As Development In Ag Preserve Stalls, County Seeking To Sustain Dairies

In the past three months, five dairies in the Chino/Ontario area have disbanded their operations and sold their herds.
The once-vaunted Chino Agricultural Preserve was formerly the most intensive milk-producing area in the world. Within its 17,000 acre confines were just under 400 dairies and 400,000 cows. With $800 million in annual dairy production in 1976, the relatively compact Chino Valley region alone was within the entire state of California a close third in milk output behind the much more expansive Tulare and Merced counties.
In the late 1950s, the Chino Valley had become a haven to dairy farmers, many of them of Dutch or Portuguese descent, who were displaced by the urbanization of southeast Los Angeles County. The preserve was formed in 1968 under the auspices of California’s Williamson Act — a 1965 law that was intended to preserve California farmland and to serve as a hedge against urban sprawl. The law granted substantial tax breaks to property owners agreeing to restrict their land to agricultural uses for at least 10 years. By 1970, the Chino Valley was the source for most of Southern California’s milk as well as a major supplier of the cheese for a much larger geographical area.
By the mid-1980s, growing numbers of dairy farmers in the preserve wanted out, as the local industry was itself being subjected to the same pressures that had been brought to bear on dairyman who had been forced to pull up the stakes of their Los Angeles County operations two decades before. Land speculators and developers eyeing the property and envisioning it as residential subdivisions supported politicians at the municipal and county levels to create a dairy-busting agenda that in time spelled the end of the preserve as a lasting entity.
In the late 1980s and into the 1990s, as the county’s land use professionals were seeking to examine the desirability of maintaining the preserve’s dairies as a hedge against the burgeoning urbanization and to determine if the dairy industry had a reasonable prospect of sustaining itself in the changing environment, the county’s elected leadership was heavily influenced by developmental interests, the major providers of political contributions. With a few exceptions, the supervisors leaned in favor of breaking up the preserve.
In 1986, the county took the first step toward deconstructing the Williamson Act’s applicability in the Chino Valley. By 1997, half of the dairies that had been operating in the preserve at its peak had left. The jousting between Ontario and Chino over annexation of the preserve had begun.
In 1999, while there were still 140 dairies operating in Chino Valley, the city of Ontario annexed nearly 8,200 acres of the 15,200 remaining acres in the preserve. Chino laid claim to the other 7,000. The county, for the most part, alternately passively and actively accepted the inevitability of the pending urbanization. Ontario drew up master plans for development of 31,000 homes, 5 million square feet of retail space and 5 million square feet of industrial space.
Chino designated over 400 acres for industrial development and earmarked 2,000 acres for new residences, with complementary plans for commercial development.
But that anticipated development came only in fits and starts. By 2005, the number of dairies had dwindled to 70. The eventual transformation of the land away from its agricultural heyday was under way in earnest. Nevertheless, the development community’s reach exceeded its grasp and the expected building boom within the preserve in the early 2000s failed to materialize. With the economic downturn of 2007, building in the area slowed to a crawl. The county, which had acquired some property in the area under the auspices of sustaining agricultural operations as well as under the assumption the land could be sold in relatively short order at a profit, became a landlord to several dairy operations the county’s political leadership and its political supporters wanted to see shelved.
Ironically, recent events have transpired to put the county in the position of continuing to prop up some of the dairy farms its political leadership a few years ago was angling to extinguish.
A case in point is that of dairyman Geoffrey Vanden Heuvel and his wife Darlene. For the last several years, the Vanden Heuvels have been leasing the 74.57 acres located at 8315 Merrill Avenue in Chino to operate their dairy. For the last 16 months, the Vanden Heuvels have been on the brink of bailing out of the dairy business, but the county has taken to cutting them a $33,000 annual break to simply keep them from departing altogether and having the property lie fallow.
In 1991, the county board of supervisors approved the Agricultural Open Space Land Acquisition and Post Acquisition Preservation program within the Chino Agricultural Preserve, using funds available to the county under the California Wildlife, Coastal and Parkland Conservation Act of 1988 and the Federal Agricultural Improvement and Reform Act of 1996. Nine major acquisitions totaling 371 acres were made utilizing Proposition 70 funds. The county also acquired fee title to the 74.57-acre dairy  at 8315 Merrill Avenue in the Ag Preserve, which is not part of the program properties. On May 21, 1996, the board of supervisors approved a purchase/leaseback agreement with Harry C. and Ruth Wiersema for the 8315 Merrill Avenue property. Escrow closed on February 7, 1997 and a ten-year lease with the Wiersemas commenced. Prior to the end of the ten-year term, the Wiersemas indicated they did not intend to request a renewal, and the property was advertised for lease to a new tenant.
The Wiersemas had sub-leased the dairy to Charles W. and Lynette E. Van Der Kooi, who continued dairy operations until a new tenant could be found.
On October 31, 2006 the board approved a nine-year, six-month, twenty-two day lease agreement with the Vanden Heuvels for the 74.57 acre county-owned dairy at 8315 Merrill Avenue  with a commencement date of February 7, 2007. In the first five years of that lease, the board approved one amendment to the deal, a sub-lease agreement between Vanden Heuvel and Van Der Kooi with a termination date of February 6, 2008, after which Vanden Heuvel became the tenant/dairy operator  The dairy includes  a 2,440 square foot single family residence.
With the onset of the current economic downturn, the dairy industry began experiencing rising feed prices and significant decreases in the price paid for milk. Many of the remaining dairy operations in the Chino Valley went out of business. Of the five dairies that disbanded their operations and sold their herds since November, two of those were county-owned dairies acquired with Proposition 70 funds.
In December 2011, Vanden Heuvel requested that the county consider a reduction in the monthly rent because of a severe decrease in the income from his dairy operations. The county balked at that request. Then, according to  David Slaughter, the director of the county’s real estate services department, “Beginning in February 2012, Vanden Heuvel began making monthly lease payments of only $8,500 instead of $11,250 as called for in the lease. While Vanden Heuvel was technically in default, staff of the county’s real estate services department determined it was not in the best interest of the county to initiate eviction because a new tenant was unlikely to be found. More importantly, vacant dairies are difficult to secure from theft and vandalism, which, in some instances, have rendered dairies inoperable, too expensive to repair, and, consequently, unrentable. The real estate services department instead conducted a market survey of comparable properties and determined that the market rent for a dairy of this size from the beginning of 2012 and continuing to the present is substantially below the rate set forth in the lease agreement. As a result of discussions with the Vanden Heuvels and with county counsel, the term of the lease will be reduced by three years from August 31, 2016 to August 31, 2013 in order to decrease the monthly rent from $11,250 to $8,500 effective, and retroactive to, February 2012.”
The $8,500 per month rent, Slaughter said, “reflects current market conditions in the Chino area for comparable dairy properties during this period of time. The county will benefit from reducing the term and changing the termination date to August 31, 2013, by being able to consider other, perhaps more favorable, options for leasing or disposing of the dairy three years earlier than the original termination date of August 31, 2016.”

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