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| Real Estate & Land |
Land Through the Generations
Daniel Gross
06/01/2004
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In the mid-1930s, Hearst’s penchant for taking on debt caught
up with him. But as his empire crumbled, he nonetheless managed to keep the
ranch. Upon his death in 1951 at the age of 88, Hearst’s possessions were left
to a series of trusts that in turn controlled Hearst Corp. “To prevent his sons
from breaking the empire apart, he gave them—and their heirs after them—only
five of the seats on the [trusts’] 13-member board,” wrote David Nasaw, author
of the authoritative Hearst biography Chief.
The family donated Hearst
Castle, which was enormously expensive to maintain, to the state of California
in 1958. But the surrounding property remained central to Hearst’s five sons,
and to their children. Starting in the 1960s, they made periodic efforts to
develop the area. None succeeded. In 1998, a plan to build a 650-room resort
golf course was stymied by local authorities. It also created tensions within
the family. “The soul of humanity needs the quiet reference of contact with the balance and beauty of the natural world,” William R. Hearst II wrote in a
letter to local officials.
The current generation of Hearsts has tried to
strike a balance between preservation, development, public access and a desire
to gain some liquidity. For the past two years, Stephen Hearst has been working
to forge a deal with conservation groups and the state of California. The
contours of a February 2004 agreement, negotiated principally by the San
Francisco-based nonprofit, the American Land Conservancy, provide for the
Hearsts to receive $80 million and a $15 million state tax credit in exchange
for a 1.75-square-mile seaside parcel. The remainder of the ranch would be
subject to an easement that would place significant constraints on development,
though it would permit the construction of some homes and an inn.
Selling or
subdividing the Hearst ranch could have yielded massive returns. However, it is
difficult to place a value on a property that has been a family haven for 130
years. When real estate is part of a broader portfolio of businesses—most of the
Hearst fortune today lies in media—the option that maximizes profits is not
always the most appealing.
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