Southern California residents sparred Wednesday over a hotly contested plan to build nearly 900 homes and a hotel on a vast stretch of land riddled with oil drilling that also provides critical habitat for endangered and threatened wildlife.

In a meeting that was still going after 12 hours, hundreds of people packed a crowded meeting room in upscale Newport Beach to hear the California Coastal Commission discuss a plan to develop the 401-acre site known as Banning Ranch. Opponents carried signs with pictures of burrowing owls and urged the state panel to preserve the shrub-covered land as open space.

Linda Mendenhall, who lives near the property, said she's tired of the traffic and congestion in Orange County and relishes the wide open views and animals she has enjoyed seeing from her home for nearly three decades.

"We just don't think they need to build another small city," she said.

More than 400 people signed up to speak on the proposal by Newport Banning Ranch to build 895 homes, a 75-room hotel and retail complex on the tract inhabited by the owls and other wildlife. Many of the homes would have sweeping ocean views and sell for more than $1 million, according to the developers.

The site is considered to be the largest remaining privately held coastal property that could be developed south of Los Angeles, according to a commission spokeswoman.

Staff members for the commission recommended developers shrink the plan and confine building to 20 acres to protect habitat for the owl, which lives in holes dug by ground squirrels and is considered a bird of special concern in California.

The owl was a very popular topic among both public and commissioners, and sometimes the topic brought laughter.

Referring to the bird's mythology as a wise creature and the dangers humans posed to them, Jonna Engel of the California Department of Fish and Wildlife said "they are not wise about cars."

Jack Ainsworth, the commission's acting executive director, said the proposed development is one of the most important issues the panel has faced in the past four decades.

"It is critically important to get it right, because we may not get a second chance here and significant coastal resources are at stake," he told commissioners.

The plan would preserve roughly 80 percent of the land as open space, but environmentalists want a larger chunk protected, saying the property is home to species including the threatened California gnatcatcher — a small, blue-gray songbird — and a rare vernal pool system that fills with rainwater where endangered San Diego fairy shrimp are known to thrive.

Newport Banning Ranch — a partnership involving Aera Energy, Cherokee Investment Partners and Brooks Street — has argued that developing about 70 acres would help raise as much as $40 million for restoration following years of oil drilling and give the public access to walking trails and educational programs on the coast.

Michael Mohler, senior project manager for Newport Banning Ranch, said the limitations suggested by the commission's staff were unrealistic and would thwart the project.

"We're proposing to restore the entire site for a beneficial ecosystem for all species, as I said earlier, including man," he said.

Commissioner Mary Shallenberger said this was a good reason to oppose the project, saying the sides are "too far apart on this."

Dozens of people also attended the meeting wearing T-shirts backing the project, which would limit oil drilling to 15 acres. If the homes are not approved, developers say they'll continue drilling on the site.

Environmental advocates contend the oil mess should be cleaned up regardless of whether homes are constructed. While some oil wells still operate, many have been abandoned and old, rusty pipes are strewn across the land overlooking the Pacific Ocean.

Steve Ray, executive director for the Banning Ranch Conservancy, urged the panel to deny the homes even if the drilling continues.

"What they see as an oil field, we see as open space," he said.

Last year, developers proposed an even larger version of the project. Staff members recommended that plan be denied, and commissioners encouraged them to work with Newport Banning Ranch to come up with a smaller proposal.

The project faces opposition from some Native American groups that have historic ties to the land where the Santa Ana River meets the ocean.

Elected officials from nearby cities also disputed whether the plan would help, or hurt, their crowded suburban neighborhoods. Newport Beach Mayor Diane Dixon supported the project.

"The Newport Banning oil field is not an environmental gem. It is a brown field," Dixon said. "It would be tragic if we let this historic opportunity slip away."