LAGUNA BEACH : Canyon Settlement Runs Into New Snag

Earlier indications of a settlement in the battle to block the development of Laguna Canyon dimmed Friday when a dispute arose over who should represent the city of Laguna Beach in land purchase negotiations with the Irvine Co.

Bargaining talks between the city and the company stalled Friday when the city rejected the developer’s request to meet with the entire City Council in closed session to discuss the proposed purchase of the environmentally sensitive land.

Mayor Lida Lenney said the company was told to deal with City Manager Kenneth Frank because the proposed meeting would have violated the state open meetings law.

City Atty. Philip D. Kohn said the law prohibits the city from negotiating with a prospective seller behind closed doors.

Irvine Co. spokesman Larry Thomas would not comment on why officials preferred to meet with the entire council and not just the staff.

“The city has come back with a response that is more complicated and troubling than we ever expected, and we are considering its elements and an appropriate response,” Thomas said.

The stalemate dampened hopes by all parties that a settlement could be reached by the end of this week, although the mayor said the company and city representatives, including some council members, could still meet over the weekend.

“My feeling is that we are so close that it would be astonishing to me if we did not have a deal,” Lenney said.

Members of the Laguna Laurel Advisory Group--including representatives of the city, the developer, environmental groups and the county--tentatively agreed earlier this week on a 5-year, $78-million purchase plan for the 2,150-acre tract scheduled for development by the Irvine Co. The land was independently appraised at $105 million.

The “agreement in principle” was conditioned on final approval by the council and the boards of all parties involved.

But instead of continuing negotiations through the advisory group, the council instructed Frank to deal directly with the company.

In addition to a lower price of $75 million, the city’s counterproposal included a demand that the first year’s purchase include all of the land on the western side of Laguna Canyon Road.

The city also wanted to wait several months before agreeing to the company’s demand that, in exchange for the purchase plan, the city and environmental groups would give up legal efforts to block development. That has become a key issue in the talks because if the city defaults on its payments, the company wants the right to continue its development plans on land not yet acquired by the city.