Council Delays Binding Action on Headlands Development

A vote on a development agreement that would bind the city to a controversial $500-million hotel and residential plan was postponed Tuesday by the City Council.

One of the major sticking points was the order in which the features of the development would be built. The proposed agreement leaves that entirely up to the developer. But council members insisted that the commercial and hotel portions of the development be built early, because they produce revenue for the city.

The agreement gives the owner of the property the right to build a 400-room hotel, two commercial centers and 370 homes on the 121-acre peninsula above Dana Point Harbor known as the Headlands. Last week, the council approved the plan in concept.

“I want to make sure the project is economically viable and fair for both the landowner and the city,” Councilman Mike Eggers said Tuesday.

The city gets its revenue from sales taxes and bed taxes. The landowner gets its slice of the pie from home sales.

The plan for the Headlands has been the focus of debate for more than three years between environmentalists who want to save the property as a natural resource and the project’s proponents who insist it will be a financial boon for the city.

The council directed the city staff to renegotiate some key elements of the plan.

Although now subject to change, the rights the agreement gives the landowner include:

* The discretion over what and when the various parts of the plan are constructed.

* Unlimited city assistance in obtaining federal and state approvals for the plan, including the California Coastal Commission.

Included for the city are:

* About 59 acres of the parcel dedicated for parks and open space and $2.8 million in improvements for the parks.

* The right to purchase a 2.7-acre parcel at the intersection of Coast Highway and Green Lantern for 80% of fair market value for a civic and cultural center.

Since the 1940s, the Headlands property has been owned by the M.H. Sherman Co. and Chandis Securities Co. Chandis Securities, a firm that oversees the financial holdings of the Chandler family, is a principal stockholder in Times Mirror Co., which publishes the Los Angeles Times.