Newport has its foot in the door

An Orange County land battle going back half a century has resurfaced, and as is always the case when it’s real estate with a Newport Beach ZIP Code, things get thorny.

At stake is a privately owned, undeveloped 402-acre parcel known as Banning Ranch.

Costa Mesa, which flanks the property on the north, has had its sights on annexing the land, arguing that the city would be most affected if it gets developed.

But Newport Beach’s General Plan already includes the ranch and calls for 1,375 homes, 75,000 square feet of stores and a small inn. In addition, the property owner prefers building in Newport rather than Costa Mesa.

Sound like a garden-variety zoning dispute? The twist is that more than 50 years ago, Newport Beach claimed jurisdiction when it attached to its city limits a foot-wide strip that rims the ranch on three sides.

“It’s really bizarre -- that 12-inch strip precedes the incorporation of the city of Costa Mesa,” said John Moorlach, chairman of the county Board of Supervisors. And that means that Newport Beach’s claim takes precedence, even though the parcel is more closely aligned with Costa Mesa.

Banning Ranch is near the mouth of the Santa Ana River. It includes wetlands, an oil production field and a bluff top that could provide home sites with spectacular ocean views. Annexing a property with such potential would be desirable for any city, which could reap millions in developer fees and improvements.

“Newport put that land under its sphere of influence before there was anything like an annexation agency or spheres of influence,” Newport Beach City Manager Homer Bludeau said proudly.

Today, the property is one of the county’s last undeveloped coastal areas. Its owners and Newport Beach don’t know the parcel’s actual value, a problem, because the city’s preference is to buy the land and leave it as open space and parkland.

Some experts estimate it’s worth more than $400 million; others say that is conservative.

Costa Mesa argues that, the 1-foot strip aside, it shares a 4,800-foot boundary with Banning Ranch and that should take precedence, according to the city’s application to put the ranch into its sphere of influence, a precursor to annexation.

Traffic, regional resources and city services favor Costa Mesa, Mayor Allan R. Mansoor said in its application. Costa Mesa believes Newport’s 1-foot strip “created an artificial and arbitrary barrier” that blocks any comprehensive planning.

In January, a local land-use agency rejected Costa Mesa’s bid, saying the city was not contiguous with the property and could never annex it. The ranch was part of several unincorporated areas included in annexation talks between the cities.

The owner, Newport Banning Ranch LLC -- comprising Aera Energy, Brooks Street and Cherokee Investment Partners -- said about 40 acres had always been in Newport Beach and that it preferred Newport because the location would add value.

“Because it’s in Newport Beach, the premium on the land is worth at least 25% greater, perhaps more” than if it were annexed by Costa Mesa, said Stephen Sutherlen, manager of Coldwell Banker’s Newport Beach office. “Though it’s not oceanfront, I’ve been up on the bluffs and they have an exceptional view all the way to Palos Verdes and Catalina.”

Mike Mohler, managing director for Newport Banning Ranch LLC, said the firm had begun a property appraisal. Newport’s 2006 General Plan, its latest, severely reduces the more than 2,700 residential units and 465,000 square feet of nonresidential development allowed under an older plan.

Under the new plan, half of the ranch would remain open space and Newport has the option to buy that land.

Banning Ranch Park and Preserve Task Force, a private group linked to the Sierra Club, would like to save the entire property from development.

Mohler said the company planned to assist the city and environmental groups find funding and buy the property, provided it could be bought for fair market value.

“Nobody at this point has put a value on the land,” said Newport Beach Councilwoman Nancy Gardner. “The city would like to do a feasibility study and say, ‘Look guys. Let’s get real and find out what the value is, and what are our chances for getting funds to buy it.’ ”

In the interim, the owners will move ahead with development plans. One of the obstacles is that the ranch has more than 500 oil wells. About 100 still operate, and those most likely would be consolidated into a 20-acre area, Mohler said.

Terry Welsh, a Costa Mesa resident who chairs the environmental task force, lamented the number of coastal areas lost to development in recent years, including Marblehead in San Clemente, the Dana Point Headlands and the Bolsa Chica bluffs.

“This is the last one,” he said. “Is it going to be developed or are we going to buy it?”

One thing is for sure: Costa Mesa will keep a close watch on put any proposed Banning Ranch project. under a microscope

“We’ll be monitoring everything from transportation to circulation access . . . everything,” said Kimberly Grant, a Costa Mesa planner.

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david.reyes@latimes.com