Carlsbad, Hunts Feud : Land Transfer Squabble Stalls Lagoon Restoration

A snag involving the planned restoration of Batiquitos Lagoon has put the $15-million enhancement project in jeopardy and has blocked the massive Pacific Rim country club and housing development planned for the wetland’s northern shore.

The state Lands Commission has asked that Hunt Properties Inc., developer of the 1,000-acre resort, turn over ownership of its lagoon lands before restoration work begins.

But officials with the development company, owned by the billionaire Hunt brothers of Dallas, say they are unwilling to give up title to the land--about three-quarters of the 526-acre lagoon--until their Pacific Rim project gets the final stamp of approval from Carlsbad leaders.

Hunt officials said that, in the meantime, they are willing to grant a “construction easement” to allow restoration work until full ownership is transferred to the state.

On Tuesday, Carlsbad officials said that isn’t good enough.

Arguing that the development firm has failed to honor an agreement to turn over the land needed for the lagoon restoration, the City Council ordered a halt to planning work on the Pacific Rim project until Hunt officials settle their differences with the state.

The council’s action, on a 3-2 vote with Mayor Mary Casler and Councilman Richard Chick dissenting, comes at a bad time for the Hunt project. Pacific Rim was scheduled to go before the city’s Planning Commission on Wednesday for final approval of the master plan, but the hearing was canceled because of the council decision.

Hunt officials insist that they agreed in June only to grant the construction easement, not to give up ownership of the land before their project was approved. Such an action would amount to a requirement by the city that “a multimillion-dollar gift of land be made as a processing fee,” Christopher Neils, an attorney representing the development firm, said in a letter delivered Tuesday to the council.

But the council majority disagreed, saying it was their understanding that the June agreement meant the Hunts were willing to give up the lagoon land, irrespective of how far Pacific Rim had progressed in the city’s planning process.

Restoration of Batiquitos Lagoon was planned to help offset damage that a massive pipeline project will cause to coastal wetlands at the Port of Los Angeles. State law requires companies that harm the environment in the coastal zone to mitigate the damage by improving another coastal area.

Although state regulations require the money be spent in the area where the environmental damage occurs, the port managed to shepherd a bill through the state Legislature allowing the funds to be spent on Batiquitos. The bill was approved last week and is on Gov. George Deukmejian’s desk.

The council’s ruling miffed Hunt officials, but by Wednesday the firm was busy trying to determine how it could satisfy the state’s desires.

Larry Clemens, a vice president of Hunt Properties Inc., said the firm hopes to meet with state Lands Commission officials early next week to hammer out an agreement.

Clemens said the firm is reluctant to give up its ownership of lagoon lands until it is assured that the restoration is going to occur.

No final agreement on the restoration has been signed by the various state agencies and private firms involved in the deal, Clemens said. In addition, the enhancement project has not cleared the necessary environmental reviews, he said.

If the Hunts were to turn over title to the property and the $15-million restoration deal fell through, he said, the firm could be left high and dry--without any say over the future of the lagoon, which the development company considers the centerpiece of the Pacific Rim project.

“It wouldn’t be too smart of us to give away property when we don’t have the lagoon restoration program in place,” Clemens said.

Curtis Fossum, staff counsel for the state Lands Commission, said the agency has agreed to allow the Hunts to go forward with their own, private enhancement effort if the state-sponsored plan fails to take place within three years.

Fossum said he felt the Hunts were reluctant to “give away the carrot” the lagoon represents in the firm’s dealings with Carlsbad officials on the Pacific Rim deal.

Indeed, some Carlsbad leaders have said any opposition they had to the Hunt’s project has been tempered because the firm is cooperating with the lagoon enhancement.

If no compromise can be worked out, the Hunts would have to make a “difficult business decision” to either turn their backs on the lagoon restoration or agree to turn over ownership of the land without first getting approval for the Pacific Rim project, Fossum said.

“I’m optimistic and hopeful that an agreement can be reached because I think it’s in everybody’s best interest,” he said.

The Pacific Rim project is to include more than 2,800 housing units, a golf course and country club, and a 254-room hotel. City planners recently scaled the project back from the 4,300 units originally planned, but the Hunts decided to go forward with the first phase in hopes of adding units as the project is built over a 10- to 15-year period.

If the deadlock over restoration of Batiquitos is not eased, it poses a problem for the $1.66-billion oil pipeline project planned for Los Angeles. The 1,030-mile pipeline between California and Texas cannot go forward without providing environmental mitigation for damage caused by a 106-acre landfill at the port.

Nonetheless, port officials said they are confident that any problems between the Hunts and the state can be solved. If not, another wetlands area can be found to be upgraded.

“It would cause some delays until a suitable alternative mitigation project is found,” said Vern Hall, a project manager for the port. “It’s always been a risk we were running.”