Dana Point Building Project OKd : Development: City Council approves plans for luxury hotel and 370 homes despite environmentalists’ opposition. It still must clear state, U.S. agencies.

A controversial $500-million development plan that would bring a luxury hotel, two commercial centers and 370 homes to one of the last undeveloped coastal sites in Orange County was approved Tuesday night by the Dana Point City Council.

With little discussion, the council approved the plan on a 4-1 vote, ending nearly three years of negotiations and rancorous debate. The battle has pitted environmentalists, who regard the 121-acre bluff above Dana Point Harbor as a protected natural resource, against the private landowner and the project’s proponents, who insist that it will provide important revenues for the young city.

Mayor Judy Curreri called the plan a compromise in which “no one got 100% of what they started out wanting. There will be more refinements. . . . But for the first phase, I think we really hammered out a fair plan.”

Despite the council vote, several more hurdles remain before any construction can begin. The California Coastal Commission, the state Department of Fish and Game and the U.S. Wildlife Service are among the agencies that must approve the plans.

For environmentalists, the bluff-top parcel known as the Dana Point Headlands has become a symbol of the fight against overdevelopment throughout southern Orange County.

Ed Gallagher, a volunteer for the grass-roots group Save the Headlands, said Tuesday that an effort would be launched to overturn the council’s decision.

The development plan is the latest of several resorts proposed throughout the years. By the late 1940s, the property had been acquired by Los Angeles developer M.H. Sherman--known for Sherman Oaks--and what is now called the Chandis Securities Co. (the company, which oversees the financial holdings of the Chandler family, is a principal stockholder of Times Mirror Co., which publishes the Los Angeles Times.)

Dan T. Daniels, president of M.H. Sherman Co., said his company has reduced the scale of the plan to meet residents’ wishes. Dedicated open space has been increased to 64.8 acres, or 53% of the parcel, the residential density has been decreased 29% and more parks and trails have been added.

Councilman Mike Eggers, a supporter of the development proposal, said the city needs the $2.3 million the project is expected to generate for the city each year.

But Councilman William L. Ossenmacher, who cast the only vote against the project, said it would not bring revenues to the city anytime soon.

“Any financial benefits that are realized would come from the hotel complex,” which could be five to 10 years away from construction, Ossenmacher said.