Suit Charges Paramount Ranch Backers Faked Research : Zoning: The Sierra Club and Las Virgenes homeowners say profitability studies were manipulated to secure county approval to allow more houses.

Proponents of the Paramount Ranch development in Agoura falsified a financial analysis to win county approval of a zoning change that would allow construction of more luxury houses, according to documents in a lawsuit seeking to nullify the approval.

When initial calculations showed that the project would make a profit under various designs the proponents did not want to pursue, they inflated the land cost so only the project they were pushing would appear financially viable, court papers charge.

The first calculations never saw the light of day, while the second version--described as a “sophisticated financial study”--was submitted to Los Angeles County supervisors in December, 1988. The supervisors later agreed to “upzone” the property to permit more houses, accepting the study as part of the legal justification.

Depositions in the lawsuit also show that while proponents of the project were repeatedly telling parks agencies that they were not willing to sell the land, they in fact secretly did sell it to a private firm for considerably less than parks officials were willing to pay.

Details of the financial study and the secret sale of the land are contained in court papers filed on behalf of the Sierra Club and Las Virgenes Homeowners Federation, whose lawsuit against the county is scheduled for trial June 28. They are seeking to void the county’s decision to permit 150 houses to be built on the hilly, oak-dotted property, which parks agencies had eagerly sought to buy for the Santa Monica Mountains National Recreation Area. Construction on the project has not begun.

The lawsuit, filed in September, contends that the county violated the California Environmental Quality Act by transferring responsibility for a thorough environmental review to the developers themselves. The purportedly rigged financial analysis, the plaintiffs contend, is but one example of how the county rubber-stamped the work of the Paramount Ranch developers’ hand-picked consultants.

“This is what happens when the county delegates preparation of what are supposed to be objective, neutral analyses to consultants who are paid by the project applicant,” said Ann Carlson, one of the plaintiffs’ attorneys. The county “just went on blind faith and accepted the developer’s contentions that all these other projects were unfeasible,” she said.

The environmental quality law requires an objective environmental impact report for major development projects. A planning agency may draft the report itself, farm it out to consultants or allow the developer to prepare it with consultants of his own choice. However, in such cases, the county must independently review the work and certify that it is adequate.

Many cities and counties hire consultants themselves, billing the developers, but Los Angeles County allows developers to hire and manage the consultants.

Plaintiffs in the lawsuit contend that the Paramount Ranch consultants were more interested in winning approval than in assessing the project, even to the point of lobbying the supervisors.

But in response to the suit, attorneys for the county and the developers argue that county officials at every step independently reviewed the consultants’ work. As a result, they say, county approval of the project was entirely legal. The lawsuit, they contend, is an attempt to block the project so the land can be bought for the national recreation area at “a bargain price.”

Plaintiffs’ attorneys investigated the origin of the financial study through depositions and documents obtained from the developers and their consultants. This pretrial discovery also revealed that, prior to approval, the project underwent a change of ownership that was not revealed to county supervisors, parks officials and other interested parties.

The 320-acre site at Cornell Road north of Mulholland Highway is part of the historic movie ranch where many Paramount Westerns were filmed. For years, the owner was retired businessman Arthur Whizin, who formed a joint venture with developer Brian Heller to build luxury houses on the site.

But the property also was high on the list of the National Park Service, which wanted to buy it as an addition to the national recreation area--the loose network of parks and trails stretching from Griffith Park in Los Angeles to Point Mugu State Park in Ventura County. Officials wanted to preserve the land for its own sake and to protect the adjacent 436 acres of the old movie ranch that the park service already owned.

Under county zoning, no more than 103 houses could be built on the land. But the developers hired an engineer who concluded that the limit was based on inaccurate slope data, and that there was enough flat land to build more houses.

Park advocates, including members of Southern California’s congressional delegation, urged the county to stick to the existing zoning and approve no more than 103 houses. Otherwise, they said, the land might be priced out of reach of the public. But in August, 1988, the county Regional Planning Commission approved a zoning change to permit 159 houses.

The battle then came before the supervisors, who were under strong pressure from park supporters to deny the upzoning. Heller had contended all along that a smaller project would not be financially feasible. But a key court ruling in another case held that such claims must be supported by evidence or the approval could be overturned.

At a hearing before the supervisors on Dec. 15, 1988, Heller submitted the “sophisticated financial study” that showed he needed 159 units. The analysis, done for Heller by Economics Research Associates, was accepted by the county for inclusion in the environmental impact report.

Apparently unknown to everyone else at the hearing, Heller and Whizin had agreed earlier in the year to sell the project for $13.5 million to Paramount Ranch Estates, a firm headed by Northridge developer Ezra Raiten, according to sale documents filed as exhibits in the lawsuit. When Heller hired Economics Research for the financial analysis, he had the firm base its calculations on a land investment cost of $14 million--close to what Raiten was about to pay, according to depositions in the case.

However, when the analysis showed alternative project designs--such as clustering the houses or building fewer of them--would also be profitable, Heller had the analysis redone. This time, he had the consultants use a land investment cost of $17.5 million.

With this key assumption changed, the 159-unit plan alone was shown to be financially viable. Only this version was submitted to the county.

When Heller’s deposition was taken April 9, he was asked where the $17.5-million figure came from. “My recollection is that I pulled $17 million out of the air,” he testified.

Heller and attorneys for the county have defended the change on grounds that the land was worth considerably more than $17.5 million. Since that is closer to its value than $14 million, they say, the change produced a more realistic study.

However, the study identifies the $17.5 million as the investment in the land, not on the property’s estimated market value.

During the Dec. 15, 1988, hearing, Heller was also asked about efforts by the park service and the Santa Monica Mountains Conservancy to buy the property. As he had in the past and would in the future, Heller said: “I am not a willing seller.”

But the following day, when the sale became final, Heller had nothing to sell. The sales agreement, now an exhibit in the case, called for Heller to serve for a year as part-time consultant to Paramount Ranch Estates at $6,500 per month. Heller would continue to seek development approvals and would allow his name to be used to “facilitate” them.

Following the sale, however, Heller continued to speak for the project and apparently no one knew that he was no longer the owner. He referred to Paramount Ranch as “my project,” including in a January, 1989, letter to Supervisor Mike Antonovich, whose district includes the site.

The next month, after completing an appraisal, the Santa Monica Mountains Conservancy made a formal offer to Heller of $21 million for the property. In April, 1989, after supervisors had approved the project with 150 houses, the conservancy made another offer--this time of $19.3 million to reflect the loss of nine lots.

Joseph T. Edmiston, executive director of the conservancy, said he knew nothing of the sale to Raiten. “The whole farce of it is that all these letters are being sent to people who don’t own the property,” he said.

Edmiston also said he was surprised that Heller and Whizin had sold to a private party “for an amount that we would have cut a check for the next day.”

Both Heller and Whizin are longtime Antonovich contributors. Yet an Antonovich aide told The Times that “Mike was unaware of the change of ownership of the property” until called about it last week.

Heller’s continuing pretense of owning the project may have helped get it approved, based on his reputation as a builder. The project was heavily opposed, but some residents said they supported it, citing the quality of Heller’s work. Had they known that he had sold his interest, they might not have spoken up.

Raiten’s past legal scrapes might have been a liability in such a bitter development battle. In 1983, the 38-year-old developer served a five-month state prison sentence in Chino after pleading guilty to writing bad checks. In 1986, he pleaded guilty to assault with a deadly weapon after trying to run down his mother-in-law and her boyfriend in a car. He was placed on three years probation and fined $1,000.

But Heller and Raiten would not say why they kept the sale to themselves. “There really wasn’t a good reason” to disclose the change in ownership, Heller said. “Regardless of who does it, it’s a beautiful project.”

Raiten wouldn’t discuss it. “Look, I don’t have time to talk to you right now,” he said when asked to comment. “Write whatever you want,” and he hung up the phone.

Plaintiffs have introduced exhibits purporting to show that consultants who worked on the environmental impact report saw their main job as getting the project approved. Among other things, the documents appear to show that consultants spent part of their time trying to influence the supervisors.

“Tickets for Antonovich event. Set meeting w/Mike--clear the air for Mike’s comfort level,” one hand-written note said. “What can we do to help Mike’s campaign?” another memo asked.

A third said, “Goals: Ensure both politically and ethically majority of supervisors can support” Paramount Ranch.

These notes were culled from the files of Engineering Technology, which served as “expediter” for Paramount Ranch and also prepared a formal response to comments, a document that is part of the environmental impact report.

Wendy M. Brogin, a former senior planner at Engineering Technology who served as project manager for Paramount Ranch, denied that the firm saw its role as getting permits for its client. In her deposition in April, Brogin testified: “My ethics are to provide an objective view of the project to the decision-maker.”

Still, Engineering Technology kept an eye on the political scene. In November, 1988, according to one document, it sent Heller a list of political contributors to supervisors other than Antonovich. “Please review names to see if you know any major contributors to urge them to contact” the supervisors, the memo said.

The project was approved by the supervisors in March, 1989, on a 3-1 vote, with only Supervisor Ed Edelman voting not to upzone the tract. After ratcheting down the project from 159 to 150 units, Antonovich voted for it, and Supervisors Deane Dana and Pete Schabarum followed his lead.

From 1985 to 1989, the supervisors received at least $36,995 in campaign contributions from officials and consultants involved in Paramount Ranch--of which $29,495, or more than three-fourths, went to Antonovich, according to campaign reports.

Engineering Technology, which also has many other clients with business before the county, led the way with contributions of $20,600 to the supervisors. Art Whizin, Brian Heller and Heller Construction contributed $10,795, all of it to Antonovich.

In March and April, 1989, Raiten and his Raiten Development, which previously had not given to supervisorial campaigns, contributed $1,000 to Antonovich, $2,000 to Dana and $1,600 to Schabarum.

Antonovich, Dana and Schabarum have repeatedly said campaign donations don’t influence their votes.

Antonovich contributors “are contributing to his philosophy and to his program for what he considers to be good government,” said his press deputy, Dawson Oppenheimer. “They aren’t buying a damn thing.”