Developer Tries to Put Houses on Eastport Site : Mission Canyon Ownership Key to Land-Swap Proposal

Times Staff Writer

Real estate developer Ray A. Watt’s complex land-swap proposal would pave the way for his firm to build hundreds of high-priced homes on Santa Monica Mountains property embroiled in a protracted legal battle pitting developers against homeowners and the city of Los Angeles.

Watt, one of California’s biggest and politically well-connected builders, is seeking to construct up to 750 homes in the Mission and Mandeville canyons area west of the San Diego Freeway and south of Mulholland Drive. As part of a complex series of high-stakes deals, Watt has proposed that his company obtain Mission Canyon from Los Angeles County.

Under Discussion

Watt’s tentative proposal--a copy of which was obtained by The Times--is under discussion at the same time that Rep. Howard L. Berman (D-Panorama City) is trying to negotiate an agreement with city and county officials involving many of the same properties, including a proposed landfill in Elsmere Canyon in the Santa Clarita Valley.


Under Watt’s three-page plan, which has been distributed to numerous city, county and federal officials, the following would occur:

Watt Industries would make the Hatchet Ranch it owns north of Jackson Hole, Wyo., available to the U. S. Forest Service, which has long sought to obtain the property in scenic Buffalo Valley. In exchange, the Forest Service would give land in Elsmere Canyon to a city or county government agency for a landfill. Watt’s company would also provide 630 acres that it owns in adjacent Whitney Canyon for access to the dump.

U. S. Sen. Malcolm Wallop (R-Wyo.) plans to introduce a bill shortly to swap rights to the Wyoming property for Elsmere Canyon. Under the measure, the Forest Service would not acquire the Hatchet Ranch but would obtain a “scenic easement,” which means that the property could only be used for ranching and farming, not for real estate development, said Wallop spokesman Stan Cannon. Watt would still own it.

Watt would share in the “tipping fees, surcharges and other revenue sharing” from the landfill, which would have a capacity of about 200 million tons. Watt did not specify his percentage in the proposal. But one of those privy to the negotiations said the developer is asking for $3 for each ton of garbage, or $600 million over several decades.


Watt would deed 1,200 acres next to Rustic and Sullivan canyons in the Santa Monica Mountains between Mission Canyon and Topanga Canyon Boulevard to a federal or state parks agency. In exchange, Los Angeles County would deed Mission Canyon to Watt and all of Rustic and Sullivan to a park agency as permanent open space.

The city would permit Watt Industries to build 300 housing units in Mandeville Canyon and as many as 450 other residences in Mandeville and Mission canyons. Homes in the area--some of which afford spectacular views of Brentwood and the Westside--sell for upwards of $500,000. Numerous city permits and approvals would be necessary for the project to proceed.

Watt Industries would pay the county up to $70 million to offset the costs of closing Mission, Rustic and Sullivan canyons as possible landfill sites. The county has been determined to retain the canyons as long- term landfill options, especially with Los Angeles rapidly running out of dumping space.

Various officials involved in the behind-the-scenes discussions--including Los Angeles Deputy Mayor Mike Gage--say Watt is a factor in the negotiations. But Gage called Watt’s initial proposal “totally unacceptable to the city,” and Berman said he would not be party to a package that includes construction of 750 homes in the Santa Monica Mountains.


Political Clout

Still, Watt’s political and financial clout and strategically located landholdings have prompted some of those involved in the process to suggest that he could be an impediment to an agreement. Environmentalists, meanwhile, privately express concern that Watt could wind up with the city’s support to build far more houses in the mountains than otherwise might have been politically possible.

“He’s very high-power, he’s a very wealthy man, he’s got lots of friends in City Hall,” said Nita Rosenfeld, who heads the Mandeville Canyon Assn.'s governmental committee. “It’s going to be a formidable battle to make sure that he doesn’t get away with anything.”

Watt Industries in Santa Monica, one of scores of real estate companies in which Watt is a principal, posted $420 million in housing sales in 1987, the second highest total in Southern California.


Like other large land developers, Watt has been generous to elected officials who decide on real estate projects. Since 1984, Watt, his companies and company employees have given at least $155,000 in campaign contributions to city and county politicians.

The top recipients have been the campaign committees of Los Angeles Mayor Tom Bradley, $25,850, and County Supervisors Deane Dana, $21,000, and Mike Antonovich, $17,600.

Possible Influence

Asked about the possible influence of Watt’s contributions, Gage replied: “Contributions are never a factor in weighing people’s proposals in this office.”


In addition, the influential Los Angeles law firm of Manatt, Phelps, Rothenberg, Tunney & Phillips is representing Watt on his land-swap proposal. Bradley has retained the firm to represent him in the city attorney’s inquiry into his ties with two financial institutions.

Berman has been contacted by Charles T. Manatt, a senior partner in the firm and a former national Democratic Party chairman, and Mickey Kantor, a well-connected Democratic attorney from the firm, according to Gene Smith, Berman’s chief Washington aide. Neither Manatt nor Kantor returned phone calls to discuss the Watt proposal.

Watt, 70, was out of town and could not be reached last week. He lives in Beverly Hills.

“He’s really the one who should be discussing it,” said Meg Gilbert, director of special projects for Watt Industries. “It’s sensitive and complicated.”


The 1,500-acre Mandeville property where Watt proposes to build 500 single-family homes already has a long and controversial history. It is owned by Eastport Associates, which filed for bankruptcy after it was unable to develop the property.

$69-Million Offer

Eastport has accepted a $69-million offer for the land from Watt-Terramics Co., another of Ray Watt’s companies, said Robert Greenfield, an Eastport bankruptcy attorney. He said Eastport will ask the bankruptcy court to approve the sale.

Eastport had received approval from the city in 1978 to build 300 residences on the property and 200 more if it could construct a secondary road to the site.


But a lawsuit filed by the homeowners and other problems--including Los Angeles County’s refusal to approve the secondary road across county-owned property--prevented the company from beginning construction by June, 1987. At that time, its most recent approval extension expired and, with it, the authority to build the 300 homes, said Deputy City Atty. Tom Kathe.

In 1988, the Legislature passed a bill sponsored by state Sen. Joseph B. Montoya (D-Whittier) that stipulated that any housing projects approved by a county Board of Supervisors would carry over when a new city is formed. However, a little-noticed provision in the measure had the effect of extending Eastport’s subdivision approval until Jan. 1, 1992, according to the company.

“When we heard that, we were flabbergasted,” Kathe said.

Eastport had maintained that the construction approval never lapsed. But when a judge ruled otherwise, the company sought legislation that would apply retroactively to its project, said K. Phillip Nierim, Eastport’s attorney. “I was principally responsible for drafting the legislation,” he said.


Judge’s Ruling

The city argued that the law did not apply to the Eastport property, but Bankruptcy Court Judge Barry Russell ruled that it did. Watt-Terramics’ $69-million offer had been contingent upon such a ruling, Eastport attorneys said.

The city has appealed Russell’s decision and the three Mandeville homeowners associations plan to file a supporting brief, said John B. Murdock, the associations’ attorney.

If Watt’s proposal is accepted, the city presumably would drop its appeal. Acquiring Mission Canyon would give the developer the property for the road that is required to build the full 500 units. He would then need approval for the additional 250 homes.


Rosenfeld of the homeowners association said Watt’s plan appears to be a bid to circumvent the public process.

“Let the man come in and show the public what he’s going to do and then we’ll talk.”

Times staff writers Gabe Fuentes and Amy Pyle contributed to this story.