Financing the Venture
The engineering challenge of creating Foster City from the marshlands of Brewer's Island required enormous financial backing. By 1962, T. Jack Foster put $4.7 million of his own finances into altering the desolate landscape of Brewer's Island ? two years before the first home was to be built in Foster City. However, a great deal more money was required to bring his dream to fruition. To finance the venture, Foster (who by 1960 had bought out Grant's interest in the development) convinced State Senator Richard J. Dolwig of San Mateo, and his associate. State Assemblyman Carl Britschgi, Jr., to sponsor and eventually pass a special act of the California Legislature: State Senate Bill 51, which created a "municipal improvement district." Named "Estero," this new district was, in technical terms, classified as a "public corporation." The first of only two such districts created in the history of California (the other was in Santa Barbara), it was authorized to issue over $85.5 million in bonds in elections between 1960 and 1967.
The City incorporated in 1971, following a long battle with the EMID (Estero Municipal Improvement District) over high taxes resulting from bond debt. (Read about it on the page on Foster City's Incorporation!) Those early years of discordancy, in combination with legal attacks against the District (eventually dismissed), caused bond sales from the Estero Municipal Improvement District to weaken considerably. Coupled with the refusal by Centex Corporation to pay taxes in 1975 (Centex is a development firm from Texas which purchased the Foster Family's interest in Foster City in 1970), the financial picture appeared bleak. This was not an isolated case. Two other "new cities" from the Kennedy era, on the East Coast, were likewise experiencing severe financial hardship. Reston, Virginia, had to be financially rescued by Gulf Oil Corporation, and the Federal government had to bail out Columbia, Maryland.
Centex again defaulted on their taxes in 1977. This time they filed a $10 million lawsuit against the City of Foster City for "illegal taxes" (Centex later upgraded the suit to $12 million). Centex and the City eventually settled out of court, which marked the beginning of stability in Foster City. The tax burden stabilized as more homes were built in the District.