Coastal Panel OKs Malibu Development : Housing: The commission approves construction of 51 luxury homes. Opponents contend that an environmentally sensitive habitat will be harmed.

Under a judge’s order to reconsider an earlier decision, the California Coastal Commission on Wednesday approved a developer’s plans to build 51 luxury homes and grade 830,000 cubic yards of dirt in Malibu’s Encinal Canyon.

By an 8-4 vote, the state panel, meeting in Long Beach, dismissed the argument of opponents that the project sets a dangerous precedent for developing land in the Santa Monica Mountains that until now has been considered undevelopable.

“It was a terrible project two years ago and this one’s no better,” said Sara Wan, vice chairwoman of the League for Coastal Protection, a watchdog group that monitors development along the state’s 1,100-mile coastline.

The project approved Wednesday is smaller than the 55 houses and 1 million cubic yards of grading the panel approved in 1991 for the 270-acre property, located in rugged hills two miles from the Pacific Ocean.

But opponents contend that, unlike the earlier approval, Wednesday’s decision fails to protect an area of environmentally sensitive habitat on the property.

The developer, Banyan Management Corp. of Chicago, acquired the property last year from financially troubled VMS Realty Partners of Chicago, and its subsidiary, the Anden Group.

Although pleased with the outcome, a company official was cautious about the project’s future. “We know this isn’t the end of the road; it’s just another step,” Banyan Vice President Edward F. Podboy said.

In her order that the state panel reconsider the matter, Ventura County Superior Court Judge Barbara A. Lane last year cited a litany of ways the project violated the state Coastal Act, including excessive grading and its impact on views from two nearby scenic highways.

The judge wrote that the concerns raised in 1991 by the commission staff appeared to vanish “like (a) Cheshire cat.”

The order was the result of a lawsuit by the city of Malibu, which opposes the project. The city’s opposition stems from the original developer’s success in 1989 in persuading a county commission to draw Malibu’s boundaries to exclude the project. Malibu surrounds the project on three sides.

On Wednesday, Malibu planning director Robert Benard argued before the commission that the revised project was inadequate and that the city probably will go back to court in an attempt to block it.

Several coastal commissioners expressed a similar view.

“This is a fool’s chase,” said Commissioner Gary Giacomini. “I don’t like to see us be the buffoon in this play.”

VMS-Anden had originally sought to grade 8 million cubic yards of earth to accommodate 69 homes and an 18-hole championship golf course. Los Angeles County supervisors approved the 69 homes in 1990 after the developer dropped plans for the golf course.