HUNTINGTON BEACH

City, 3 Landowners Agree to Settle Suit

The city Redevelopment Agency has agreed to pay three property owners $2.3 million to settle a lawsuit over an important area in the downtown redevelopment project. Under terms for the out-of-court settlement, the agency will pay $1.8 million to James and Joan Koller and Lauro Guarano for their jointly owned properties at 302 5th St. and 313 Main St. It will also pay the Kollers $500,000 for their building at 314 5th St.

The land constitutes about one-third of a redevelopment block bound by Main and 5th streets and Olive and Orange avenues. The agency, which owns the rest of the block, plans to tear down the existing shops on the site and replace them with condominiums, a grocery store, offices and new shops.

The owners sued the city three months ago, claiming that their properties are worth more than the city was offering.

The negotiated settlement price is close to what the owners had demanded, and about one-third more than the agency had originally offered, officials said.

The suit, among other concerns cited, also challenged the validity of the city’s environmental review of the properties and questioned whether the proposal is consistent with city land-use policy. The Kollers and Guarano waived those complaints in exchange for the settlement, said attorney Barry A. Ross of Irvine, who represented the owners.

“My clients were just interested in a fair settlement, and they finally got a fair offer,” Ross said.

The deal remains contingent upon the findings of a three-month Redevelopment Agency study to determine whether the property contains toxic substances. Officials suspect that the aging buildings may be contaminated with asbestos and that the ground beneath them may be fouled by gasoline leakage.

Depending on what the agency finds, the sale could be canceled. Should that occur, the owners would continue pursuing the lawsuit, Ross said.

Assuming the study does not discover any significant contamination, the sale will be completed within six months, officials said. Final construction plans must still be approved by the City Council.

The council approved the lawsuit settlement this week by a 4-0 vote. Councilwoman Grace Winchell was absent, and Councilmen Jack Kelly and Don MacAllister abstained, saying they have business interests that would be affected by the development plans.