Developer Gets Permits to Erect Boardwalk Mini-Mall

The ever-changing fortunes of a proposed Venice Boardwalk mini-mall have shifted again. The developer of the controversial project for 601 Ocean Front Walk has obtained his permits from the city as part of a favorable settlement of his $20-million lawsuit against the city of Los Angeles.

A recent closed-session City Council vote to settle the lawsuit came just weeks after developer Stephen Blanchard lost a bid for approval of his project with the California Coastal Commission.

The Coastal Commission declined to approve the project because of the pending lawsuit and because the city had not yet issued the permits for the project or granted it environmental clearance. Normally, projects do not reach the Coastal Commission until the city signs off on them.

Blanchard’s case, however, was an anomaly because he last year invoked a little-used state law out of frustration over the city’s delays in processing his application--the first time the law has been invoked in Los Angeles. The state Permit Streamlining Act calls for automatic approval of permits for a development project if a city fails to act on an application in a timely fashion.

Based on an opinion from the Los Angeles city attorney’s office, the city acknowledged its error and agreed to deem the project approved--without public hearings or environmental clearance--as “a matter of law.” A few months later, however, the Board of Zoning Appeals ruled just the opposite, prompting Blanchard to file a lawsuit demanding the approval and permits. He also filed a separate $20-million claim against the city, seeking damages for the delays. This claim is a required administrative prelude to a court action.

In a letter to the Coastal Commission, Blanchard attorney Sherman Stacey has asked that the project be reconsidered, saying the legal uncertainty is resolved.

Blanchard is seeking to build a three-story building in the heart of Venice, containing offices, shops and 12 fast-food restaurants, some of which would serve alcohol.

Those plans have been fought by area residents, who claim the proposed project will devastate an already crowded neighborhood with traffic, noise and other problems.

The residents banded together as the North Venice Beach Coalition and have a lawsuit pending against Blanchard and the city, saying that approval of a project without environmental clearances is against state law.

It is unclear what the group’s next legal move will be or whether its position is strong enough to persuade a judge to stall the project until their suit can be heard.

The coalition’s attorney, Barry Fisher, criticized Venice-area Councilwoman Ruth Galanter for going along with the settlement rather than letting the courts sort out the legal morass.

But Rick Ruiz, a spokesman for Galanter, said she accepted the settlement that was proposed by the city’s lawyers because the city attorney “made a very strong case that the lawsuit was not winnable.”

Deputy City Atty. Susan Pfann said the settlement was “a plus for the city” because it included some environmental mitigations, such as parking restrictions, that had been proposed by the city, but not included when the state Permit Streamlining Act was invoked. In that situation, the project is accepted as is.

The original opinion that the city had broken the law by failing to approve or disapprove the project came from the city attorney’s office, so any effort to defend the now-settled Blanchard lawsuit would involve arguing that the city’s own legal advice was flawed.

Another wrinkle in the case is the contrary Board of Zoning Appeals ruling, which ignored the city attorney’s opinion and ruled in favor of the residents. That decision has been ignored by the city.