Headland Properties Inc. will bow to a California Coastal Commission requirement and start construction late this year on 100 units of affordable housing in the luxury Palisades Highlands development.
Under a 1980 agreement with the Coastal Commission, Headland pledged to build the affordable housing in exchange for permission to build estate homes and town houses in the mountainside development overlooking the Pacific Ocean.
The development company made several attempts in 1979 to get the state Legislature to exempt the huge project from commission control and last year was unsuccessful in seeking state legislation that would have lifted the affordable-housing requirement.
Headland also failed to gain commission approval in August for a plan to locate the required housing in West Los Angeles instead of affluent Pacific Palisades.
After years of negotiations, Headland officials said the company is ready to build the required lower-cost housing on a five-acre site at Sunset Boulevard and Palisades Drive, at the entrance to the deluxe development where homes cost up to $1.8 million.
W. Charles Chastain, executive vice president and an owner of the development company, said it is a misnomer to call the required housing "low cost" or "low income."
"We're talking about units priced at up to $130,000, and a minimum required (buyer's) income of about $30,000," he said in an interview Thursday.
Chastain said Headland will build 68 senior-citizens' units averaging 600 square feet in size and $77,000 in price. The other 32 will be three-bedroom, 1,000-square-foot condominiums priced between $100,000 and $130,000 or $135,000, he said.
The prices will be based on a formula determined by federal and county government housing agencies, not by Headland, Chastain said.
Government agencies also will handle buyer applications and sales of the condominiums, which are to be on the market by summer, 1987, he said.
Chastain said that Headland in effect will subsidize the 100 units, pricing them for less than it costs to build them.
"It will cost us about $1.5 million to do this," he said, but the company viewed affordable housing as "a trade-off" necessary to get commission approval.
Chastain said that he had suggested that Headland donate the $1.5 million to the city of Los Angeles to build senior housing in West Los Angeles, where he said residents would have easier access to transportation and services than they would in Pacific Palisades.
But the Coastal Commission rejected that plan, ruling that Headland must honor its original commitment.
Headland has been working on the Palisades Highlands project for 20 years since the original master plan was approved, Chastain said. The project now consists of about 1,200 dwelling units, of which about one-third are single-family homes ranging in price from $350,000 to $1.8 million and two-thirds are condominium town houses ranging from $225,000 to $475,000, he said.
The development will include about 1,800 dwelling units when all building is completed in about six years, he said.
Of the original 3,500-acre property, about 400 acres have been developed for housing and the remainder has been donated as city, state and federal parkland, Chastain said.
Headland Vice President Brett La Shelle presented the company's plans for the affordable housing units at a recent meeting of the presidents of 14 Palisades Highlands homeowner associations, according to Hyman H. Haves, chairman of the groups.
Haves said that some residents are concerned about the effect lower-cost housing might have on their property values. But he said that other issues are of greater concern to residents. Among them are reducing the traffic impact of increased development in the area, he said, and getting state help to repair a landslide-prone area affecting Palisades Drive, the main access road to the hillside development.