SEAL BEACH : Mola Files Claim for Losses of $11 Million

Mola Development Corp. has filed a claim against the city seeking $11 million for losses related to its four-year battle to build a $200-million housing development that the city first approved, then rejected.

A claim must be filed before the developer can sue the city. Mola attorney Jeffrey M. Oderman said the company plans to sue Seal Beach if the City Council rejects the claim.

The city’s original approval of the 335-unit Hellman Ranch project last October was thrown out by an Orange County Superior Court commissioner in March because Seal Beach’s housing plan had not been updated in compliance with state law when the approval was given. Three months after the commissioner’s action, a new City Council voted to reject the project.

Mola’s claim, which names the City Council and three of its members, says the city never informed the developer that the housing plan was out of date.

Councilwoman Gwen Forsythe, however, said Mola “was fully aware that the housing element (of the city’s General Plan) was outdated” and should not try to blame the city for the loss of its project.

The claim also alleges that the city treated the company unfairly during its evaluation of the project.

“They have singled Mola out for requirements that have never been imposed on any other development in the city of Seal Beach and, to my knowledge, have never been imposed on any development in coastal Orange County or Los Angeles County,” Oderman said.

Chief among the “arbitrary and unreasonable” requirements cited by Mola were those aimed at dealing with potential hazards of building on a site straddling an earthquake fault.

Council members Forsythe, Marilyn Bruce Hastings and Frank Laszlo cited such concerns when they voted in June to reject the project.

Mola named them in the claim because “they are the three individuals who were responsible for putting Mola in the position it’s in,” Oderman said. “They are the ones who made the decision to turn this project down without regard to the existing rules and evidence.”

He said the new council, seated in May, reversed the old council’s conclusions about the safety of the site even though land conditions and project specifications were unchanged.

The City Council will vote Sept. 10 on whether to deny or accept Mola’s claim, City Manager Robert Nelson said. Only after the city formally rejects its claim can Mola file a lawsuit seeking compensation for the $11 million the company claims to have spent since 1986 to secure rights to the land and pay other pre-development costs, Oderman said. He added that the developer will also sue for additional damages.

Nelson said the claim “is not a surprise. They’ve been saying over and over again that if the city rejected (the project) they’ll sue.”

“I don’t think this claim has merit,” Nelson said. “I expect that (city staff) will recommend it be denied.”

The $11 million in losses claimed by Mola is two-thirds as big a sum as the city’s entire 1990-91 budget, which is $16.4 million.

Oderman said the claim does not mean Mola will abandon plans for the Hellman Ranch project. Company officials are still hoping the state’s 4th District Court of Appeal in Santa Ana will reinstate the original approval given to the project last October, Oderman said.