Oceanside Council Deadlocks on Pact to Settle Developer’s Suit : Dispute: Company says it’s ready to go to court after the surprise vote that saw Mayor Bagley and Councilwoman Bishop on the same side for once.

The Oceanside City Council balked Wednesday at an agreement with a developer that would have settled a $30-million lawsuit against the city.

In a vote that surprised the City Hall audience, the council deadlocked 2 to 2 over the agreement with Marlborough Development Corp., which plans to build a housing tract at the eastern edge of town. The vote scuttled, at least for the moment, the city staff-negotiated agreement, which originally appeared to be a shoo-in.

For longtime council observers, perhaps as surprising as the tie vote was the rare teamwork of Mayor Larry Bagley and City Councilwoman Melba Bishop. Bagley and Bishop, usually vocal opponents, voted to reject the settlement. Councilman Sam E. Williamson was out sick.

With no agreement in hand, the city and the developer moved one large step toward a costly courtroom battle scheduled to begin in mid-September.

Dorian Johnson, vice president of the Riverside-based development company, was in shock after the morning meeting.

“I’m obviously disappointed and I’m surprised,” Johnson said. “We negotiated in good faith with one another and thought we had an agreement. Now to vote (to the) contrary . . . is surprising.”

The long-simmering issue, which neighbors of the project site say goes back five years, revolves around a proposal to build Marlborough Country Estates on 124 acres next to Jeffries Ranch at the county border. The developer’s original plan was to build, in three phases, 260 homes on lots averaging 10,000 square feet.

But in December, with Marlborough already clinging to an approved final tract map for a major portion of the development, the city slapped an equestrian zone on 889 acres, including the project area, in the name of maintaining a rural atmosphere. Among the stipulations of the ordinance are requirements to set aside 7,200 square feet of each lot for equestrian-related items such as a corral, feed storage and an exercise yard.

The ordinance effectively decreased the number of homes Marlborough could build on the property to 150, a loss the company estimated at $15 million. Accusing the council of reneging on a commitment, Marlborough quickly filed its lawsuit and demanded that the ordinance be overturned.

After eight months of negotiations, a settlement was recently ironed out by the city staff, council members Bishop and Don Rodee and Marlborough. In exchange for the rights to their old plan, Marlborough agreed to provide extra equestrian trails, turn three residential lots into an equestrian park and build larger homes, among other concessions.

Reacting to demands by residents and council members at Wednesday’s meeting, Marlborough topped off the settlement by agreeing to put up a security bond to build the park before breaking ground on the homes.

But Bagley and Bishop stalemated the agreement. While Bagley’s nay vote was expected, Bishop’s was not, considering she had helped negotiate the agreement.

A recent appellate court decision and testimony by several Jeffries Ranch residents convinced Bishop there was still a way to go before settling, she said after the meeting. Before the vote, three ranch residents sharply criticized the proposed agreement and warned that the council members could suffer the consequences in the November election.

“I’m not prepared to settle until we can satisfy the neighborhoods and the mayor,” Bishop said. “It’s not that I want to go to court, but I believe there is still room to negotiate.”

Johnson said his company is still prepared to go to trial but that the ball is in the council’s court.

“We have a settlement on the table. The City Council was the party that did not accept that,” Johnson said. “We always considered the fact that it may go to court. Our suit wasn’t filed to posture ourselves.”