Santa Monica Shelves Plan for Airport Project : Development: A petition drive had raised the prospect of a referendum on the office plan. City Council decided that there is not enough time to devise alternative proposals.

The Santa Monica City Council has closed the book for now on a three-year controversy over plans to build a large commercial office project on city-owned land at Santa Monica Municipal Airport by deciding not to pursue the project.

The council voted 4 to 2 Tuesday night to accept a recommendation by City Manager John Jalili to drop the matter for now because the city staff was too busy with other projects to come up with alternative proposals in time for the November city election. Councilmen Ken Genser and David Finkel voted against Jalili’s proposal, and Councilman William Jennings was absent.

The council had approved an 822,000-square-foot project in the airport’s southeast corner in October, 1989, but rescinded its approval in January after residents opposed to the development collected enough signatures to force a referendum on it in the November election. The council then directed city staff to contact community leaders and develop a process in which a new proposal could be presented and discussed.

The project was envisioned as consisting of a half-dozen six-story office buildings, several parking structures and related facilities. In addition to the opposition from Santa Monica residents, the proposal also caused an outcry in nearby neighborhoods of Los Angeles that, because of the development’s location along Bundy Drive, would get the brunt of the traffic it generated.

Mayor Dennis Zane, one of the project’s staunchest supporters because of the millions of dollars in revenue it would generate for the city, had hoped to pull together a plan for a scaled-down project in time to place it on the November ballot as an alternative to the residents’ initiative.

But Jalili said in a report to the council that after meeting with some community leaders, a “succinct process resulting in a ballot issue” for November “does not appear to be feasible.”

Jalili said there was such diversity of opinion in the city over what should be done with the 37 1/2-acre airport parcel that it did not seem prudent to rush a decision.

“The atmosphere is so volatile and charged over the use of this resource that it is unlikely that resolution can be pursued at this time with an appropriate level of objectivity,” he said in the report. “Simply put, the stakes in terms of potential costs and benefits for the city are great; any lasting decisions about the land should be made with equally great care.”

Jalili recommended that the planning process start over in a year or two, and if a project emerges it should be placed on the ballot.

The staff report said the developer the city had chosen for the project, Reliance Development Group of New York, had spent about $2.5 million on preliminary designs, legal fees and environmental reports. Reliance President Henry Lambert said the cost was actually more than $3 million.

For now, Reliance is simply out of luck, city officials said, because its right to build the project was always contingent on receiving final city approval.

The company will, however, get the first crack at developing a new project if the city agrees to pursue one within the next two years. Jalili had recommended giving Reliance the right of first refusal for a five-year period, but council members said that was too long.

Genser, who opposed the project all along because of potential traffic problems, opposed granting Reliance such a right, saying it would depress the value of the project because no other developers would bid for it.

In a telephone interview, Lambert said he was disappointed that the city decided not to pursue the project.

“We are not pleased about it,” Lambert said. “We were invited to negotiate with the city . . . but realistically it was something that is not desirable for the vast number of residents.”

Lambert said if the city decides to pursue another project within the next two years his company would still be interested.

“I see no reason why we wouldn’t,” he said.

But residents were pleased with the council’s decision.

Sharon Gilpin, one of the organizers of the successful referendum drive, said the City Council made the right choice.

“I applaud the council for accepting the will of the people,” Gilpin said.

“We’re thrilled,” said Jennifer Polhemus, a resident of the Sunset Park neighborhood near the airport.

The controversy over the project began soon after the City Council selected Reliance in 1987 to build a 1.3-million-square-foot office development.

Residents in Santa Monica and nearby Mar Vista immediately complained about potential traffic and pollution problems the project would generate. In response to the complaints, city staff in early 1988 recommended that the project be reduced to 1 million square feet.

The Planning Commission recommended last year that the project be further reduced to between 600,000 and 750,000 square feet. The City Council, on a 4-3 vote, approved an 822,000-square-foot project in October.

Within a month, however, a residents committee had collected nearly 8,000 signatures calling for the council to rescind its approval or place the matter on the ballot. A homeowners group and a pilots group also filed suit challenging the city’s authority to develop the land without voter approval.

Meanwhile, Los Angeles Mayor Tom Bradley and two Los Angeles City Council members publicly opposed the project, and raised the threat of legal challenges if Santa Monica proceeded.