Laguna Land-Use Battle Going to Trial

One of Southern California’s longest running land-use battles is scheduled to go to trial today to determine how much money, if any, the city should pay property owners who want to build homes in the rural Diamond-Crestview community.

Eight years into the legal fray, the plaintiffs are claiming that the city effectively robbed them of their property rights by not installing streets in a timely manner so they could build.

Joseph Gughemetti, a San Mateo attorney representing the landowners, said their lawsuit could cost taxpayers $16 million.

“The city has long believed it could wear out an opponent and, I think, assumed that would happen in this case,” Gughemetti said. But, “to a person, all the landowners are as dedicated now as they were eight years ago.”

City Atty. Philip D. Kohn, however, said the city has moved forward with plans to install streets and drainage pipes in the area. He said it would be unrealistic to expect the city to pay for the lots simply because there have been delays in preparing the area for construction.

The case has been a major headache for city leaders. At a City Council meeting earlier this year, Councilman Wayne Peterson said, “It’s the lone thing that wakes me up in the middle of the night, worrying about it.”

Lot owners say they too have lost sleep over the legal entanglement.

Jack R. Greenly, who owns a dozen lots in the area and had hoped to live on one of them, said he has been trying to build since 1966.

“For 20-some-odd years I’ve been trying to move to Laguna,” the Newport Beach resident said. “I really think we’re at the end of the line now.”

But Gughemetti said most of his clients would rather have the money. Attorneys say the 39 lots involved are valued at about $300,000 each.

The city “will write a check,” Gughemetti said, “and they’ll own the land.”

Kohn, however, questioned that scenario. “The lots have not been rendered valueless,” he said Monday. “They could walk in tomorrow and make an application for a building permit which would be processed.

Much of the debate surrounding the Diamond-Crestview neighborhood has revolved around who was responsible for the area’s roads.

In 1985, some empty lot owners sued the city in an attempt to have roads installed. In 1989, an appellate court ruled that the streets belonged to the city and it would have to pay to improve the roads, or abandon them and pay the lot owners “just compensation,” Kohn said.

In June, 1990, the city submitted plans for improving the streets with a goal of having them widened and paved by October, 1993.

After dozens of city hearings, the City Council approved a development plan for the area on Sept. 1, 1992. It called for the streets to be installed in piecemeal fashion as the homes are built and for lot owners to pay for the portion of street in front of their land.

But later that same month, Orange County Superior Court Judge David H. Brickner ruled that the city must build and pay for the streets. He gave the city 45 days to submit a revised plan to install or repair the roads.

In the process of unsuccessfully appealing that decision, the city missed Brickner’s deadline. As a result, in December, the judge ruled that the city had chosen to abandon the streets and ordered the current trial to consider the question of damages.