Don’t Celebrate Tentative Pact to Save Canyon Yet, Mayor Says : Environment: The city must work out means for a town of 25,000 to raise $78 million to pay for Laguna Laurel in five years.

The message on Mayor Lida Lenney’s answering machine Wednesday cautioned callers not to celebrate prematurely. While it’s good news that a tentative agreement has been reached to sell Laguna Canyon land to the city for $78 million, she said, officials have “a ways to go before we sign an agreement.”

What the city must consider in the days ahead is how a town of 25,000 residents and an annual budget of $25 million can raise the money buy the 2,150 acres known as Laguna Laurel.

At best, the funding plan is expected to look like a patchwork of revenue drawn from a city bond issue; state parks, wildlife and coastal funds; the county and private donations. As those funding sources are contingent on the good will of voters and bureaucrats, the city will also scrutinize its own budget to see if money exists to help finance the deal.

Because funding is problematic, city officials were reluctant Wednesday to embrace the tentative agreement announced Tuesday night by the Laguna Laurel Advisory Group, which represents the city, the Irvine Co., environmental groups and Orange County in negotiations for Laguna Laurel.

“There are still some questions and concerns about the plan that need to be worked out before the council takes formal action,” Councilman Robert F. Gentry said.

The City Council is expected to meet before the end of the week and decide whether to ratify the tentative agreement, which gives the city five years to buy the land. Two $33-million payments would be due the first and last years of the agreement, with smaller installments due in the second, third and fourth years.

“The first down payment is the one we are all concerned about right now,” Gentry said. Even if the city receives all the funds it expects in the first year, the city would still be about $5 million shy of the $33-million payment due June 30 of next year.

“I do not know of another city that has recently committed so many dollars to purchase so much land. We are making history,” Gentry said. “We want that history to be positive, not negative.”

The Irvine Co. agreed to consider selling the land and give up a 3,200-unit development after public opposition grew intense. Negotiations for Laguna Laurel began earlier this year and intensified about 10 days ago.

City Manager Kenneth C. Frank said Wednesday that the Irvine Co.’s latest proposal is the first viable offer. Previous offers to sell the land for $90 million and $82 million were well beyond the city’s reach.

“Until this last proposal, we were so far apart that this was not worth (staff) spending a lot of time on it,” he said.

Nonetheless, Mayor Lenney said city staffers met with the developer Wednesday afternoon in an attempt to lower the purchase price to $75 million, which was the city’s last offer. “What’s $3 million between friends?” she said.

The city’s primary funding source for Laguna Laurel is a $20-million bond issue on the Nov. 6 ballot that will require approval by two-thirds of Laguna Beach voters. Although polls have shown strong voter sentiment to preserve the canyon, officials worry citizens will reject the bond issue if there is no viable financing plan in place.

If the bond issue is approved, the county government has promised a $10-million contribution over a five-year period for land acquisition. State open space funds totaling $6.5 million may also be available to the city.

Ironically, the city may reap a $7-million windfall from a project it is fighting to stop--the San Joaquin Hills Transportation Corridor. The county may pay the city that amount for land it is acquiring through the powers of eminent domain to build the highway, and that money could be applied to a Laguna Laurel purchase.

From there, the proposed funding sources become less certain.

Paul Freeman, the lead negotiator for the Laguna Laurel Advisory Group, said committee members are hoping to raise about $1 million per year in private donations.

He said the city may also be able to compete for a portion of the $15 million available each year through a state wildlife habitat measure approved by voters last June. An additional $3 million to $4 million may be allocated to the county, Freeman added, if California voters approve another open space proposition on the November ballot.

But an official with the state Wildlife Conservation Board recently warned that competition for those funds is fierce, and projects must meet strict criteria.

“If their project qualified for every fund that’s available to this office, it would still be keen competition,” said Jim Sarro, the board’s assistant executive director.

State Sen. Marian Bergeson (R-Newport Beach) said she has offered to compile a list of possible state funding sources and help get agency approval for those dollars to be spent in Laguna Canyon.

She agreed that competition for funds would be great, and said: “It just means we have to work better and harder.”

The advisory group has also considered initiating another state proposition for open space that would include a specific line item for the Laguna Canyon land, and lobbying for a new state tax that would be assessed whenever real estate changes hands.

But Bergeson downplayed the likelihood that those two options would win approval.

Another possible funding source lies in Leisure World on the northern border of the Laguna Laurel property, said Freeman. Residents there may be asked to approve a special benefits assessment district that would earmark the funds for land acquisition.

Residents there recently formed the “Leisure World Residents to Save The Canyon,” and 500 members also joined the Laguna Canyon Conservancy, one of the environmental groups involved in the negotiations.

But Dave Blodgett, president of the Leisure World group, said residents strongly support efforts to thwart development but he was not sure they would support a special tax district.