After roughly nine hours of discussion Wednesday, the California Coastal Commission voted 9-1 to deny a proposal to develop homes, a hotel and retail space on part of a 401-acre swath of land in Newport Beach known as Banning Ranch.
More than 100 people in the audience who had stuck around late into the night at the Newport Beach Civic Center erupted in applause.
Newport Banning Ranch LLC had hoped to build 895 homes, a 75-room hotel, a 20-bed hostel and 45,100 square feet of retail space on 62 acres of the coastal expanse, some of which has been occupied by oil operations for decades.
Commissioner Mary Shallenberger made the motion to deny the project, citing a lack of cohesion between the developer and commission staff members who recommended the project be reduced to about a third of the proposed size.
"It is clear to me from today's testimony from the staff report, the developer and the public that we are still very far apart," she said. "The developer has made it clear they do not accept staff's recommendation. This is a project we have to get right. We can't get just good enough on this one."
Commissioner Roberto Uranga dissented in the vote, citing merits of the proposed project, including opening the site for public use and educational opportunities.
"There is a project; it's just not to the level that's acceptable to everyone," he said. "There's probably still some opportunity to come to middle ground on this. We just haven't reached it yet."
Commissioner Wendy Mitchell was absent, and Chairman Steve Kinsey recused himself after falling under scrutiny earlier this year for failing to promptly report private meetings with members of the Banning Ranch development team.
Preservationists — mostly Newport Beach and Costa Mesa residents — held up posters depicting various wildlife and green signs with "Save Banning Ranch" printed in large white letters. They cheered as they exited the Newport Beach City Council chamber.
Newport Banning Ranch spokesman Adam Alberti said the developer is weighing its next move, saying it's too early to speculate what it might be. Developers can alter their plans and resubmit to the Coastal Commission within six months.
"We are deeply disappointed in tonight's action," Alberti said. "Unfortunately, we were denied in our efforts to clean, restore and open Newport Banning Ranch."
During the hearing, Commissioner Mark Vargas went back and forth with staff over a burrowing owl habitat on the site and questioned whether the bird would survive and perhaps thrive in an area with limited development. He also raised concerns about the applicant suing the commission if the panel denied the project.
Commission staff said the project would affect 38 acres of environmentally sensitive habitat, including those that sustain vernal pools, native grasses and sensitive species such as burrowing owls, the San Diego fairy shrimp and the California gnatcatcher.
In a report released in late August, staff indicated it would sign off on developing only about 19.7 acres that fall outside of areas identified as environmentally sensitive habitat, particularly for burrowing owls.
Interim Executive Director Jack Ainsworth said during the hearing Wednesday that the staff recommendation was based on facts and sound science and urged commissioners to be conscious of the significance of the Banning Ranch property, which is said to be the largest undeveloped coastal area in Southern California.
"This is one of the most important decisions we've faced in 40 years," he said.
Newport Banning Ranch representatives had said staff's recommendation amounted to a denial of the project and was not based on the current conditions of the land, which has been degraded after roughly 70 years of oil drilling.
Michael Mohler, senior project manager for the developer, said staff's plan would allow development on only about 10 acres after buffers for environmentally sensitive habitat and fire safety were taken into consideration. He said the project would not be economically viable if the commission followed staff's recommendation, which he argued constitutes an illegal taking of private property.
Oil was discovered on the Banning Ranch site in the 1920s and has consumed much of it since 1944. Drilling peaked at 295 wells in the 1980s and has declined in the decades since.
Newport Banning Ranch has proposed that the oil wells be contained to about 16 acres on the site. It has billed the development project as a means to fund cleanup of the hundreds of abandoned wells, rusty pipes and invasive plants that pepper the land.
"You've all seen the property, it's a highly degraded oil field site with great potential," Mohler said. "We're proposing to restore the entire site to a beneficial ecosystem for all species, including man. We ask you to remove the gate, remove the fence and let us get on with business and deliver a superior project that has been before you for four years."
As part of its proposal, Newport Banning Ranch set aside about 329 acres as preserved, natural open space with about seven miles of public trails.
Coastal Commission staff indicated it supports the developer's effort to clean up the site. However, Newport Banning Ranch has said that proposal hinged on whether the commission signed off on the development.
Steve Ray, executive director of the Banning Ranch Conservancy, which opposed the project, said the developer is legally required to clean up the oil operations, regardless of whether the development was approved.
"What they see as an oil field, we see as open space, so if they want to leave it, that's fine with us," Ray said, prompting an uproar of support from many in the audience at the meeting.
The tension between the project's supporters and opponents, which has been bubbling under the surface for years, was palpable as hundreds of people gathered outside the council chamber before the hearing began.
The Newport Banning Land Trust, an arm of the developer that would be responsible for the land's restoration, had a large white tent set up on the grass where the hearing was being screened. Immediately adjacent were a few smaller tents set up by various conservation groups opposing the project.
A crowd formed just outside the chamber after a supporter and an opponent got into a heated exchange over the development as the meeting continued inside. At the time, commissioners had not even begun discussing the Banning Ranch issue.
The road to Wednesday's hearing wasn't easy for either side.
In the mid-1990s, developers planned to build 1,750 homes on the site but abandoned the project years later.
In 2008, Newport Banning Ranch proposed 1,375 homes, 75,000 square feet of retail space, a hotel, a hostel and several parks on about 95 acres. That plan was approved by the Newport Beach City Council in 2012.
The Banning Ranch Conservancy sued the city and the developer, saying the city violated its general plan, which prioritizes open space in West Newport. The case is awaiting a hearing before the state Supreme Court.
The Coastal Commission first considered the city-approved project in October last year. After an eight-hour hearing, the commission sent the developer back to the drawing board to make significant cuts to the project's footprint and scope.
Commissioners and staff suggested at the time that they likely would favor "less intense" development.
In May, staff recommended approval of the smaller version of the development with a series of conditions to further reduce its footprint, but Newport Banning Ranch opted to postpone a hearing before the commission, arguing that some issues remained unresolved and that it needed more time to review the staff's proposal.
At the time, commission staff identified about 55 acres of the site as having potential for development.
Staff's latest reduction in the recommended buildable area boiled down to a foraging area for burrowing owls, which have been present at Banning Ranch for decades.
In May, staff determined that the owls' wintering burrows were an environmentally sensitive habitat area, so they assigned a buffer to it. However, according to the most recent staff report, they did not identify the owls' separate foraging space as a protected area. Biologists said that without protecting the foraging area, protecting the birds' habitat was basically pointless.
Staff also recommended conditions to eliminate a proposed thoroughfare known as Bluff Road, which would run north-south through the property to connect West Coast Highway with West 17th Street.
Staff noted that the plan for Bluff Road tried to minimize effects on two arroyos on the property but still would have a direct impact on wetland habitat and other sensitive areas. Staff wrote that the project instead could be supported by existing roads.
However, Newport Beach city officials said eliminating Bluff Road would create a challenge for firefighters and police who would need to respond to the neighborhood in an emergency and asked the commission to allow it to remain in the plan.
"The Newport Banning oil field is not an environmental gem. It's an old oil field," Mayor Diane Dixon said. "It would be tragic if we let this historic opportunity slip away."