A controversial Arroyo Grande housing project in the works for more than 10 years failed to win approval for a tentative tract map last week, and could be sent back to the drawing board for a redesign if one City Council member has his way.

After a nearly four-hour public hearing Tuesday, the council voted

5-0 to delay a decision on Castlerock Development's plan for the Meadows at Rancho Grande until July 22.

The council directed city staff in the meantime to find answers to questions raised about the development, particularly which agency would have jurisdiction over a “gully” on the site, and whether it would legally be considered a wetland or riparian area.

However, the council could further postpone the next hearing if the staff isn't close to getting answers from such agencies as the U.S. Army Corps of Engineers, the Central Coast Regional Water Quality Control Board, the California Department of Fish and Game and the U.S. Fish and Wildlife Service.

All of the council members questioned various aspects of the plan, but councilmen Jim Guthrie and Ed Arnold seemed to favor the project, also known as Tract 1998, which has seen numerous revisions and reductions in scale.

“I could approve this tonight with conditions,” Arnold said.

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But Mayor Tony Ferrara said the proposal had two “deal breakers” he could not support - the emergency fire access road he believes is inadequate and the lack of “finished lots” that would require separate approvals for each home.

Councilman Chuck Fellows voiced the strongest opposition, saying he would not approve the plan because it calls for filling in what he refused to call a “gully,” referring to it as a “biotic element” more diverse than Meadow Creek.

“That, in my mind, is a major insult to the environment,” Fellows said of plans to fill the gully to create several of the project's 15 home sites.

He proposed an entirely new design that appeared to put home sites within 50-foot buffers for a creek riparian area and endangered Pismo clarkia habitat, as well as a location he vetoed last year because of its impact on oak trees.

The project, located in a roughly triangular 26-acre area extending northeast from the intersection of James Way and La Canada, is proposed as a clustered 15-lot subdivision.

Most of the individually designed custom homes would be located at the end of a long cul-de-sac off La Canada, where one home site is also proposed.

Twenty-two acres would be permanent open space. Of the 1,260 oaks on the site, 11 would be transplanted and 11 would be removed, but 44 new trees would be planted.

The relatively small lots and their location are the result of the project being redesigned to satisfy public objections and City Council directions when a 17-unit project was rejected in 2007.

That project - and previous 21- and 36-home proposals - would have resulted in a higher loss of oak trees and intruded on creek riparian and wetland areas and Pismo clarkia habitat.

Pismo clarkia is a small, annual wildflower that grows only in the western foothills of San Luis Obispo County, favoring the fringe areas just outside oak tree groves. It has become endangered by the loss of habitat.

Residents near the site - most of them living on Asilo in an adjacent tract - raised a number of objections to the redesigned project at Tuesday's hearing.

Doug Tate, a city planning commissioner who recused himself May 6 when the commission voted 2-1 to recommend the council approve the tentative tract map, said the site with its natural resources “deserves better.”

“The gully seems to be a natural bioswale that cleans any runoff before it reaches the creek,” he said. “It is not a source of sediment to the creek.”

Others objected to the proposal that the homeowners association be responsible for monitoring and enforcing environmental issues; the small lot sizes; damage from 730 truckloads of fill dirt; the impact of the city drawing water from a well on the site; squeezed wildlife corridors; and visual impacts, among other issues.

Councilman Joe Costello echoed many of the residents' questions, but he noted that 84 percent open space is “phenomenally more than we had when we started.”

“I'd love to say at this point I would not approve any development on this site, but we're going to see some form on development on this site,” he said.

Guthrie said the design is the best possible to avoid the Pismo clarkia, protect the wetlands and avoid the majority of the oaks.

“The Catch-22 is there's no way to do this without moving the houses up on the hill,” he said. “... At some point, you have to look at tradeoffs.”

Arnold said he doubted the plan would affect wildlife movement, but he also doubted a 15-member homeowners association would want to take on environmental monitoring and enforcement.

“As a whole, the community would benefit from the fact it would preserve over 1,200 oak trees,” he added.

Fellows noted that the clustered lots, the hiking trail, the riparian and wetland enhancement plan and the water well deeded to the city are positive aspects of the plan.

But noting that he has degrees in botany and worked in greenhouses, he said the gully is not a “lifeless scar,” as he'd been led to believe.

“I'm not advising that we leave it in a natural state to throw up a barrier” to the project, he said, noting the site has held development rights for 30 years. “It's up to us to make the smallest hit on the environment.”

He also showed his rough redesign that would move most of the building sites down the access road closer to the creek tributary and Pismo clarkia, and would include a one-way looped access road with culvert bridges over the gully.

“A day and a half ago, I thought we had a solution,” Ferrara said. “That was before I had a chance to walk the property.”

He objected to the individual homes requiring separate approvals, and said relying on the homeowners association for monitoring and enforcement was “asking the impossible.”

But he said could not support the emergency access road that would traverse a steep hill he described as a “cliff.”

“I agree with my colleagues, we are going to have a project there,” he said. “I hope it is a good one, but it must be a safe one.”

June 1, 2008