Plans for Estate Rile Neighbors : Development: The spectacular 10.4-acre bluff-top property next to Laguna Beach may become the site of 26 custom houses unless protesting neighbors prevail.

For the drivers who pass by on Coast Highway daily, Smithcliffs is a mystery hidden behind bougainvillea, oleander and pine, marked only by a wrought-iron gate, a "private" sign and a driveway curving out of sight.

To insiders and longtime locals, however, the bluff-top estate is known for two reasons: its colorful past and its eight-figure value as a 10.4-acre piece of the ever-shrinking, undeveloped oceanfront.

But both the mystery and the seclusion of the site may soon be history. Because Smithcliffs has a new owner, construction magnate Gary Brinderson, with a new plan for the property: 26 custom homes. And the neighborhood is preparing to fight.

Jeannette Merrilees, whose McKnight Drive home backs up to the estate, has a petition signed by 200 members of the community protesting the development. The 26 homes, she contends, would be "built on five-foot pads to make the most of the views. Unfortunately, they will look down upon us from about 40 feet high. I can't imagine what it will do to our privacy or our property values."

Brinderson would not be interviewed, but company spokesman Steven Fink said: "Mr. Brinderson and all of his projects are known for the quality of the buildings themselves. Everything he does speaks of the highest quality. The Brinderson Towers are the most obvious symbols of the type of work Mr. Brinderson involves himself with."

Brinderson Construction is currently building the 14-story Brinderson Towers on MacArthur Boulevard in Irvine. The

company also builds U.S. naval shipyards, he said.

The battle over the fate of Smithcliffs has another twist.

Like exclusive Emerald Bay, next to and upcoast of Smithcliffs, while nearly surrounded by the city of Laguna Beach, it is not in the city. Under an old arrangement, it is actually in county territory.

Laguna Beach planners, however, claim that that is a distinction on paper only.

"It is our position that his property should be annexed (to Laguna Beach) and dealt with as part of the city," said Kyle Butterwick, the city's planning director. "The city will certainly be the recipient of the impacts of his development."

And Laguna Beach has made it clear that the project as it stands is unwelcome.

"We have had written correspondence with Mr. Brinderson expressing our concerns about the project," Butterwick said. Those concerns, he said, include traffic, lack of public access to the beach and a substantial elimination of mature trees.

"It was not the most sensitive site plan they could have submitted," Butterwick said. But Brinderson has submitted that plan to the county--not Laguna--and doesn't intend to seek the city's blessing, Fink said.

"The property in question is in the county, not in the city of Laguna Beach," Fink said. Brinderson "enjoys being in the county. He very much wants to stay in the county. Whatever services are needed will be handled outside the city of Laguna Beach. And he doesn't feel any reason to be concerned by these actions."

When he bought this 10.4-acre estate for a reported $15 million five years ago, however, Brinderson bought a piece of Laguna legend. Named Smithcliffs by Los Angeles oil man Lon Smith, one of its previous owners, the gray stucco mansion nestled next to gated Emerald Bay has a history of intrigue attributed most directly to another owner, the cigar-smoking Florence Lowe (Pancho) Barnes. Barnes, a member of a wealthy Pasadena family, was a lover of planes, and her exploits as an aviator and hostess of raucous parties on the property are legendary among those who remember Laguna Beach in the 1930s.

"Pancho Barnes was a party lover and brought a crowd of Hollywood types down here to her parties," said Louise Turner, a realtor in Laguna Beach since 1957 and a resident of Laguna Beach since 1933. "She had a swimming pool on the property with portholes in it so those in the bar in the basement of the house could watch the people in the pool. She also had a runway on the property for the aviators, one of whom unhappily was unable to stop his plane and went over the cliff."

Barnes eventually moved to the Mojave Desert, where she owned a bar and motel later portrayed in the movie "The Right Stuff." And Smithcliffs fell into disrepair until Smith bought the property as a beach retreat from his Los Angeles home. Since Smith and his wife died, the property has remained vacant except for a trailer Brinderson put there.

What will become of the estate now remains in question.

Until last week, it was generally thought that the city of Laguna Beach had the upper hand because of Brinderson's need for sewer service. City officials figured that he eventually would have to ask them for it.

Last week, however, Brinderson found an ally: the powerful board of directors of the Irvine Ranch Water District. The board voted unanimously to provide a sewer connection to Smithcliffs for future homes. Although the district's territory extends only as far as nearby Irvine Cove and is not contiguous with Smithcliffs, it could provide sewer service through its membership in the Aliso Water Management Agency, which owns the sewer lines along Coast Highway.

It was a move that infuriated Laguna Beach City Manager Kenneth C. Frank.

"We are vehemently opposed to that annexation," Frank said. "I can't imagine any justification that will enable LAFCO (the Local Agency Formation Commission, which rules on potential annexations) to allow it. We are very, very opposed to any attempt to provide sewer service to that piece of property."

Peer Swan, the president of the Irvine water board, said the board simply is doing its job: providing service to a potential customer.

"We are not land-use planners; we are a water and sewer district," Swan said. "And for us to even take on the role of a land-use planner would be inappropriate. That smacks more of Eastern Europe, the old Eastern Europe, than the United States. This district has a history of accommodating developers who, for reasons of proximity or cost of service, ask to become a part of the district."

Frank said the city has gone out of its way to compromise with Brinderson on the project.

"We've offered to work with Mr. Brinderson's people since Day One. And I have privately told at least two of his people that I see an alternative that would benefit our community and the Brinderson group," Frank said.

Merrilees, who appeared before the water board to protest its involvement, said she plans to continue monitoring the project and to present her petition to county planners.

"Just about every developer with a project in north Laguna has extended us the courtesy of making a presentation to the North Laguna Community Assn.," she said. "Mr. Brinderson has never even contacted us. He is avoiding the process of extending consideration to his neighbors, the city of Laguna Beach. The reason is simple: We are tougher on development here."

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