Expansion of Theo Lacy Wins OK : Jail: County and city officials approve a settlement that opens the way for more prisoners at the facility. Litigation had stopped work on the project last year.

County and Orange city officials Tuesday settled the last remaining issues in the longstanding dispute over the Theo Lacy Branch Jail expansion project, opening the way for construction of badly needed jail space.

Under terms of the settlement, both the city and Tishman West Management Corp., which owns the City shopping complex across from the jail, will drop their lawsuits and agree not to file any new complaints against the project.

In return, the county will limit the number of inmates in the jail to 1,326 under normal conditions and 1,968 under “emergency” or “unusual” circumstances. The jail now holds about 620 inmates.

A state appellate court ruled earlier this month that the county could proceed with the jail expansion even while several issues remain unresolved. But Tuesday’s settlement, which was approved by both the City Council and the Board of Supervisors, means the project can now go forward with no threat of future litigation or an injunction against its use. Tishman West is expected to sign the agreement later this week, city officials said.

“The biggest advantage to the county in settling is that the cloud of litigation is gone,” said Rich Adler, a senior planner with the county’s Environmental Management Agency and one of the negotiators of the settlement. “Without it, we could have proceeded (with the construction) and still been open for another lawsuit.”

In a prepared statement, Mayor Don E. Smith called the agreement “the best possible course of action.”

After approving the settlement terms Tuesday, the supervisors voted to put the contract for the $41.5-million expansion out to bid. The project’s original contractor was released after the protracted court battle halted construction in May, 1989.

Adler said a new contractor could be chosen by July, and the project could be completed about 18 months after that.

The settlement comes as welcome news for county officials, who have been desperately seeking new jail space for years. While the Theo Lacy expansion will ease overcrowding at the Central Men’s Jail in Santa Ana, the county still must find a location for a new, long-term, maximum-security facility.

Under the settlement terms, only minimum- and medium-security inmates may be housed at Theo Lacy.

Other terms of the agreement include:

* The establishment of a jail design review committee with county, city and Sheriff’s Department representatives. The committee’s purpose will be to ensure that the jail design complies with the environmental impact report.

* The county and city will cooperate to extend Metropolitan Drive from the City Drive through the Manchester Complex of government buildings and along the Santa Ana River to Chapman Avenue. The county will grant the city an easement for the road in return for other property and the city’s agreement to relocate the county animal shelter, which stands in the way of the proposed road extension.

* The county will give the city land for a new fire station next to the Manchester Complex parking structure in return for the city’s waiving of fees for additional police and fire services resulting from the jail’s expansion.

Emergency circumstances are described in the agreement as natural or man-made disasters, such as an earthquake, fire or flood, while unusual circumstances include jailhouse riots or “major law enforcement actions” in the county.

Jail overcrowding or the county’s failure to build new facilities will not constitute an emergency, according to the agreement. And while the agreement’s definition of “unusual” circumstances does not similarly restrict the county from relieving overcrowding by putting extra prisoners in Theo Lacy, county planner Adler said the intent is the same.

“The intent was not to allow that to happen, and I’m sure we’ll interpret it that way,” Adler said. “It is not intended to be a loophole.”

The city must also be notified in writing of the reason for housing and additional prisoners at the jail--who may remain there for no more than 60 days--and may take the matter to arbitration if it disagrees with the county.

The Theo Lacy expansion is part of a $148-million project to improve the 71-acre Manchester Complex. The complex includes a juvenile court, a family law and probate court, a 60-bed juvenile intake facility and two parking structures, all of which are under construction.