The Los Angeles Times from Los Angeles, California • 36

SAN DIEGO COUNTY BUSINESS Part IV Tuesday, February 9, 1982 Eos Alleles States More Layoffs Planned by Avco Builder Still Making a Profit Despite Depressed Sales By ANTHONY RAMIREZ, S.D. County Business Editor Avco Community Developers the developer of Rancho Bernardo that recently laid off more than 60 workers because of poor housing sales, plans further but "not really significant" layoffs over the next three months. R. Barry McComic, Avco Community's president, said. In an interview last week, McComic said, "I would really be surprised if, over the course of the next three months, we terminate any more than 15 people at the maximum." Avco Community, based in Rancho Bernardo, now has about 425 employees.

Because of sluggish housing sales, Avco Community has been depending more and more on its commercial and industrial projects, which constitute about 30 of its business, McComic said. He said that if several such projects, which he didn't identify, aren't consummated, then "some people probably won't have a job." McComic said the laying off of about 50 people in late January and about a dozen in December probably will save Avco Community about $2 million a year in salary and benefits. He said that many other real estate developers began trimming staffs earlier than AVCO. "I told my employees that I intended to wait until the last possible minute to take drastic action," McComic said. "Unfortunately, the last possible moment came and went without my knowing exactly when it was." Avco Community, a unit of Avco a diversified aerospace, consumer finance and real estate conglomerate in Greenwich.

is still making a profit, McComic said. Indeed, McComic said, "I could have weathered the circumstances without trimming the staff, but it's a question of whether you want to pay 60 people even though they're not doing anything." In the year ended Nov. 30, Avco Community reported an after-tax profit of $7.6 million, down 22 from the year-earlier $9.8 million. Fiscal 1981 revenue totaled $74 million, down nearly 20 from the year-earlier $92 million. Avco Community is continuing to build homes, McComic said.

It is building about 150 homes, contrasted to 370 in the year-earlier period. Avco Community has about an eight-month inventory of 437 homes, McComic said. The developer's main problem is high interest rates that cause a high cancellation rate. At Avco Community's developing projects in San Diego and Orange counties (there are completed projects in Tucson and Phoenix, and Macon, 612 houses were committed to be sold in 1981, but only 360 sales actually were completed. Nearly 40 were canceled, most of those because buyers couldn't qualify for financing.

By contrast, the 1980 cancellation rate was 15 and the 1979 rate 10, McComic said. Because of the current high cancellation rate, McComic said, "for all practical purposes, we have to sell every house almost twice." At Rancho Bernardo, however, the cancellation rate is 28. "Many of our customers are retired or semire-tired," McComic said. "They buy with cash" and so aren't hurt by high interest rates. The average price of a Rancho Bernardo house is about $165,000, which means mat even at the Avco Community -subsidized mortgage rate of about 16.5, a family must earn nearly $58,000 to qualify for a typical loan.

Torrey Enterprises says it has completed financing for the first stage of project development. An artist's rendering of the luxury hotel and marina complex to be built on San Diego Bay. HOTEL: Luxury Project Financing Set Industry Notes CRANE: Big Lift Continued from Page A into a new industrial plant, rents for about $200 an hour. Brewer believes that crane rentals will become even more popular because the cost of buying the equipment is so high. The 14.5-ton crane costs $200,000, while a 100-ton crane costs more than $500,000.

"A lot of contractors used to own cranes and other types of equipment," says Brewer. "But the cost of machinery is now so exorbitant and the cost of money is so high" that a contractor must use his crane 136 hours out of the total 160 work hours in a month to make a profit. Cabrillo was started in 1976 by Brewer, who was operations manager for MH Golden one of the largest general contractors in San Diego. Room for Another "In my job at Golden, I felt there was room for another reliable crane company with good equipment that could do the job in a timely, safe manner," Brewer says. And apparently, Cabrillo has been successful.

Brewer drives a pale yellow Jaguar, which he describes as "temperamental," and last year, the company opened a branch in Phoenix, Ariz. "We could only move north or east, Brewer says. "And north was out because I don't like the congestion in Los Angeles." Cabrillo's major competition is Enniss Enterprises, which has been in the crane business since 1961. Reid Enniss, the owner, attributes part of Cabrillo's quick growth to the fact that Enniss couldn't operate when the company lost its insurance for six months in 1977 just after Cabrillo started. Enniss, which now has 25 cranes in its fleet, has also been hurt by the downturn in the construction industry.

Business is off about 15, Enniss says. Other Costs High Equipment is a major operating expense, but labor ranks second, says Brewer. Crane operators are paid an average of $18 an hour, plus fringe benefits. Insurance is a third significant cost. Cabrillo carries $10 million in liability coverage.

"This is a high-risk business," Brewer says. "Cranes can tip over, lines can snap or loads can fall. People can get killed." Fortunately, he says, no one has been killed by a Cabrillo crane. in the second phase. Parking will be under a landscaped roof below the hotel towers and concealed from view.

Shopping Complex Dropped Williams said a proposed shopping complex on the hotel site was dropped from plans because the Port District lease agreement made the commercial complex "not economical" and because the Seaport Village shopping center adjoins the hotel property to the northwest. Competition to obtain the waterfront hotel -marina site was spirited during 1980 hearings before the Port District Commission because annual revenues from the development were estimated to be $40 million to $70 million. The port district acquired control of the former Navy recreational field through a 1979 agreement that called for the land to be ready for development by this month. Among the municipal improvements required was a $l-million relocation of Pacific Highway from the waterfront to the northern edge of Navy Field to allow for the hotel -marina development. date about 450 boats with "dockside luxury services" including cable TV and room services for boats.

The second phase of the development will provide a second 25-story hotel tower, bringing the number of hotel rooms to 1,370 and the total investment to $250 million. 1984 Opening Bids on the first phase of construction will be let Feb. 24. An estimated opening date for the first hotel tower and marina is January, 1984. In addition to an initial $200,000 option payment, the hotel rent schedule calls for a $200,000 payment the first year and a payment for the second through fifth years.

During the sixth year, the hotel will pay $600,000 to the Port District and then $1 million a year in the seventh through 20th years. Hope Consulting Group of San Diego designed the complex, which will include three swimming pools, restaurants, four racquetball courts and eight tennis courts. Plans also call for 1,496 parking spaces in the first phase of the project and an additional 819 spots Continued from Page A scientific research park on Torrey Pines Mesa north of La Jolla and UC San Diego. Fitzpatrick called the Intercontinental site on San Diego's bayfront "one of the outstanding locations in the entire world. "We are looking forward to participating in this venture and feel this will be a very long-time partnership," Fitzpatrick said.

50-Year Lease Option William's said the 50-year lease option will be exercised March 31. He said the Port District Commission will meet today to consider minor changes in the lease not affecting district revenue. In the initial construction, a 684-room hotel tower and a luxury yacht harbor will be built on the bayfront Navy Field adjoining Seaport Village. Intercontinental Hotels Corp. was chosen by the Port District over Hilton Hotels to operate the bayside hotel.

Intercontinental, formerly a subsidiary of Pan American World Airways, operates about 60 hotels worldwide. The marina will provide 20,000 linear feet of dockage to accommo Oak Industries Inc. announced it has formed a new subsidiary, Oak Satellite to consolidate and develop the company's activities in satellite communications. The company also announced that Oak Communications another subsidiary, and Willamette Subscription Television have established a licensing agreement under which Willamette will provide Oak's ON TV subscription television services (STV) to Portland and Salem, Ore. and Vancouver, beginning Jan.

31. The National Bank of La Jolla announced that it earned $4,968 during its first month of operations. The bank opened in temporary quarters on Dec. 1 after a $4-million dollar public offering. Kay Laboratories Inc.

has entered into a manufacturing licensing agreement for Kay products with Rad Winter Ltd. of London. Rad Winter is a manufacturer and distributor of health care products, primarily in Europe. Rancho Santa Fe Thrift and Loan has opened for business at the Villa Plaza in Encinitas. Mission Thrift and Loan has received approval from the state Department of Corporations to begin operation.

Capitalized with $1.25 million, Mission Thrift will pay 8V interest on passbook accounts, which produces an annual yield of 9. General Dynamics Electronics Division has received an additional $15.2 million in contracts for 375 additional player units and interrogator and interrogatorrelay stations at the U.S. Army's National Training Center, Fort Irwin, Calif. W.R. Effinger a real estate development and strategic planning firm, has announced that it has begun the circulation of a private stock offering of up to 350,000 shares of common stock.

Israeli Company Buys Shares in Langley Corp. based producer of metal products for the aerospace and electronics industry. Before the stock purchases, Laddon said, he had set up a Feb. 18 meeting with representatives of the Israeli firm to discuss possible joint ventures. But he said he had no idea the Israeli company was interested in buying any of Langley's stock.

The meeting is still scheduled. "I don't view it as a hostile move," Laddon commented. "The amount they bought won't give them effective control." In the filing, the Israeli company said that, although at one time it had considered seeking control of Langley, it now does not intend to make a tender offer for Langley shares. For its fiscal year ended Oct. 31, Langley reported net income of $889,700, or 66 cents per share, a 46 increase from the $610,400, or 46 cents per share, for the year-earlier period.

Revenues declined 3.6, to $10,279,000 in 1981. An Israeli company has spent about $400,000 to buy 98,032 shares, or 7.3 of the outstanding common shares of Langley corp. E.L. Advanced Science Industries Limited, a subsidiary of Etz Laud Limited, said in a filing with the U.S. Securities Exchange Commission that it is interested in exploring with Langley the possibility of pursuing joint projects.

"The stock purchases were a surprise," said M.B. Laddon, chairman of Langley, which is a San Diego- HOUSING: Costs Soar Continued from Page A He also noted that his organization only included about 40 of the real estate agents in the county, so the figures might not be fully representative. Possible Explanation A researcher for the California Association of Realtors also was puzzled, but offered a possible explanation. "My initial guess," said the researcher, who declined to be named, "is that we're seeing a lot of four-or-more bedrooms" in the sample. She explained that such houses are most likely to have assumable mortgages with older, below-market interest rates.

Such houses would command higher prices, she said. New houses weren't included in the survey sample, she said. Also, she said, the variance between San Diego County median price rises and those elsewhere in Southern Calfiornia is partly "just catch-up." Housing prices in Los Angeles and Orange County rose "pretty high, pretty fast," she said, and San Diego prices are beginning to follow suit. "The real estate market is different from other asset markets like gold," the researcher said. "Underlying demand is still strong, which tends to support prices, even in a depressed real estate market." PAPPLIANCESl TTOTT I BUY or RENT Rent to Own REPAIRS DEATH FORCES SALE of 24 rented single family homes In San Diego Area.

The price has been slashed by $264,000. Max. tax shelter for investors. Must sell. Ask for Ara, Agt.

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