NEWPORT BEACH MEASURE A : Tax to Buy Bluff-Top Property Loses : Way appears clear for the Irvine Co. to develop three tracts long the center of efforts by preservationists.

Residents here voted against Measure A Tuesday, refusing to tax themselves for the $68 million needed to buy three scenic, bluff-top properties overlooking Upper Newport Bay, early election returns show.

With returns complete, the measure was being voted down by a margin of 64.8% to 35.2%. The defeat paves the way for the Irvine Co. to begin developing much of the Upper and Lower Castaways and Newporter North into residential areas.

The 138-acre parcels have been the turf over which local environmentalists and developers have bitterly fought for three decades. This time around, the battle was between environmentalists who want to preserve open space and the property owners who don’t want to foot the bill.

Elated with the early results Tuesday night, opponents of the measure attributed the defeat to grass-roots efforts of residents and business owners who were adamant against paying higher taxes.

“I hope this matter is finally put to rest,” said Ron Hendrickson of the Newport Taxpayers Alliance.

Supporters of the measure said they were disappointed with the early results and blamed the apparent defeat on the economy.

“I guess we probably have to acknowledge that the preservation of open space was not as high a priority as we hoped or expected,” said Robert Shelton, who spearheaded the campaign for Yes on Measure A. “We recognized going in that this tax was going to be a tough sale because of the recession.”

Measure A was supported by the Newport Conservancy, a local environmental group founded by City Councilwoman Jean Watt. The group pushed to get the measure on the ballot and also paid $60,000 to finance the election.

The measure would have set up an assessment district to collect up to $120 yearly from owners of single-family homes for the next 30 years to finance the purchase of the land through bonds. Apartment and mobile home owners would have been assessed $102 per unit annually. Commercial property owners would have paid $120 yearly for every 2,000 square feet of space.

Supporters of the measure asserted that by endorsing creation of an assessment district to buy the bluff-top properties, residents would preserve open space for the city’s future generations. Property owners also would reap environmental, property-value and recreational benefits from undeveloped land and play fields in the city, supporters said.

But opponents countered that the $68-million price tag was too high, especially since the Irvine Co. has promised to leave 60% of the land untouched even if it is developed.

Those against the measure included the Newport Taxpayers Alliance and the Newport Harbor Area Chamber of Commerce.

The Irvine Co. has plans to build a 71-slip marina on the Lower Castaways, 151 homes on 26 acres of Upper Castaways and 212 homes on 30 acres of Newporter North. The remaining 78 acres would be preserved as open space for the city to maintain as stipulated in an agreement last year by city officials and the Irvine Co. The company has no timetable for the development.

The conservancy in June persuaded the Irvine Co. to sell the properties for $58.3 million, or about 20% less than the land’s initial appraisal. The $68-million assessment would have covered the $58.3-million acquisition and about $10 million in restoration and maintenance costs.

As envisioned by supporters of Measure A, the 57-acre Upper Castaways would have included open spaces for hiking, biking and walking trails and recreational facilities. The privately funded Newport Harbor Nautical Museum would have been built on the four-acre Lower Castaways. The 77-acre Newporter North, a more environmentally sensitive area located near the ecological reserve, would have remained mostly untouched.

The City Council placed Measure A on the ballot to gauge taxpayers’ willingness to finance the conservancy’s plan.

Under the Landscaping and Lighting Act of 1972, which allows city government to set up assessment districts for property improvements, city officials did not need voters’ approval to form assessment districts.

Newport Beach City Council members, however, said they wanted residents to have a say in the matter, and that at least 60% of the voters would have to approve the measure.

The decision was not a popular one. Those opposing the measure alleged a conflict of interest among some council members--specifically Mayor Clarence Turner, Jean Watt and Evelyn Hart, all of whom supported Measure A.

In recent City Council meetings, opponents heaped epithets and insults on the three council members. One woman even placed curses on Turner, Watt and Hart and their families.

Times staff writer Mary Lou Pickel contributed to this report.