Conexant, Newport proposal under fire

Mathis Winkler

NEWPORT BEACH -- Right now, it’s nothing but a draft, and discussions

ended in disagreement before Conexant Systems, Inc. withdrew its

566,000-square-foot expansion project in August.

But supporters of Measure S -- a growth-control initiative on the

November ballot -- are criticizing a proposed developers’ agreement

between the city and Conexant, saying the document would not force the

company to pay for increased traffic the expansion would cause.

“This is clear proof that the city is giving unduly favorable

treatment to this development at the expense of taxpayers,” said Phil

Arst, a spokesman for Measure S. He added that the draft document

supported the initiative’s calling for voter review of general plan

amendments.

Measure S proposes to put before a citywide vote any development that

allows an increase of more than 100 peak-hour car trips or dwelling units

or 40,000 square feet over the general plan allowance.

Measure T, an opposing initiative, would add parts of the city’s

traffic phasing ordinance to the City Charter and nullify Measure S,

should voters approve both measures.

Arst said Measure S supporters had problems with a maximum

$10-per-square-foot developer fee, which would pay for street

improvements and public utilities made necessary by the project. Setting

such a limit to the fee would keep the city from charging more, should

costs run higher, Arst argued.

Other problems with the draft agreement include the 25-year time

period the company is given to complete its project, Arst said. A city

ordinance requires completion within five years.

The developers’ agreement also permits Conexant to sell the property

to a third party that would not generate tax revenue for the city. This

would leave Newport Beach residents with increased traffic, noise and

pollution without getting any tax money in return, Arst said.

The proposed developers’ agreement came under scrutiny after it became

known that three of the four city officials involved in the negotiations

owned stock in Conexant. It also has been one of the main targets of

Measure S supporters.

While Planning Commission Chairman Edward Selich has since sold his

Conexant stock, Councilmen Gary Adams and Tod Ridgeway still own their

shares. Both have said they will sell their holdings. Planning

Commissioner Larry Tucker, also on the committee, did not own any

Conexant stock.

The city attorney’s office plans to investigate whether Selich

violated conflict of interest rules by participating in a commission

discussion on Conexant’s proposal. Selich said he had not been aware that

he still owned the stock at the time the discussions took place.

While Arst called the $10-per-square-foot fee an unwise cap given the

possibility that traffic improvements would cost more than expected,

Selich said the committee set the $10 fee in the absence of a

comprehensive traffic fee program.

“It wasn’t any exact math,” Selich said, adding that the draft

agreement was “fair and logical.”

“The purpose of a development agreement is to let the project move

ahead without [a comprehensive traffic fee plan] in place. ...[$10] is at

best an educated guess,” he said. “We came up with our best shot at

coming up with a fair proposal that was good for the city and the project

proponent.”

So far, the city has no long-range traffic fee program in place. An ad

hoc city committee has been charged with looking into the matter as part

of updating Newport Beach’s general plan.

As a guide, city officials have looked to Irvine, which set up a

comprehensive fee program in 1982 and updated it in 1999. Where Newport

Beach charges $2.01 per square foot for office buildings, $1.12 per

square foot for industrial buildings and $6.06 per square foot for retail

buildings, Irvine’s corresponding fees are $10.70, $3.30 and $10.70.

Irvine’s special fee program covers the Irvine Business Complex, which

lies adjacent to John Wayne Airport. Newport Beach also plans to

establish fees for its airport area.

Assistant City Manager Sharon Wood said a difference in age between

the two cities could be the reason why Newport Beach is lagging behind.

“Irvine may tend to be more aggressive,” Wood said. “They are more of

a growing community where we are built out. When you are a recycling

community, you don’t tend to think of infrastructure improvements as much

as you do when you are in a situation such as Irvine’s.”

While Conexant officials agreed to pay the fee if the city could come

up with a program within 24 months of issuing the building permits, the

members of the developers’ agreement negotiating committee wanted to

extend that period to 60 months “due to the anticipated length of time

the establishment of the program may take,” according to a staff report.

A second disagreement came from Conexant’s unwillingness to contribute

$500,000 to a new fire station in the area around the airport. While the

committee did not want to accept Conexant’s offer of a $250,000

contribution, a July 6 staff report stated that the smaller sum would

meet the company’s requirement to pay a proportional share of the cost to

build the station.