In 1906 the Santa Fe Railway, a subsidiary of the Atchison, Topeka & the Santa Fe, purchased all of the lands that made up the original San Dieguito land grant from several owners, including the Osunas. The railway’s intent was to use the land to grow lumber for railroad ties. From 1906 to 1914, after much study and experiment, Walter E. Hodges, vice president of Santa Fe’s California properties, planted 3.5 million Eucalyptus trees from seed on 3,000 acres in the southeast section of the land grant closest to the San Dieguito River. Overtime, the venture proved unsuccessful, predominantly because despite the species phenomenal rate of growth the trees had to be quite mature, even old-growth, to have the structural capacity needed to underlay the rails for the great trains coming West.

Santa Fe was ready to walk away from their well-intended failure. Just weeks before they were to put the land grant on the market one of San Diego’s most significant land and water developers, Colonel Ed Fletcher, intervened and assured them they could change course and recoup their losses. Both Fletcher and the Santa Fe were fully aware of the agricultural potential of the property. In today’s horticultural parlance, San Diego County is known as the ‘Avocado Belt’, prime land for agriculture, horticulture, and most famously, floriculture. Fletcher convinced them that if they planted the land in citrus and avocados they could make money off the ‘tonnage’, or shipping, of California fruit back East. The brilliant idea of ‘Gentlemen’s Farmer’ estates arose and from then on a new project was launched.

It was obvious in order to support the numbers of orchards that were envisioned a dependable source of water would be needed. Again, Fletcher comes to the rescue with upstream landowner William Henshaw who held the riparian rights for the San Dieguito River. Soon Walter E. Hodges, on behalf of the Santa Fe Land Improvement Company, laid the groundwork for the construction of what would later be called Lake Hodges Dam. The Santa Fe Irrigation District was also formed and provided water for not only Rancho Santa Fe but for the downstream communities of Del Mar and Solana Beach, which coincidentally were being developed by Col. Fletcher.

By 1921 Santa Fe filed a subdivision map generated by land expert and road engineer Leon Sinnard. It outlined land parcels that radiated out from a central core of small lots to very large ones. A Civic Center now referred as the ‘Village’ was comprised of the Santa Fe Land Improvement Company’s offices and Francisco’s food market, a Garage Block, a schoolhouse, village rowhouses for Santa Fe staff, and a Guest House, later named La Morada, now the Inn at Rancho Santa Fe. Later more commercial buildings were added. At the time of the filing of the map, Santa Fe decided to retire the name of Rancho San Dieguito for their namesake, Rancho Santa Fe.

Thus, began the planning and the construction of homes, estates, orchards and roads that traced the natural topography. Staying in character, the Santa Fe hired the best architects, Requa Jackson and Lilian J. Rice; landscape architect Glenn Moore; and agronomist A. R. Sprague, among others. Soon a stunning semi-rural community sprang from the land. Born out of its inherited traditions, yet for modern living, and steeped in art and character.

In 1928 the Rancho Santa Fe Covenant was recorded, which formed the Rancho Santa Fe Association and Art Jury, which was meant to ensure the orderly development and retention of the ranch’s character after the Santa Fe planned their exit.