Favoritism to Select Firms Alleged : Irvine Adopts Zoning for New Corporate Land Use

Times Staff Writer

Amid allegations that they were favoring “a select few” corporations, Irvine City Council members on Tuesday night unanimously approved a zoning change that allows three of Orange County’s largest firms--the Fluor Corp., Parker-Hannifin Corp. and American Hospital Supply Corp.--to build hotels, restaurants and for-lease office buildings on their corporate landholdings.

The decision gives a green light to the new owners of the 162-acre Fluor headquarters in Irvine to go ahead with the first phase of plans to develop 5.2 million square feet of high-rises and other commercial projects on the property. They will be allowed to build 1.4 million square feet of space for mixed use on land that otherwise could only have been developed as housing for their own employees.

Also, Parker-Hannifin can proceed with plans for commercial development on 15 acres formerly used by the Parker Bertea Aerospace Group and on 42 acres it owns along Jamboree Boulevard in Irvine. And although American Hospital Supply has no imminent development plans, Tuesday’s vote guarantees that it can build up to 1.6 million square feet of speculative commercial development on its own Irvine property.

Potentially, the council’s action would also allow commercial development on five other corporate properties in Irvine for a total of 4.7 million square feet formerly reserved for corporate use.


The council approved the zoning amendment by a 4-0 vote after Councilwoman Barbara Wiener left the room because she said her husband’s business involvement in the Irvine community would present her with a conflict of interest.

Council members said the amendment would not add to the city’s traffic burden. Also, they pointed out that corporations that apply for mixed-use development must first provide special fees to pay for traffic circulation improvements. Normally, such fees are paid after new buildings are occupied.

Another provision of the amendment requires corporations that develop their properties for non-corporate uses to apply for conditional use permits, which is not required for corporate expansion alone.

Before voting, Irvine City Mayor David Baker said the council was in the position of “trying to pick the best of a number of difficult alternatives.”

At the public hearing before the vote, Koll Co. Division President Richard Ortwein said: “We feel the council should not make a political decision to change the rules which would clearly benefit a select few.”

The city staff also opposed the change, saying that it is not needed and is not in the city’s interest.

Paul Hegness, a lawyer who said he represents a number of firms near John Wayne Airport, complained that the firms being allowed to build projects on land that had been reserved for corporate expansion are being allowed to “leapfrog” other developers on waiting lists to build in Irvine.

But Jim Erickson, attorney for the Fluor Corp., told the council that the amendment is “an equitable solution” and is not robbing others of opportunities to develop.


The council’s action culminates almost a year of debate over an issue that caused an unprecedented rift in the usual solidarity of the Irvine business community, pitting industrial giants like the Irvine Co., the Koll Co. and Fluor Corp. against one another.

The furor was triggered last March when the Dallas-based Trammell Crow Co., on the verge of buying the 162-acre landmark Fluor corporate headquarters in Irvine, checked with the city to determine whether it could proceed with plans to develop 122 acres of grassy fields around the existing Fluor buildings.

At issue was whether multiuse development of the prime Fluor property, flanking the San Diego Freeway at the gateway to Newport Beach, would be permitted under a 1982 city zoning ordinance that set the stage for more intense office development on 2,500 acres near the John Wayne Airport. That area, first called the Irvine Industrial Complex-West and now called the Irvine Business Center, originally was planned for manufacturing plants.

Fluor and seven other firms applied for and received special authorization under the ordinance to construct 4.7 million square feet of buildings on their properties. According to the city’s legal staff, the authorization was limited to construction of office space that would be used exclusively by the firms’ own employees.


Therefore, the council took the position that before the companies could use their corporate building “credits” to build speculative office buildings, the city’s zoning ordinance would have to be amended.

Nonetheless, Fluor and several other companies in Irvine with corporate development credits, including Parker-Hannifin and American Hospital Supply, have continued to maintain that under the original ordinance they can build whatever they want on their property.

Trammell Crow and Winthrop Financial Associates, which together bought the Fluor property last July for $340 million, considered the zoning allowance so important that they said if the council refused to allow multiuse development, they would withhold $35 million of the property’s purchase price. The surfacing of corporate development plans last spring initially aroused complaints from the Irvine Co. and Koll Co., both of which have office, hotel and restaurant complexes that would be in direct competition with the proposed Fluor and Parker Hannifin multiuse developments.

Later, the Irvine Co. withdrew its objections to the zoning change after determining that traffic would not worsen.


However, Smith Tool Co. has opposed any change in the 1982 zoning ordinance, which its representatives say clearly was intended to restrict development on corporate properties.

Smith Tool officials complain that if they had known that the corporate development credits could be used for other construction, they would have applied for them. Smith Tool, which like Fluor has seen its business shrink with the nationwide slump in oil-related services, would also like to develop its Irvine landholdings for added income.

In an attempt to restore harmony in the Irvine business community over the zoning issue, the Orange County Industrial League for the last year has held a series of discussions in which all the parties participated. In the end, however, they did not change their positions.

The tension derives in large part from the city’s adoption in 1982 of a 15-million-square-foot ceiling on additional office construction, all of which is already allocated to would-be developers. The ceiling was intended to prevent a compounding of the region’s No. 1 planning problem: traffic congestion.


With city encouragement, the Industrial League has embarked on its own study of ways in which the city might improve its traffic-circulation system to pave the way for additional office development.