The Battle for Bolsa Chica : Signal Counting on Sacramento Hearing to Break the Barrier on Marina Project

An Orange County official tells of a wistful letter he once received from a boat lover who wanted to reserve a marina slip in the huge development planned for the Bolsa Chica wetlands.

The request was on behalf of the writer’s grandson.

Like many others, the man could see himself growing old waiting for the billion-dollar-plus project to become a reality.

But recently, the far-reaching plan to develop Bolsa Chica, which would include the restoration of 915 acres of wetlands, has jumped forward.

Signal Landmark Properties Inc. was given preliminary approval almost two years ago by the state Coastal Commission for a basic development plan for the environmentally sensitive 1,200 acres of Bolsa Chica it owns. In the last year it has pushed forward at two levels:

- In Washington, it successfully lobbied for inclusion of a provision in the omnibus Water Resources Development Act of 1986 to provide an innovative financing plan for a proposed $90-million navigable ocean channel Signal wants as a part of the development.

- In Sacramento, controversial state legislation that would create a public agency, dominated by Signal and with city-like powers to issue building permits and bonds, has passed the Senate. SB 1517, by Sen. Marian Bergeson (R-Newport Beach), will be heard Aug. 17 by the Assembly Natural Resources Committee.

Clearly, said Signal lawyer Russell G. Behrens, the time for action has come.

“Are we going to sit around the tennis court and think about playing tennis, or are we going to play some tennis?” he asked. “It’s time to move.”

The Bolsa Chica area, which covers 1,600 acres along Pacific Coast Highway south of Warner Avenue, has long been coveted by nature lovers and developers.

Environmentalists see it as an important wetlands area in a state where there are fewer and fewer preserves for migratory birds and wildlife, which use them as feeding grounds and resting places. And developers eyeing Bolsa Chica have envisioned homes and businesses with views that, on clear days, stretch to Catalina Island to the west and the Spruce Goose in Long Beach to the north.

Although the marsh, now dotted with oil rigs, is but a shadow of what it was before the replenishing tides were blocked by sand at the turn of the century, it takes only a drive across one of the dirt roads that crisscross the pickleweed-covered land to understand why so many people have fought for years to keep development out of the area. Great blue herons spread their wings and hesitate for a moment before they step into flight. Least terns and tiny Belding’s savannah sparrows, both of which are endangered species, flutter across wide, shallow pools of saltwater.

But there has never been money for the state or federal government to restore the wetlands, let alone purchase them outright as a public preserve.

When Signal Landmark purchased the land in 1970 for $20 million, it planned to develop the area. But to do so, it had to deal with preservation of the wetlands.

In a deal worked out in 1985 after years of negotiations with the state Coastal Commission, Signal will be allowed to develop the lowlands in return for restoring the 915 acres of wetlands and turning them over to the state.

“It’s like threading a needle to achieve the best of restoration of the wetlands . . . while still allowing development to take place,” said lawyer Jerry Patterson, a former congressman who was hired by the City of Huntington Beach to advise it on SB 1517. “Because without any development, there’s no plan for restoring and maintaining the wetlands.”

When complete, the project as proposed would have 5,700 housing units, including 2,500 on the mesa and others on the lowlands, as well as restaurants, hotels and shops. Signal also wants a navigable ocean channel leading to a 1,300-slip marina to attract recreational boaters and to enhance views, greatly adding to the value of homes and businesses there.

A Signal spokesman put the total build-out at more than $1.4 billion, based on an average $250,000 sales price per housing unit, which he conceded was probably low. All told, the cost of the infrastructure, including an ocean channel, streets and sewers, is estimated at $233 million.

Signal must return to the Coastal Commission with a wetlands restoration plan and a feasibility study on the ocean entrance, including its impact on the popular Bolsa Chica State Beach, to get a final certification to go ahead with the development.

The project has enjoyed support from Orange County, in whose unincorporated area Bolsa Chica lies, and Huntington Beach, which surrounds the area and will eventually annex it--as well as other cities in the county.

But, since the Coastal Commission agreement was worked out, not much progress has been made toward turning the plans into reality. And, as several people familiar with the project pointed out in recent weeks, in business, time is money.

That is why, as Behrens said, Signal took the initiative.

“We’ve introduced this legislation to get things moving to overcome the inertia that’s existed on this project for years,” Behrens explained.

Favorable Climate

Signal has been eager to move the project along for several reasons.

For one thing, the political winds are relatively favorable. There is a pro-business Republican in the governor’s office who has control over three key state agencies involved in the project: Recreation and Parks, Fish and Game and the Coastal Commission. Also, there is a pro-growth majority on the City Council in Huntington Beach.

But this could change, and there is always the continuing opposition of environmentalists.

One county official, who asked not to be identified, said: “Signal’s attitude during this whole thing is ‘Hurry up, hurry up, hurry up--this is our money, this is our project.’ They see they have a lot of hostile people and organizations who would like to be able to slow down the project or kill it altogether.”

Behrens conceded that Signal believes having the special district in place to finance the infrastructure would “eliminate some risks,” including “the political swings in city politics and Orange County politics over the 15 to 20 years it takes to do the job.”

‘Return on Investment’

“If we’re going to give all that land away, spend all that money to restore wetlands and on top of that spend all that money on infrastructure, we need assurances we will have ability to get a return on our investment,” Behrens said.

In response to this concern, Huntington Beach officials have been pushing for an annexation-development agreement as a way of assuring Signal that it will be able to proceed with its development once it gets final approval from the Coastal Commission and the county.

The major stumbling block in the project is the ocean channel. Even before Signal bought the property, Congress had authorized the U.S. Army Corps of Engineers to study the feasibility of a small-craft harbor at Bolsa Chica. But those studies never have been completed and, even if they had, there was no one willing to commit the huge sums to build the channel.

Then, without any fanfare and with the support of U.S. Sen. Pete Wilson (R-Calif.) and Rep. Dan E. Lungren (R-Long Beach), Signal succeeded last fall in getting an amendment written into the omnibus federal Water Resources Development Act of 1986 that enables Congress to provide $44.8 million in loans to build the ocean channel.

Innovative Idea

Knowing that the federal government is no longer willing to pay outright for such recreational water projects--or even to split the bill--Signal and its economic adviser, Williams and Kuebelbeck, came up with an innovative plan under which the federal government’s loans would be repaid in full over the next several decades.

Though there is no guarantee the federal government ultimately will approve the loan, the prospect of full repayment is bound to move the project up the federal priority list, should it prove feasible after the current studies are completed.

Signal would repay part of the money from the escrows of the development’s homes as they are sold. Other money would be repaid through a benefit assessment based on the appreciation through the years of the individual residential and commercial properties.

“One of the things the feds have never done is try to recover a part of the enhancement of the land values that results from the construction of a project,” said Bob Wills, a Washington lobbyist who worked with Signal to develop the federal legislation.

Signal spokesman Wayne Clark said that there has been national interest in the financing scheme because the federal government, under both the Carter and Reagan administrations, has said that recreational navigational projects are no longer a priority.

Feasibility Study

“There are projects stopped all over the place,” Clark said.

The bill also authorized $900,000, which is expected to be allocated this year, for an Army Corps of Engineers study that will determine, among other things, whether a navigable or non-navigable ocean channel is economically and technically feasible.

To further speed up the process, Signal recently contracted with the State Lands Commission to put up $700,000 of the firm’s own money so that the Corps of Engineers can build computer and physical models needed to complete the channel study. Normally, these models are not built until preliminary studies are done.

Signal now has turned its energies to SB 1517, which it believes will put it in a stronger position once the Corps’ study and others are completed and the company returns to Congress for the loan money.

The bill would create a five-member special district, controlled by Signal, that would oversee development of the project. Among other things, the district could issue bonds to repay money borrowed from the federal government for the ocean channel and to install streets, sewers and other infrastructure.

“If that’s in place . . . that becomes part of the financial feasibility,” said Clark.

Competing Interests

Bergeson, who agreed to carry the 80-page bill for Signal, saying she wanted to maintain control over it, has taken a lot of heat from those who say it is of benefit solely to the company.

“We knew it was not going to be an easy bill to carry, because it was obvious there were many, many competing interests,” Bergeson said last week. “You’d think you had everything fingered as far as those who would be involved in the process, and then you’d find there would be four or five more.”

“What she discovered is this bill is an extremely hot potato,” said Victor Leipzig, president of Amigos de Bolsa Chica, the 1,000-member environmental group that has long fought the development. “She has had to stand back and let all the participants fight over the bill. She hasn’t executed the kind of control she was talking about in justifying authoring the bill herself.”

Among those hovering over the bill as the Aug. 17 Assembly Natural Resources Committee hearing approaches are:

- The City of Huntington Beach, which initially was concerned that Signal was trying to get around local zoning requirements to set up, in essence, a “city within a city” through Bergeson’s bill. Huntington Beach officials, for example, want to make sure that whatever infrastructure the special district authorizes meets city standards and that the housing and other structures meet its codes.

It is also concerned that Signal might use taxing authorities to increase its profit and leave state and local government and future residents with unspecified maintenance costs.

Huntington Beach also wants reassurances that Signal will be responsible for mitigating any damage caused by construction of an ocean entrance, including the considerable expense of sand replenishment that might be needed on the beaches from Anaheim Bay on the north to Newport Beach on the south.

“This is recurring as a bone of very severe contention,” Huntington Beach Mayor Jack Kelly said last week.

- The State Lands Commission, which administers more than 300 acres of Bolsa Chica wetlands owned by California, probably will be the state agency to receive the remainder of the restored wetlands from Signal when the project goes forward. In addition, if the navigable ocean entrance is constructed, the commission could receive 230 additional acres for a public marina.

The commission’s concern with Bergeson’s bill is to make sure that the special district does not interfere with state programs in the area.

- The state Department of Recreation and Parks is concerned about the impact of an ocean channel on Bolsa Chica State Beach. That beach attracts more than 4 million people a year. Should the channel be cut, the department wants to make sure there is “reliable and responsible funding” tied to the bill to mitigate the loss of beach and any sand replenishment problems along the coast.

- The state Department of Fish and Game, which runs the 300-acre ecological reserve, among other things, wants to be sure that the special district will not have the power to shut off water to the wetlands.

- The Coastal Commission wants to make sure its agreement with Signal is not undermined.

- The Sierra Club is concerned that Bergeson’s bill implements the development side of the bill without fully taking environmental concerns into account.

One of the major concerns of environmentalists is that the bill, as originally written, contained no funding mechanism for wetlands restoration, although it was promoted as a bill to restore the marshlands. The cost of restoration is estimated at upwards of $12 million, and Signal says that maintenance could cost $200,000 a year.

The bill was amended in the Senate to provide an $1,800 assessment on each home built in the project, which would raise about $4 million to $4.5 million. “It’s a statement,” Bergeson said. “The commitment is made for restoration and maintenance.”

- Orange County, which has long been a proponent of the project, has traditionally acted as the mediator between the city and the developer.

- Shell Oil, which has oil rights in Bolsa Chica, wants to make sure it does not end up paying added assessments. Shell also is keeping a watchful eye on any plans to consolidate or relocate its facilities--and who would pay for that.

- The Metropolitan Water District, which owns about 83 acres in Bolsa Chica, wanted to build a desalting plant there some day. The bill was amended to allay the district’s concerns that it would be assessed or taxed.

According to William Abbott, water district general counsel, the agency’s land is needed for Signal to carry out its development plan, so Metropolitan is considering selling it or trading it for other property along the coast.

- Amigos de Bolsa Chica opposes the bill as premature and of convenience only to Signal.

- The Surfrider Foundation says the breakwater that would be required by an ocean entrance would destroy almost a mile of good surfing. “All they ever talk about is the birds and the boats,” said Tom Pratte, executive vice president of the 700-member foundation. “They haven’t been talking about the beach.”

Amendments to Bergeson’s bill have been flying all over the place, some of them technical in nature and some substantive. The State Lands Commission alone proposed 34 amendments, and Signal has proposed at least as many. Signal’s high-powered Sacramento lobbyist, James D. Garibaldi, is working with Behrens in ushering the bill through the Legislature.

Bergeson said the agreements reached so far are “fragile,” but she believes that “we have fashioned a bill now that has the potential for success.”

In preparation for the hearing, the key players--the City of Huntington Beach and Signal--have had frequent meetings to try to resolve their differences. The City Council is expected to consider the progress of the talks at its meeting Monday.

The city would favor passage of the bill if its concerns are satisfied. But as Rich Barnard, assistant to the city administrator, said, referring to the chance that the bill would be put over to next year: “We would not lose any sleep over that.”

Anxious for Finish

Bergeson, now that the bill is closing in on the last several weeks of this year’s session, is eager to see the matter resolved.

If the bill is put over, she said, “everybody will go back and say, ‘Hey, we don’t have to worry about it. Let’s forget about it, and things will work themselves out.’ But things don’t work themselves out.”

Sooner or later, ocean channel or no, the infrastructure for the development will have to be financed, she said. The special district would “prevent the kind of delays that are far more costly in the long run. Costly in money, and also costly in emotions and frustrations that I think linger on for years.”

There is still fear by city negotiators that Signal may try last-minute maneuvers to amend the bill.

Complex Bill

“It’s a very complicated bill, and sometimes things can slip in without you realizing what they really mean until later,” said lawyer Katherine Stone, who, along with Patterson, was hired by Huntington Beach to interpret the bill. “A few words can sometimes make a big difference. It’s hard for a city or any of the state agencies to get their positions together quickly enough to act.”

But while talks have been anything but easy, the legislation also is seen as the catalyst to get all the parties talking again.

Until now, there has been “quite a bit of polarization and misunderstanding and not a lot of dialogue going on,” Barnard said. “At least the legislation and development agreement have got everybody talking and better understanding each other’s concerns.”

Behrens said if the special district is put in place next January, and the ocean entrance is authorized by the Coastal Commission and the Army Corps of Engineers, Signal could start construction of an ocean entrance by 1992. Housing construction could start on the mesa as early as late 1989, he said.

“Once we’ve overcome inertia, we’ve got to keep things moving,” Behrens said. “Slowing down doesn’t help the process because it takes the need to deal with the issues away, and therefore they don’t get solved.”

THE KEY MEASURE

SENATE BILL 1517 would create a special district, controlled by the landowner, Signal Landmark Properties Inc., to govern the early stages of a proposed residential development and marina on Orange County’s environmentally sensitive Bolsa Chica wetlands. The board governing the district would consist of five members, three of whom would be appointed by Signal. The others would be a Huntington Beach City Council member and an Orange County supervisor. Four of the five members would have to agree before the district could levy fees or issue bonds to finance roads, sewers, water lines and other public works projects. Author: Sen. Marian Bergeson (R-Newport Beach).