Laguna Beach Is Hard-Pressed for Hillside Money

Three months after city leaders vowed to restore a hillside that tumbled into Bluebird Canyon, destroying or severely damaging 20 homes, Laguna Beach residents wonder if the promise can still be kept -- and at what cost.

The Federal Emergency Management Agency recently denied the city’s $1.2-million request for disaster funds to stabilize the canyon, sending local officials scrambling to fund the $7-million project.

The work includes shoring the hill to prevent further slippage and unclogging Bluebird Creek before the winter rains. Flamingo Road, which buckled into ruin, must also be rebuilt at an added cost of $5 million to $8 million.

The city is appealing FEMA’s denial, but, short of a federal reversal, officials say they do not know how they will pay for repairs.

It’s a sober turnaround from the group hug officials and residents shared in June while vowing to rebuild the neighborhood.

“You’re trying to make people who lost everything feel good that you’ll try to help them, but then you need to take a deep breath and think again about what you can do,” community activist Frank Ricchiazzi said.

“The city has been very generous when it comes to things like the community clinic, but we’re going to have to say no. ... There’s no choice. We don’t have the money.”

The city is obligated to protect the public by ensuring no further slide damage and bulwarking homes along the slide’s edges, Ricchiazzi said.

What’s done next is likely to consume hours of debate.

Despite its pricey real estate, Laguna Beach’s coffers are hardly flush.

Because the city has long eschewed them, there are no car dealerships, big-box stores or shopping malls that produce tax revenue. The city has $3.7 million in reserves, City Manager Kenneth C. Frank said, but any spent funds must be replenished by July 1.

In addition to limited revenue, its unusual topography and isolation necessitate an extra fire station, additional lifeguards posted at “pocket beaches,” and a city bus system to navigate the hills.

“It’s a nice place to live, but people have to pay a price for that,” Frank said.

To free up funds from the city’s $50-million budget, officials are considering selling city property -- including a site used by the Girl Scouts -- putting off capital projects and freezing new hiring.

Federal officials haven’t detailed their reason for denying the city’s aid request, which piggybacked on an earlier state declaration of emergency triggered by storms in January and February. The slide was deemed too minor to warrant its own proclamation.

A letter from FEMA to state officials said only that the June 1 landslide couldn’t specifically be attributed to the earlier rains, a conclusion contradicted by a state geologist, one with the U.S. Geological Survey and several hired by the city.

“It’s rare to not really be given the reason and justification,” said Eric Lamoureux, a spokesman for the state Office of Emergency Services. “We’re trying to get more information.”

Councilwoman Cheryl Kinsman said she blames an erroneous impression of Laguna Beach as a wealthy enclave with the means to do things on its own.

Officials in Malibu had the same complaint in 1997, after the city nearly went bankrupt waiting for federal disaster funds promised four years earlier.

“There is a sense that people in Laguna are millionaires,” Kinsman said. “I think that’s what they see from Washington, D.C.”

FEMA also denied individual assistance to homeowners and business owners in Orange, Los Angeles and four other Southern California counties that suffered damage during the February storms.

In 1995, the agency revised its long-standing policy of paying to restore hillsides that slid, saying it was too expensive.

In 1978, FEMA contributed most of the $4-million cost of rebuilding a slide in Bluebird Canyon just to the east of this year’s.

Now, city officials are scraping together $7 million for the winterization project, partly by delaying the purchase of a fire engine and police cruisers.

The water district is kicking in $1.5 million and property owners are contributing $500,000.

The project will restore drainage in the canyon, stabilize the cliff, and provide erosion control such as reseeding.

Work will be completed by Nov. 1.

After that, Frank said, the city has no choice but to rebuild Flamingo Road because the street provides a secondary route for nearly 350 homes in Bluebird Canyon.

If fire or another slide swamped Bluebird Canyon Road, he said, residents would be trapped.

With that in mind, officials hope to complete a dirt road leading to the rear of Bluebird Canyon by mid-October.

If Flamingo Road were restored, the area would be stable enough that lost homes could be rebuilt, said the city’s slide relief coordinator, Bob Burnham.

Although residents wouldn’t have the flat lots they had before, the homes could be built on new sloping lots, he said.

Displaced residents have been told they would have to help pay for the project, he said, though a dollar figure hadn’t been set.

Residents received some good news last month when the Small Business Administration set up shop in the city, offering low-interest disaster loans to property owners and renters.

The SBA will lend as much as $200,000 to repair or replace a damaged home and as much as $40,000 to repair or replace personal property.