L. A. Settlement May Aid Developers’ Plans for Warner Center : Woodland Hills: Commercial real estate people say the recently settled Warner Ridge case could expedite approval of half a dozen projects nearby.

Developers in Warner Center could benefit from the recent settlement of the Warner Ridge legal dispute, in which the Los Angeles City Council abandoned efforts to block construction of a large commercial real estate project in Woodland Hills.

Under the settlement, reached two weeks ago after a series of court decisions against the city, the Warner Ridge developers not only won permission to build the controversial condominium and office project, but were also granted exemptions from as much as $25 million in fees that they might have otherwise had to pay.

The case was seen as a bellwether for many other disputed real estate projects.

“There’s obviously a lot of joy in the development community over the decision,” said Seth Dudley, senior vice president at the Los Angeles office of Julien J. Studley Inc., a commercial real estate broker.

Studley and other commercial real estate figures said the Warner Ridge case could expedite approval of half a dozen major projects that have been proposed in Warner Center--the west San Fernando Valley’s premier business complex near Warner Ridge. If built as the developers envision, the projects would add about two dozen office buildings, a new hotel, and expansion of the Topanga Plaza and Promenade shopping malls in Warner Center.

But the Warner Center developers--which include big companies such as JMB/Urban Development Co., LaSalle Partners and May Centers Inc.--have had their projects stalled while city planners rewrite the Warner Center Specific Plan that would govern future development in the business center.

The Warner Ridge case involved allegations that the City Council had illegally changed the zoning at the site to block the project.

The specific type of zoning dispute involved with Warner Ridge is not at issue in Warner Center. But observers say the legacy of Warner Ridge is that it has effectively helped shift power away from city officials who might seek to thwart development. And some see additional pressure for the Warner Center master plan to be completed quickly so projects there can move ahead.

“It’s forcing the city to sit back and say, ‘OK, we’ve stalled these developments long enough,’ ” said Bill Ripberger, director with commercial real estate broker Cushman & Wakefield in Woodland Hills.

Nonetheless, some Warner Center developers remained guarded in their assessment of the impact that the Warner Ridge case might have on their projects. “I think the city is just going to be a little more cautious,” said Craig Cahow, vice president of Trizec Warner Inc.

Trizec, a subsidiary of Trizec Corp. Ltd., a Canadian developer, owns the four-story headquarters building of computer printer-maker Dataproducts Corp. in Warner Center, and hopes to build four six-story buildings on adjacent land.

Ben Reznik, a Sherman Oaks land-use attorney who represents Trizec, said he has already noticed in certain cases a greater willingness by the city to negotiate, “from the staff level all the way up to elected officials.”

John Matthews, senior vice president of JMB/Urban, said he’s reserving judgment on the long-term effect of the Warner Ridge case. “We don’t fully understand all the implications of it yet,” he said. With Blue Cross of California, JMB/Urban hopes to build eight office buildings on 32 acres surrounding Blue Cross headquarters in Warner Center.

But George Mihlsten, a partner in the Los Angeles law firm Latham & Watkins that represents JMB/Urban and the Voit Cos., Warner Center’s biggest landlord, said the Warner Ridge settlement could give a psychological boost to developers.

“I don’t think anybody views the decision as one that will have a dramatic immediate impact on day-to-day development,” he said. “But it is an important indication that the courts are beginning to set limits on what cities can do to developers.”

Indeed, John Gebhardt, vice president at Voit, said developers might now have more of a feeling that when there are land-use disputes, “you can fight and win.”

Even before the Warner Ridge decision, however, there were signs that the outlook for developers in Warner Center had improved.

In November, the Planning Commission instructed its staff to rewrite the preliminary Warner Center Specific Plan released in July that would have put a 26.8-million-square-foot cap on development--up from the existing 15.8 million square feet.

Developers argued that the preliminary plan would have made their projects virtually impossible to build. That’s because the plan also included tight density restrictions and fees to help pay for traffic improvements that were so high it would have made the developments prohibitively expensive, they said.

In ordering the rewrite of the plan, planning commissioners urged that more development be allowed and that the traffic fees be sharply reduced.

Also, last week the City Council approved a deal to allow three Warner Center developers--May Centers, JMB/Urban and O’Connor Group--to contribute $270,000 to pay for an expedited review of the master plan and their proposed projects. The revised Warner Center plan could be completed next month, planning officials said. If the new plan is approved after public discussion, a developer would then be free to push ahead with the approval process for each individual project.

“I think the plan that emerges will be a much more reasonable response,” Matthews said.

Some developers said a more flexible stance by the city toward development in Warner Center is probably driven in part by economic considerations. The construction slump is viewed as a big contributor to the recession, and concerns have grown in Los Angeles over the loss of businesses and jobs to other areas.

Although Warner Center’s vacancy rate is more than 20%, most of the unoccupied space is in one building opened last year by Voit. The rest of the empty space is in small pieces that developers say won’t satisfy the demand for large chunks of office space that major tenants such as Health Net have said they’ll need during the next several years. If they aren’t allowed to build, developers contend, many big employers might transfer operations out of the area.

Trizec Warner’s Cahow said he’s also hopeful that the selection last week of a new chief of the embattled city planning department, Con Howe of New York, will bring a new era of coordinated planning to the city. Howe, whose appointment is expected to be approved by the City Council, has been lauded by city officials as someone who has the skills to balance growth with demands to preserve neighborhoods.

Warner Center developers, however, still face other obstacles. Many real estate projects throughout the country have failed to get off the ground lately because banks have become so cautious about financing new projects that they typically require a building to be almost entirely pre-leased before funds are committed.

“In the ‘80s, density was the biggest issue,” said Carla Gazzolo, senior vice president at CB Commercial in Sherman Oaks. “The anthem for the ‘90s is: Where are you going to get the construction financing?”