Activists Hail Seal Beach’s Rebuff of Mola : Housing: New council’s no vote gives environmentalists a hard-fought victory. But the developer, which has invested $11 million, isn’t giving up.

After a costly four-year battle, a flurry of lawsuits and bitter allegations of improper conduct by the City Council, environmentalists were savoring a hard-fought victory Tuesday that blocked a Mola Development Corp. housing project proposed for one of the last undeveloped areas in this beach city.

Last month the outgoing City Council, in its haste to approve the project, touched off a local furor when it held two meetings until 2 a.m. and 4:30 a.m. just days before two new members were to be sworn in.

In the end, it came down to a swing vote cast by newly seated Councilwoman Gwen Forsythe who, ironically, had supported the project before her election but changed her mind after learning about questionable seismic conditions at the site.

On Monday, amid a colorful crowd that featured a group of chanting Indians and cheering residents, council members voted 3-2 to reject Mola’s plans for a $200-million residential development slated for the Hellman Ranch property, voicing concerns about the safety of building homes on land that straddles the earthquake-prone Newport-Inglewood fault.

“In my opinion, it’s one of the most hazardous areas in California to build on,” said Councilman Frank Laszlo, a longtime project opponent. “Hopefully something else can be built, either commercial or residential, but not on the dangerous part of the land.”

It was the second major setback in recent weeks for Mola, a Newport Beach-based company. Just two weeks ago, federal regulators seized control of Charter Savings Bank, a 12-year-old Newport Beach savings and loan, of which 90% is owned by Mola. While regulators called for an investigation into possible wrongdoing at the thrift, Mola officials maintained the failure of Charter Savings would have no effect on the continuing operations of its parent company.

But with the defeat in Seal Beach, the company has suffered yet another blow to its public image.

Although earthquake safety was the stated concern for rejecting Mola’s plans, questions over the environment also played a part in the outcome. Many environmentalists and residents had rallied against the development on the grounds that homes would cause environmental damage to about 100 acres of wetlands on the property. As one of the few remaining expanses of undeveloped land within the city limits, the Hellman property came to symbolize a growing concern among many Orange County residents about vanishing natural resources.

In the aftermath of Monday’s vote, longtime project opponents, such as Seal Beach resident Patty Campbell, hailed the council decision as “a wonderful moment in the history of Seal Beach.”

She was joined by a group of five Gabrielino Indians who tapped on drums and chanted their contentment. “It’s a blessing for us and our ancestors,” said Manuel Rocha of Baldwin Park, who identified himself as the spiritual leader of the group. “It would have meant destruction of more of our burial sites.”

Yet even as project opponents basked in the afterglow of victory, an attorney for Mola made it clear that company officials have no intention of abandoning a development that has already cost nearly $11 million in the preliminary design and planning stages.

“I think that emotion just carried the day and reason and common sense got left far behind,” said Mola attorney Jeffrey Oderman. “The geo-technical grounds that they used to disallow our project would necessitate no building at all in that area of Orange County and probably, for those people who feel that way, evacuating their homes and moving to the state of Utah.”

Company officials had noted that the size of the project had been trimmed drastically over the years and provided for the restoration of 41 acres of wetlands. In addition, the company said it was willing to set aside 26 acres for public parks.

Oderman said Tuesday the company will go to court July 11 to ask a judge to reinstate development approvals that the City Council initially granted to the company last October, then later revoked.

That development agreement was thrown out by a Superior Court judge in March who ruled that because the city had not updated its housing plan since 1982, the Mola project’s approval, given while the city was out of compliance with California state law, was also invalid.

Now that the council has adopted a revised housing plan, Mola officials argue, their project should be permitted to go ahead as planned.

If a judge denies that request, most observers, including council members who supported the development, have little doubt that Mola will resort to litigation.

Councilman Joe Hunt called a lawsuit “inevitable. . . . They (Mola officials) have said they will file a number of lawsuits. They could take the position that they had the project approved and it was through the city’s negligence that they lost it.”

Hunt, a vocal supporter of the project, had called it “as outstanding a package as I could imagine any developer giving.”

A lawsuit would be yet another chapter in a complicated tale that began in 1986 when Mola first proposed a 770-unit project for 149 acres located in the northwest area of the city between Seal Beach Boulevard and the San Gabriel River.

After years of wrangling, the council approved revised plans for a 335-unit project--less than half the density of the original proposal. But by that time the city’s housing plan, which is required to maintain a certain percentage of affordable housing units for low-income residents, was out of date.

Seizing upon an opportunity to block the development, the Wetlands Restoration Society--a local group seeking restoration of the property’s 100 acres of historic wetlands--filed a lawsuit.

In March, a Superior Court judge ordered the city to update its housing plan before considering the Mola project or any other major development. Although the city has since complied, project opponents argue that the new plan should be reexamined because it was drafted by the previous City Council.

“We think it was hurriedly passed and not in the best interest of the city,” said Galen Ambrose, vice president of the Wetlands Restoration Society.

Despite the likelihood of future litigation by Mola, environmentalists maintain the battle is all but won.

“We don’t think they have a very strong case,” Ambrose said. “The city has a right to protect its future citizens from potential death and that’s why the council rejected this plan. The land is too dangerous to build on.”

CHRONOLOGY: THE HELLMAN RANCH

1982: Seal Beach City Council approves Ponderosa Homes’ plans to build 1,000 houses on 225 acres of the Hellman Ranch property, which included about 100 acres of historical wetlands. Ponderosa backs out in 1984.

1986: Mola Development Corp. proposes building 770 units on 149 acres.

1986-89: Planning Commission and City Council debate Mola plan.

October, 1989: City Council approves a revised Mola plan for 335 homes.

November: Wetlands Restoration Society sues city for approving Mola plan without an updated local housing plan.

March 6, 1990: Judge orders Seal Beach to update housing plan.

March 16: Judge invalidates 1989 City Council approval of the Mola project because of obsolete housing plan.

March: Seal Beach submits revised draft housing plan to state.

April 12: State determines revised housing plan is inadequate, citing a lack of commitment to providing low-cost housing.

May 9: Planning Commission meets until 2:30 a.m. to approve housing element after rejecting it three other times and immediately afterward approves Mola project.

May 10: City Council meets until 4:30 a.m. and approves housing plan.

May 14: City Council considers initial approvals for Mola project, now at 329 homes.

May 15: Two new Council members officially take their seats after an election widely viewed as a referendum on the project.

June 25: A new City Council votes, 3-2, to reject Mola plan.

Source: Los Angeles Times files