Triumphant Homeowners Are Turning Apprehensive : Encino: Now that the developer of the commercial project they opposed has filed for bankruptcy, they face the prospect of waging the same battle with a future landowner.

Encino homeowner associations thought they had scored a victory when developers decided to build a three-story office building instead of a six-screen movie theater at Hayvenhurst Avenue and Ventura Boulevard.

They were elated when the developers’ lack of funds shrank the project to a one-story furniture design center.

But when the developers declared bankruptcy--blaming obstacles the homeowners raised--and the property was put up for sale last week, homeowners were left to reflect that they may have lost a better deal than any they will be able to strike with a future developer.

“We have mixed feelings,” said Robert Glushon, president of the Encino Homeowners Assn. “We are apprehensive that the property is on the market, which means there will be new developers and a new fight to be waged.”

Benjamin M. Reznick, attorney for the developers, Ventura Encino Ltd., argued that the homeowners have themselves to blame. It was their opposition to the original development plans that dragged out the building permit process, which resulted in a bank foreclosing on the developers’ loan and seizing the property, he said.

Glushon and Gerald Silver, president of Homeowners of Encino, furiously fought the original plans by Ventura Encino Ltd., a partnership consisting of Jona Goldrich of Goldrich & Kest developers and David Roberts, chairman of Unity Savings & Loan Assn. in Beverly Hills. The partnership applied to the city in 1988 for a permit to build a 377,000-square-foot building on the 5.7-acre site, with three stories aboveground and four below, including the six-screen theater.

At the time they applied for the permit, they met all zoning requirements, Reznick said.

When the city approved a standard environmental clearance for the project, homeowners were up in arms, Glushon said. They presented the Building and Safety Department with a petition containing 3,000 signatures, requesting that the developers conduct an environmental impact report to determine how the project would affect the neighborhood, he said.

The homeowner associations approached City Councilman Marvin Braude for support. Braude wrote to the Building and Safety Department, urging that an environmental review be required. The city revoked the environmental clearance previously granted and required an environmental study, Glushon said.

“The environmental impact report delayed the project over a year,” Reznick said.

Had the environmental study not been required, only a successful lawsuit by the homeowners associations would have prevented a permit from being issued in 1989, Glushon said, and the building could have been erected without further problem.

The report suggested the developers make improvements to avoid aggravating traffic congestion on Ventura Boulevard. But even with those changes, the project would have generated an additional 10,000 vehicle trips a day.

At a public hearing in June, 1990, at which residents discussed the findings of the environmental impact report, they emphasized that their major fear was the traffic that the theaters would generate on already-congested Ventura Boulevard.

In an effort to compromise with the community and the City Council, the developers changed the project to a three-story, 335,000-square-foot office building with two levels of underground parking, Reznick said.

Although it was still a large structure, the office building was appealing to Encino residents because it would not have generated evening traffic, as the theaters would have.

At that point, “anything less than what was supposed to go there was welcome,” Glushon said.

But by the time the developers received city approval for the smaller project, “it was too late,” Reznick said. They could not get a loan to finance the $115-million project. Banks considered them a high risk for a loan, and because of the recession retailers were unwilling to lease property, he said.

The developers were paying $250,000 a month in mortgage payments for property that generated no income, Reznick said.

As Imperial Bank, which financed the $28-million land purchase, threatened to foreclose, the developers filed for bankruptcy to buy time, he said. They had one year to get financing for construction, Reznick said.

To the residents’ delight, Ventura Encino Ltd. scaled the project down to an even smaller one: a 100,000-square-foot, one-level building that would have been a wholesale and retail home furnishing center, Glushon said.

“It never got off the ground because they could not get approval from the bankruptcy court,” he said.

Ventura Encino Ltd. is still trying to negotiate a deal with the bank, which is trying to sell the land for $23 million, Reznick said. “There is still a possibility that my client may pull it off. What is the bank going to do with the property?”

Though the land is in a desirable location, finding a buyer may be a difficult task because of the recession, Reznick said.

“A few years ago it was a hot property,” said Doug Humphrey, sales manager for Jon Douglas Commercial Brokerage. “It’s a great location because it’s in the center of Encino. But now, faced with the economy, even if retailers or offices are on prime land, there are very few takers.”

Some homeowners are still bitter about the 20-foot-deep, 600-foot-long hole in the property, said Gerald Silver, president of Homeowners of Encino. The company began digging the hole as part of a state-ordered cleanup of gasoline that leaked into the soil when it was previously owned by Terry York Chevrolet.

“They were required to take out 6,000 cubic yards of soil and they took out 105,000 cubic yards of soil because they wanted to get a head start on the project,” Silver said.

The hole collects rainwater.

“We have Lake Hayvenhurst out there,” Silver said.