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Dana Point Vote Binds City to Headlands Plan : Development: Landowners win right to build $500-million hotel and 370 homes on prime coastal parcel. Approval comes over environmentalists’ protest.

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TIMES STAFF WRITER

A contract that binds the city for at least a decade to plans for a $500-million hotel and 370 homes on the Headlands peninsula near Dana Point Harbor was approved Tuesday by the City Council.

The council voted 4-1 to adopt the 73-page development agreement giving the landowners the right to build the homes and a 400-room hotel on 121 acres of prime oceanfront land, one of the last undeveloped coastal properties in Orange County.

The agreement, which has been renegotiated over the past two weeks, is a document that legally secures the plan the council approved on April 5, despite the protests of several environmental groups that want to save the property as a natural resource.

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The council majority has for months insisted that not only does the landowner have the right to develop its property, but that the city will need the more than $2 million in estimated annual revenue that ultimately will be produced by the hotel and two planned commercial sites.

“This is an economic insurance policy for the city,” said Councilman Mike Eggers. “Ultimately, it will be good for the landowner and the taxpayers of Dana Point.”

The plan’s opponents, who have fought for more than three years to save more of the bluff-top land for parks or open space, have urged the council to reject the agreement. One grass-roots group is circulating a petition calling for a citywide vote to overturn the council’s actions.

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Councilman William L. Ossenmacher, who supports that effort and who cast the lone vote against the project, said, “This agreement looks to me to be extremely one-sided. There are some very small benefits to the city and some great benefits to the property owner.”

Resident Bob Larwood, one of the plan’s most outspoken critics, said before the meeting that the plan is not the financial boon some expect.

“All through this negotiation, (the council) has put through the idea there would be $2.3 million coming into the city from this plan,” Larwood said. “But unless the hotel and commercial areas are built, we will never see that money, at least not for 10 or 15 years. There is this feeling that once this deal is passed the city will be rolling in money, but that’s just not going to be the case.”

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The timing of the construction of the proposed hotel and retail centers was one of the key issues in the renegotiation of the agreement over the past two weeks. As the agreement now stands, at least 50% of the hotel would have to be finished before the last 65 homes could be built. The agreement does not require a guarantee that the commercial centers will be built.

The new agreement also pushed up the completion of the hilltop park at the highest point of the bluffs and reduced the purchase prices on two parcels of land the city has the option of buying.

“We have tried to respond to all the requests the City Council has made,” said Dan T. Daniels, a spokesman for the Newport Beach-based M.H. Sherman Co., which owns the property along with the Chandis Securities Co. (Chandis Securities, a firm that oversees the financial holdings of the Chandler family, is a principal stockholder in Times Mirror Co., which publishes the Los Angeles Times.)

The city also will get 59 acres dedicated as parks or open space and $2.8 million in improvements to the parks, according to the agreement.

“I think the development agreement, especially now with these changes, gives an awful lot of benefits to the city of Dana Point,” Daniels said.

Members of the Dana Point Headlands Conservancy said they will continue to work to save more land on the bluffs, despite the council vote. Jacqueline Cain, one of its founders, said the group did not take a stand on the plan.

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“We are nonpolitical,” said Cain, an eight-year Dana Point resident. “We are seeking federal and state grants and working on a bond initiative to purchase parts of the land. We are going to continue that no matter what happens.”

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