When Los Angeles County Supervisor Zev Yaroslavsky and City Councilman John Ferraro dropped a bomb on Universal Studios Inc.’s expansion plans by recommending a 40 percent cut in the project, it was another sign of the enduring power of homeowner groups in local politics.

The expansion plans had been enthusiastically endorsed by business and the city’s important tourism industry, which concluded that the hotels and theme parks planned by Universal would attract thousands of visitors who now make Disneyland and San Diego their preferred destinations.

But at public hearings and behind the scenes, homeowners mobilized against the plan.

“We are not a ragtag group of NIMBYs in the Hollywood Hills,” said Krista Michaels, president of the Cahuenga Pass Property Owners Association, referring to not-in-my-backyard opposition. “We are very organized, and we have been organized for a very long time.”

Since the late 1980s, to be precise, when Michaels’ organization was formed to combat growing traffic problems along the Barham/Cahuenga corridor. Since then, the Cahuenga Pass group has teamed up with other homeowners associations in the vicinity of Universal to thwart expansion plans and quiet its noisy attractions.

“This is a group that would know how to pull the levers of power, and has been doing it for quite a while,” said Jack Kyser, chief economist with the Economic Development Corp. of L.A. County. “They have the time and the money to be able to pursue their agenda.”

The proposed development calls for construction of 5.9 million square feet of theme park attractions, hotels, film studios and offices, plus 6.3 million square feet of parking lots to go on Universal’s 415-acre parcel at Universal City.

On June 6, Ferraro and Yaroslavsky announced their recommendation that the scope of the development be reduced by 2.5 million square feet, or 40 percent. The two lawmakers also ruled out any new theme park development, nixed convention-style hotels and said there should be a maximum of 1,200 hotel rooms on the property. Universal had proposed five hotels with 2,500 rooms, including the Valley’s only five-star hotel.

Perhaps most devastating to Universal was Yaroslavsky’s public comment that any proposal from the studio that involves further theme park construction would be “dead on arrival” if it were brought before the county.

Ferraro agreed that the restriction on theme park development probably isn’t negotiable.

“Unless there is some way of alleviating the traffic, I don’t see how we could allow any more than we’ve agreed to,” Ferraro said.

The project is currently up for approval by the city and county planning commissions. Although neither Yaroslavsky nor Ferraro sit on those boards, their recommendations are likely to be binding because Yaroslavsky and Ferraro both represent the Universal City area.

Two questions now loom: What, if anything, can Universal do to put its plan back on track? And if it must accept the revisions, can its dream of a destination resort still be realized?

Universal’s political options appear limited. Mayor Richard Riordan, who has championed himself as sympathetic to business interests in the city, has so far sat on the sidelines. And spokesman Steve Sugerman could not predict when or if the mayor would get involved.

“He’s still looking at it,” Sugerman said. “This is a very big, complex issue.”

Political consultants said Universal made a strategic error by lining up business support but failing to attract more backers from the neighborhood.

“I always think it’s not a prudent course, especially on a land development project, to think that just talking about the economic benefits will get you approvals. You’ve got to work with the homeowners,” said land use attorney and lobbyist Mark Armbruster.

Universal did put considerable effort into bringing the project’s neighbors into the fold. The studio sent them glossy mailings, and even went so far as to send representatives to the living rooms of nearby houses for one-on-one discussions of the project.

But the homeowners were unconvinced. They swamped the five public meetings held to date on the project, with more than 700 people attending each hearing and so many requested to speak that extra meetings had to be scheduled. Nearly all the speakers repeated the same mantra: They had no opposition to expansion of Universal’s motion picture and television production facilities, but the noise and traffic associated with a theme park/resort were unacceptable.

Homeowners groups also complained that the community organization backing the project Universal City Tomorrow consisted mainly of business people who don’t live in the region.

Denise Coleman, co-chairwoman of the group, said that is nonsense. Over 2,000 people signed cards saying they support the expansion project, many of them living within three miles of Universal City, she said.

Nonetheless, both she and the group’s other co-chairwoman, Gloria Gold, live in the “213” area code.

Ferraro said the lack of community support for the expansion was a factor influencing his decision.

“The business people don’t live around there, they wouldn’t be impacted by the traffic problems,” Ferraro said. “We represent the people, we have to keep their interests in mind or we won’t represent them very long.”

Political consultant Richard Lichtenstein said Universal’s problems may have stemmed from past failures to be a good neighbor to surrounding homeowners. Although he believes the studio did a good job in its recent efforts, it may have been too little, too late.

“It’s really difficult to get the studios to focus on those outreach issues on a day-to-day basis,” Lichtenstein said. “They’re more worried about Clint Eastwood’s newest movie.”

Opinion is mixed about what Universal should do next. Some political consultants suggest that the studio try harder to court local homeowners and find out where they may be willing to compromise. Others say the studio may be secretly rejoicing over the apparent setback.

“What if they put all these extra developments into the plan with the intention of giving them away later? That would have been an awfully expensive plan to build; maybe now, they’ve gotten exactly what they really wanted,” said one City Hall insider.

Helen McCann, vice president of the master plan for Universal, would provide no specifics on Universal’s next move, saying the studio will respond at the next public hearing on the project July 2.

“There’s always been this need to strike a balance between our business goals and community issues. We have been committed to finding that balance since Day One,” she said.

McCann also would not address whether Universal’s resort ambitions could be realized with a 40 percent cutback.

A study commissioned last year by the L.A. Convention & Visitors Bureau showed that 31 percent of visitors to L.A. go to the Universal Studios Hollywood theme park, making it the county’s top attraction. But 60 percent of the county’s visitors actually stay in Orange or San Diego counties and make day trips here, according to Hollywood Chamber of Commerce Executive Director Leron Gubler.

Universal’s goal is to create a facility similar to Disneyland in Anaheim, which is surrounded by hotels thus visitors stay in the area for several days, spending money on various local attractions and making day trips to surrounding regions.

Michael Collins, executive vice president of the Convention & Visitors Bureau, said it will still be possible to create a “destination” resort at Universal City it just may not attract as many people as Universal originally intended.

“If there is to be a 1,200-room hotel to be built at Universal Studios, that is exciting news for the travel industry,” Collins said.

The fight, observers on all sides agree, isn’t over. If anything, the process of negotiation and compromise has just begun.

“I think (Universal) has had a brilliant strategy from Day One, and that is asking for the world and then leaving it to the community to whittle it down to what is acceptable,” said Tony Lucente, president of the Studio City Residents Association. “Now is when the real work begins. If the community sits back in full complacency and says they’ve won, I think they’re making a real mistake.”