Scaled-Down Project Proposed for Airport : Development: Santa Monica mayor says the city needs the revenue. He suggests a plan that includes less office space and 20 acres set aside for a park.

Having lost his fight to save a commercial office project proposed for Santa Monica Municipal Airport, Mayor Dennis Zane is scrambling to win public support for a smaller project, saying the city needs the revenue the project would generate.

In the face of a voter initiative to overturn the project and opposition from Los Angeles officials and residents, the City Council, at Zane’s request, rescinded its approval of the larger 822,000-square-foot development. Zane is now proposing a 580,000-square-foot project with 20 acres set aside for a park.

Zane estimates that the smaller project would generate more than $200 million over the 75-year life of the development agreement.

He said he would like to see his new proposal placed on the November municipal ballot.

“The community interest is best served by a ballot measure,” said Zane. “The burden of compromise is to find a place where people who disagreed with me agree with me. I am willing to set aside my initial judgment and find a common judgment.”

Zane said he believes that the strong opposition to the 822,000-square-foot office project resulted in part from the council’s failure to adequately communicate the need for the revenue it would produce.

“I have spent eight, nine years on the council,” said Zane, who was elected to a third term in 1988. “Through that time I have been committed . . . to quality education, a quality park system, providing an environment in which our children can grow up healthy, and in public safety.

“The airport project would allow us to address some of those needs. . . . The benefits are significantly superior to the burdens on the other side.”

Because a referendum drive collected nearly 8,000 valid signatures, the council was obligated to rescind its Oct. 10 approval of the project or place the matter before the public; on Tuesday, the council rescinded its approval by a 6-1 vote. Only Councilman William Jenning voted against the repeal, saying he believes that the matter should have been placed on the ballot. The city staff was also directed to contact community leaders both supportive and opposed to the project to develop a process in which a new proposal could be presented and discussed. A recommendation is expected in 30 days.

Zane said placing the larger project on the ballot with so much opposition would have been like playing a game of chicken, in which two cars race at each other, each taking the chance that the other will move out of the way first.

“The appropriate thing is not to play chicken, but to find a negotiated compromise,” he said.

Some of Zane’s council colleagues praised his decision.

“We need to recognize the need to have any project grow out of the will of the people . . . and articulated by the people,” said Councilman David Finkel, who in October voted against the larger project.

“The lesson I hope we all learned is that the people want a say on whatever is done with the land,” said Councilman Ken Genser, another earlier opponent of the larger project. “I don’t think it was a matter that (the residents) didn’t understand (the need for revenue), it was that they didn’t like what was being proposed.”

Councilman Herb Katz was the third councilman who voted against the project. Council members Judy Abdo, Christine Reed and Jennings joined Zane in voting for it.

Former Mayor Jim Conn, who supported the project while in office through 1988 and then formed a citizens group to support it, said he is disappointed that Zane gave up the fight.

“I really regret that it has come to this,” Conn said. “The proposal that we made originally is the best thing for the future of the city. I don’t think there is any evidence that (the project) would have lost (in a referendum election). What we have is 10% of the people who said they wanted it to go to the ballot.”

However, he added, “I will support whatever the council feels is appropriate. There has to be a viable revenue flow from that property. Of course, it makes perfect political sense to find consensus rather than go to the mat.”

The development began as a 1.3-million-square-foot office project in 1987, when the City Council selected Reliance Development Group to develop 37.5 acres of unused airport land on the city’s eastern border. But opposition from residents in Santa Monica and nearby Mar Vista over potential traffic and pollution problems persuaded city staff to recommend early last year that the project be reduced to 1 million square feet.

The Planning Commission recommended that the project be further reduced to between 600,000 and 750,000 square feet. In October, the City Council narrowly approved the 822,000-square-foot project.

Within a month, a citizens committee had collected nearly 8,000 valid signatures, and a homeowner and a pilots group had filed suit challenging the city’s authority to approve development of the public land without voter approval.

Earlier this month, a Mar Vista resident filed suit challenging the project’s environmental impact report. Los Angeles Mayor Tom Bradley supported the suit and denounced the project as environmentally insensitive. Los Angeles City Council members Marvin Braude and Ruth Galanter, whose districts abut Santa Monica, had already come out against the project.

Although the project would be built entirely within Santa Monica, the only access to it would be from Bundy Drive in Los Angeles.

Los Angeles traffic engineers are currently studying the traffic impact of the new smaller proposal.

Although some opponents of the rejected project have said privately that they would support the smaller proposal because of the recreational facilities, others are waiting to see specific plans and financial projections before committing to it.

“It does not make sense to approve a project whose revenues would be used wholly to support a new park,” said Councilwoman Abdo. “If there is agreement among the various people that results in a project that brings in enough revenues for the city, I would be supportive.”

Greg Thomas, the Mar Vista resident who filed suit against Santa Monica, said he is still concerned that the project could be enlarged.

“I’m a doubting Thomas, so to speak, as to whether this is the project the will eventually be presented to the people of Santa Monica,” he said. “Whatever is presented, we want to make sure that the concerns of Los Angeles are addressed.”

Meanwhile, Henry Lambert, president of Reliance, said his company has been unfairly caught in the middle.

“We were asked by the city to build a development, and we were awarded a development of 1.3 million square feet,” he said in an interview. “Then, after spending $3 million, the process is telling us now that we will be lucky to get 600,000 square feet. Obviously that is not what we bargained for.

“It’s an absurd process to get this far down the road and have it fall apart. This was a well-thought-out project. Both we and the city have spent a lot of time and money to negotiate a complicated agreement. To have a metamorphosis at this point is absurd. In a just world, the city would be legally, or at least morally, bound to the project.”

But he says he will continue negotiations to build something at the site.

“We would like to have as large a project as possible,” Lambert said. “But we will do what we can to save the project.”