California City Redevelopment Aids Hyundai, Angers Others

Paul Shigley on
May 1, 2004

Long a land of big dreams and failed schemes, California City has lured a major automobile company to town with a redevelopment deal and environmental planning assistance. In March, Hyundai Motor America started building a test track and related facilities in California City that will employ about 100 people, which would make Hyundai the second largest employer in town.

The project does have detractors, though. Some landowners contend the city has abused its redevelopment and eminent domain powers, while some environmentalists argue that the project does not adequately mitigate impacts to two rare animal species. The city aggressively defends itself against such accusations. City Manager Jack Stewart pointed out that a federal district court ruled for the city in a lawsuit brought by property owners, and a habitat conservation plan for the desert tortoise has been accepted by state and federal agencies. Still, litigation on a number of fronts is continuing.

In the meantime, contractors are grading, paving, building and installing utilities for the 4,340-acre test track facility, which includes a 6-mile-long oval track, a hazard course and 20,000-square-feet of engineering and test buildings. Construction is scheduled for completion this fall, according to Stewart.

California City is located in southeastern Kern County, a little north of Edwards Air Force Base. With 203 square miles of the western Mojave Desert within its boundaries, California City is the state’s third largest city behind Los Angeles and San Diego. But California City has only about 11,500 residents. There have been a number of plans for large-scale development along the lines of Palm Springs since the city incorporated in 1965, but little has come to fruition despite the construction of 600 miles of roads and the city’s open-for-business attitude. By far the largest institution of any kind in California City is a 2,600-inmate, minimum security federal prison. About 530 people work at the prison.

A few years ago, California City began work on annexation of 29 square miles on its southern flank. City officials could see that growth in the area would more likely be along Highway 58, east of the City of Mojave — and not north up Highway 395, as envisioned earlier, Stewart said. The annexation brought the city limits to Highway 58. At the same time, the city detached 29 square miles on its north side. Neither of the large tracts was developed, but the land the city detached was higher quality habitat, Stewart said. The city also added the new territory to its redevelopment project area, which already covered most developed parts of town.

Along the way, Hyundai officials contacted the city about the proposed test track. Hyundai reportedly liked California City because it offered a large, contiguous site and is within a few hours drive of the company’s design center in Irvine.

Under the deal eventually worked out, California City’s redevelopment agency and Hyundai will split tax increment 50/50 over 10 years to reimburse the Korean company for the cost of building roads and water lines, according to Stewart. The redevelopment agency assembled about 200 parcels covering 1,000 acres. Most landowners willingly sold to the agency, which then sold the land to Hyundai. However, the city has pending eminent domain suits against about a dozen holdout landowners. The city also agreed to include the Hyundai test track in the EIR for the annexation and redevelopment project area extension. The city worked with the U.S. Fish and Wildlife Service to arrange an Endangered Species Act "take" permit for the threatened desert tortoise, and a state "take" permit from the Department of Fish and Game for the Mohave ground squirrel, which is on the state’s threatened species list.

In exchange for the city’s assistance, Hyundai will employ about 100 people in jobs ranging from security guard to engineer, Stewart said. Honda has a similar test facility in unincorporated Kern County that has proven to be a stable employer, he said. The Hyundai project will also generate tax increment although Stewart declined to estimate how much. Hyundai is reportedly spending $50 million to build the test facility.

The federal take permit is part of a habitat conservation plan (HCP) that addresses only the desert tortoise and the Hyundai site. The Fish and Wildlife Service adopted the HCP in January. It calls for offsetting the loss of tortoise habitat acre for acre by protecting land elsewhere. Hyundai has purchased 3,387 acres adjacent to an existing tortoise preserve and has established a $1.5 million endowment. Tortoises found on the site (at least two dozen have been located) are supposed to be moved to protected land. Additionally, the state Department of Fish and Game has required Hyundai to offset every acre of lost ground squirrel habitat with 2.3 acres of protected land elsewhere.

In February, the Center for Biological Diversity and Defenders of Wildlife sued the Fish and Wildlife Service over the HCP. The groups characterized the site as "pristine desert wildlands" and said the HCP does not do enough to protect the tortoise. Center for Biological Diversity ecologist Daniel Patterson said a better site selection process would have placed the test track elsewhere. "In the same region there is a bunch of old, trashed ag land with little habitat value," Patterson said.

While the environmental litigation is only getting started — and settlement talks have already commenced — litigation over redevelopment and eminent domain activities is deep in the legal system. Project opponents filed a validation action regarding California City’s expansion of redevelopment project area borders. A Kern County Superior Court judge threw out the suit on procedural grounds, but in March the Fifth District Court of Appeal overturned that decision and the case is headed back to Superior Court for trial.

The lawsuit questions whether land in the 15,000-acre addition to the city’s redevelopment project area is blighted and primarily urbanized, as required by state redevelopment law. The city based its findings on the fact that there are numerous odd-shaped lots with multiple owners, and the parcels are not adjacent to roads or utilities. The city also found that the lots are of inadequate size for development and were created by an old land fraud scheme.

But June Ailin, of Kane, Balmer & Berkman, who represents landowners challenging redevelopment and one holdout property owner, said many parcels in the area are 10 to 20 acres apiece, "not postage stamp lots that nobody can do something with." She added, "What they are saying is that absence of infrastructure equals blight. But absence of infrastructure does not equal blight. It’s vacant nothing surrounded by vacant nothing."

California Redevelopment Association (CRA) Executive Director John Shirey said he did not know a great deal about the California City project. But he said, "I get concerned whenever I hear about wide-open desert land being called blighted and designated for a redevelopment area. … It needs to be urbanized and it needs to be part of an area that has seen better days."

In fact, the use of redevelopment to build shopping centers and golf courses in the Coachella Valley desert led to the 1993 reform of state redevelopment law — reforms that CRA backed and that appellate courts have interpreted tightly.

Stewart, though, makes no apologies. The city’s actions met the definition of redevelopment law, he said. "My desire would be to extend it [the project area] a lot further," Stewart said.

Contacts:
Jack Stewart, California City, (760) 373-8661.
June Ailin, Kane, Balmer & Berkman, (213) 617-0480.
Daniel Patterson, Center for Biological Diversity, (520) 623-5252.
Project environmental assessment and habitat conservation plan: Hyundai HCP