Accord Ends Dispute Over Wetlands : City, State to Buy Land Near Lagoon; SDG&E; to Drop Suit

A protracted and complicated legal battle between SDG&E; and the City of San Diego ended Tuesday when the city agreed that it and the state should pay the utility $2.25 million to purchase and preserve the wetlands of Los Penasquitos Lagoon.

The agreement also calls for city officials to extract from SDG&E; $25 million to $30 million less in fees than anticipated during the early 1990s to pay for running power lines underground along major San Diego streets.

In return, SDG&E; has agreed to dismiss its troublesome 12-year-old lawsuit against the city. The suit alleges that the city used its powers to change the zoning on the property and, in essence, take it without paying for it.

“We’re very pleased to have this longstanding lawsuit finally settled,” said Harry Compton, regional governmental affairs director for SDG&E.; “It’s been a point of contention between the company and the city since 1974. It’s just good, I believe, to have it behind us.”

Compton said the company signed the settlement Tuesday morning. The City Council approved it unanimously shortly before lunch.

The settlement ends a legal case that began in 1974, after the city designated the SDG&E; land around the lagoon as open space and changed its zoning it from industrial to agricultural. The utility had purchased the 225 acres of Sorrento Valley land, just west of Interstate 5 and south of Carmel Valley Road, as part of a 400-acre tract envisioned as a site for a nuclear power plant.

SDG&E; charged that the city had deprived the company of the economic use of the land. In January, 1976, a Superior Court judge agreed that the zoning change was a “taking” of the land, and a jury subsequently awarded the company $3.2 million in costs and damages.

City officials decided to put that amount aside in a separate fund while it appealed the case. The matter reached the U.S. Supreme Court, which ruled 5-4 in 1981 that it did not have jurisdiction in the case because, in part, SDG&E; had failed to prove a “taking” of its land when it did not apply for municipal permission to develop its property, city memos show.

Instead of closing the case, the high court’s decision allowed the company to begin another round in the courts, arguing that permission to build was denied because of zoning.

Meanwhile, the $3.3 million set aside as a contingency fund by the city has grown to nearly $5 million. Council members sought the settlement as a way to end the case and free the fund for other uses, said Deputy City Atty. C. Alan Sumption, who has handled the SDG&E; lawsuit for the city.

The state Coastal Conservancy became part of the settlement when it recently proposed using $2 million in state funds to purchase 200 acres of the lagoon and surrounding areas. The city has agreed to pay $250,000 for 25 additional acres near the lagoon, and SDG&E; will retain ownership of about 15 acres, the agreement stipulates.

As part of the settlement, Compton said, SDG&E; also asked city officials to revise their schedule to collect fees for placing utilities underground between 1990 and 1994. Lower-than-anticipated fees would save money for SDG&E; customers, Compton said.

SDG&E; will drop its lawsuit when the land sale clears escrow, he said.