Warner Ridge Investors Seek Permits as Settlement : Development: The plaintiffs would drop $100-million suit if given the go-ahead. The City Council is reviewing the offer.

Riding high on recent courtroom victories in their lawsuit against the city of Los Angeles, investors in a proposed Warner Ridge development say they will settle for permits to build a large-scale, mixed-use project rather than a possible $100-million settlement, it was learned Tuesday.

The Los Angeles City Council in a Tuesday executive session reviewed the real estate partnership’s settlement offer but took no final action. The lawmakers are seeking additional information to help weigh the proposal, including real estate appraisals, several sources said.

The impetus on the council is to settle the litigation and yet seek a way to limit its potentially far-reaching and costly effects on the city’s land-use practices, according to sources.

Leading the pro-settlement faction on the council are council President John Ferraro and Councilman Hal Bernson, chairman of the council’s planning committee, who are said to be hopeful that a final accord will be ratified Friday by the lawmakers when they meet in executive session on the matter.

Meanwhile, the parties to the lawsuit are required by court order to meet today with a judge to map their efforts to reach an out-of-court settlement before going to trial. Due to recent court decisions, the only outstanding issue at the trial, set to begin Feb. 10, would be the damages owed by the city.

Councilwoman Joy Picus, who has led the fight against the Warner Ridge partnership’s development plans, remains the only council voice against settlement, sources said.

To drop their litigation, the Warner Ridge investors want permits to build a project on their 21.5-acre Woodland Hills property that would include 690,000 square feet of commercial development, 125 condominiums and up to $4 million in credits for various city fees.

The developer, according to these sources, also has agreed not to oppose the city if and when it appeals to the California Supreme Court a lower court ruling in the Warner Ridge litigation that could wreak havoc on the municipality’s longstanding zoning practices.

“The developer is saying, ‘We’re in it for ourselves, and it was not our intent to foul up the rest of your zoning practices, so we won’t oppose your appeal,’ ” said one source familiar with the terms of the complicated offer.

Several sources said the city is desperately trying to narrow the effect of the Dec. 31, 1991, state Court of Appeal ruling.

That decision held that the city acted illegally by denying the Warner Ridge investors commercial zoning for the property when the local community plan identified the area as suited for such development. Picus, who was being heavily pressured by homeowners to oppose the project, led the council in January, 1990, on a vote to give the developers enough zoning for only 65 single-family houses instead of a 810,000-square-foot commercial project.

But in its 3-0 ruling, the appellate panel said the developer was entitled to zoning equal to the community plan designations for the site.

Within a week of this ruling, a Superior Court judge held--in another ruling critical to the case--that the council’s actions to downzone the Warner Ridge site deprived the developer of “all economically viable use” of their property.

More devastating to the city, however, was the state Court of Appeal ruling.

That ruling, it is feared, may provoke a spate of lawsuits against the city by other disappointed developers who were similarly treated. Already, another Woodland Hills developer has filed a $2.5-million lawsuit that contains allegations very much like those in the Warner Ridge litigation.

Also, the appellate court ruling may require the city to embark upon a costly program of rezoning thousands of properties to bring them into compliance with their community plan designations, according to the city’s Planning Department.

This upzoning would also have a hidden cost because now--as the price it exacts for upzoning properties such as these--the city often imposes a wide range of mitigating and costly conditions, informed observers say.

Finally, developers seeking such upzonings now often feel compelled to make campaign contributions to lawmakers to smooth the way for council consideration of their projects. “It will make it harder to raise money,” one observer said.

Presenting the settlement offer to the council were Ferraro and Bernson, who have held at least two closed negotiating sessions with the developer in the past week.

The pair did not actively advocate council acceptance of the plan but made it clear that they favor a settlement, sources said.

Ferraro later told reporters that the council did not wish to vote on the proposal until it obtained additional information.

“The view today was that the council wanted more information so they could weigh whether the proposal was good,” said one source who was in the executive session.

Robert McMurry, attorney for Warner Ridge, refused to comment on the progress of the negotiations with the city.