In reversal, Coastal Commission staff endorses major project

By Anne C. Mulkern | 05/02/2016 01:13 PM EDT

Reversing its earlier position, California Coastal Commission staff recommended the approval Friday of a contentious real estate project on the last large undeveloped coastal lot in Southern California.

Reversing its earlier position, California Coastal Commission staff recommended the approval Friday of a contentious real estate project on the last large undeveloped coastal lot in Southern California.

In a report prepared for the agency’s May 12 meeting, the staff proposed an alternative footprint and other conditions, but otherwise gave the go-ahead for developing Banning Ranch — 895 houses on part of a 401-acre lot. Commission staff described the site — located partly in Newport Beach and partly in unincorporated Orange County — as the region’s "largest privately owned open space remaining along the coast."

Banning Ranch also would include 45,100 square feet of commercial space, 4.6 acres of retail, a 75-room hotel and a 20-room hostel, with 310 acres preserved as open space.


The fight over whether to allow Banning Ranch has stretched over several years (Greenwire, March 21). The staff last October had recommended against approving it, saying it wasn’t consistent with the California Coastal Act. That preservation law is considered one of the toughest in the nation.

Staffers in the new report said they "worked diligently" to verify and map sensitive environmental resources on the parcel, in order to allow for a revised proposal. The staff said it found about 55 acres it said could be used for development, plus an additional 11 acres for consolidated oil operations. The Banning site contains active and closed oil wells.

"Staff is recommending an alternative development plan that is substantially different than the applicants’ proposal in order to avoid [Environmentally Sensitive Habitat Areas], Wetlands and other identified site constraints," the report said. It added that "the revised project developed in conformance with the recommended conditions of approval will preserve a significant open space habitat corridor."

To gain approval, it said, Banning Ranch proponents will need to redesign proposed residential and commercial parts of the project to fit into the "potential development areas" identified by commission staff, "taking into consideration the existing habitat" on-site.

The Banning Ranch decision is being watched closely. Some see it as a test likely to show whether the commission is taking a more pro-development bent after ousting its executive director, Charles Lester, in February. Commissioners in October postponed a vote and advised the developer to produce a smaller plan more likely to comply with the coastal protection law. The commission has oversight over the bulk of land-use planning in 15 counties that touch the coast.

Banning Ranch provides habitat to species including the coastal California gnatcatcher, burrowing owl and San Diego fairy shrimp. There also are wetlands and vernal pools. Preservation groups say the rare expansive lot shouldn’t be carved up. Additionally, there’s opposition to increased traffic and other congestion from a large real-estate project.

Developers argue that the only way to restore the site and open it to the community is to allow the project. Otherwise, it will remain a derelict brownfield for another 50 to 100 years, Michael Mohler, chief operating officer at the Brooks Street real estate firm, has said.

"We are pleased that after nine years — five at the City of Newport Beach and four at the Coastal Commission — we have a Coastal Commission Staff recommendation for approval," Mohler said in an email. "While the project is not the same as the one the City approved in 2012, we have worked very hard with Staff to get to this point. We are reviewing the details of the Staff Report and believe that, with a handful of refinements, we can reach an agreement with the Coastal Commission and move forward with an economically viable project that will clean up this 400-acre oil field and open up this property to public use."

The site is owned jointly by Aera Energy LLC — a subsidiary of Exxon Mobil Corp. and Shell Oil Co. — and the investment firm Cherokee Newport Beach LLC. Those companies and the Brooks Street real estate firm are partnering as Newport Banning Ranch LLC to develop the site.

Project foes promise fight

Agency ecologists in October had labeled "a significant portion" of the property as environmentally sensitive habitat.

The staff report then said the site had 18.9 acres that could be developed without bumping up against environmental restrictions. About 7.4 of those acres would be used for consolidated oil operations, leaving Banning Ranch’s developers with about 11.5 acres to build on, said Terry Welsh, president of the Banning Ranch Conservancy, the main group opposing housing on the property.

The commission staff, in now finding 55 acres that can be used for development, has shrunk the earlier ESHA area, Welsh said. He added in an email that "it is not good for us."

"At the Oct. hearing, rather than denying the applicant’s permit, the commissioners directed their staff and the applicant to work together to find a project that could be approved," Welsh wrote. "Most of us hoped that such a project would avoid the ESHA delineated in Oct. (that left 11.5 acres available for a housing project of anywhere from 100-200 homes).

"While not as large as the applicant’s original proposal, such a project would still be considered a very large coastal project by any measure," he added. "Instead, the [California Coastal Commission] staff has removed ESHA by re-classifying areas of ESHA as ‘non-ESHA’ and is now allowing a nearly five-fold increase (55 acres) the potential area of development.

"We plan on challenging the CCC staff’s ESHA reclassification at the hearing," Welsh said.

The staff report said that commission biologists "have more critically reviewed current site conditions, as well as additional ecological studies and corrections in mapping provided by the applicants, in making their current ESHA determination."

The commission staff said that since last year, it had been conferring with project developers to come up with a revised project that could be approved.

The staff cautioned that some of what it was proposing could cut into development profits.

"The applicant may argue that, given the significant costs of developing the site, the amount of development that could occur consistent with staff’s recommended conditions does not provide an economically viable project," the staff report said. But neither the Coastal Act nor other state laws "require that this Commission guarantee developers a profitable return on their investments."

"Nevertheless, Staff’s recommendation would allow for a substantial amount of residential and commercial development on the project site," it added. The commission also doesn’t have to allow additional development "in order to provide the developer with sufficient revenue to fund the clean-up operation, as the oil operator is already obligated to complete that clean-up under existing law."

In addition, the report said, the commission would have to find that the project met the requirements of the California Environmental Quality Act, another tough environmental planning law. It requires concessions for adverse impacts.