It was summertime when Sherrie Rabellino, her husband and two children first visited Prescott and became enchanted with its historic downtown square. The family was hell-bent on moving from its lifelong home in Santa Rosa, California, a once-rural community 50 miles north of San Francisco that in the last ten years has been engulfed by urban blight.

"We sat on the courthouse steps and watched the square dancers," Rabellino says. "It had the feeling and small-town charm we were looking for."
Yavapai County's beautiful stone courthouse is the square's focal point. Flanked by a gently sloping lawn and a perimeter of shade trees interspersed with park benches, the courthouse projects an image of what's right with America. It is solid and imposing, graceful and reassuring. It is cozy, safe. It beckons one to lie down on the grass and take a nap.

"It's permanence. It's all the good qualities. It's a symbol of old- time value systems," says ten-year Prescott resident Nancy Thomen.

So the Rabellinos sold their retail jewelry business and their home, and moved to Prescott. They bought a new house and set up a wholesale handcrafted jewelry business that is not heavily reliant on Prescott's shaky, service-oriented economy.

Rabellino says many of her old friends in Santa Rosa also are considering a move to Prescott, but know they must act soon. "Prescott's real estate values are going up, and Santa Rosa's are going down," she says.

The Rabellinos and friends are not the only Californians moving to Prescott. In fact, one out of three people moving to this central Arizona mountain town of 30,000, breathtakingly flanked by the Prescott National Forest, is from California. Many of the immigrants are retirees (or within ten years of trading in the computer for the golf clubs), but there also are a sizable number coming with young families.

Most come flush with cash from the sale of overpriced California homes. They have little choice but to pay premium prices for real estate and build huge, quarter-million-dollar homes on Prescott's pine-covered hillsides. Otherwise, they fall victim to the federal government's capital-gains tax on their home-sale profits.

The steady influx of monied Californians is driving Prescott's real estate prices sky high. Lots in town that sold for $20,000 a few years ago are now snapped up at $40,000. Exclusive subdivisions with gated entrances are popping up, "offering" prime building sites for $100,000 and more.

"It's unbelievable," says Dave B. Gackle, a broker for Hidden Valley Real Estate and a 13-year veteran of Prescott's real estate market. His company sold 18 homes through the first three weeks of January, up from two homes for the same period last year.

The real estate boom is welcomed by Prescott's town council, which, after a few years of control by formerly out-of-state retirees, is back firmly in the grip of longtime Prescott business interests.

But lost in the euphoria of increasing building permits, jumps in retail sales and rising electrical hookups is the real impact on Prescott and other small towns in Arizona of this influx of new people.

In other areas of the country where Californians relocated in the past--primarily Oregon and Washington--a nasty backlash soon developed. The new arrivals were derided as "Californicators," because they screwed things up, driving real estate prices so high natives could no longer afford to live in their own town.

So far, rural Arizona--like Phoenix and Tucson--has welcomed the California money with open arms. But there are thunderclouds building on the horizon. Sooner or later, the pressure will build and all hell will break loose.

If there is any town that is ripe for good, old California-bashing, it's Prescott. The community sports a slogan of "Everybody's Hometown," because its visage pulls so strongly at American heartstrings. But it is quickly becoming a place too expensive for Prescott natives to live.

"The way the trend line is going for actually being able to live here, Prescott won't be anybody's hometown," says Town Manager Mark Stevens.

@body:Ned Warren would roll over in his grave if he could see the steady stream of people moving into Prescott and the surrounding area. The late land-fraud kingpin made a killing in the 1960s selling the same high-desert acreage over and over to an untold number of naive, out-of-state investors. He figured few buyers would actually attempt to live on their ranchettes, making it a very remote likelihood that multiple "owners" of the same piece of property would show up at the same moment.

Unlike 30 years ago, when hardly anyone moved to such mini-Ponderosas, thousands of people now actually have set up housekeeping in Arizona's outback. And many of the new arrivals are loaded to the gills with cash. While Phoenix and Tucson were in the midst of a deep real estate recession during the late 1980s and early 1990s, Arizona's rural communities, particularly the towns along the Colorado River and in the central mountains, kept growing at a steady clip. Even Yuma, with a main drag famous as home to every type of fast-food restaurant ever to turn on a grease-fryer, has experienced a population boom, fueled by companies fed up with the high cost of doing business in California.

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John Dougherty
Contact: John Dougherty