New Snag in Fryman Canyon Deal : Environment: The Santa Monica Mountains Conservancy says the swap might be illegal and could require the agency to pay $61,000 more than agreed.

The Los Angeles City Council voted 12 to 2 this week to approve an estimated $10-million-plus deal to buy Fryman Canyon for a park, but the elation of environmental activists was quickly dampened when a state official said the plan contains a “poison pill provision” that threatens the deal.

Julie Zeidner, press secretary for the Santa Monica Mountains Conservancy, said the council-approved deal is possibly illegal and could require the state parks agency to pay $61,150 more than agreed to Fryman Canyon owner Fred Sahadi.

“The conservancy can’t accept these terms,” Zeidner said. The conservancy and the city would jointly put up money to buy the 63-acre parcel.

The reaction of the Santa Monica Mountains Conservancy to the council action left city officials such as Councilman Michael Woo, in whose district the property is located, stunned and baffled. “I don’t understand,” he said as he ordered his staff to look into it.

“Incredible” is how Jane Blumenfeld, Mayor Tom Bradley’s top planning deputy and a Fryman watcher, described the latest twist in the tortuous negotiations and controversy that have surrounded the effort to purchase the scenic canyon, which lies just north of Mulholland Drive and west of Laurel Canyon Drive.

Later, Woo said he was “not overly concerned about this--I think it can be worked out. I don’t see this as a deal-breaker.”

Zeidner, however, refused to say whether the council plan means that the purchase of Fryman Canyon for a park has been irrevocably quashed.

She accused the city of adding the new provision as a way to put the conservancy in the position of scuttling the deal. “Maybe this is a PR stunt to put the onus for killing the deal on the conservancy,” Zeidner said.

In the past, conservancy Executive Director Joseph T. Edmiston has also complained bitterly that the city has been willing to overpay Sahadi.

Under the plan approved Tuesday, the city and the parks agency would pay Sahadi about $10 million to $10.4 million--the exact value depends on how much four city-owned properties that Sahadi is to get in return from the city are worth.

The last state-sanctioned appraisal said the Fryman property was worth $8.75 million. But an earlier appraisal, partly paid for by the conservancy, set the value at $13.7 million.

During the council debate, objections to the deal came from council members Joan Milke Flores, Ruth Galanter, Ernani Bernardi and Zev Yaroslavsky. They were disturbed that the city attorney’s office was unable to assure the council that it was legal for the city to participate in a deal that may have involved paying the developer more than the appraised value for his property.

Yaroslavsky, who voted for the deal, said later that he felt ambivalent about it.

“I hope this does not set a precedent for acquiring or negotiating acquisitions of parkland for prices above appraised value,” he said. “I voted for this. But it was close enough and ambiguous enough that it would’ve been wrong to stand in the way of such an important park purchase. Some day, the difference between the appraised value and the negotiated price may be much greater.”

The conservancy’s board of directors approved the purchase plan last week. That plan and the one adopted by the council have the following elements in common:

* The conservancy would pay $6.7 million to Sahadi.

* The Department of Water and Power would deed the four parcels to Sahadi. The parcels, totaling about 10 acres, include two sites in Pacific Palisades, one in Woodland Hills and one in the Calabasas Highlands. The value of the four parcels has been variously estimated at $1.2 million or $1.65 million.

* The city and the conservancy would authorize the payment of an additional $1.96 million to the developer. This money would be borrowed from the Runyon Canyon trust fund, set up to buy parkland in the Hollywood Hills.

* To repay the Runyon Canyon fund, the DWP would deed over a fifth parcel it owns next to Marquez School in Pacific Palisades to the conservancy. The conservancy would sell this property to raise money to reimburse the Runyon account.

Under the city plan, the first $61,150 in revenue from that sale would go to the DWP. That amount is what the utility originally paid for the parcels. It is also effectively what the parcels are worth to the utility because state law requires the DWP--if it elects to sell--to sell surplus land to the conservancy at its original cost.

The problem with that payment is that it appears to involve the conservancy as a kind of go-between in deeding the four parcels to Sahadi, Zeidner said. The conservancy does not want to be so implicated because it is barred by law from paying any more out of its own coffers for the property than the $8.75-million appraisal, Zeidner said.

Woo, however, said he believed that the deal adequately insulates the conservancy from any charges of wrongdoing.