Hilltop Housing Proposal Dies as Laguna, Developer Settle Suit

The City of Laguna Beach and a developer have reached an out-of-court settlement ending a six-year battle over a piece of hilltop, ocean-view property known as Laguna Heights in south Orange County.

Under terms of the settlement, the city will buy half of the 471 acres of open space for $3.9 million, Laguna Beach City Manager Kenneth C. Frank said Wednesday.

The remainder will be dedicated to the city by the property owner, WBM Inc., a wholly owned subsidiary of the Bank of Nova Scotia, which purchased the land in 1979 for $1.9 million.

The Carma-Sandling Group, an Irvine-based developer, had wanted to build 108 houses on 28 acres of the unincorporated land but ran into problems because the city owns and operates a mini-park at the end of Alta Laguna Boulevard, the only road that could have provided access to the proposed development.

With the settlement, approved Tuesday, Carma-Sandling’s development proposal was withdrawn.

“It appeared that this was the only way to resolve the issue,” Frank said Wednesday.

Six lawsuits had been filed over the years. The settlement ended the most unusual of these, which had gone to trial in August. The county filed suit against the city for eminent domain over the mini-park land, which amounts to less than one acre, in an attempt to give the developer road access.

Laguna Beach officials had been willing to allow the development go through if it were reduced to 70 houses, but Carma-Sandling held fast at 108 units, maintaining that anything less would not have been economically feasible.

Frank said the case pitting the county against the City of Laguna Beach, which traditionally has fought to preserve open space, was the first of its kind. And because of the uncertainties surrounding its outcome, the city and property owner decided it would be better to settle the dispute out of court.

Frank said the settlement’s major benefit to city residents is that “in the long run, it reduces the traffic congestion that would have occurred.”