first, here are my versions:
Greg-Nowickis-MacBook-Pro:sample_app Greg_Nowicki$ ruby -v
ruby 2.0.0p451 (2014-02-24 revision 45167) [x86_64-darwin13.1.0]
Greg
Changing development.rb did not help me at all.
However, what did help me is:
$ rvm 2.0.0
BEFORE creating the app with
$ rails new first_app
Note that the Gemfile version was 2.0.0, and not 2.1.1 which is what I had originally, so match the ruby versions before you create your app.
Not sure why this is important.