LAGUNA BEACH : Land Seized by City Too Costly to Keep?

City officials said Tuesday they may return a 9.2-acre plot of land that they forcibly acquired from the owner rather than meet the $1.4-million price that a Superior Court jury said they must pay for the land.

“It is just totally ludicrous,” Laguna Beach City Manager Kenneth C. Frank said of the jury’s valuation of the triangular piece of land at the intersection of El Toro and Laguna Canyon roads.

The city had offered to pay $350,000 for the land, featuring big rock outcroppings and eucalyptus trees, and had planned to incorporate it into its greenbelt program.

Frank said the City Council would meet in a closed session late Tuesday night to decide what step to take next. But, he said, “The most probable course is to walk away from the deal.”

Frank contends that under the current zoning for the property, its owner, Rossmoor Partners Ltd., headed by Leisure World founder Ross Cortese, could build only one home on it.

“It wouldn’t be the end of the world,” he said.

Angelo Palmieri, an attorney representing Rossmoor Partners, said that if the property is returned, his client will proceed with plans to develop it, building a mini-mall close to the intersection and several houses farther back from the traffic.

Palmieri said that although the parcel is zoned for low-density residential development, he believes the city would be legally obligated to change the zoning to accommodate commercial uses. In support of his position, he noted that only half a mile away the city rezoned 64 acres to allow a 693-unit housing development.

“If we made application for some commercial use that met all other requirements and were rejected by the city, it would give us grounds for an inverse condemnation claim and we would be right back in the courts again,” Palmieri said.

Palmieri said Cortese had intended commercial development for the parcel since he acquired it in 1961. He said in 1966 the unincorporated land was annexed to the city of Laguna Beach “with the understanding it would be commercial.” But in 1977, he said, the city adopted the existing residential zoning.

When Cortese refused to sell the land to the city, the city exercised its condemnation powers and took possession in April of last year.

The city similarly forced another property owner, John DeWitt, a San Gabriel Valley oil dealer, to sell 200 acres to the city as part of a greenbelt. The land is on a ridgeline overlooking Laguna Canyon Road and is about half a mile from the Cortese property.

The price that the city will pay for the DeWitt acreage will also be determined in court, with the city offering $600,000 and DeWitt claiming it to be worth $3 million. Frank said the matter is scheduled to go to trial in July.

Palmieri said that after Monday’s trial, jury members told him they conservatively based their valuation on maximum development of the property under its current zoning, which they figured would allow the construction of four homes.

Rob Clark, deputy city manager of Laguna Beach, argued Tuesday that while the city’s General Plan would allow up to four homes to be built on the land, the zoning for the property is more restrictive and takes precedence. Under the zoning, he said, only one house could be built. “I wish the jury had understood that,” he said.