SANTA ANA — A state court Tuesday upheld two 1994 ballot measures that blocked a $500-million resort-housing complex on the Dana Point Headlands, but affirmed the landowners' right to eventually build on one of the last large undeveloped coastal properties in Southern California.
The unanimous decision by the 4th District Court of Appeal leaves the door open to other development proposals for the environmentally sensitive 121-acre parcel that has been the subject of deep political division in the community.
But for the moment, opponents of the Headlands project--which called for a 400-room hotel, a commercial center and up to 370 homes--were elated by the ruling.
"This is great. . . . The judge upheld the vote of the people of Dana Point," said resident June Golumbic, a supporter of Save the Headlands, a local group that helped organize the referendums against the project.
The City Council had approved the resort proposal in April 1994, sparking an uproar by residents who said the development was too large and without sufficient open space and parkland.
The property is owned by M. H. Sherman Co. and Chandis Securities Co., a firm that oversees the financial holdings of the Chandler family, a major stockholder in Times Mirror Co., which publishes the Los Angeles Times.
The referendums were placed on the November 1994 ballot and won easily. The landowners then sued, charging that the measures exceeded the city's power and violated state planning law. The owners also argued that the referendums constituted an unlawful taking of land without just compensation.
In April 1995, Superior Court Judge Marvin G. Weeks ruled there was no merit to the suit, a decision that was upheld Tuesday.
The 12-page state appeals court opinion, written by Justice William F. Rylaarsdam, said voters have a right to use the power of referendum over governmental actions involving land-use plans.
"A rule declaring the voters cannot reject a proposed specific plan falling within the parameters of the city's general plan would render the exercise of the power of referendum meaningless," the decision said.
The court also said the referendums were constitutional because they merely rejected one specific proposal, and the city's general plan still "contemplates development of the Headlands."
"There has not been a final decision denying [the landowners] all economically viable use of the property," the court said, noting that 11 other development options were included in an environmental review of the property.
The decision leaves the landowners with several options. They could appeal to the California Supreme Court, come up with a new development plan, or wait for city government to propose another plan on its own.
Project spokesman Dan T. Daniels, president of M. H. Sherman, could not be reached for comment.
Dana Point City Councilwoman Karen Lloreda said it's now up to the council to help formulate a new plan for the Headlands.
"This has been very divisive in our city," Lloreda said. "I think everybody would like a plan that is acceptable to all of us. Right now, no one has access to the land. The fences are up and the gates are locked."
Lloreda said she hopes the council begins discussing another plan in early January, a desire shared by newly elected Councilwoman Ruby Netzley, who opposed the resort complex.
"We need to get right on it," Netzley said. "I think we should pass something better than what was offered before. . . . We need more open space and more parkland that is more accessible to the public."
The appeals court decision is the latest chapter in a decades-old dispute over the proposed development of the Headlands peninsula, a bluff-top property that is home to the California gnatcatcher and the Pacific pocket mouse. The gnatcatcher is considered threatened and the pocket mouse is on the federal endangered special list.
But the court warned that the city must either allow some development in the future or be ready to compensate the landowners. In their Superior Court lawsuit, the landowners had sought reimbursement of $3 million spent processing the development plan, plus attorneys fees.
The appeals court agreed that "unnecessary delays in approving a proposed development or repetitive denials of specific plans complying with the city's general plan will amount to a taking requiring Dana Point to pay compensation. . . ."
Ken Rozell, Dana Point's assistant city attorney, said the court is warning the city that "at some point" a development plan must be approved.
"That time has not yet come, but the court is saying it is close," Rozell said.