Panel OKs Controversial Fryman Canyon Project : Housing: Despite arguments from Mayor Tom Bradley’s representative, a city board extends a grading permit issued in 1988 for 26 luxury units.

After more than three hours of heated debate, a city commission granted a major victory Tuesday to a developer trying to build houses in a Studio City canyon, a development that anti-growth advocates tried unsuccessfully to block with a cultural landmark campaign.

Rejecting arguments from Mayor Tom Bradley’s representative that the development should be subjected to a comprehensive environmental review by the city, the Board of Building and Safety Commissioners voted 3 to 2 to extend a grading permit issued in 1988 to Fred Sahadi.

Sahadi plans to build 26 luxury houses in Fryman Canyon, a wooded gully west of Laurel Canyon Boulevard. His plans to break ground on the project April 21 were halted by a city stop-work order issued when foes of the project appealed to the Cultural Affairs Commission to halt the project by designating the canyon as a culturally significant site.

In recent months, slow-growth activists have repeatedly appealed to the Cultural Heritage Commission to stop planned development projects by designating the sites as city landmarks, which can prevent changes to the property for up to a year.

Because Sahadi had not begun work, the permits expired May 1 while the cultural commission was considering the matter.

Bradley, City Councilman Michael Woo, Rep. Howard L. Berman (D-Panorama City) and Assemblyman Terry B. Friedman (D-Los Angeles) petitioned the commission to take advantage of the permit’s expiration as an opportunity to review the impact the project would have on the environment.

They said the environmental impact report for the project was prepared in 1978, and that the state Department of Fish and Game and the U.S. Army Corps of Engineers are both conducting further investigations into the project plans, which call for filling in a stream.

But Bradley’s planning adviser, Jane Blumenfeld, said the city should not rely on those state and federal government agencies to safeguard the city’s interest and should conduct its own environmental review.

When the project was begun, open space and natural areas were not as rare as they are now, she said. The 1978 environmental impact report did not consider problems now facing the city--the drought, the crisis in trash disposal, the overloaded sewer system, and traffic--that would be exacerbated by new housing, she said.

Although Sahadi’s representatives said the project had already been subjected to appropriate environmental review, Blumenfeld said it was inappropriate to let a project proceed based on standards of past decades.

“Knowledge is an evolving process, and the reason we have time limits is so we can adjust the process to effect those changes,” she said.

But Sahadi and his attorney argued that it would be unfair for the city not to extend the permits since it was a city commission that prevented work from beginning last month before the permits expired.

Since then, the Cultural Heritage Commission decided to designate half of the 63-acre parcel as a cultural landmark, a compromise that would not block construction since Sahadi’s plans already called for designated areas to be preserved as open space and donated to the Santa Monica Mountains Conservancy.

“We could have activated the permit but it was forbidden by the city,” said Benjamin Reznik, Sahadi’s attorney.

Reznik also said Sahadi is working with the Department of Fish and Game and will not begin construction until the state agency approves the plans. The city is not responsible for enforcing the state law, Reznik said, and the grading permits should not be affected by negotiations with the state.

The commissioners were split on the issue.

Commissioner Richard Hartzler said he did not believe that the permits should be extended if responsible environmental agencies such as the Department of Fish and Game and the U.S. Army Corps of Engineers have doubts about the project.

But Commissioner Tom Woo expressed the prevailing sentiment. “As an architect, I can feel what the appellant is going through because his project has been delayed through bureaucratic procedures through no fault of his own,” he said. “I feel compassion with the appellant.”

As a condition of the extension, however, the commissioners ordered that no work begin until the Department of Fish and Game approves the project.

Judy Marx, who led the campaign to stop the project, said she was crushed by the vote, but has not lost hope that the canyon can still be turned into a park. She said she and other friends are willing to try to raise money to supplement an offer by the conservancy to purchase the property from Sahadi.