Judge Will Not Force ‘Lower Cost’ Development : Hidden Hills: The builder could still sue the city over the project, which would have included low-income housing.

Saying he was reluctant to involve himself in the details of running the city government of Hidden Hills, a Los Angeles Superior Court judge Thursday declined to order the wealthy city to build a controversial development that would include lower-cost housing.

But Judge R. William Schoettler, Jr. said his ruling should not deter the proposed project’s developer from pursuing a lawsuit that the judge said could “potentially” cost the city $1 million or more.

Schoettler’s decision appeared to open the way for the unraveling of a 1989 court-approved settlement in which Hidden Hills agreed to “advance and develop, and if appropriate construct” lower-cost housing for senior citizens. It also cast doubt over the future of the city’s redevelopment agency and a $5.9-million flood-control project that Los Angeles County was to fund as part of the same settlement.

Noting that the newly elected Hidden Hills City Council has “a sincere desire” to “undo everything” regarding the settlement, Schoettler said: “I have no particular desire to force down the city of Hidden Hills’ throat a redevelopment program of any sort. . . . I am reluctant to intervene in the government process of Hidden Hills.”

Schoettler’s decision Thursday contrasted sharply with remarks he made last month, when he said in court that he was prepared to order city officials into his court to see that the redevelopment suit settlement was carried out as agreed on.

The settlement was reached in a lawsuit filed in 1984 by the county and a private attorney over the formation of the Hidden Hills redevelopment agency to fund the storm drain. Part of the lawsuit by the county dealt with state requirements that 20% of redevelopment funds be spent on “affordable” housing.

To settle the suit, Hidden Hills agreed to annex and zone land where Tarzana builder Danny Howard was proposing to construct nine single-family homes, an office building and--at the city’s suggestion--a lower-cost housing project. The county in turn agreed to pay for most of the storm drain.

But public disclosure of the deal caused an uproar in Hidden Hills, a gated community of private streets where the average home price recently was estimated at more than $800,000. This month, voters overwhelmingly installed a new council majority that had campaigned against Howard’s project and said redevelopment was not needed. The new council took office this week and immediately set out to contest the settlement.

Howard filed his own lawsuit last year, alleging that the council was trying to back out of the deal. On Thursday he asked Schoettler to order the city to approve his project by May 6, when he said his option to purchase the land will expire.

Although the judge turned down Howard’s request, he spoke several times of “potential” damages the city could face if Howard takes his suit before a jury.

When Michael Jenkins, an attorney for the city, argued that the settlement is invalid, the judge said: “You will lose on the issue of whether or not those acts were valid. . . . I think it’s a lousy position.”

“We are talking about at least a seven-figure judgment potential,” Schoettler said.

Benjamin M. Reznik, Howard’s attorney, said he would seek “eight figures.” Howard, he said, was “dragged” in by the city’s promises of a development agreement and its annexation of the site, only to have his project dashed by the political firestorm later.

The city operates on a budget of about $300,000 and has a cash reserve of about $900,000, said Chris K. Van Peski, a former councilman defeated this month.

Also appearing at the hearing was former Hidden Hills City Atty. Wayne K. Lemieux, who had been fired by the new council at a special meeting only hours before. Lemieux said he was still the attorney for the city redevelopment agency.

New council members David G. Stanley and Howard Klein said the agency’s future will be the subject of public hearings. But Klein and Councilwoman Susan Norris Porcaro had made criticism of the agency a focus of their campaigns.

A theme of the new council’s campaigns was that residents opposed taking redevelopment funds from county tax rolls for affluent Hidden Hills, and that they did not necessarily oppose lower-cost housing. Jenkins made the same argument Thursday to the judge.

Lemieux countered that the 6-year-old agency was not opposed until lower-cost housing entered the picture.

The judge said: “I suspect that’s probably a little closer to the true facts.”