Simi Valley Battles Builder Over Right to Control Growth : Development: A lawsuit challenges the city’s authority to regulate land use in its ‘sphere of influence.’

To Simi Valley officials, more is at stake than 250 acres of prime hilltop land.

The outcome of a lawsuit challenging the constitutionality of Simi Valley’s growth-control ordinance, they say, could have a far-reaching effect on land-use regulations in cities throughout the county and even the state.

Long Beach Equities Inc., which proposes building 249 luxury houses inside Simi Valley’s “sphere of influence,” filed the suit nearly two years ago in an attempt to have its project exempted from the city’s growth law. The developer alleges that the law allows property to be taken without just compensation because the city can dictate how the property is used.

Ventura County Superior Court Judge Bruce A. Thompson last May upheld the developer’s claim against the city, and the case is scheduled to go before the state’s 2nd Court of Appeal on June 20.

“It could be a precedent-setting case if cities can’t control development inside their spheres of influence,” Councilman Glen McAdoo said. “That would scare the hell out of cities.”

A “sphere of influence” is land designated for annexation by an adjoining city and often included in the city’s general plan, which is used as a guide for development.

Katherine E. Stone, the attorney representing Simi Valley, said more than 100 California cities have shown their support by signing a petition to be presented to the appeals court.

Stone said that although the lawsuit poses a threat to all cities in the state, there is a more immediate concern in Ventura County.

“It’s important because Ventura County is being assaulted by Los Angeles,” Stone said. “The agricultural land here is still cheap. If people buy up the land and develop it for housing, they can make an enormous profit because people want to live here. That’s what’s driving all of this.”

An attorney representing the developer disagreed.

“I think the city has tried to generate that . . . this is going to change planning throughout the county,” said Karen J. Lee, attorney for Long Beach Equities. “That simply isn’t the case.”

Lee said the developer should not be bound by the city’s growth law because before purchasing the land in question, known as Marr Ranch, the company had been assured by the city that the property was slated for residential development.

In addition, the developer paid $650,000 for planning and environmental impact reports before the passage of the growth law in 1986, Lee said.

Under the ordinance, Lee said, Long Beach Equities could lose much of its $7-million investment in addition to several million dollars in potential profits. She said if the company is not allowed to build, it should be reimbursed for its losses.

Simi Valley officials said the city’s growth law could delay completion of the project but does not prevent it from getting started.

The law, which expires in 1996, limits the number of city-issued building permits to 172 a year, said Assistant City Planner Jim Lightfoot. The permits are allocated among competing developers based on such criteria as project design, public amenities and the number of affordable units.

The developer’s efforts to get the county to approve its project also have been frustrated.

The reason is Ventura County’s planning laws limit most urban development to within the region’s 10 cities, including their spheres of influence.

The spheres are approved by the Local Agency Formation Commission, the state-established agency that oversees annexations and incorporations.

Bob Braitman, an executive officer with the commission, said the purpose of the spheres is to prevent developers from engaging in what he termed “zoning for dollars,” a process in which a developer negotiates with both the county and the city to see who will strike the best deal.