Real Estate Recovers, Heads for the Hillsides : Santa Monicas: Renewed ridgeline activity draws ire of secluded communities and environmentalists.

From the air they look like archeological digs of lost civilizations.

And perhaps they are--wide, dusty swaths of the Santa Monica Mountains where residential home developers of a different era, the late 1980s, built monuments to optimism by flattening ridges for tracts of ultra-expensive houses in the expectation that the Southland’s real estate boom would go on forever.

It didn’t, and some speculators lost millions of dollars.

But recently, with the recession ebbing, home prices firming and the state running out of money to buy open space for parkland, a dozen residential development companies have made plans to create or finish major home projects in the Santa Monica Mountains between Griffith Park and Woodland Hills. Numerous individual property owners have joined in the land rush.

One developer wants to put 64 homes into the pristine woodlands surrounding Lake Hollywood. Another will set 30 condos in grasslands over the Hollywood Bowl. The developer of the Westside’s ritziest mountain development expects to have 20 gigantic estates under construction by summer. And Merv Griffin has obtained city approval to subdivide a 157-acre mountaintop above Benedict Canyon into six immense home sites.

Reasons for the new push are demographic, generational and financial. In the same way that many middle-class home buyers have migrated to the Antelope Valley and Ventura County to escape Los Angeles’ crime and crowding, many wealthy residents with young families from the Westside and Valley are now moving higher into the Santa Monicas in search of the security of gated communities. In many instances, prices have fallen 50% from their 1989 peaks.

“It’s the last frontier” for major home construction in Los Angeles, said John C. Funk, an attorney who represents several builders.

The rebound has disappointed and galvanized area hillside homeowners who have withstood waves of development for five decades, and fret that their high rural enclaves will become just another gridlocked suburb. Santa Monica Mountains Conservancy officials, meanwhile, worry about the increasing danger to wildlife migration routes and to the scenery of the United States’ only urban mountain range.

“If you bring all the congestion of the city to the hills, they won’t be the resource and treasure they are now,” recently lamented the newsletter of the Federation of Hillside & Canyon Assns. “The piecemeal destruction of these hills is at hand.”

Ironically, homeowners and conservationists celebrated just two years ago when, after two decades of tortured consideration, the Los Angeles City Council adopted restrictions on development for a half-mile on either side of the 22-mile length of Mulholland Drive.

Declaring the twisting 65-year-old street a “scenic parkway,” the Specific Plan prohibits the construction of homes on prominent ridges and imposes strict height, grading and density limits aimed at preserving the beauty of roadside vistas. Compliance is enforced by the city Planning Department under advisement by a design review board stacked with Mulholland-area residents and conservancy officials.

The law went into effect amid the area’s real estate depression, when little development was contemplated. Now, with renewed confidence in urban mountain real estate, builders are buying land cheap in foreclosure and at federal Resolution Trust Corp. auctions, with tract and grading entitlements attached that predate the city’s Specific Plan. Longtime owners too are following through with massive remodeling or subdivision plans--some seeded by insurance money gained after the Northridge earthquake--for which permits were granted before the restrictive ordinance started.

In June, for instance, major home builder J.M. Peters Co. bought a 174-lot Tarzana development called Mulholland Park at the southern end of Reseda Boulevard from Bank of America in foreclosure for $26 million. That was about 65% off its estimated value of $72 million. Its previous owner was a Japanese partnership. Individual home prices will hover around $1 million.

The scope of such developments leaves veteran hillside homeowners activist Alan Kishbaugh cold.

“I call them slums for the rich,” said the president of the Federation of Hillside and Canyon Homeowners Assns. “I’ll never understand why people with that much money want to live so close together.”

Part of the reason, said city Planning Director Con Howe, are laws aimed at minimizing grading. New Los Angeles ordinances governing hillside density encourage developers to pack homes into clusters surrounded by buffers of open space. That space is often sold or donated to the mountains conservancy for its splendid, crazy-quilt stretch of cross-mountain parkland.

The clustering effect makes it easy on makers of maps to the stars’ homes since much of the hillside land is selling to celebrities who prefer to live in family-oriented private neighborhoods instead of individual gated estates in older communities with fuddy-duddy images like Bel-Air.

Indeed, a six-mile stretch between Coldwater Canyon and the San Diego Freeway has become guard-gate row. Seven private communities have sprung up there in the past decade, and the newer ones are revving up sales of empty lots after withstanding the real estate crash of the early 1990s.

At Mulholland Estates, a gated development off Mulholland Drive near Beverly Glen, musician John Fogerty, actor Fred Dryer, singer Paula Abdul, game show hostess Vanna White, actress Lonnie Anderson and hockey star Wayne Gretzky live within shouting distance of one another in giant, $2.5-million homes on mostly half-acre lots.

At Beverly Park, a gated development scarcely a mile east near Coldwater Canyon Boulevard, basketball great Magic Johnson, Walt Disney Co. Chairman Michael Eisner, rocker Rod Stewart, six Indonesian businessmen, one Saudi prince and several Westsiders like California Pizza Kitchen co-founder Larry Flax own much bigger estates or lots. Homes still range in price up to $10 million, but developer Brian Adler said that two-acre lots once going for $4.5 million can now be had for $2.3 million. Bargain-pricing seems to work. A majority of the 64 two-acre lots he graded at the market’s peak have lain vacant for four years. But he claims sales of one a month now, and said construction will begin on 20 homes by summer.

What’s life like behind the Wrought-Iron Curtain?

The wide streets of steeply sloping Mulholland Estates are lined with mature camphor trees to provide the illusion of a neighborhood that’s been growing for 20 years, instead of six. One resident said neighbors pride themselves on their friendly block parties and on efforts to avoid raising “hoity-toity Westside kids.” Although they technically lie in Sherman Oaks, their homes get prestigious--some say pretentious--90210 ZIP codes because a Beverly Hills postal carrier covers that stretch of Mulholland Drive.

The community clearly is expanding, if slowly. Vast empty lots do lie like forgotten playing cards among grand mansions built wall to wall. But most streets today teem with contractors’ trucks. And the air rattles with the sound of sandblasters.

The construction noise is sweet music to Kenneth Chang, one of three Mulholland Estates developers. The architect recently stood in a light rain outside his Spartan office and declared that the final 20% of his 96-lot community would be built out over the next two years.

“The pace of sales has gotten regular and steady--the best thing for the real estate market,” he said.

A double rainbow from the waning storm framed Chang as he spoke and symbolized the concerns that arc over such developments. Property owners feel entitled to earn a pot of gold from their hillside investments, while longtime nearby homeowners and conservationists consider the mountains themselves gold.

Asked why his community has such an unusually wide view of the San Fernando Valley, for instance, Chang proudly pointed out that he had sliced the property’s central ridge by 70 feet and used that 1 million cubic yards of dirt to fill in and flatten an adjacent canyon. That grading led to the creation of flat streets in the otherwise rugged terrain, where Gretzky’s sons now tutor Chang’s boys and others in roller hockey.

It’s this view of land management that galls the homeowner groups.

“I hate that development--they raped the mountains,” said Kishbaugh about Mulholland Estates. “People used to build their homes low and let them ramble. Now you’ve got people who have this big-box mentality and feel this need to build out to the edge of their lots. What’s worth saving is the open space. I’m interested in the shape of the contours of the mountains, not how it can be cut by a bulldozer.”

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In effect, though, the homeowners’ battle against gated communities along the ridgeline is over. The developers are now merely elbowing each other to draw new customers to lots that have sat idle for up to five years with the meter ticking.

More infuriating to area residents are whole projects that were graded but abandoned when the market soured.

Stan Herman owns one such bedeviled development. A leading Beverly Hills real estate agent, he bought 99 acres on a handsome mountain near Franklin Canyon a decade ago and obtained city approval to scrape off 1 million cubic yards of dirt for 13 huge lots. So far, he has shoved 600,000 cubic yards off the mountain. But he’s run out of money; he needs $8 million to finish the job.

So his chopped-off mountaintop sits, yellow and sad amid the rolling green hills, with mammoth, mute ground-moving tractors resting there--the bane of drivers gazing west as they descend Coldwater Canyon Boulevard south toward Beverly Hills.

“I’ll admit it disturbs me. I’m an environmentalist,” Herman says, adding he’s listed the property for sale at $16.75 million. “This is the only subdivision I’ve done in my life, and maybe I’m not expert enough. Maybe I’m in over my head and need someone to help me.”

Homeowners have encouraged city planners to force developers to put up a completion bond before grading, guaranteeing that they will not leave the hills scarred if a project is abandoned.

So far, builders have turned back the proposal--and it would not help with well-financed builders who can afford to rip down a mountain and leave it fallow until the market turns.

The sons of hotel tycoon Barron Hilton did that in a Mandeville Canyon development called Brentwood Country Estates. In October, they sold the first of 13 lots that were graded in 1991 and have lain stripped in full public view since.

Merv Griffin turned out to be another property owner left holding a major piece of graded land during the recession.

In 1987, the entertainment mogul bought a 157-acre mountain in Benedict Canyon from the sister of the late Shah of Iran for $5 million. He intended to erect a 58,000-square-foot mansion that would give him the largest and highest home in Los Angeles.

Griffin sliced more than 1 million cubic yards of dirt off the hill to create a 14-acre flat pad there in 1988 that included room for four lakes, a four-lane driveway and a garage big enough for 60 limousines. But before launching construction, he bought the Beverly Hilton Hotel and changed his mind, according to his realtor, Steve Lewis of Jon Douglas Co.

Since then, the mountain has sat, bald and baleful, 136 feet lower than intended by nature--though so high that its scar can only be seen from the air. Griffin, who will donate 70% of the hillside to the conservancy for parkland, recently obtained city permission to subdivide the property into six lots and is about to put the whole thing on the market for $15 million.

It might be the last of its kind for sale.

“So many ridges have been compromised that no more should be cut from now on,” said Ralph Avila, a city associate planner who has been responsible for enforcing the Mulholland Specific Plan. “It’s important to preserve what we have left.”

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Still, there are plenty of developers and individuals who wish to hazard building in the mountains.

Marching west from Griffith Park, their names and ambitions are largely unknown except to immediate neighbors and the mountains conservancy: the Jefferson Development Corp. property at Lake Hollywood; Hillpark above the Hollywood Bowl; the Coscan-Davidson Homes property near Mandeville Canyon; the Woodland Hills Estates property near Topanga Canyon.

All but Hillpark have expressed an interest in selling their land to the conservancy--a measure of their frustration at scrimmaging with homeowner groups and the recession.

But the state park acquisition agency spent its last dollar on the Canyon Oaks development near Topanga Canyon in March, and voters’ rejection of Proposition 180 in June left it unable to make any large purchases until at least 1997.

So development is moving fitfully forward.

Two men with the clearest view of the home-building curve are the conservancy’s critters-and-cash duo: ecologist Paul Edelman and parkland acquisitions chief John Diaz. Despite the lack of money, they sit at conservancy headquarters high above Malibu and plot to acquire new open space by cajoling, shaming and wheedling it from private owners or richer public agencies.

At the top of their hit list is the Lake Hollywood project. Jefferson Development controls 174 acres in a grassy bowl there above the city reservoir. In the face of virulent local opposition, it filed a draft Environmental Impact Report two years ago that called for scraping 1.7 million cubic yards of dirt off pristine ridgelines and dumping it in an adjacent canyon to create 64 spacious guard-gated home sites and a long road to reach them.

Edelman, a UC Santa Cruz-trained biologist, covets the land, calling it the “Griffith Park Connector.” He contends that deer and other mammals cross it to reinvigorate their gene pool in the little remaining open space between the Hollywood and San Diego freeways. The conservancy has teamed up with the Los Angeles Department of Water and Power in an attempt to buy two-thirds of the land from Jefferson, but its finances make the effort quixotic at best.

“It could be the key development battle of the year if they proceed,” Diaz said. Jefferson officials declined to comment on their plans.

Also high on the conservancy’s list is a 240-acre tract of highlands between Mandeville and Sullivan canyons in Brentwood owned by a partnership of Coscan-Davidson Homes and Los Angeles auto dealer Herbert F. Boeckmann.

Coscan executive Andrew Oliver expressed frustration at his firm’s inability to develop the property into a gated community of 34 lots on one-acre pads priced at more than $2 million.

“Homeowner groups and politicians have absolutely decimated property rights with environmental laws,” Oliver declared.

Coscan will finalize its environmental impact report with the city Planning Department by January; a draft circulated six months ago included plans for a bizarre vertical corkscrew tunnel up through a mountain to the property from Mandeville Canyon Road.

Edelman and Diaz would dearly like to buy the Coscan land as a southern gateway to public trails in the “Big Wild”--the 18,000 acres of state-owned terrain between the San Diego Freeway and Pacific Coast Highway. A fire road framing the property has been a popular route for hikers and mountain bikers like Mayor Richard Riordan for six decades.

Emotions run high in the pretty canyon. Attorney Eric F. Edmunds, who coordinates local opposition to the project, condemns Coscan’s strategy as a “total speculation play.”

“We think the whole thing has been an effort to drive up the price they’d get from the conservancy,” Edmunds said.

For his part, Oliver calls the Big Wild “the product of someone’s imagination.” But he said Coscan would indeed sell if the conservancy can scrape together the money. Since that’s unlikely, he said, Coscan hopes to have its environmental impact report approved in January and homes under construction by April, 1996.

Should the rest of the city care?

Louise Frankel, a longtime homeowner activist in Tarzana, believes the give-and-take between builders, the city and the conservancy usually yields a promising compromise. She battled throughout the 1970s and ‘80s to keep Gulf America and others from developing 2,000 acres in the Big Wild triangle between Brentwood, Tarzana and Encino.

“The hills behind Encino are so nice because bunches of us just banded together from all over the mountains, sent smoke signals and marched into City Hall together,” she said. “In each of our fights, we reduced the number of lots and forced them to give more open space to the state.

“For the good of future generations and the city, it is not selfish to suggest that some of these lands should not be developed. People use them every day for hiking and biking and for just being at peace. This is important for the human soul.”

Million-Dollar Mountains

Here are the major eastern Santa Monica Mountains recent home developments, as well as proposed projects where the state Conservancy has an interest in acquiring parkland.

1. Woodland Hills Estates

Owner: Rayes family

Size: 65 acres

Parkland dedication: At least 32 acres proposed

Lots: 37 on 35 acres

Developer received subdivision approval last week; appeals could last through April. Owner would rather sell the land to the Conservancy; negotiations began last year but halted after hangup over appraisal.

2. Mulholland Hills Estates

Owner: Avatar Holdings Inc.

Size: 408 acres

Parkland: City and Conservancy each bought 40 acres with option for remainder.

Comment: Home development still possible. Conservancy covets the land as a critical north-slope habitat with ample grassland.

3. Mulholland Park

Developer: J.M. Peters

Size: 570 acres

Parkland dedication: 444 acres

Lots: 174 on 126 acres (homes $550,000 to $990,000

Mulholland Gateway Park created from open space. Project was subject of intense opposition over its size and lengthening of Reseda Boulevard.

4. Silver Hawk

Developer: Dale Poe Development

Size: 220 acres

Parkland Dedication: 110 acres.

Lots: 154 from 110 acres

Developer expects to sell to “move-down” buyers from the Westside who won’t go east or north of Tarzana because “any further, to them, they’ve gone off the edge of the Earth.”

5. Coscan-Davidson Homes Property

Owner: Coscan-Davidson Homes and Herbert F. Boeckmann

Size: 238.5 acres

Parkland dedication: 150 acres proposed

Lots: 34 estates (averaging 2.5 acres each) planned on 88.5 acres

Final EIR due in January. Mandeville Canyon homeowners have mounted strong opposition. Popular trails run through property.

6. Brentwood Country Estates

Developer: Eastridge Development Co. (controlled by Hilton family)

Size: 248 acres

Park dedication: 150 acres

Lots: 13 on 98 acres

Homes: Breaking ground for three in March ($2.5 million-plus)

Developer graded 4 million cubic yards of dirt in 1990-91; development has sat vacant since.

7. Bel-Air Crest

Developer: Prestige Homes (Goldrich & Kest subsidiary)

Size: 541 acres

Park dedication: 376 acres

Homes: 175 on 165 acres ($895,000-$2 million)

Lots: 71 left

Development forms longest, widest block to wildlife movement in eastern Santa Monicas. State seeking grants for trails.

8. Mulholland Estates

Developer: North Mulholland Properties

Size: 188 acres

Park Dedication: 109 acres

Lots: 90 lots on 79 acres ($795,000 to $1.65 million)

Homes: 54 ($2.45 million-plus)

Conservancy turned development’s western edge into Fossil Ridge Park, a trail-laced hill with paleontological specimens and great views.

9. Merv Griffin Property

Owner: Merv Griffin

Size: 157 acres

Park Dedication: 105 acres

Lots: One 14-acre pad or six 2- to 6-acre pads

Griffin once planned to build biggest, highest house in Los Angeles here. Property will soon be put on sale for around $15 million.

10. Beverly Park Estates

Developer: Adler Development Corp.

Size: 325 acres

Parkland dedication: 20 acres

Lots: 80 on 305 acres

Homes: 16 in Beverly Park South; 10 in Beverly Park North, with 20 more to break ground by summer ($2-million-plus for lots; $6-10)

Originally graded in ‘60s for Teamsters Union-funded country club. Adler partnership bought it in liquidation and turned it into area’s most lavish tract. Conservancy complains it blocks wildlife movement.

11. Stan Herman Property

Owner: Stan Herman

Size: 99 acres

Homes: 6-13 planned

Developer needs $8 million to finish grading. Now listed for sale at $16.75 million. Owner calls it “the last, best mountain in Beverly Hills;” Conservancy alls it an “unprecendented visiual intrusion.”

12. Alex Trebek Property

Owner: Alex Trebek

Size: 80 acres

One of the last big pieces in far eastern Santa Monica Mountains; laced with hiking trails. Conservancy could acquire it as part of deal with MTA over Red Line tunneling rights under nearby Runyon Canyon.

13. Hillpark

Developer: 7200 Hillpark Drive Corp.

Original Size: 31 acres

Homes: 30 condos on 8 acres

Important corridor for wildlife heading west from Lake Hollywood area. Conservancy rejected parkland offer of 22.6 acres in part to protest unusual way city granted permission to build.

14. Lake Hollywood

Developer: Jefferson Development Corp.

Acreage: 174

Lots: Plans for 64 of 1 to 3 flat acres ($700,000-plus)

Developer would cut ridge above northwest rim of Lake Hollywood by 90 feet to add access road. Conservancy wants to team with DWP to acquire two-thirds of the property, a wildlife migration route.

Other Key Properties

A. Stoneridge Estates. Developer offering 45 acres to Conservancy.

B. The Summit. The original gated community in the mountains.

C. Shram Development. Developer hopes to build 4 gated estates and dedicate 7.5 acres to Conservancy for Coldwater trail link.

D. Fryman Canyon West. Owner of 32 acres scaled down plans from 10 estates to 1, but early in year; agreed to sell to Conservancy.

E. Briar Summit. Conservancy wants to acquire 51-acre parcel from Avon heir’s trust fund, which tried to develop in unique habitat block.

F. Wright/Oakshire Property. Owner of beautiful 16-acre woodland wishes to sell to Conservancy but might be forced to develop.

Sources: Developers, Santa Monica Mountains Conservancy, City Planning Department.

Researched by JON D. MARKMAN / Los Angeles Times