (The High Cost of Free Parking) and Charles Marohn (Strong Towns). Narrow streets that de-emphasize cars, pedestrian spaces, and mid-rise "missing middle" housing—townhomes and small multifamily buildings—are hallmarks of the Strong Towns approach.
Rendering from California Forever
California Forever’s site speaks at length about their intent to maintain open space and "build a compact community away from prime agricultural lands." Given the magnitude of their land holdings, they should have no problem doing that—at a density of 10,000 people per square mile "in town", they would only need to dedicate an eighth of their land (10 of 81 square miles) to development to build a city of 100,000 people. The remainder could be open space, solar farms, ranches, or anything else.
California is not an easy place to build new things. Armed with a number of legal tools, recalcitrant elected officials and even local busybodies can delay projects for years or decades if not kill them entirely. Very little development in California is ministerial or "by right"; almost all must go through some kind of discretionary review and approval—often involving multiple rounds of community engagement. And even once projects are approved, the California Environmental Quality Act (CEQA) gives individual project opponents the ability to force developers to undergo years of costly environmental review.
Not to be outdone by the state, California counties and municipalities have erected barriers of their own. Since 1984, Solano County’s General Plan has prohibited more or less all greenfield development in the county. The County’s "Orderly Growth Measure"—which attempts to force all new development to happen within existing towns rather than on agricultural land—requires that any approval of Flannery’s project be accomplished through a county-wide ballot measure updating the county’s General Plan. The vote could happen as soon as next year.
The California Forever site takes pains to align the project with the Orderly Growth measure in spirit. As mentioned earlier, the city’s middle-density design enables a fairly large city to be built in the core surrounded by open space, allowing California Forever’s backers to argue that they’re furthering the goals of the Orderly Growth concept while providing much-needed housing.
If Flannery loses their ballot measure, the city’s plans have likely reached a dead end barring some constitutional challenge to the Orderly Growth Measure, which I find unlikely to succeed. But even if they win their ballot measure, it will still face the kind of litigation that can drag projects like this out for years.
(For what it’s worth, there seems to be disagreement on whether California Forever’s plans would still be vulnerable to CEQA litigation. A direct vote should supersede CEQA, but there are still likely paths for opponents to challenge aspects of the project on CEQA grounds.)
So even in an upside scenario it will be many, many years before anything gets built.
The Good, The Bad, and The Ugly
Since its announcement two weeks ago, California Forever has drawn a lot of attention—most of it negative. While I don’t know everything California Forever has in the bag, this is my unvarnished take on what I’ve seen to date and where the project might go from here.
For starters, we need more people thinking like Jan Sramek. Ambitious visions in the brick-and-mortar world are in short supply, and our collective eagerness to see them fail has driven a generation or two of entrepreneurs into mobile ad optimization and crypto scams. I hope California Forever succeeds simply to encourage more talented people to do interesting things in the world of atoms.
And I don’t believe we have any moral imperative to slog it out with existing cities’ ossified bureaucracies as some urbanists have argued. We need to build, and if existing cities won’t allow us to do so, it’s perfectly reasonable and morally acceptable to build new ones.
I also view the New Urbanist model that Flannery has embraced as the best approach to building a new city today—or at least one that requires discretionary approval. New Urbanist design can unlock significant density: Park Slope, Brooklyn has a density of almost 50,000 people per square mile with relatively few buildings taller than six stories. New Urbanism also allows planners to embrace a traditional aesthetic that evokes nostalgia and draws inspiration from pre-war American town centers and local vernacular. It may not get the architects and urban aesthetes excited, but it probably has the highest likelihood of getting approved and built.
And while it’s a low bar, whatever California Forever creates will likely be in the top decile of greenfield development quality in the United States today. People priced out of California end up in the sprawling car-oriented suburbs of Phoenix, Austin, or DFW, the latter of which now stretches halfway to Oklahoma in a contiguous carpet of treeless single-family subdivisions.
If your land assemblage is so large, secretive, and aggressive that it prompts a Department of Defense investigationon homeland security grounds involving multiple federal, state, and local elected officials as well as military intelligence officers your discretionary entitlement process is probably not off to a great start.
I say this from the cheap seats with love, but I don’t believe I could’ve designed a worse announcement than California Forever just pulled off. This was never going to be easy or controversy-free, but having everyone from the federal elected officials to local mayors to the Air Force going on the record with concerns about your project is bad. The roster of Silicon Valley elite is also bad—we’ll get to that in a bit. And your sole example of community engagement being a push poll you did earlier this year is bad too.
Aside from the substance of the proposal—much of which is good, and almost all of which was lost in the headlines about shadowy tech billionaires—I cannot think of anything good to say about California Forever’s public affairs execution to date.
Take this little anecdote from their site, for example:
For example, when California Water Service and Travis were building a new water pipeline to Travis in 2021 and asked us to sell them a right of way for the pipeline, we immediately offered to donate the right of way for free instead.
I cannot imagine what kind of alarm bells that behavior raised at the Department of Defense. Who donates a right of way to the military? Any private or non-profit developer would see dollar signs. Some community organizations or individual owners might simply say no. But just give it away for free? That’s the behavior of a hamfisted foreign actor or a lunatic. And lunatics generally don’t buy tens of thousands of acres of land near military bases.
In a sense, the fact that this is going to a popular vote is perhaps California Forever’s only saving grace. They have at least a year to convince the people of Solano County that these plans will give them jobs, raise the value of their homes, and add amenities to their county that can only be found an hour away in Sacramento or San Francisco today. Since all those things are likely true, California Forever has a fighting chance. But it’s not off to a great start.
While California Forever’s announcement fumbled the bag, they weren’t exactly set up to succeed. Since Flannery Associates started buying land six years ago, public opinion has swung dramatically against Silicon Valley, the technology industry as a whole, and (in particular) people who got rich building technology companies.
This is in "the ugly" because I’m not sure how to fix it, but the technology elite have likely lost their moral authority to do something like start a new city. And nowhere is this more true than in California, where voters are more likely to believe that we have too many people than we have too few homes. California Forever’s mere association with names like Andreessen and Moritz was enough to generate a cycle of negative publicity on a national scale.
There’s plenty of blame to go around here, but it’s going to be tough to build anything ambitious in a low-trust democratic society in which people have decision-making power but don’t believe anything they’re being told by anyone. I’m not sure what I would do today if I were in Sramek’s shoes, but actually engaging the local community and appointing some people beyond narrow tech and urbanist circles into positions of real power and authority seems like a good first step.
Experienced developers know they need "friendlies" in the local community who can vouch for them to elected officials and (if needed) the media. California Forever chose not to cultivate those relationships in favor of maximizing operational security. In my view, they misread how dramatically public opinion of tech money and power has swung since they began buying land.
Friends Don’t Let Friends Start New Cities in California
There are two really hard things about building a new city in the developed world today:
Assembling and entitling land
Generating economic activity
There are very few—if any—places where both of those things are easy to come by. Anyone looking to build a new city will have to pick at least one of those battles to fight, and picking the right one for you is very important.
The vast majority of real estate developers—even those that can make magic happen with entitlements—are powerless when it comes to generating economic activity. The best know how to foster a sense of place and encourage retail activity, but even that requires an abundance of potential customers already in the general geographic area. And the majority of developers simply outsource the work of generating demand to brokers and move onto their next project. So placemaking developers almost always choose to fight the battle of entitlements knowing that economic activity and demand will be present when (and if) they get to the other side.
California Forever did not need to do that.
Jan Sramek managed to convince some of the most powerful and influential business leaders in America to throw meaningful financial resources behind this project. Relatively small and low-cost actions by his backers—a new outsourcing center, a small fabrication plant, a new accelerator or tech hub—would make a tremendous impact in many places in the United States. $800 million buys some land in Solano County, but it could build the better part of a mid-sized city and drive economic revitalization in the Kanawha or Ohio River Valleys.
If that’s too much of a stretch, even up-and-coming areas with nascent tech communities like the industrial Hudson Valley, Northwest Arkansas, and northern Alabama would be far more likely to embrace Sramek’s vision (and his backers’ money). This is no compromise; in fact, the built environment Sramek is able to create would be much more in line with his vision than a California product eroded by dozens of rounds of NIMBY feedback and design-by-committee.
West Virginia Forever, courtesy Midjourney
Sramek and his backers did not need to go to place that already had strong demand drivers. They could’ve brought their own economic engine and generated extraordinary financial returns in the process. Instead, California Forever signed up for a decade of bitter fighting with people who do not feel they want or need more money, jobs, or economic growth.
I hope Sramek and California Forever figure it out. America needs what they have, even if we don’t know it yet.
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