Irvine Exceeds Limits on Business Complex Development, Audit Finds

Irvine officials have exceeded self-imposed development limits in the prestigious Irvine Business Complex, a finding that some builders warn could threaten future construction in the master-planned community.

An outside audit of city planning practices released Monday confirmed what city officials had suspected about the level of development in the 2,300-acre complex, which includes highly desirable commercial property around John Wayne Airport.

Since 1982, the city has approved 4.5 million more square feet of office and commercial space than allowed in the complex, raising concerns about serious traffic congestion if all projects within the complex are eventually built.

Ceiling Established

Under a 1982 environmental impact report, roads in the complex can only handle traffic generated from 34.5 million square feet of office space. Therefore, the City Council that same year established a development ceiling of 35 million square feet in the Irvine Business Complex ordinance.

But the audit, prepared by the Costa Mesa-based firm of Deloitte Haskins & Sells, found that the city has approved more than 39.5 million square feet of new construction, which is in violation of the city’s own ordinance.

The report also noted that the city has failed to collect about $5 million in development fees, which Assistant City Manager Paul Brady Jr. blamed on a series of “miscalculations and accounting errors” within City Hall.

Councilman Ray Catalano, one of the chief architects of rules governing the Irvine Business Complex, said the report is “an indictment” of the city’s management of the nationally renowned office and high-technology business development.

Councilman C. David Baker agreed: “(The audit) points out that we have some severe weaknesses that must be corrected quickly. . . . “

At a briefing Monday, City Manager William Woollett said he will recommend passage of an emergency ordinance restricting development in the disputed area at the City Council’s Oct. 27 meeting. He said the 45-day measure--which would place tough size restrictions on any new project--would not affect any development that has already been approved in the complex, which is bounded by Campus Drive, the Costa Mesa Freeway, Barranca Parkway and San Diego Creek.

The ordinance, Woollett said, is necessary to give staff time to examine what went wrong in implementing the Irvine Business Complex plan. A five-member task force will review the city’s internal planning procedures as well as conduct a new traffic study to determine whether existing and planned roads can handle more than 34.5 million square feet of office space. The city manager said it will take close to a year to complete the evaluation, adding that once the urgency ordinance expires in mid-December he will seek a 10-month extension.

Despite assurances that projects already approved in the complex will not be derailed, some developers expressed uneasiness Monday.

“Sure we’re concerned about the impact this will have on our project,” said Bill Kearns, a project manager for Birtcher, the country’s ninth-largest commercial development firm which owns a 15-acre parcel on the southwest corner of Von Karman Avenue and the San Diego Freeway. The Laguna Niguel-based company has approval to build three offices, totaling 750,000 square feet, but Kearns said the project may include an athletic club, hotel and some retail stores.

“Irvine has always been a desirable place to build because it was easy to understand the rules . . . ,” Kearns said. “But if the rules get more expensive or more confusing, I’m sure some may look elsewhere.”

John Shumway, executive vice president of Market Profiles, a Costa Mesa research firm, said “the jury is still out” on whether the planning breakdowns in Irvine will discourage building in the business complex. But he added that those builders who have already secured project approval “are in the driver’s seat. . . . Those who haven’t are not as well off.”

City officials blamed the complexity and enormity of the Irvine Business Complex for much of their troubles. And they said there has been tremendous pressure from developers to get into the complex, which strained the planning system and led to inconsistencies in the review and charting of projects through the city approval pipeline.

In accepting full responsibility for the planning snafu, City Manager Woollett offered: “Maybe we erred and tried to make this too complicated from the beginning.”

In 1964, seven years before the city incorporated, the county targeted roughly more than 101 million square feet of commercial and industrial development for the area.

Then in 1982, worried about runaway development in the complex coupled with the expansion of John Wayne Airport and overall growth of the county, and Irvine in particular, Irvine officials adopted the Irvine Business Complex ordinance.

The ordinance called for 41 million square feet of building. When the EIR called for a maximum of 34.5 million square feet, the city ordinance was modified to 35 million.

But, Woollett said, some city departments, such as the Community Development Department, the city’s principal planning wing, didn’t get the word and continued to use the 41-million-square-foot figure. Others, such as the Transportation Services Department, which handles roads, used the 34.5-million figure.

It was not until six months ago, Brady said, that the discrepancy was discovered. At that point, he said, the council was told of the problem.

Currently, about 28 million square feet of commercial and office space exist in the complex. Even though another 11.5 million square feet have been approved, Woollett said it is “highly unlikely” that there will be a rush to get those projects off the ground in the next year to avoid any kind of future restrictions the city might place on the complex.

The audit also found that the city has failed to collect nearly $5 million in fees from “a lot more than a dozen” developers, money which helps pay for road improvements and widening in the complex, an auditor said.

He said the city will seek to recover the fees, going to court if need be. A series of accounting errors and poor record keeping was blamed for the fee foul-up, Brady said.

Brady said the city failed to develop an overall monitoring system to track the progress of the Irvine Business Complex.

“We did not spend enough time looking at the big picture,” he said.

Woollett said that “not enough time was spent” on supervising staff “to prevent this from happening. . . . It was not the best of efforts.”

Brady acknowledged that the planning problems with the complex “may tarnish the city’s image in the development community.”

But Councilman Catalano said that even if there is short term defection by builders, the complex will always be highly prized by corporations because of its central location in Orange County and proximity to John Wayne Airport.

“In real estate they say the three most important things are location, location and location. This area has it,” he said.

For years, the complex consisted of warehouses, aerospace companies and a few corporate headquarters. But in the early areas, the land became too valuable for manufacturing purposes and companies began acquiring property and building high-rise offices for corporate headquarters.

Although 100,000 people work in the area now, the complex is only about two-thirds built. Roads have yet to be widened and extended to meet the traffic demands to come.