Developer Blames Bankruptcy on 8-Year Burbank Fight : Finances: Although he won approval last month to build 129 luxury houses, Sherman Whitmore IV has other business ventures that are in trouble.

Sherman Whitmore IV, the combative developer whose plans to build in the Verdugo Mountains above Burbank kindled public ire for nearly eight years, claims that the protracted battle has forced him into bankruptcy in Miami.

Whitmore fought Burbank residents and officials over his plans to build 129 luxury houses on 117 acres he owns in Cabrini Canyon. Burbank City Council members gave reluctant blessing to the development last month after Whitmore met all 112 conditions the city set for approval.

But the victory may be too late for Whitmore, who in October filed for federal bankruptcy protection for two Florida companies after Miami officials demanded money he owed them on a project to renovate a dilapidated, city-owned boatyard.

Miami City Atty. Jorge L. Fernandez said Whitmore has done no work on Dinner Key Boatyard and paid no rent since he won a city contract in April to develop it. Whitmore now owes more than $300,000 in back rent and fees, and the city is trying to evict him and the mortgaged 68-foot yacht on which he lives. The city’s legal action against Whitmore is on hold pending further hearings in his bankruptcy cases filed Oct. 26 for Cal-Florida Marine Industries and the Dinner Key Boatyard Joint Venture, both Miami companies.

Whitmore did not return repeated calls seeking comment, but Miami city officials and Whitmore’s business partners said the developer has consistently blamed his financial problems in Miami on delays in his Cabrini Canyon project. He told Miami officials that he soon stands to gain several million dollars from lot sales in Burbank.

However, a spokesman for the J. M. Peters Co., the Newport Beach developer who will pay Whitmore for the right to build on the hillside, said no payment schedule has been set.

Even though Whitmore won the right to develop the hillside, in a sense there were only losers in the battle. The group of residents who fought to defeat the project was unable to achieve its ultimate goal: preservation of a wetlands.

No solid estimate is available for how much the delays cost Whitmore, but one of his attorneys said the loss could be as high as $30 million in expenses and lost revenues.

Neither party will say how much the J. M. Peters Co. will pay Whitmore for his land.

Burbank officials said Whitmore has assured them that his difficulties in Miami will not affect his Cabrini Canyon plans. Community Development Director William Kelly said that since much of the development will be done by a company not owned by Whitmore, city officials view Whitmore’s Miami dealings more as an interesting sidelight than a threat to the project.

Brian Bird, an attorney representing Whitmore’s Burbank Hill Properties Co., said Whitmore’s Miami ventures were “totally separate” from his California holdings. He did, however, acknowledge that “success here would make life easier” for Whitmore in Miami.

George dePozsgay, the Miami attorney handling Whitmore’s bankruptcy case, refused to comment. Judge Sidney M. Weaver, who is presiding over the bankruptcy proceedings, declined to be interviewed.

Marvin Dunn, a partner in Whitmore’s boatyard project, said he and other partners have filed suit to remove Whitmore from the operation. Dunn said members of the Dinner Key Boatyard Joint Venture feel betrayed by Whitmore, who they said rolled into town in a white Rolls-Royce with a financial statement showing that he was worth $13 million.

Whitmore was to provide the financial support needed by the partnership--largely composed of respected Miami businessmen--to renovate the boatyard and marina, but was unable to secure financing for the project. He once promised to finance the $6-million renovation personally, but never produced the money.

Dunn said that when Whitmore’s partners questioned him about his dealings in Burbank, “he would tell us California was none of our business.” Dunn added that Whitmore ignored his partners when they asked questions about the Miami project.

Whitmore’s combative demeanor has won him few friends in Burbank or Miami. “If he never showed up here again, it would be too soon,” Dunn said.

Whitmore once described Burbank city officials’ behavior in their dealings with him as unconscionable. And at a meeting last month, Whitmore sat smiling coolly in the front row while Burbank Mayor Thomas Flavin sharply criticized the developer for his attitude during the eight-year battle.

“These people view my hills as being their hills,” Whitmore said in a 1986 interview. “Well, one way or another, I’m going to develop them or they’re going to buy them.”

Meanwhile, officials from the J. M. Peters Co. said delays in the Burbank project have cost them nearly $1 million in actual expenses and perhaps several times that in revenues lost because of the sluggish housing market.

Paul Lukes, a J. M. Peters planning director, said the slump in house sales prompted the company to reconsider the type of residences to be built on the property. Original plans called for houses costing $350,000 to $800,000. Lukes said houses on the project may be scaled down but added that nothing has been decided.

The delays were caused in large part by a group of residents who rallied around 1.4 acres of federally protected wetlands that will be destroyed when grading begins.

Connie Wilson of the Burbank Mountain Reserve Protection Assn. said the group, which opposed the development, has not decided on its next move. She declined to comment further except to say that “the big losers are the animals” who use the wetlands as a stopover during migration.

In approving the project, council members ordered the city’s public works director to withhold a grading permit until Whitmore proves that the wetlands will be replaced. He is required by federal law to create or enhance at least 3.5 acres of habitat elsewhere.

In 1987, council members reduced the number of dwellings Whitmore could build by nearly a third--from 181 to 129--and attached 112 conditions to final approval. Community Development Director William Kelly said in a memo that Whitmore had met all 112 conditions, thereby eliminating any legal basis the council would have had to reject the project.

The council’s final vote was 3 to 1, with Councilwoman Mary Lou Howard dissenting and Councilman Robert Bowne abstaining. Bowne removed himself from discussion of the project after several people at the meeting accused him of having a conflict of interest, saying he had reserved a lot in the tract.

Bowne denied the allegations but said he excused himself to avoid the appearance of a conflict. He acknowledged that he had expressed an interest in purchasing a lot in the development but said he had never made any formal commitment.

The decision ended eight years of bitter public debate over the future of the property. Whitmore first proposed developing the hillside land in the early 1980s, when he bought it. Several of his early plans were rejected by the council.

Envisioning a greenbelt in the hills behind Burbank, city officials in 1985 received a $3-million state grant to buy Whitmore’s land outright for use as undeveloped open space. But Whitmore and the city were unable to reach agreement on a purchase price and negotiations broke off.