Anaheim Ready to OK Homes in Canyon : Development: The council favors the Irvine Co.’s 8,000-house Mountain Park. Orange County, though abandoning its jail bid, still wants a landfill there.

On the heels of Orange County supervisors’ vote to abandon plans for a Gypsum Canyon jail, the Anaheim City Council indicated Tuesday night that it will approve an agreement with the Irvine Co. that would transform the canyon into the 8,000-home Mountain Park development.

The council is scheduled to vote on the agreement in two weeks, but comments of council members Tuesday indicated that a majority already favors the project.

Still, possible hurdles remain before development can begin. Gypsum Canyon is not in Anaheim city boundaries--yet. Further, county supervisors want to locate a landfill in the canyon, and the county has filed a lawsuit against the city. Environmentalists are also fighting Anaheim’s plans in court because they say the development would harm native animals and plants.

Under the proposed agreement, the city would eventually annex about 2,340 acres of the 3,179-acre canyon and would receive development fees of about $4 million, plus construction, police, fire and other fees that could total in the tens of millions of dollars.

The company would also agree to build a $2.7-million city maintenance yard within the project boundaries, as well as a high school, a junior high school and three elementary schools.

“I can’t imagine it won’t” be approved, Mayor Fred Hunter said.

Under the agreement hammered out by representatives of the city and the Irvine Co., the company will also maintain 1,414 acres east of the city as a wilderness area. That land would not be annexed by the city.

In return, the Irvine Co. would receive the city’s approval to build the project and the city’s support in the company’s court battles with the County Board of Supervisors and an environmental group over the canyon’s future.

Two environmentalists at the council meeting said they would prefer that the canyon be left untouched.

The agreement also states that it could not be overturned by future city councils or by the city’s voters in a referendum. City Atty. Jack L. White said Tuesday that such provisions have been upheld elsewhere by state courts as binding.

The city and company are also negotiating the creation of special taxing districts within the proposed development so its residents will foot the bill for streets, water pipes, sewer lines and other infrastructure.

“This will be a 5-to-10-year project, and in that time the members of the City Council will change, and there will be changes in the company,” company spokeswoman Dawn McCormick said. “This protects the commitments they have made.”

But it could still be some time before construction begins because the battle over the project may move into the courts.

On Tuesday, the supervisors dropped their effort to condemn the canyon so a jail can be built on the land. But the board kept alive a lawsuit that could enable the county to acquire the canyon for a landfill.

David Chaffee, the deputy county counsel, said the county believes that the environmental report filed by the Irvine Co. and previously approved by the Anaheim City Council inadequately dealt with such issues as traffic, grading, blasting and protecting wildlife.

“Until the board decides otherwise, we will continue to pursue our case,” Chaffee said.

Hunter, however, said he has spoken with staff members for some county supervisors who have indicated that the county will eventually drop its lawsuit.

Environmentalists, led by the Fullerton-based Friends of the Tecate Cypress, want the project scrapped or at least reduced, citing threats to both native animals and plants. They too have filed a lawsuit to halt the development.

“This agreement takes away the city’s policing powers in such areas as controlling air pollution and says that the agreement supersedes the result of any referendum,” said Connie Spenger, president of the Tecate group. “The city cannot take away its residents’ right to a referendum.”

Spenger added that the project would hinder the free movement of mountain lions, deer, bobcats and other animals that roam the canyon and would also threaten the nation’s northernmost stand of Tecate cypress.

Hunter disagreed, saying there would still be plenty of open space in the proposed development.

“It’s expensive to sue,” said Hunter, an attorney. “I don’t see them continuing on if they can’t piggyback their suit onto the county’s suit.”