Builder Seeks a Way to Tax Homeowners for Slide Costs

San Juan Capistrano is considering a plan that would bill new-home owners for hillside stabilization if their houses are damaged by landslides--a proposal that has some longtime residents crying foul.

Developer SunCal Cos. of Anaheim, which is building the 350-unit Pacific Point project, is proposing an assessment district that would let the city issue bonds if it needed money to repair slopes. The bonds would be paid off by a tax on the district’s homeowners.

The City Council heard public comment on the proposal Tuesday night but took no action.

Some homeowners whose property was damaged by a May 21 landslide complained to city officials that creation of a Geologic Hazard Abatement District, or GHAD, would let developers off the hook too easily if they build on land that may be unstable.

“It’s a rip-off of the homeowners,” said John Jay Curtis, who lost his yard and pool in the May landslide and was forced to move from his condemned Via La Mirada house. He and some other residents of the city’s Meredith Canyon area have sued SunCal Cos. alleging that preliminary work for nearby Pacific Point caused the slides that damaged their homes.

“The developer is taking a project that was marginal, had been denied before, is in a known geologic hazard, and now wants to stick the homeowners with the bill,” Curtis said.

City officials said creating a GHAD such as the one proposed for the 350-unit Pacific Point project is a “standard condition of development” in risky hillside areas of San Juan Capistrano. Such districts, they said, would allow funds to be raised to fix defective slopes while homeowners and developers resolve their differences in court.

“With this, they can get the slope repaired, get back into their houses and get their homes and lives back together,” said Bill Huber, San Juan Capistrano city engineer.

Pacific Point would be the third development in the city to feature a GHAD, a mechanism the city borrowed from landslide-prone areas of Los Angeles County as a way of raising money with long-term, low-interest debt to deal with the massive costs of unstable land. Huber said San Juan Capistrano is the only city in Orange County using the program, which is allowed under state law.

Because the formation of the GHAD is needed for work to continue at Pacific Point, its rejection by the city could stall the project just as the developer is preparing to seek approval for the commercial portion. Without the abatement district, SunCal would be barred by city regulations from proceeding.

The GHAD is “a condition that was placed on the property and is a policy of the city,” said Gary Luque, chief operating officer of SunCal. “It’s not a standard condition, but it’s something the city requires in San Juan Capistrano.”

But opponents like Curtis said it’s a crutch that irresponsible developers can use to build on unsafe land and duck liability, as he believes SunCal has done in San Juan Capistrano.

It’s “an unconscionable way of allowing the developer to build on a clearly hazardous site and then dump the burden of future expected damage . . . to someone else, namely the unsuspecting future homeowners of a new development,” Curtis said.

“The idea of allowing SunCal to form a GHAD to get bonds issued to repair future slides on this project is a slap in the face of the citizen-homeowners who have suffered the loss of their homes and property,” he said.

Curtis said he saw the city’s choice as siding with developers by approving the GHAD or siding with citizens by rejecting it.

Houses on Via La Mirada were built in the 1970s and stood undamaged until SunCal began grading on the slopes below for its Pacific Point project. But because the hills and valleys in the southern San Juan Capistrano were the site of ancient landslides, Curtis said, the slope failure was “predictable.”

Beside Curtis, 20 other homeowners have sued SunCal, saying the developer’s earthmovers graded along a known fault just before the landslide occurred.

“This whole area was caused by landslides,” said Kenneth Kasdan, an Irvine attorney who represents most of the homeowners. “The whole valley floor has landslides mapped in them. You can see the failures as you drive down the 5 freeway.”

City engineer Huber said approving a GHAD does not allow developers to build in unsafe areas and does not absolve them of responsibility if there is a failure within 10 years.

“The developer is not off the hook in any way,” Huber said. “This covers geologic hazards outside the developer’s responsibility.”

Although the abatement district would provide an additional level of protection for homeowners, Curtis said, it also would give the developer a way out of thorny land problems. Instead of allowing Pacific Point to move forward, he said, the city should have considered halting the project.