Irvine Co. Withdraws Fashion Island Plans

Citing the threat of a new slow-growth initiative in Newport Beach, the Irvine Co. on Thursday withdrew its proposal for several major building projects in and around Fashion Island, including a major expansion of the popular outdoor mall.

The plans, which were first presented to the city nearly a year ago, would have entitled the company to add 200,000 square feet of shopping space to the Fashion Island mall, two six-story office buildings, 150 apartments on Newport Center Drive and a day-care center that would have doubled as an adult education facility.

But in a letter sent to Newport Beach Mayor John E. Noyes on Thursday, Irvine Co. Executive Vice President Gary Hunt said the ballot initiative in November “adds a great deal of confusion to the already complex, time-consuming and costly city planning process.”

The company withdrew its plans “in light of these uncertainties and the apparent significant obstacles it presents for thoughtful and responsible planning,” Hunt wrote.

The Irvine Co.’s move took slow-growth proponents by surprise Thursday. Several of the initiative’s most outspoken supporters declined to comment on the news in depth until they are able to discuss the implications at a meeting today.

However, other backers of the so-called Greenlight Initiative, which would require voter approval for major development projects, wondered whether the Irvine Co.’s action was a political ploy to lie low until after the November election and bring back the project should the measure fail.

The proposed project was years away from completion, part of a plan that the Irvine Co. developed at the city’s request. At the earliest, a City Council vote to move forward with the project would have taken place in August. It is not uncommon for companies to put forth development plans when the economy is strong, which gives them the option of whether or not to build in the future.

If the project is indeed dead, it would be the first casualty of the initiative, which is aimed at preventing traffic congestion on the streets of Newport Beach. Other projects in the works include a hotel at the Newport Dunes, a housing development at Banning Ranch and an expansion of the Conexant Co. headquarters on Jamboree Road. It is unclear what affect, if any, the initiative will have on those projects.

City and business leaders, who oppose the initiative, greeted the news with disappointment, suggesting that the measure could drive potential investors to other cities.

“I kind of expected this. It’s tough enough to get a project through the planning department and the City Council,” Noyes said. “That isn’t something they want to get involved in.”

Noyes said that traffic in the city would increase whether these plans go forward or not.

“Until they build a beach up in Irvine, it’s not going to stop traffic,” he said.

The primary reason for withdrawing the proposal, Irvine Co. officials said, was the uncertainty the initiative caused.

“The company was going to have to spend significant time and resources in planning for this,” Irvine Co. spokesman Paul Kranhold said. “That’s not a risk we were willing to take at this time.”

Analysts said that Newport Center--the office buildings that ring Fashion Island--has thrived in recent years. Leasing rates in the area have grown above $4 per square foot, the highest in the Southland. Vacancies have remained among the lowest, staying in the single digits.

But in order to make new development pay off, the Irvine Co. could have been forced into a riskier plan of creating new buildings without specific tenants in mind. As the cost and demand for land grows due to high job growth, lease rates may exceed $5 per square foot, analysts said.

By scaling back its plans, however, the company can focus on more profitable development elsewhere in Orange County that has significant demand and faces far less opposition from community groups, said Douglas Killian, vice president at the Voit Co. in Irvine.

“I think they realized it will be an uphill struggle with the surrounding neighborhood if they proceeded,” he said.

Initiative Would Mandate Citywide Vote

Richard Luehrs, president of the Newport Beach Chamber of Commerce, said the business community was developing a response to the Greenlight Initiative.

“I certainly understand the Irvine Co.’s resistance or lack of enthusiasm with going forward in the face of this new initiative,” he said. “It’s unfortunate because we believe the future progress and growth of the community is important to the quality of life here.”

The measure would mandate a citywide vote on projects that are large enough to require a significant change in the city’s General Plan.

Under the initiative, a development proposal would trigger a vote if it exceeded the city’s General Plan for a specific area by 40,000 square feet, 100 residential units or the generation of 100 peak-hour car trips. In areas of the city that are already highly developed, the measure would require a vote for even small-scale expansion.

After gaining more than 7,000 signatures to win the Greenlight Initiative a spot on the city’s ballot, proponents had hoped to bring the matter to voters immediately. But the City Council rejected their request for a special election and scheduled the vote for November.

The initiative’s supporters were less concerned about the retail expansion at Fashion Island--which is already 1.2 million square feet--and more worried about the construction of the two new office towers, which they said would generate significant traffic congestion but little additional income for the city.

“It appears that Greenlight is starting to have an effect, and hopefully now a more reasoned dialogue between the voters and developers can take place,” said one proponent of the measure, who spoke on the condition of anonymity.

Times staff writer Daryl Strickland contributed to this report.

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Expansion Plan Dies

The Irvine Co. is scrapping plans to build office towers on a parking lot in Newport Center, as well as plans for residences, a day-care facility and an adult education center.