Charles Slutzkin:
Assistant to Joe Eichler,
1964-'66

"Joe Eichler was aggressive, he was a gambler. He didn't dip his toe in to see how the water was. He leaped in. And the aggressiveness and the gambling allowed him to start that business and succeed. And then under different economic circumstances, they led to the demise of the company. Back then, I got concerned enough about what I saw that, on my own, I ran a financial analysis of the company, and then tried to explain to Joe what I had seen as the problem. But he didn't want to talk about it.

There wouldn't have been an Eichler Homes if Joe hadn't had these character attributes that created something pretty special out of nothing. Then when you have those same personality characteristics in a different period of time, his strength became his weakness."

Ned Eichler:
Son of Joe Eichler
and Eichler Homes Vice-President until 1966

"Late 1966 was a point at which my father and I were really at logger heads about what to do. What I wanted to do was to put the company in Chapter 11 bankruptcy, and try to work out something, and I had some ideas on how to do this. My father did not want to do that -- for two reasons. One, he claimed that he just didn't believe it was necessary, that we could survive somehow. And secondly, he was concerned about how that decision would reflect itself.

Some local money broker, who I viewed as a very sleazy character, showed up one day with Charles Parr and Bob Bryson. And I said, "There's nothing to buy here." I thought, "Why would anybody in their right mind do this?" But Bryson claimed that his big creditor had money available, and he could work this out. I think Bryson was a con man who conned himself, then conned Parr, who was connable. Parr was a relatively innocent guy, with a modest amount of money, who wanted to be a big shot at something. I bitterly argued with my father against making this deal. He may have been right in an odd, psychological sense. A lot of people could decide that the downfall wasn't my father's fault. And I thought that was okay.

My father's mood oscillated between depression, and illusion -- and I think this is true of lots of people in that condition. Bryson and Parr, in some sense, were an illusion. I understood in part what my father was going through and what he was doing. And I was angry at him at the same time. When we finished Geneva Towers, I resigned from any other duty with the company. Whatever else was going on, other than Geneva Towers, I had nothing to do with. And then the company under Parr and Bryson went bankrupt."

Bob 'R.J.' Parr:
Son of Charles Parr, Eichler Homes President, 1966-'68

"When Joe Eichler knew that the 'ship was sinking,' I believe he tried to bring in someone that he truly believed could turn things around. Unfortunately, Joe's 'rose-colored glasses' kept him, in my experience and opinion, from allowing my father Charles to fully take control financially and do what he should have. It appeared that Joe did not know what to do, and just could not let go.

My father spoke of ego clashes with Joe -- fantastic blowups that Charles would come home from, and then recount every gory detail. Then, after all was said, we would ask why he would continue to work with Joe. My father said, "That hardheaded SOB is a genius. All geniuses are egoists and pay the price for innovation.

Everything appeared to be in place to turn the company around. The only thing that did not work was Joe's withholding operating capital. So, if you can't build, can't sell, and can't spend some of the existing moneys to pay off debt and indicate forward movement, how can a company survive? This was, according to my father, what Joe Eichler really wanted: simply to buy some time."

LAST DAYS OF EICHLER HOMES
A great building machine hits rock bottom -- when
Eichler's urban high-rise gamble toppled his company

From the pages of the Eichler Network newsletter
By Paul Adamson

Joe Eichler's fierce independence and dedication to principle, even to the point of defending design more strongly than his architects, were traits that made his homes distinctive. The company and its product were outgrowths of Eichler's expansive and uncompromising personality, and his success depended in large part on his deep personal involvement in the details of the everyday business.

What made Eichler Homes unusual -- the devotion to design, and the insistence that product innovations should come from within the company and from the architects, rather than from his industry's more typical combination of company consensus and market research -- were the qualities that made the company a leader in the field. But, ironically, those same traits would eventually cause Eichler Homes' downfall.

The end came as Eichler was branching out beyond the suburban formulae that had brought him such rich rewards in his first ten years. Anxious for new challenges, Eichler was perhaps complacent with an operation that by 1960 was a well-developed system producing 900 homes per year. His son Ned suggested he might have become even "bored" with the repetitive pattern of his suburban developments. Eichler's ambition to-explore-new prospects-drove him to enter several new markets in a relatively short period of time -- all involving complex urban conditions in San Francisco -- just as the local real estate market began to soften. The company became overextended and its decline came on with surprising quickness.

Eichler's entry into the urban market was typically enthusiastic. Motivated by his desire for new experiences, but also by his strong sense of social purpose, Eichler took on a remarkably diverse set of projects -- from high-rise luxury apartments to subsidized housing. Beginning in the early 1960s, Eichler Homes developed the lower middle-class Laguna Heights complex, in the Western Addition redevelopment area; the Geneva Towers project and townhouses in Visitacion Valley; Central Towers, a twin-tower project in the city's notoriously down-and-out 'Tenderloin' district; and the 32-story Eichler Summit apartment building, arguably the most luxurious building of its day, at 999 Green Street, on prestigious Russian Hill.

Unprepared for the complexity of San Francisco development, Eichler quickly found himself in financial trouble. The scale of these multi-unit buildings involved longer completion schedules, complex permitting processes, and considerably different construction methods from his suburban subdivisions. Most significant perhaps was the extended schedule for returns on investments. While the suburban developments could be sold house by house as each was finished, the large-scale urban projects were typically rental properties, and the multi-unit buildings needed to be finished in their entirety before a single unit could be rented.The rental market in San Francisco, in 1963 and 1964, when the first buildings were completed, was weak, and Eichler Homes found its income was falling short of expectations. Eichler had tried to balance his construction costs at the Laguna development by selling its low-rise apartments as co-ops while the high rise was being built, but the sales costs were insufficient to offset the continuing construction. Charles Slutzkin, whom Eichler had hired to assist on the urban projects, made a financial appraisal of the Laguna development, and found that even with full occupancy the rents were insufficient to break even. Fortunately, the Summit was soon completed, and its near-instant status as one of the best new properties in the city allowed Eichler to charge the highest rates in its class. However, the building had been an ambitious design, and construction costs ran over by some two million dollars, a huge sum for a company of Eichler's size. In addition, the rental market in all classes was slow and total incomes were not keeping up with costs. In 1966, the income from the building would help keep Eichler Homes afloat for several months, but only because the company was able to forestall their mortgage payments.

By 1966, the company assets had become depleted to an alarming degree and Eichler had begun to suffer physically from the resulting stress. Even the suburban developments had run into difficulties. That year, Eichler fell ill, suffering from heart problems, and had to be hospitalized. He called upon his son Ned, who at that time had been away from the company while consulting with the University of California at Berkeley, to step back in and help manage in his father's absence. Ned found his father "completely flat," lacking any of his usual energy or enthusiasm. Depressed over the company's finances, Joe asked Ned to review the assets. Ned's review revealed the company to be near collapse, and he recommended filing for Chapter 11 bankruptcy. The senior Eichler refused, hoping that he could restore the company's success, and not wishing to harm his reputation with negative publicity just as some of his most personally satisfying work was close to realization. Geneva Towers was then nearly 90 percent finished. The project had been important for Eichler's sense of social responsibility, representing the largest project in the country under a federally sponsored program that allowed units to be purchased at below-market rates. Eichler had received some gratifying publicity early on when Vice-President Hubert Humphrey had attended the groundbreaking ceremonies. However, the construction had gone over budget, and Ned took over the completion of the project, managing a deficit of nearly a million dollars through an out-of-court bankruptcy procedure. The company remained teetering on the edge of insolvency, still building in the suburban developments, but losing money nonetheless. Joe Eichler, perhaps denying the true state of affairs, remained devoted to saving his business, and at the least, anxious to stave off the ignominy of bankruptcy.

Eichler may have become somewhat desperate for solutions at this time, and vulnerable to farfetched remedies. It was during this trying period that two potential investors approached him: Charles Parr, a successful owner of a Los Angeles advertising firm and part-time real estate investor; and Robert Bryson, an entrepreneurial investor. According to his son, R.J., the senior Parr had had some impressive successes reconstituting struggling building companies in Southern California, and had shown a genuine aptitude for securing financing for some large-scale construction projects, including the B'Nai Brith Hospital in Los Angeles. He also had great admiration for Eichler, and was eager to emulate his success with homebuilding. In May 1966, with Bryson's help, Parr offered to buy a controlling interest in Eichler Homes. Ned Eichler recalled that while neither Parr nor Bryson appeared to have the capital necessary to absolve the company's debts, they managed to secure some financing and purchased Joe Eichler's and Ned's stock with promissory notes. Ned's brother, Richard, perhaps suspecting that the two potential owners were in over their heads, insisted upon cash for his shares. Parr and Bryson assumed the roles of president and vice president, respectively, while Eichler stayed on as chairman. Difficulties began for the new owners almost immediately, and the company continued to shrink as losses mounted.

Parr had admired Joe Eichler's achievements and, according to his son R.J., had hoped to duplicate and perhaps exceed Eichler's earlier success. R.J. recalled his father's hopes for a revived Eichler Homes when he emphasized: "This was an opportunity for Charles to turn something around." He also remembered that there was interest in expanding the Southern California operation, an idea Eichler and Parr both initially seemed to agree on. Parr even imagined expanding the company as far as Chicago and Florida, and hoped Eichler Homes could partner with other established builders, including Kaufman and Broad, in an effort to expand their prospects. Parr's belief that this was possible may have been bolstered by a trend, which began in the late 1960s, wherein large corporations invested heavily in building companies. Ned Eichler recalled one Bay Area builder, Danny Schwartz, whose company had been known by local members of the building industry to be in poor financial shape, who sold his business to a major corporation for some $12 million. By the time Parr and Bryson acquired Eichler Homes, it is likely that they would have had trouble convincing prospective buyers, especially those that were in the industry, to invest. Eichler Homes had some 7,000 creditors, and the San Francisco projects, being so much more difficult than those that had created the company's earlier success, had financially overwhelmed the company. This, Ned Eichler affirmed, would have been all too apparent to anyone.

Based on discussions with his father, R.J. Parr contended that Joe Eichler had misrepresented the financial health of Eichler Homes when he agreed to Parr and Bryson's takeover, because the senior Parr discovered that even monies for operating capital were insufficient. In September 1966, only four months into Parr and Bryson's tenure, the situation had become so dire for the new owners that they filed a $15.8-million suit against Eichler (and his two sons) for "illegal tyranny." By late 1966, as part of their settlement, Parr and Bryson gained full control of the company with Eichler's resignation.

During the following months, it became publicly evident that the company was failing. Court proceedings began at the instigation of creditors, and Parr was subpoenaed to appear in court with increasing frequency over the next year to answer for the debts. Despite the fact that Eichler Homes was essentially broke, the courts continued to pressure Parr and Bryson to honor the company's obligations. Believing Eichler Homes to be in better financial health than turned out to be the case, Parr had pledged to honor its debts in full, using his own assets as collateral. When accurate accounting was made and the creditors began their legal pressures, Parr became personally liable. Finally, the principal lender to Eichler Homes, the Chartered Bank of London, called in their loan, and the company was all but finished. Parr and Bryson, both of whom had been living in Eichler homes in the Harbor Point subdivision at Marin's Strawberry Point, having by that point no recourse -- and apparently, according to Parr's son, no support from Eichler, who as chairman was legally protected from the effects of bankruptcy -- both fled. Parr and his family moved to Florida. Bryson had mysteriously left several weeks ahead of Parr, reportedly leaving behind his wife and children. Eichler Homes dissolved in 1968.

Joe Eichler had taken some big risks building in San Francisco, but as was his habit, he had plunged ahead with enormous enthusiasm, expecting to succeed despite the odds. The focus of considerable praise, those projects were consistent with progressive ideas for urban residential design, and remain a testament to Eichler's commitment to innovative design and socially responsible development. One suspects that, in the end, it would be the social benefits that would have mattered most to Eichler, a supposition that may be corroborated by a recollection of Charles Slutzkin, who noted that Eichler's office was surprisingly free of any record of the many awards his company earned over the years. Instead, one photograph was given prominence behind Eichler's desk: a picture of two children, one black and the other white, walking to school in Lucas Valley together with their arms around each other.

See other Eichler Modern Stories