Problems Complicate Skyline Area Plans : Growth: Thousand Oaks wants to control development, but is hindered by finances and a defunct real estate venture.

Fallout from a defunct real estate venture and Thousand Oaks’ continuing budget crunch have complicated the city’s plans to control development in the isolated--but highly visible--pocket known as the Skyline Area.

City leaders have long sought ways to bring the 144-acre patch east of Conejo Ridge Avenue and west of Foothill Drive to current design and safety standards without sacrificing the region’s remote, rural ambience.

Late Tuesday, the council unanimously approved several proposals: to consider merging tiny lots--some as small as 5,000 square feet--to prevent excessive development; to look at purchasing ridgeline parcels for preservation as open space, and to start evaluating the costs of bringing water and sewer service to the area.

But it remains unclear whether the city will have the means, or the money, to implement those ideas.

Citing budget concerns, a three-member council majority turned down a chance to buy nearly a dozen hilltop acres for $46,750.

And the council’s objective of consolidating some of the Skyline Area’s cramped parcels also foundered Tuesday night. Most of the area’s 253 parcels are considered too small for development under current standards. Lots slope up steep hills, and some lack access to roads.

By consolidating lots owned by the same person, the council hopes to limit development--allowing, for example, just one house where five or six separate parcels now lie.

Yet at least 56 of the Skyline Area lots, including dozens considered prime candidates for merger, have become entangled in complex legal proceedings that could limit the council’s options.

Council members were told Tuesday that a Santa Monica mortgage broker purchased scores of Skyline Area lots in the late 1980s. Jennifer Shaw, an attorney for a court-appointed receiver sorting out the broker’s land holdings, said the broker attached up to three mortgages on each lot by persuading investors to lend her cash.

On each lot, the mortgages were worth way more than the property itself, Shaw said.

The financing scheme collapsed when the broker stopped making interest payments to her investors, “and they concluded that they had been bamboozled,” Shaw said.

Late last year, the broker pleaded guilty to grand theft and was sentenced to seven years in state prison. Now, the Los Angeles Superior Court receiver is trying to repay the mortgage holders by selling the broker’s many land holdings, including those in the Skyline Area.

The court would block any city action to consolidate or rezone the parcels, Shaw told the council.

And in an interview, Shaw expressed frustration that the council would even consider merging the lots, a move that would drive down their value.

“Nothing can happen to those lots without the approval of a judge sitting in downtown L. A.,” she said. “But merely by their saber-rattling about merging the lots, the council is killing the value of the property and making it nearly impossible to sell them.”

Although Thousand Oaks may be unable to merge lots tied up in the legal wrangling, the City Council will look into consolidating other parcels within the area.

“It’s a simplified way to reduce the impact of development in a very sensitive and difficult area,” Councilwoman Judy Lazar said.

Some property owners, however, do not share her enthusiasm. Instead of merging their parcels, they are asking the city to consider building the infrastructure--wider roads, a water tank and sewer service--that would allow them to make use of their long-vacant land.

“Many property owners are looking forward to developing this land and putting homes on it,” said Michael Li-Paz, who owns three lots in the area. “How long will it be until the city might get involved and send tractors in to build a water tank?”

In response to his plea, the council directed city staff to estimate the cost of preliminary engineering studies, which would be necessary before any infrastructure improvements could begin.

About 80 lots in the Skyline Area are developed, and some vacant parcels already have the infrastructure necessary for construction.

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The council Tuesday approved construction of a 99-bed convalescent home on one ready-to-develop lot at the northeast corner of Fairview Road and Foothill Drive.

Two residents who own property in the Skyline Area complained that the council should withhold approval of the convalescent center until the city comes up with a comprehensive plan for dealing with surrounding lots.

But in a 4-1 vote, with Mayor Elois Zeanah dissenting, the council decided to allow developer Orlando Clarizio to go ahead with the convalescent home.

“In my 30 years on the council, this (Skyline Area development plan) is probably one of the most complicated issues the city has ever dealt with,” Councilman Alex Fiore said. “We’re fooling ourselves if we think we can get it resolved within a six-month period or a two-year period. It’s going to be a long, long process.”