The Silicon Valley elite looking to build a city from the ground up

In 2017, Michael Moritz, the billionaire venture capitalist, sent a message to a potential investor about what he saw as an unusual opportunity: a chance to invest in founding 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 Pitch said could create thousands of jobs and be as walkable as Paris or New York’s West Village.

He drew a kind of blank slate for a city that could be reconsidered, from design to construction to new forms of governance. And everything would not be far from San Francisco and Silicon Valley. “Let me know if you like this,” he said in the note, a copy of which The New York Times read.

Since then, a company called Flannery Associates has been buying large lots in a largely agricultural region 60 miles northeast of San Francisco. The company, which has little public information about its operations, has committed more than $800 million to secure thousands of acres of farmland, court documents show. Lot after lot, Flannery made offers to every landowner for miles, paying many times the market price, whether the land was for sale or not.

The purchases by a company unknown to the area and whose business was a mystery have become the subject of intense speculation and development News stories, unsettled landowners, local supervisors, the nearby air force base and members of Congress. Did Disney buy it for a new theme park? Could the purchases be related to China? A deep water port?

Flannery is the brainchild of Jan Sramek, 36, a former Goldman Sachs trader who has quietly courted some of the biggest names in tech as investors, according to the pitch and people familiar with the matter. The company’s ambitions expand with Project 2017: Take a dry patch of brown hills, bisected by a dual carriageway between suburbs and rural countryside, and transform it into a community of tens of thousands, with clean energy, public transportation and… busy city traffic urban life.

The company’s investors, whose identities have not yet been released, are a who’s who of Silicon Valley, according to three people who were not authorized to speak publicly about the plans.

These include Mr. Moritz; Reid Hoffman, co-founder, venture capitalist, and Democratic donor of LinkedIn; Marc Andreessen and Chris Dixon, investors at venture capital firm Andreessen Horowitz; Patrick and John Collison, the sibling co-founders of payments company Stripe; Laurene Powell Jobs, founder of the Emerson Collective; and Nat Friedman and Daniel Gross, entrepreneurs-turned-investors. Andreessen Horowitz is also a supporter. It was unclear how much each had invested.

Brian Brokaw, a representative for the investor group, said in a statement that the group is made up of “Californiaans who believe 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.

California housing has long been an intractable problem, and Silicon Valley moguls have long been frustrated by the Bay Area’s housing shortage and the difficulties of building in California in general as their labor force has exploded. Companies like Google have clashed with cities like Palo Alto and Mountain View over expanding their headquarters, while their executives have funded pro-development politicians and “Yes in my backyard” activists hoping to achieve this by turning to looser development and development policies Zoning laws urged building simpler, faster, and taller.

The practical need for more space has at times turned into grandiose visions of building entire cities from scratch. A few years ago, Y Combinator, the startup incubator, announced an initiative that dreams of turning empty land into a new economy and society. Years earlier, Peter Thiel, the PayPal co-founder and billionaire Facebook investor, invested in the Seasteading Institutean attempt to build a new society on lily pad-like structures in the law- and tax-free open ocean.

But while these ideas have garnered a lot of attention and curiosity — praised in some quarters for their vision and ridiculed in others for their hubris — they were little more than talk.

When Flannery began scouting for land, it bought so much land so quickly that it startled locals, who had no idea who the buyer was or what plans he had in mind. Catherine Moy, the mayor of Fairfield, California, began posting about the project on Facebook a few years ago after receiving a call from a farmer about a mystery buyer bidding across the county. In an interview, Ms Moy said she went to the district assessor’s office and found Flannery had bought tens of thousands of acres of land.

John Garamendi, a Democrat who along with Mike Thompsonanother Democrat representing the surrounding region in Congress said he had been trying to discover the company’s identity for four years.

“I couldn’t find anything,” he said.

On Friday, he said that suddenly changed. Flannery officials reached out to him and other elected officials this week, asking for meetings about their plans. That meeting is now being planned, he said.

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

The land Flannery bought is not earmarked for residential use, and even in his 2017 pitch, Mr. Moritz acknowledged that the rezoning “could definitely be a challenge” — a nod to California’s notoriously difficult and contentious development process.

To complete the project, the company will almost 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 by promises of thousands of local jobs, higher tax revenues and investment in infrastructure such as parks, a performing arts center, shopping, restaurants and a trade school.

The financial gains could be huge, Mr. Moritz said in the 2017 pitch. He estimated that the return from repurposing alone could be many times the original investment, and many more if construction got started.

“If the plans are even remotely implemented, this should be a spectacular investment,” wrote Mr. Moritz.

The Bay Area is among the most expensive regions in the country, even after rent and home prices plummeted in the wake of the pandemic. Economists and real estate experts have blamed California’s persistent housing shortage and inability to build enough to meet demand for decades.

Mr. Moritz nodded to that in the email to the investor, arguing that “these efforts should alleviate some of the pressures in Silicon Valley that we’re all feeling — rising real estate prices, homelessness, congestion, etc.” He added that his Group secured approximately 1,400 acres for less than $5,000 per acre. Since then, the price per hectare has increased, and the company’s recent purchases have totaled nearly $20,000 per hectare, according to court documents and people familiar with the matter.

The purchases came to light this spring when Flannery’s attorneys filed a lawsuit in US District Court accusing landowners of colluding to raise prices.

According to the lawsuit, the group was focused on Jepson Prairie and Montezuma Hills, a farming area in eastern Solano County between the cities of Fairfield and Rio Vista. This area is mostly uninhabited and covered with ranches, windmills, and power lines.

In November 2018, the company mailed offers to “most of the property owners in this area,” the lawsuit states, and included incentives such as the ability for sellers to withhold wind turbine income and occupy the properties rent-free under long-term lease-back agreements. In the five years, the company bought about 140 properties from 400 owners, the lawsuit says.

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

As offers continued and prices rose, Solano County landowners began bickering over who was buying so much land for so much money.

“They would come out with an offer four to five times what the market was at the time,” Ms Moy said. “Those were deals they couldn’t pass up.”

Flannery’s offerings created multi-millionaires across the county, but no one seemed to know what the mysterious corporation was planning to do with the land that now made up a large portion of the entire county.

That changed last week when residents received texts and emails containing a survey asking their opinion on a range of questions. One asked her to rate the popularity of several names, including “Joe Biden,” “Donald Trump,” and “Flannery Associates.” Another question began by describing a possible voting initiative for a project that would include “a new town with tens of thousands of new homes, a large solar energy farm, orchards with over a million new trees, over 10,000 acres of new parks and open space.”

Ms Moy cited poor infrastructure, including the dual-lane highway that traverses the region, which she said was already congested with super-commuters heading to the edges of the Bay Area and beyond. The area is also regularly affected by droughts and is at high risk of forest fires.

“It seems like a dream of the future,” she said.

Sheelagh McNeill contributed to the research. Yiwen Lu contributed to the reporting.

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