The Billionaires’ Secret Plan to Solve California’s Housing Crisis


This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email transcripts@nytimes.com with any questions.

michael barbaro

From “The New York Times,” I’m Michael Barbaro. This is The Daily.

[MUSIC PLAYING]

For years, a mysterious company has been buying farmland on the outskirts of Silicon Valley, eventually putting together a plot twice the size of San Francisco. But at every step, those behind the company kept their plans for the land shrouded in secrecy. Until my colleague, Conor Dougherty, figured out who they were and what they were up to.

It’s Monday, March 11.

So Conor, this story begins as a real estate mystery that you took it upon yourself to try to crack wide open. So tell us about where this mystery unfolds.

conor dougherty

OK. So if you imagine you’re in San Francisco and you drive north further up into the Bay Area into an area called Solano County. And then you go way east and you end up in this very rural corner of the Bay Area that not a lot of people know about. And it’s over here, in this rural corner of Solano County, where our story takes place.

And it’s these open sort of rolling landscape of yellow hills with almost nothing on it. The largest structures there are wind turbines. And a lot of the families out there are farmers. They farm sheep, feed crops, and cows. And many of the people out there have been there since the 1860s.

This is a place where families stay in the same place for generations and pass the farms down several times. This is a place where not a lot changes, but then, in 2017, something very unusual starts to happen. A company called Flannery Associates, which nobody in the area has ever heard of, starts buying land.

And they buy more the next year, the year after that, the year after that, more and more and more and more, until pretty quickly they’re the biggest landowner in the entire county. So all these neighbors are at supermarkets, they’re at church, they’re at schools. I mean, this is a place where everyone knows everyone.

They’re all on community boards together. They all talk to each other all the time. They all sort of simultaneously get these offers for their land.

michael barbaro

Right. And like you said, they don’t even know who the offer is coming from. All they know is that a very aggressive, as we say in New York, highly motivated buyer, is in their midst.

conor dougherty

Exactly. Highly motivated buyer. So they not only want everyone’s farm, they start offering people these incredibly sweetheart deals, which say, OK, well, I’m going to buy your land, but you can stay there for the next decade or two, depending on how old they are. And for all that time, you can collect all the income from this land.

They don’t even want the income of the land. So one thing everyone realizes pretty quickly is, these people are not interested in farming.

michael barbaro

[LAUGHS]: Because if they wanted to farm, they would kick the farmers off the land they had just bought.

conor dougherty

Or they would want to make money from farming.

michael barbaro

Right.

conor dougherty

They don’t care about the price that reflects the income and they don’t even care about collecting the income. So they very obviously have a plan that has nothing to do with farming. And so the question is, what’s the plan? And who are these people?

michael barbaro

Right.

conor dougherty

So then the county starts to get curious who this is, but because this Flannery Associates is incorporated in Delaware, which has some specific rules that kind of cloak who is behind a company, nobody can figure out who they are.

And they send a bunch of letters to the company, Flannery Associates lawyer. And this lawyer kind of just puts them off and says, oh, don’t worry about it. This is a group of wealthy families who are looking to diversify their assets and they just want to park it in farmland, basically.

Local mayors, concerned citizens are going down to the libraries and pulling property records and looking up corporate LLCs and stuff to sort of try to figure out who is behind this. The county becomes very concerned about what is happening here. There’s this massive information vacuum and people start to fill it.

[MUSIC PLAYING]

archived recording

We’re talking about Solano County, where the single largest landowner is now an LLC based in Delaware.

The group Flannery Associates has acquired tens of thousands of acres of dry farmland, equivalent to nearly double the size of San Francisco, and no one knows why. So whatever they are, I know what they aren’t. They aren’t buying carbon credits. They have intentions that are outside of our usual land use ideas. That’s what makes it scary, I guess, is that we know nothing about them.

conor dougherty

Now there’s an important detail here that I’ve left out, which is —

archived recording

A mysterious purchase of dry farmland near Travis Air Force Base, one of the most critical military bases in the Western US, has raised serious questions.

conor dougherty

All of this land is near and surrounds Travis Air Force Base, which is a very important strategic Air Force base, sometimes called the gateway to the Pacific. And the concern is that a foreign actor of some kind, spies basically, is buying up a bunch of land around an Air Force base.

archived recording

And it may very well be Chinese money.

conor dougherty

With a goal of surveilling it or something like that.

archived recording

For an enemy to be able to be right next to the base to monitor, to listen in to the communications. It would certainly be possible to do that if you own the land adjacent to the fence line of Travis Air Force Base.

conor dougherty

There’s never any evidence of all this, but because of where the land is situated around this base —

michael barbaro

Right. It’s a somewhat reasonable suspicion.

conor dougherty

Yes. So by 2023, members of Congress, all sorts of people are flipping out. The Defense Department starts investigating this. The FBI starts investigating this. The State Department starts investigating this. All of these agencies are investigating who is behind this company. Just anything you can come up with, people have thrown the idea out, except for what it turns out to be.

So I cover housing here, and this was a little off my beat, but I was very interested. So I start looking into it a little bit and made a couple calls, but I didn’t turn up much. Then one day pretty much out of the blue, I get a message, and I can’t exactly say where, or how, or from whom, but someone tells me, I know what this is.

michael barbaro

Tantalizing.

conor dougherty

This isn’t some group of rich families trying to park their cash in farmland, like the Flannery Associates lawyer implied. This is, at least according to this tip, some of the most powerful people in technology, venture capitalists, executives from Silicon Valley, buying this land and they’re trying to round up other investors to join them.

michael barbaro

So now you have a theory about who is buying this land. It’s a bunch of really rich venture capital types from Silicon Valley. But at this point, you don’t really know if that’s actually true.

conor dougherty

Totally. And as you know, you get a lot of tips as a reporter. Some of them sound quite extraordinary and turn out to be nothing, but for various reasons that I can’t get into, I sort of knew this had to be worth checking out. So I call basically everyone I’ve ever met.

I mean, I’m kidding, but I start just blitzing the phones, right? I am sitting there texting, calling, just trying to find anybody who might know anything about this in this kind of nexus.

michael barbaro

I think the technical term is “dog with a bone.”

conor dougherty

Yes. So then I started working with my colleague, Aaron Griffith, who covers venture capital. And eventually, through a ton of reporting, we were able to confirm that, yes, in fact, the money behind Flannery Associates was a who’s who of Silicon Valley.

[MUSIC PLAYING]

Laurene Powell Jobs, the widow of Apple co-founder Steve Jobs. Marc Andreessen, very famous venture capitalist from Andreessen Horowitz. Michael Moritz, billionaire venture capitalist from a company called Sequoia Capital. Reid Hoffman, co-founder of LinkedIn.

Some of the richest people on Earth are actually the ones buying all this farmland. And the craziest thing is what I learned their plan was. To take all this land, an area about twice the size of San Francisco, on this farmland building totally from scratch a brand new city that they hoped would help solve California’s housing crisis, and beyond that, create an entirely new model for building communities in this country.

michael barbaro

We’ll be right back.

So what do you end up learning, Conor, about the specific plan that all these rich folks have for this model city that they want to build on this farmland?

conor dougherty

So this whole thing, I learned, is the plan of a guy named Jan Sramek.

michael barbaro

And who’s that?

conor dougherty

Jan Sramek is an interesting guy. He’s originally from the Czech Republic, and in his telling, he grew up in this tiny town of thousand people, but he’s this very precocious, entrepreneurial young guy. According to him, he brought internet to his town and actually cut a side deal for himself to get money for this. He’s always looking for an angle. And with the help of different scholarships, he studied at Cambridge, goes to the London School of Economics, and becomes a star trader at Goldman Sachs.

He leaves Goldman Sachs and eventually makes his way to California, where he does several startups that have a pretty mixed record of success. And one thing to know about Jan is that he’s really enamored with the culture of Silicon Valley. He loves the startup thing. He loves the feeling of the way people in Silicon Valley try to blend this kind of philanthropic message with capitalism. The “we’re saving the world and we’re going to make a bundle doing it.” Like, this whole sort of spirit of Silicon Valley, all of this appeals to him. But there’s one thing he really doesn’t like, especially being a European, he hates the place.

michael barbaro

[LAUGHS]:

He likes the culture, but he hates the physical.

conor dougherty

He hates the physical place. Now if you’ve ever spent time in Silicon Valley, it’s really not a very remarkable place. It’s very sprawled out. You go to Sand Hill Road, which is where all the biggest venture capitalists are. And it’s like this kind of crappy office complex.

There are, of course, some very beautiful wealthy neighborhoods, but a lot of the housing stock is these kind of cul-de-sacy, whatever you would stereotype is the kind of American suburb, it just feels like that. So not only is he sort of uninspired by this very low density landscape, there’s a huge housing crisis in California at this time. And not only is there a huge housing crisis, there’s just a ton of conflict over whether or not the state should build more, how it should build. It’s just a big fight over basically whether to even solve it.

So he is coming to this all very fresh. And the idea that there’s this place where people start big companies and investors give young guys millions of dollars to chase their crazy idea. I mean, this just seems like paradise to him. And allowing more people to move here, building tons more housing, building great buildings, that’s what he thinks should be happening.

michael barbaro

So his argument basically is that a place as magnetic, and energetic, and influential as the Bay Area, as Silicon Valley, deserves a physical community worthy of all those qualities that does not exist. In fact, it’s the opposite.

conor dougherty

Yes. 100 percent. Now that feeling that Jan’s expressing that Silicon Valley and San Francisco can do better, that it’s become too hard to build in California, that this vibrant place has gotten stuck, that feeling is shared by a lot of very rich and powerful people. In particular, in the venture capital and tech community, there is this very deep frustration in that world that as much influence as they’ve had on the digital world, they’ve had very little influence on the physical world.

I mean, these are people who grew up dreaming of flying cars, and you know, monorails through “SimCity” landscapes, that sort of thing. And yet they live in this strip mall, office complex, cul-de-sac suburb. And because of the politics of the state, it’s almost impossible for them to change that.

People talk constantly about this. And Jan, at this point, is extremely well connected. He is friends with billionaires. He’s in a book club with some pretty high-powered venture capitalists. So he puts together a plan for a new community in eastern Solano County, one that lives up to his vision and one that he brings to these people. And eventually, he’s got almost $1 billion to pursue this idea of building an entirely new city from scratch out in this rural area.

michael barbaro

So Conor, what happens once you and “The Times” break the story and tell the world what’s really going on because it’s been so secretive and mysterious until that point?

conor dougherty

So within an hour or two of us breaking this story, Jan’s LinkedIn page re-identifies him as CEO of California Forever.

michael barbaro

California Forever?

conor dougherty

Flannery Associates is dead and California Forever has taken its place. It’s a whole new company with a whole new name and a very friendly face. And not only that, it’s as public as you can be. It goes from black box that nobody can get in to a company that has opened four offices around Solano County so that you can walk in and go, hey, how are you doing? What’s this project? And learn about it, and see maps, and talk to people about it.

michael barbaro

Wow.

conor dougherty

A company that has put billboards all over the 80 Freeway on the way up to Sacramento saying, “California Forever.” So they’ve gone from nothing to you can’t stop hearing about them.

michael barbaro

Well, what exactly are they saying once they decide to acknowledge what they are, rebrand themselves, and start having what sounds like the beginning of a conversation with the people in this county?

conor dougherty

So because of county law, they cannot build this city unless they get a vote of the people.

michael barbaro

Right. California is, among other things, land of the ballot initiative.

conor dougherty

Exactly. Solano County has a rule that says you can’t build in the rural areas, and that’s because they want to preserve these farms just as they’ve been for generations. So at the start of this year, California Forever filed a proposed ballot initiative that would undo that and pave the way for them to eventually build this city. And the hope is that this initiative would go before Solano County voters in November.

[MUSIC PLAYING]

archived recording

Good evening. Good evening, everyone. Thank you for being here. How’s everyone doing tonight?

Great.

Thank you for coming out.

conor dougherty

So they have to go on this massive charm offensive because not only do they have to eventually convince elected officials and all of these people to give them permission to build —

archived recording

Thank you for coming out and learning about this California Forever project. You’ve been hearing a lot about it in the media. And we’re here to get your questions answered. We know everybody’s got a lot of questions.

conor dougherty

They have to get the whole county to vote affirmatively for this project.

archived recording

So, Jan, take it away.

conor dougherty

So Jan goes from nobody has heard of Jan to he’s everywhere in the county. He’s meeting with elected officials. He’s meeting with union leaders.

jan sramek

Good evening, everyone. Thank you for coming. To introduce myself, you might be asking yourself, why is this guy with a funny accent here?

conor dougherty

And then he starts having a series of public town hall meetings in all these different cities across Solano County.

jan sramek

This acceleration in home prices and pushing of particularly working class families out of California has been building up since the ‘80s.

conor dougherty

And he just begins pitching people.

jan sramek

Every five years, it gets worse, and it gets worse, and it gets worse, and it gets worse.

conor dougherty

And the pitch really begins with all the huge problems California is facing right now.

jan sramek

And so where our project ties in together with this is that we do think that we need to revisit some of these ideas. And we need to look into if our kids are going to be able to live in California, if California is going to be a state that does something about homelessness, if California —

conor dougherty

And he really says, I have an answer to what is ailing us. We need to build again. We need to think big again. That this is what California needs to essentially shock itself out of its current malaise.

jan sramek

New community, homes and safe walkable neighborhoods, good paying local jobs, locally owned shops and businesses, big employers. Make it big enough to be an economic engine for everyone. Make it big —

conor dougherty

And he says, we’re going to build row houses with bike lanes and a dense city with a bus running around the perimeter of it where you can walk to shops, and basically describes Brooklyn, where you live or where you’re sitting.

jan sramek

And we went out and we found a group of investors who wanted to double down on California, and who believed that if you could purchase enough property, that you could design a project that was designed in a way that it made everyone around better.

conor dougherty

And eventually this city, they hope, will have 400,000 people living there.

michael barbaro

A from scratch, fully envisioned, densely constructed community where you go to work, you go to the theater, you do your grocery shopping all within walking distance of your row house, which is attached to another house, which is exactly the kind of dense style of living that urban planners say we should be having in this country. More of it, not less of it.

conor dougherty

Exactly.

michael barbaro

Conor, all of this sounds eminently reasonable that I wonder why Jan approached it from the beginning with so much secrecy and mystery because that doesn’t feel in keeping with the spirit of what he is talking about here.

conor dougherty

Yes. Well, pretty simple answer there. Money. What Jan will tell you is that they were worried that people would jack up the prices of the land.

michael barbaro

If they were public?

conor dougherty

Yes. That if people out there realized that the richest people in the world had a plan to buy all this land, they would start raising the prices.

michael barbaro

Got it.

conor dougherty

But at the same time, it created a ton of suspicion in this community. And on top of that, it’s possible some of these farmers might not have sold if they would have known what the plans were. Many of these people have a very deep connection to the idea of this as an agricultural place.

michael barbaro

Well, to that point, what happens once the public and all the farmers who have sold their land learn precisely what the plan is and what they have sold their land off to become?

conor dougherty

So people are incredibly unhappy about it.

[MUSIC PLAYING]

So I go to the town hall and right off the bat —

archived recording

My question is, where are you making your money? Because it comes across like you’re doing a big favor for all of us to build this, but I know you’re looking for a bottom line. So I’m curious.

conor dougherty

People contend that this is just a plan to get rich. If you get your way, you will get to build this giant city, and the land you bought for not very much money will suddenly be worth an astronomical amount more. And these people who are already billionaires are just going to get richer.

archived recording

I am one of the 43 individuals that has been named in the lawsuit because I own 200 acres of land.

conor dougherty

As they acquired the land, they also used some pretty significant strong arm tactics such as suing farmers, many of whom were in a lawsuit with them during the town hall.

archived recording

Will you commit to dropping the lawsuit against the local farmers who are not aligned with your vision in a goodwill attempt to change the way that you are interacting with our community, which is right now unacceptable?

conor dougherty

At one point, this family rose up and one after the other started saying, you’re suing my family.

archived recording

Flannery/California Forever’s divisiveness and deception are very well documented.

conor dougherty

Then there’s the more obvious thing people say which is —

archived recording

How do you expect anyone in this room or the county to believe what you’re saying?

conor dougherty

How do you expect us to trust you after you’ve been basically lying to us for seven years?

archived recording

I would like you to explain further why you look at farmers, whose land is more important to them than your money, why we are a problem?

conor dougherty

This is a rural area and does not want to be a city. They have remained here because they like being farmers and they like being in a small town where everyone knows each other, and that is the way of life to which they are accustomed. And many of these people will tell you, I know California has a housing problem.

They are aware that there are big cities not too far from them and that they have significant troubles. But what they’re saying is, this is farmland. If you want to solve San Francisco housing problems, like, maybe you start in San Francisco.

michael barbaro

Right.

conor dougherty

No one there seemed particularly happy about it.

michael barbaro

Right, which does not seem like a great sign if, as you said earlier, Conor, what California Forever needs most is to hear from this community that it’s willing to vote to let this city get built.

conor dougherty

Yes, people are very skeptical of them. And I’ve even heard people who are more seasoned political people saying, it’s very hard to trust them right now. And if I’m going to give them all this affirmation in the form of a vote, I need to be pretty confident that they’re going to do what they say they’re going to do.

michael barbaro

I mean, there’s a real irony here, which is that California Forever thought that the best way to circumvent all of the normal screaming, and yelling, and community opposition, and bureaucracy, and NIMBYism of big city California was to escape to rural California and try to build a brand new model of housing and urban living there. And they ended up unleashing a different, but it sounds like no less fierce version of all those same forces just a couple hours outside the city.

conor dougherty

Exactly. And I think they probably knew that would happen. And I think in a weird way this is what they want.

michael barbaro

What do you mean? Why do — what do you mean they want it?

conor dougherty

I think in their mind, it’s almost easier to build a city than it is to build a duplex. I think they would rather have one big, gigantic, knockdown, drag-out expensive fight, and then if they get approval, just build the city. If you think about it, the problem in San Francisco is that they fight over every little duplex. They fight over every little apartment building.

And I think they’re sort of like, OK, let’s do this once. Let’s have it be as furious and expensive as it can be. And if we get over that hump, then we can build a city that they hope one day will have 400,000 people in it. And I think they’ve calculated, if we do on this scale, it’ll be too big to fail.

michael barbaro

This is fascinating.

conor dougherty

This project is almost ideological for Jan.

[MUSIC PLAYING]

He knows that there’s a huge distrust of Silicon Valley and billionaires, and that many see his approach as hubris. He’s totally aware of all of this.

But this is a state that built the Golden Gate Bridge and went from a little frontier town to the fifth largest economy in the entire world. And I think there’s a feeling that it’s forgotten how to do those big things.

And I think what Jan would tell you, his argument, is somebody needs to revive the spirit. Somehow we need to get Californians excited about big things again. And if it’s not this, then what is it? And if it’s not them, then who?

michael barbaro

Well, Conor, thank you very much. We appreciate it.

conor dougherty

Thank you, Michael.

michael barbaro

We’ll be right back.

Here’s what else you need to know today. The Justice Department has begun a criminal investigation into the mid-air blowout of a panel on an Alaska Airlines Flight that forced the plane to make an emergency landing in January. Federal investigators have suggested that Boeing may have delivered the plane to Alaska Airlines without installing the bolts necessary to hold the panel in place.

And in an interview over the weekend with MSNBC, President Biden delivered some of his harshest words to date about Israel’s deadly military strategy in Gaza and about the man leading it, Prime Minister Benjamin Netanyahu.

archived recording (joe biden)

He’s hurting — in my view, he’s hurting Israel more than helping Israel by making the rest of the world — it’s contrary to what Israel stands for. And I think it’s a big mistake. So I want to see a cease fire.

michael barbaro

In the interview, Biden was asked if there was a point at which Netanyahu’s actions would compel the US to cut off military aid to Israel.

archived recording (joe biden)

There’s red lines that if he crosses and — they cannot have 30,000 more Palestinians dead.

michael barbaro

Today’s episode was produced by Rikki Novetsky, Michael Simon Johnson, Eric Krupke, and Will Reid. It was edited by Marc Georges, fact checked by Susan Lee. Contains original music by Chelsea Daniel, Marion Lozano, Diane Wong, and Rowan Niemisto, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for The Daily. I’m Michael Barbaro. See you tomorrow.



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