City Won’t OK Initiative for 329 Homes : Safety issue: Some council members fear that an earthquake fault through the property would make the project dangerous.

Despite a last-minute offer by Mola Development Corp. to sweeten the deal, the City Council this week refused to approve a voter initiative to allow the company to build 329 houses on the old Hellman Ranch property.

In a letter to the city, Mola’s attorney said that if the council approved the initiative, the company would drop all litigation and appeals against the city, defend the city against third-party lawsuits stemming from the action and donate a five-acre park worth $750,000. Mola had sued the city after the City Council rescinded approval for the project last year.

“The bottom line is that delaying this ordinance for just five months could cost the city well over $1 million,” said Councilman Joe Hunt, who tried along with Mayor Edna Wilson to persuade the council majority to approve the plan.

Although supporters of the initiative gathered more than 4,000 signatures with the intent of putting the issue on a special election ballot, City Clerk Joanne M. Yeo said the council could wait until the next regularly scheduled election in March, 1992, because the initiative did not specifically request a special election.

The council also chose to postpone setting an election date on the issue for a month while the city attorney prepares a report on the proposal.

The majority of council members said they are concerned that it would be unsafe to build a housing development on the property because an earthquake fault runs through it. Councilman Frank Laszlo held up a map of the proposed project area with a wide red swath indicating the path of the Newport-Inglewood fault.

Mayor Edna Wilson and Hunt disagreed with the majority, saying they think experts have shown that using proper building methods can compensate for the earthquake hazard.

“After four and a half years of this, I don’t see how there could be any further questions,” said Wilson, who, along with Hunt, worked with Seal Beach Citizens for Parks, Open Space and Responsible Government to collect enough signatures to qualify the issue for the ballot.

Members of Seal Beach Citizens United, who oppose the Mola project, said that waiting until the regular election will save the city about $50,000.