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Tuesday, June 18, 2024 | Back issues
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Fed-Up Developer of Newport Banning Ranch Sues Calif. Coastal Commission for $490 Million

SANTA ANA, Calif. (CN) — A long-festering fight over 400 acres near Newport Beach has landed in Superior Court, where the developer of Newport Banning Ranch sued the California Coastal Commission for $490 million for rejecting its plan to build a hotel, stores and nearly 900 homes near coastal bluffs.

The blistering lawsuit, filed Friday by developer Newport Banning Ranch and the field's two owners, Cherokee Newport Beach and Aera Energy, accuses the commission of holding a "borderline sham" hearing of biased presentations from its staff and then arbitrarily denying the project.

"Specifically, the presentation was marked by erroneous, irrelevant, omitted, or completely unsupported information regarding the Revised Project and NBR [Newport Banning Ranch] property and on key issues for decision by the Commission — all of which portrayed the Revised Project and NBR in an unfavorable light," according to the lawsuit in Orange County Court.

The project has been dogged by controversy, particularly because hearing on it came after the Coastal Commission fired its popular executive director, Charles Lester, in February. His many supporters claimed the commission fired him because he refused to buckle to pressure from developers. One commissioner said the problem involved his leadership approach.

The California Coastal Commission has tremendous power in its oversight of coastal development. A spokeswoman for the commission said Monday she could not comment on the lawsuit because the agency had not been served.

The commission rejected the project by 9-1 at its Sept. 7 meeting. One commissioner described the land at issue as one of only two intact coastal bluff ecosystems remaining in Southern California, with "the largest concentration of endangered and threatened species in Orange County" and several Native American archeological and burial sites.

"You can't make a mistake with that and turn back when you find you haven't had it quite right," Mary K. Shallenberger said then, in moving to reject the project. "If we don't get it right, things will be lost forever."

George Soneff, with Manatt, Phelps & Phillips, one of the developer's attorneys, referred questions to the development's senior project manager, Michael Mohler, who could not be reached late Monday. But in a statement, Mohler said that during the Sept. 7 commission meeting, "there were an extraordinary and unprecedented amount of procedural errors, misinformation and errors in fact that did not provide the opportunity for a balanced decision that considered all the facts."

The property at the center of the case is "a large, degraded brownfield site with scattered oil operations in a highly desirable and valuable coastal location, surrounded by urban development —which has sat fenced off from the public for over 70 years," the developer says in its lawsuit. About 60 wells are still producing oil.

Newport Banning Ranch won approval from the city of Newport Beach in 2008, to clean up the property and develop it with a small hotel, 75,000 square feet of retail space, 1,375 homes, open space, parks and new roads.

The developer submitted the proposal to the Coastal Commission in 2013. "What followed thereafter was a years-long series of delays and ever-expanding demands from commission staff," the lawsuit says.

In 2015, Newport Banning Ranch proposed a scaled-back plan, but the commission told it to revise the project further. Yet, the developer says, "Each time NBR resolved a commission staff issue, commission staff would raise the bar higher, adding yet new requirements."

The developer itself asked for an extension in May this year, to give it more time to address the Coastal Commission's concerns.

By then, the developer had trimmed the proposal to 895 homes and 45,000 square-feet of commercial space, added affordable housing and shrunk the developed area by 40 percent, to 62 acres.

Then, two weeks before the Sept. 7 meeting, the Coastal Commission's staff issued a new report, demanding more cutbacks to protect foraging grounds for rare burrowing owls. The commission staff added an addendum to its new report at 5 p.m. Sept. 2, the Friday before Labor Day, and amended it again on Sept. 6, according to the complaint.

During the commission's Sept. 7 meeting, senior staff counsel Alex Helperin said developers typically propose plans they know go beyond what California's Coastal Act would allow and then scale back the plans as part of the "iterative process" with staff.

He told the panel that the staff's revised Banning Ranch proposal "is consistent with the Coastal Act."

In its lawsuit, Newport Banning Ranch calls the late issue of burrowing owls an "ambush." It claims the proposed reduction to the project would have "eviscerated" it by confining development to "three disjointed areas totaling little more than 10 acres."

During the meeting, commission members questioned the last-minute recommendation. But they were "persuaded by the need to designate additional foraging habitat for breeding burrowing owls, a decision which effectively destroyed the Revised Project," the developer says in the complaint. "It was an arbitrary action, and not supported by the evidence."

Newport Banning Ranch asks the court either to order the Coastal Commission to approve the project, or to pay it $490 million in damages for inverse condemnation.

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