Irvine Co., Newport in $19-Million School Pact : Construction: Developer to drop lawsuit over fees. One part of the accord will give the district an endowment..

The Irvine Co. will provide up to $19 million in funding for school construction at planned developments on the Newport Coast and in the San Joaquin Hills in lieu of future developer fees under an agreement announced Tuesday with the Newport-Mesa Unified School District.

The agreement calls for the Irvine Co. to drop a lawsuit brought against the district in March, 1989, that challenged the amount of developer fees the district attempted to levy for construction of schools in the new communities.

The proposal was approved unanimously by the school board Tuesday night.

“We have been involved in negotiations for over 18 months,” said John Nicoll, Newport-Mesa school superintendent. “This is a splendid example of how the private sector and public sector can work together to solve some difficult problems. We feel this is a very fair arrangement and will work out to the good of the developers as well as the school district.”

The Irvine Co., which plans to build up to 6,000 residential units within the boundaries of the Newport-Mesa district, filed the suit in protest of the district’s plans to charge the maximum allowable developer fees under state law of $1.50 per square foot for residential areas and 25 cents per square foot in commercial areas in the planned communities, said Jeanette Justus, schools facilities coordinator for the Irvine Co.

Under the agreement announced Tuesday, the Irvine Co. will provide up to $19 million for district use in the new communities planned in the Corona del Mar area in eastern Newport Beach. The figure includes a $5-million endowment for use as the district sees fit, of which $2 million will be provided immediately. The district will receive the remaining $3 million after the Irvine Co. receives the go-ahead from county planning officials and the Newport Beach City Council to start future development, Justus said.

“This endowment is a direct contribution from the Irvine Co. to the children and families of the Newport-Mesa Unified School District,” Irvine Co. Senior Vice President Gary Hunt said in a statement to the school board Tuesday. “It gives the district maximum flexibility in the use of these funds to develop and implement innovative programs and enhance the quality of education throughout the district in whatever way this board deems best.”

The agreement also calls for the Irvine Co. to immediately provide $4 million in funds for renovation of existing schools to serve students residing in new developments in San Joaquin Hills and the Newport Coast. Up to $10 million more would be made available for purchase of a 10-acre site and construction of a new elementary school if deemed necessary by the district, according to the agreement.

“I am personally very pleased and excited about this proposal,” Hunt said in his written statement to the school board. “I am pleased because it resolves the current pending litigation between the district and the company and because of the opportunity it presents to us both to provide . . . for the school needs of new residents while at the same time benefiting existing residents of the district.”

Clayton H. Parker, an attorney representing the Newport-Mesa district, said both sides were pleased with the agreement. “We think it’s a good deal,” he said.

The Irvine Co. lawsuit marked the second time in as many years that the Newport-Mesa Unified School District was challenged over developer fees. In 1988, the Building and Industry Assn. filed a similar suit seeking repayment of $3 million in fees from the district. In March, 1989, Superior Court Judge Leonard Goldstein ruled that the district failed to show that its financial needs justified the maximum fees possible under state law and ordered the district to refund $600,000 in fees to a group of developers.