A Deep Divide Over Bill for Hearst Land

As Gov. Gray Davis ponders whether to sign a bill closing a loophole in land-use law that critics say has allowed speculators throughout the state to shake down taxpayers, a half-built housing project in Glendale has emerged as Exhibit A in a last-minute lobbying battle.

Opponents of the bill, including a Texas investment group that owns the land, say the Mountain Oaks project illustrates everything bad about the legislation. The development’s infrastructure is in place and the land is ready for building new homes, yet the project would be stalled--perhaps for good--if Davis signs SB 497. That would infringe on the landowner’s rights as well as block severely needed housing, they contend.

But supporters say the intense lobbying campaign misrepresents the situation and, in fact, proves why Davis should sign the bill. The project has only one paved road and no street lights, sidewalks or sewers. An old lodge on the site burned down years ago, its swimming pool hasn’t had water in it since the 1970s and it is in a high fire hazard area.

“I would put it in the top grouping of difficult areas for us to protect,” said Steve Howard, Glendale’s fire marshal. In some extreme cases, he said, the Fire Department might decide to just let some houses burn after getting residents out.

Dave Bobardt, a senior city planner, added: “It’s a very poor design. . . . If we allow it to be legitimized, it would be a problem for the city.”

The contrasting descriptions of the 48-acre Mountain Oaks development demonstrate the deep divide in the battle to close a loophole that critics say real estate speculators have used to gain millions of dollars from taxpayers.

Under existing law, investors have used decades-old maps and deeds to get “certificates of compliance” that allow them to circumvent traditional planning rules. Then, using lot-line adjustments, they can move the parcels around like puzzle pieces, in some cases moving the lines for an undevelopable mountain property to the beachfront.

In some high-profile cases, such as at Big Sur’s spectacular Bixby Creek and along the rocky Santa Cruz County shoreline, developers never built anything but used the threat of building to increase the land value and then sell to publicly supported preservation groups. One developer reaped a $20-million profit from the Big Sur sale.

In recent months, Rep. Sam Farr (D-Carmel) has branded the tactic a form of “environmental terrorism” because it artificially drives up the price that government or environmental groups must pay to preserve treasured properties.

Some preservationists worry that the process could be used to develop or inflate the price of the magnificent 83,000-acre Hearst Ranch along the coast in San Simeon. Some estimate it might cost preservation groups $300 million to buy development rights.

Hearst also opposes the bill and has lined up powerful allies. Hearst has retained Darius Anderson, who happens to be Davis’ chief fund-raiser, and former Interior Secretary Bruce Babbitt.

On Wednesday, real estate interests opposed to the bill were trying to meet with the governor, one lobbyist said. Davis could decide to sign it or veto it as early as today. If he does nothing by Sunday, it will become law on its own.

A coalition lining up against the bill includes 13 real estate, forestry and construction groups that have donated hundreds of thousands of dollars to Davis in the last two years.

Records show that among the recent donations was a $37,000 contribution on Sept. 17 from the California Business Properties Assn., a coalition member.

Opponents Fearful of Property Devaluation

Real estate lobbyists have argued that Mountain Oaks is an example of what can happen when a bill is passed hastily to solve a complex problem. Going after Hearst might be well and good, opponents say, but it is the mom and pop landowners who will suffer.

“Our contention was the bill, while not judging its motivations and the debate about Hearst, should be crafted narrowly so innocent players are not swept up,” said Rand Martin of the public relations firm Rose & Kindel, which represents the property owners at Mountain Oaks.

In a letter sent to Davis by Rose & Kindel on Sept. 24, Martin said, “If SB 497 becomes law, we face a severe devaluation to our property.”

Mountain Oaks is located up a one-lane, rutted road struggling up an oak-dotted canyon in the Verdugo Mountains next to La Crescenta. Martin said it has a colorful history, having once been owned by the American Nazi Party and intended as a cabin retreat for party members.

Only 12 homes were ever built, and residents say they never got some of the basic requirements of modern life, such as sewers and street lights. The main road used to wash out until residents raised $20,000 and paved it a decade ago. Since the city of Glendale annexed the property in 1952, it has passed through numerous owners with big plans to build out its 401 lots, without success.

The city has long been concerned about the undersized lots, as well as the many unpaved roads that do not follow rights of way and the fact that the entire development has only one means of street access despite being in a high fire hazard area.

Mountain Oaks LLC bought the property in 1999. Attorney Martin said the buyers fully intend to upgrade the existing infrastructure to meet the city’s standards. But the bill on Davis’ desk would stymie their plans by changing the rules “in the middle of the game,” Martin said.

“The entire infrastructure for the 401 planned residences was installed and constructed, including a common area, pool and clubhouse, roadways, water system, power and sewers,” Martin said in a letter to Davis.

Glendale officials sent a letter of their own urging the governor to sign the bill because the city felt “Rose & Kindel misrepresented the property,” Bobardt said. The city said the subdivision was created illegally in 1930 without any public hearings.

If the new owners were allowed to go through with their building plans, “the city would be unable to obtain infrastructure dedications necessary to adequately and safely serve this area,” Sharon Hightower, the city’s interim director of planning, said in an Oct. 5 letter to Davis.

Martin said that even if the rules are to be changed, they should not apply to Mountain Oaks. He called the buyers “innocent purchasers” who were playing by the rules as they existed when the land was sold.

Greg Martin, a deputy district attorney who lives in the development, said the property has passed through many owners over the years who had big plans to build out the acreage. All eventually gave up and left because the city resisted further development.

Legislation Wouldn’t Prevent Development

Even if the land-use legislation is signed into law, that wouldn’t prevent completion of Mountain Oaks, bill supporters say. The new owners could simply play by the rules and file a new tract map with the city and go through the normal planning procedures.

Greg Martin and neighbor Bill Maupin said they would welcome improvements. “We’d get our streets and lighting,” Maupin said. “But it has to be done the right way.”

To those supporting the legislation, that’s just the point. Developers, they feel, should not be able to game the system to get around inconvenient political realities.

“The city of Glendale, like many cities in California, had a number of subdivisions recorded in the early part of the [20th] century that were never developed,” the city’s letter to Davis states.

The city fears what would result if developers dredged up all those old subdivisions and leverages them into a right to build.

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Times staff writer Dan Morain contributed to this report.