An 11,000-unit housing development and 325-acre "employment center" has won approval from the City of Lathrop, in the San Joaquin Valley east of the Bay Area. If built, the project would be the first major urbanization of one of the many flood-prone islands in the Sacramento-San Joaquin Delta. The "River Islands" project is proposed to include a wide variety of housing types, office parks that could employ 15,000 people, and a new retail and civic core for the 14-year-old city in San Joaquin County. But detractors, chiefly the Sierra Club, say the site is wrong for such development because the entire 4,800-acre project site lies within the 100-year floodplain. River Islands is of great interest to the state Board of Reclamation, which would have to approve the proposed changes to the flood management systems, because the development would be the first of its kind in the Delta. Not in recent history has a development put thousands of people on a site that has flooded with some regularity, said Steve Bradley, the board's chief engineer. City officials and the developer, the Cambay Group, contend that they have the flooding issues figured out. The developer proposes to surround the site, known as the Stewart Tract, with levees that are up to 100 yards across. Called "high ground," these levees would be big enough to allow housing development with a view of the adjacent river, said Susan Dell'Osso, project manager for the developer. "You won't even know it's a levee," she said. Where the high ground technique is not used, the developer will reinforce existing levees. An environmental impact report by EDAW Inc. found no flooding issues on site or downstream that had not been fully mitigated. That EIR, however, is going to be challenged in court by the Sierra Club. "We are adamantly opposed to build housing for thousands of Bay Area commuters on a Delta island," said Eric Parfrey, chairman of the Sierra Club's Mother Lode Chapter. "It's in the wrong location." A transition Lathrop might be the most growth-friendly city in a rapidly urbanizing county. The population of San Joaquin County has swelled by about 75% since 1980, according to the Census Bureau and state Department of Finance. The cities of Tracy, Manteca and even Stockton provide affordable bedrooms for Bay Area workers, despite commutes that can reach two hours in each direction. In the last few years, Lathrop (population 12,000) has seen some of that development in the form of single-family houses, freeway-serving commercial strips along Interstate 5, and new distribution warehouses. But the city has been the site of more planning and talk than of actual earthmoving. In 1996, Lathrop approved Gold Rush City on the same site as the currently proposed River Islands. Gold Rush City was to be a development of four theme parks, at least 5,000 hotel rooms, three golf courses, a regional shopping mall and 8,500 housing units (see CP&DR, August 1996). Backers said the project would create 15,000 to 20,000 jobs — about one job for every new resident — and provide the city with $30 million to $60 million in annual revenue. The Sierra Club sued to prevent Lathrop from annexing the Stewart Tract and other farmland east of I-5. The environmentalists won a procedural ruling at the state Supreme Court that allowed the case to go forward, but they lost on the merits at the trial court in late 2000 (see CP&DR Legal Digest, January 2001, October 1999). The Third District Court of Appeal upheld the trial court in an unpublished decision last year. Still, Gold Rush City never went beyond the drawing board. In November 2000, 56% of city voters approved amendments to the project development agreement, allowing housing construction to go forward before the promised job creation. In January, a unanimous City Council carried out Measure D by approving an amended development agreement, 30-year vested tract maps and other entitlements for River Islands. The first phase calls for 4,000 housing units (mostly single-family homes), a 3.7 million-square-foot employment center, and a 45-acre town center. The second phase involves an additional 7,000 housing units and two golf courses. The first phase is scheduled for completion by 2015, with another 10 years anticipated for full build out. In approving the project, councilmembers said River Islands would aid Lathrop by providing jobs and a diverse mix of housing. River Islands offers the "last and best price of ground for a business park" in the region, Councilman Robert Oliver said. Councilmembers said the city did not have control over impacts such as traffic congestion on freeways to the Bay Area, cumulative air pollution and the threat of flooding. The city is imposing a regional traffic mitigation fee to fund freeways, but the city has no control over the timing of those improvements, Mayor Gloryanna Rhodes noted. The U.S. Army Corps of Engineers and the Federal Emergency Management Agency — not Lathrop — should deal with flooding issues, Oliver contended. A new empire Lathrop Community Development Director Bruce Coleman believes San Joaquin County is a smaller, younger version of the Inland Empire east of Los Angeles. People who work in job centers near the coast are moving inland to get lower home prices, but with the exception of the logistics industry, most jobs remain in the Bay Area. "I think we can do it differently here," said Coleman, who previously worked in the San Bernardino County cities of Highland and Chino Hills. The way to improve on the Inland Empire model, he said, is to create cities with individual identities that are separated from each other and that offer an adequate number of good-paying jobs to decrease the area's economic dependence on the Bay Area. San Joaquin County and some of its cities have taken steps toward preserving farmland buffers (see CP&DR Q&A, September 2000), and the county is part of the Inter-Regional Partnership, a state pilot program aimed at improving the local jobs-housing balance in the East Bay and northern San Joaquin Valley. Coleman believes the River Islands project is what the area needs. The project is proposed to provide every type of housing from apartments to large-lot, single-family homes to retirement living. The city will assess each new housing unit an economic development fee of $5,000 — a total of $55 million at full build out. Under the development agreement, 80% of the fee is for the River Islands project area, and 20% can be spent anywhere in town. Expenditures require the approval of both the master developer and the city. The proposed town center — a "Main Street" with a mix of retail shops, services, housing and possibly civic buildings — is located toward the eastern end of River Islands, but in the geographic center of the entire city, so it should provide a focal point for the whole town, Dell'Osso said. The entire project is designed with a water theme. A winding lake of about 300 acres is planned, as are numerous canals and waterways, giving the project about 20 miles of water frontage. About one-third of the lake frontage will be open to public access, Dell'Osso noted. Also, about 1,000 acres along the Paradise Cut, a creek on the project's southern boundary, will be set aside as habitat for the rare riparian brush rabbit and Swainson's hawk. The designated habitat also will provide additional storage for flood flows. "It's not just a housing development," Coleman said. "Yes, there are 11,000 housing units, but there is so much more to it." Not just yet Although the Cambay Group — an arm of Britain's Somerston Holdings Limited that is developing some of the Dougherty Valley in Contra Costa County — has received its entitlements from the Lathrop City Council, River Islands still faces a number of obstacles. The developer needs permits from the state Board of Reclamation and the U.S. Army Corps of Engineers. Commenting on the EIR, the Board of Reclamation's Bradley raised questions about the loss of flood storage on Stewart Tract and the downstream impacts. He also questioned the growth-inducing effects of urbanizing a Delta island. "It's a very, very big project," Bradley said. "If they reinforce their levees, that passes along the impact [of flooding] to someone else." Disposal of wastewater is also an issue. Engineers at the Central Valley Regional Water Quality Control Board (RWQCB) made clear they were not satisfied with the EIR for River Islands or with a draft EIR for a city sewer project that would serve the development. "The long-term wastewater disposal needs for the community need to be resolved, and appropriate permit limitations established, before subdivisions are approved for development," Timothy O'Brien, a RWQCB engineering geologist, wrote to the city last November. Early portions of River Islands would dispose of wastewater on the ground, but build out will require disposal of treated effluent to the San Joaquin River, which is already polluted. "At this point, the only assessments that have been done are for a land discharge," said Patricia Leary, a RWQCB senior engineer, who said the state will not permit wastewater disposal in the river without far more analysis. The potential for flooding, wastewater disposal and other issues are likely to be part of the Sierra Club lawsuit. The city adopted overriding considerations because the project would have unmitigated impacts on traffic, air quality, agricultural resources, mineral resources, public services and utilities, and fisheries. Parfrey, of the Sierra Club, said that as the project has gained momentum, the city has not provided adequate scrutiny. There are more appropriate places in the Central Valley to build houses than flood-prone farmland, he said. Planning Commissioner Crystal Quinley, who cast the only vote against the project, agreed. She endorsed the design of River Islands, but, she said, "I don't think it's in the right location." No one disputes the need for more and better jobs in the area. Yet there are no guarantees River Islands will fill with businesses — especially with Bay Area office vacancy rates in the range of 20%. Business advocates have struggled for years to lure businesses over Altamont Pass to the Central Valley. Moreover, Tracy and the 14,000-unit Mountain House development now under construction north of Tracy have about 900 acres designated for office growth, and both locations are about 10 miles closer to the Bay Area than Lathrop. Coleman believes River Islands will attract businesses once there has been two to five years of high-quality residential development. "The companies are going to want to be near their employees. It's a long-term thing," he said. Despite the questions, there is minimal opposition to River Islands within Lathrop. During the final public hearing in January, only two people (including Parfrey) spoke against the project. And Lathrop has plenty of other growth plans. In January, the city approved a 1,700-unit, 660,000-square-foot retail development just north River Islands called Mossdale Landing. That would be the first 40% of development within the 1,161-acre Mossdale Village. Coleman expects Lathrop's population to quintuple to approximately 60,000 within 25 years. Contacts: Bruce Coleman, Lathrop Community Development Department, (209) 858-2860. Susan Dell'Osso, Cambay Group, (209) 858-2040. Steve Bradley, Board of Reclamation, (916) 653-8089. Timothy O'Brien, Central Valley Regional Water Quality Control Board, (916) 255-3000. Eric Parfrey, Sierra Club, (209) 462-7079. River Islands website: