City Vote All But Ends Miramar Project Fights : Development: Compromise between council and builders eliminates one of last hurdles in long debate over 3,100-home plan north of Scripps Ranch.

Removing one of the last obstacles to the long-debated 3,100-home Miramar Ranch North project, the San Diego City Council on Tuesday approved a compromise that will permit the developer to build a handful of luxury homes overlooking Miramar Lake.

In a conclusion to more than a decade of debate and hundreds of hours of hearings over the 1,200-acre project north of Scripps Ranch, Tuesday’s council meeting focused on a dispute over whether eight premium lots offering views of the lake could be built on a 4-acre knoll.

Last week, when the council approved development plans for the final phase of the project, it prohibited the builders--McMillin Communities and BCE Development Inc.--from grading the knoll.

That decision, attorneys for the builders argued, violated a 7-month-old settlement agreement that resolved a lawsuit brought by the developers when the city imposed stringent regulations on the entire project designed to protect hillsides and sensitive vegetation.

That dispute, in turn, threatened nearly $80 million in public facilities--including an east-west highway, parks, a library and school sites--that the builders agreed to provide as part of the development.

Wanting neither to tie up those dollars nor to confront another lawsuit so soon after resolving the earlier one, the council proposed a compromise allowing the developers to build four premium lots on the knoll and an area to the east.

Feeling they were legally entitled to the eight premium lots originally envisioned, the developers asked that, in exchange for reducing the number to four, they be permitted to install gates in part of the project, thereby limiting public access to areas of higher-cost homes.

The council, however, rejected that request, with members characterizing the proposed gates as an elitist touch that would unfairly restrict the public’s access to the project’s open spaces.

“If the public has to look at those homes up around the lake, the public has the right to go up there and look at the view,” Councilwoman Judy McCarty said.

Environmentalists and some Scripps Ranch community leaders urged the council not to reverse the position it adopted last week, arguing that allowing development of even the four luxury lots on the knoll would simply be another concession to a builder that, as one speaker put it, “has already gotten enough.”

However, when McMillin officials indicated that they found the compromise acceptable, the council--not willing to risk another lawsuit--approved it by a 6-2 vote, with Councilmen Tom Behr and Bruce Henderson opposing it and Mayor Maureen O’Connor absent.

Walter Heiberg, McMillin’s project manager, emphasized that, from the company’s perspective, the principle underlying the dispute over whether the knoll could be developed was more important than the specifics.

The council’s action last week, Heiberg argued, was interpreted by potential lenders as a violation of the earlier settlement agreement, posing problems in lining up financing for the project. Tuesday’s decision, he added, could alleviate those difficulties.

“The issue was not the knoll, not the gate-guarded community,” Heiberg said. “It was that we had a settlement agreement . . . that had been violated. That put us in a difficult position.”