Rancho Arroyo is the once under construction site of a housing development run by corrupt ex-cop Jack Travis and Mesa Verde Construction. Although a future neighborhood in progress, it was also the sight of a blazing shootout between Travis and his henchmen and Team Riggs/Murtaugh.
Rancho Oroya first appears as a car pulls over into the site where Tyrone meets Jack Travis and the latter tells him he is investing in the site to keep people away from gangsters like him.
As he and Tyrone go further into the development site, Travis calls out Smitty and asks him "what the matter" before guiding him to an area where more of his men are pouring the foundations for a house. Travis tells Smitty they should start over and "rebuild" their relationship before Hatchett pistol whips him and pushes him in the concrete as Travis' men pin him down and bury him in concrete alive. Tyrone witnesses this and is more than shocked and attempts to look away, but Travis tells him to stay and watch saying they can sign their names there.
Later, inside a trailer at the site, Hatchett is on the phone with an angry Tyrone after a shipment of firearms had gone wrong, being foiled by Martin Riggs and Lorna Cole. Despite trying to calm Tyrone down, Hatchett passes the phone to his boss Travis, who promises he will give him his ammo the next day.
The next day at night, Team Riggs/Murtaugh and Cole storm Rancho Oroya and begin to end Travis' arms dealing campaign by taking out his men and setting the site on fire. In the blaze, Travis seemingly kills Cole, as Riggs pursues him while Murtaugh takes out the last of Travis' henchmen with a machine pistol filled with "cop killer" bullets. Jack Travis gets the upper hand in the battle with Riggs and attempts to run him over with a digger. But before he is close to doing that, Murtaugh passes his "cop killer" gun to Riggs who shoots through the plow and mortally wounds Travis. Both exchanged words with each other before Travis is forced into the fire, still sitting in the digger.
In the aftermath of the shootout, helicopters, police, and ambulance arrive as the medics escort Lorna Cole onto a gourney and Riggs stays by her side, telling her "I love you" before she is lifted away.