Consensus may be rare in Sacramento, but nearly everyone agrees on one thing this year: proposals that cost money are doomed. The state budget deficit appears to get larger every day, so the issue is going to be where to reduce spending, not where to add money. One way around the budget constraints is to get bond funds earmarked for favored programs, which is precisely what is happening with the housing and school construction bonds proposed for the November state ballot. Despite the lack of money — or maybe because there is no money — lawmakers could still pass a number of policy bills related to planning. In fact, one of the 2001-02 session's more important bills passed in late January and was signed by Gov. Davis in February. The measure, SB 107 (Sher), overhauls the natural communities conservation planning (NCCP) process in a compromise fashion that satisfies most builders and environmentalists. However, Sacramento Assemblyman Darrell Steinberg's AB 680, which would establish a sales tax sharing program in the six-county Sacramento region, has attracted the most attention this year (see William Fulton's column in this month's edition). The Assembly approved the bill in January, but as of late February it had not been set for a Senate committee hearing. Steinberg argues that the bill provides a "smart growth" approach because it reduces local government's incentive to chase retail development, and it rewards jurisdictions that pursue affordable housing, infill development and open space preservation. But Dwight Stenbakken, legislative director for the League of California Cities, said the state has no business dictating how the local portion of sales tax gets allocated. "If you tinker with it in one region, then you tinker with it everywhere," warned Stenbakken, who said the bill would set a bad precedent. A number of cities from outside the Sacramento region are lobbying against AB 680. On another subject, many lobbyists, observers and Capitol insiders expect Sen. Joe Dunn's housing element crackdown bill to pass in some form. The bill, SB 910, drew intense opposition from local government last year because it would withhold road funds from cities and counties whose housing elements are rejected by the Department of Housing and Community Development. Talks continue regarding the legislation's language, but both Dunn and Assembly Housing and Community Development Committee Chairman Alan Lowenthal (D-Long Beach) say they are committed to the concept. There is talk of a bill that would change the regional housing needs assessment process. A housing element working group at the Capitol has been "talking about a million different things," said one participant, who expressed concern that nothing solid had emerged from the group yet. The notion of a California Environmental Quality Act exemption for small infill developments has gained favor, although some environmentalists and environmental justice advocates refuse to budge on the issue. And a bill that would require local governments to adopt urban growth boundaries could resurface in 2002. "I think the Legislature is more and more interested in having smart growth principles in general plan law," said Bill Allayaud, state legislative director for the Sierra Club. As of late February, some bills were simply "spot bills," which are placeholders until bill authors and sponsors can decide on what should go into the legislation. Endangered species reform Sen. Byron Sher's SB 107 could turn out to be one of the most important pieces of environmental legislation this year. The bill overhauls the state NCCP law, which is California's version of habitat conservation plans that were so popular with the Clinton administration. Under HCPs and NCCPs, developers set aside land as habitat for endangered species in exchange for "incidental take" permits that allow development on other lands that could support endangered species. Sher's legislation reauthorizes the Department of Fish and Game (DFG) to sign agreements with landowners or public agencies, but requires the agreements to have specific conservation objectives. The new law also requires rough proportionality between the level of mitigation and development's impact on endangered species habitat. The law also establishes a public participation process, including a 60-day review of draft documents. Defenders of Wildlife, the California Native Plant Society and the Nature Conservancy supported SB 107 because for the first time it calls for definitive, scientific standards as the bases for habitat plans. Environmentalists have long charged that habitat plans are based more on politics than science (see , June 2001, Environment Watch, January 2001). The groups also endorsed new bill provisions relating to implementation, monitoring and adaptive management, all of which the environmentalists said would make habitat plans more effective. Still, the Sierra Club held out. Allayaud complained that the measure gives builders an air-tight assurance that there will be "no surprises" regarding future restrictions if they participate in implementation of a habitat plan — but the environment received no such guarantees. Also, the bill was silent on the issue of the government using eminent domain to acquire important habitat, Allayaud said. While SB 107 had fairly widespread support — or at least lacked major opposition — SB 985 (Florez and Hollingsworth) appears to be pitting developers and farmers against environmentalists in the traditional way. The bill addresses "fully protected" species — 37 animal species designated in state law as untouchable. The bill would abolish the fully protected species statutes and require the Fish and Game Commission to maintain a list of such species following a review of each one. The Commission's decisions would be exempt from CEQA review. After that agency completes its review, permits for "incidental take" of the species could be granted for a variety of reasons. The fully protected species statutes predate the California Endangered Species Act and some of the animals covered are not rare, according to a legislative analysis. Environmentalists see the statutes as especially important, but many stakeholders recognize the need to reform the law because it conflicts with modern wildlife management. The bill specifically addresses the Colorado River and the Salton Sea. A new agreement among Western states requires California to reduce its importation of Colorado River water by 15%, which means less water for agriculture in Imperial County and, thus, less runoff flowing into the increasingly saline Salton Sea (see , February 2000). The brown pelican is a fully protected species that subsists on fish living in the Salton Sea, so a project that harms the pelican's habitat could violate the fully protected species statutes. SB 985 does not require mitigation for the take of brown pelicans or other fully protected species that would be harmed by the Colorado River Water Use Plan. Proponents of the bill — including the California Building Industry Association, the California Farm Bureau Federation, the California Forestry Association and Tejon Ranch Company — say that while the measure would allow "incidental take" of species, it would also expand a pilot recovery program and still allow for fully protected status for the rarest species. Opponents — such as Defenders of Wildlife, the Center for Biological Diversity, the National Wildlife Federation and the Planning and Conservation League — complain that the bill allows "take" without also offering meaningful species recovery provisions. Housing, housing, housing Recession or no, the lack of affordable housing remains one of the hottest land use issues in the state. A proposed $2.1 billion housing bond (SB 1227) being carried by Senate President Pro Tem John Burton (D-San Francisco) has become a focus of lobbying, as it has become a "Christmas tree" on which lawmakers and interest groups are hanging their favored programs. "I think the back of the line for Burton's office is in Fresno," joked Marc Brown, co-director of the California Housing Law Project. He said the bill is very fluid and tracking it has been a full-time job. Gov. Davis has spoken favorably about a housing bond, and the administration has apparently budgeted under the assumption that the bond will pay for ongoing programs. Lawmakers early this year approved Davis's request to slash $100 million from housing programs this fiscal year. The governor's proposed housing budget for 2002-03 contains further reductions and provides no money at all for multifamily housing construction and rehabilitation. Most people expect SB 1227 to get the needed two-thirds vote to qualify for the November ballot. However, one source at the Capitol said he was concerned that not all the necessary votes are lined up in the Assembly, so a handful of Republicans (at least four GOP votes are needed) could force concessions favored by their allies in the building and real estate industries. It appears certain that about 40% of the bond would fund various multifamily housing programs. Other projects likely to get a piece of the pie are a downpayment assistance program, farmworker housing grants, homeless assistance, supportive housing, CalHome, and the recently de-funded Jobs-Housing Balance Program. Of course, nobody gets any money unless voters approve the housing bond. Housing advocates, including Brown, have also gotten behind a bill introduced by Assemblyman Rod Wright (D-Los Angeles) that would make the second units and density bonuses "by right" projects that do not require discretionary approval of cities and counties. The bill, AB 1866, also prohibits cities and counties from imposing policies — such as lot coverage and setback standards — that prevent projects that qualify for density bonuses from being developed at maximum permitted densities. On another front, proposed CEQA exemptions for infill projects could become a more active battlefield this year. Assemblyman Joseph Canciamilla (D-Pittsburg) has introduced AB 1882. It would codify an existing exemption in the CEQA Guidelines for projects within city limits on no more than five acres, that is consistent with the general plan, surrounded by urban uses, has no habitat value, and would not result in significant impacts to traffic, air quality, water quality or noise levels. A bill left over from last year, AB 1086 (Calderon), would streamline environmental review of certain infill development projects. Builders, real estate interests and housing advocates backed the bill, but the Association of Environmental Professionals and numerous historic preservation organizations opposed it, saying that some projects would receive no environmental review at all under the measure. The bill never got out of Sen. Sher's Committee on Environmental Quality, but it could get retooled this year. Infill exemptions are a sticky issue for the environmental community, which often rails against greenfield development. The Sierra Club's Allayaud said promoting infill is a key part of the organization's growth strategy, and the club is willing to consider CEQA exemptions. "All of the environmental organizations zealously guard CEQA," said Allayaud. "There have been degrees of attacks on it for years. … So it's the proverbial camel's nose under the tent. Once you get started, pretty soon you have exemption on exemption." But Brown said it is time for environmentalists for line up on the issue. "I've been telling the environmentalists for years that if we don't make it easier to do infill, we'll continue to sprawl out onto farmland and greenfields," Brown said. A bill by Sen. Tom Torlakson (D-Antioch) takes a different approach to infill. His SB 1262 would set aside 10% of a county's State Transportation Improvement Program (STIP) money as incentive grants for local governments that approve infill housing projects close to shops, schools, and transit. The bill is modeled on programs in San Mateo and Monterey counties and one run by the Metropolitan Transportation Commission, according to an analysis by the California Chapter of the American Planning Association. School bonds A conference committee has met regularly for several months regarding a proposed school bond. As of mid-February, the committee appeared to have settled on two bonds of about $13 billion apiece for the November ballot and the 2004 ballot. Those would be the largest bonds in state history. About $2 billion from each bond would be designated for "critically overcrowded schools," which includes schools on any sort of multi-track schedule and poorly performing schools. This money is aimed primarily at Los Angeles Unified School District, which has always fared badly in the traditional first-come, first-served method of allocating state school bond money (see , June 2001). A key part of the bond package is suspension of "level III" fees on development. When state bond money runs out — as is expected to happen this summer when the state awards the last of the $9.2 billion bond approved in 1998 — school districts can assess developers for the full cost of building new schools. These level III fees would be several times the amount most school districts now assess developers. School bond proponents have offered to suspend authorization for level III fees in exchange for the building industry's support for the proposed bond. Lawmakers and interest groups cut a similar deal in 1998. Contacts: Dwight Stenbakken, League of California Cities, (916) 658-8200. Marc Brown, California Housing Law Project, (916) 739-6293. Bill Allayaud, Sierra Club, (916) 557-1100. California Chapter of the American Planning Association website: http://www.calapa.org/ Planning and Conservation League legislation website: http://www.pcl.org/leg/leg.html

A Superior Court ruling that blocked the Chula Vista Redevelopment Agency from condemning a 3.2-acre parcel has been overturned by the Fourth District Court of Appeal. The appellate panel rejected all arguments from the landowner and ruled that the city's eminent domain lawsuit was an appropriate action that served the public use. In 1974, Chula Vista adopted the Bayfront Redevelopment Project for territory west of Interstate 5. In 1998, the redevelopment agency amended the project area to include land under the jurisdiction of the San Diego Unified Port District, although the district retained discretion over development. One year later, the city, the port district and BF Goodrich Aerospace (BFG) entered into an agreement that called for a number of land exchanges. BF Goodrich had two factories in the project area, and the idea behind the agreement was for the company to close one facility and expand the other. The agreement also allowed the Port District to redevelop the 60-acre site BF Goodrich would abandon, and for the city to extend H Street to improve circulation. To make the deal work, the city had to acquire 3.2 acres owned by Rados Bros. and give it to BF Goodrich to accommodate the company's consolidation at one location. Rados Bros. was not a willing seller, however. During a July 1999 public hearing, Rados Bros. objected to the plan. The landowner said it had signed a contract to remove vacant buildings from the site, and, therefore, it would no longer be blighted and could not be condemned. The city went ahead and filed an eminent domain complaint against the landowner. San Diego County Superior Court Judge Sheridan Reed blocked the city's plan. Judge Reed ruled that the proposed condemnation was not for a public use, that the city's "resolution of necessity" was a gross abuse of discretion, and that the proposed acquisition was a "de facto taking" by the Port District. On appeal, a unanimous three-judge panel of the Fourth District, Division One, overruled Reed and said the city had a right to take the Rados Bros. property. The court first dealt with the issue of public use. Acquiring property for redevelopment is clearly a public use, so the public use for taking the Rados Bros. property was presumed to have been established when the city adopted the redevelopment project, the court ruled. Thus, Rados Bros. should have challenged the redevelopment plan within 60 days of its adoption, not during a subsequent eminent domain proceeding, the court ruled. "It appears," Justice Richard Huffman wrote for the court, "that instead of applying a conclusive presumption of blight in the Bayfront Project Area, the trial court applied the blight concept to the Rados parcel individually. However, even if Rados were to eliminate the vacant buildings from its property, the proposed taking is for a public use. … nblighted property within the redevelopment district may be taken to further the objectives of the redevelopment plan." Rados Bros. had also argued that the involvement of BF Goodrich in the deal eliminated the public purpose, but the court disagreed, saying the BF Goodrich project benefited the city. The appellate court next addressed the question of necessity. This is where the trial court ruled the city had grossly abused it discretion because there was no evidence that BF Goodrich's consolidation at one site was a necessity. The appellate court disagreed. The project brings many benefits to the area, and the BF Goodrich consolidation requires the assemblage of land, Huffman wrote. The court also rejected the Rados Bros. argument that the city had failed to impose adequate safeguards to ensure the condemned property would be put to public use. "The relocation agreement allots four years for BFG's relocation, and requires it within six years to commit to using the Rados property for industrial or office space," Huffman wrote. "If BFG does not comply, the Agency has a five-year option to purchase the property for $1,052,409 plus 6% interest, thereby retaining control over the ultimate development and safeguarding against BFG's speculation or profiteering." As for the Port District being the "de facto condemnor," the Fourth District offered a different view. No law precludes the city from "undertaking redevelopment that concomitantly benefits another public entity," the court concluded. The Case: Redevelopment Agency of the City of Chula Vista v. Rados Bros., No. D037231, 02 C.D.O.S. 483. Filed December 17, 2001. Modified January 7, 2002 and January 15, 2002. Ordered published January 16, 2002. The Lawyers: For Chula Vista: Charles Bird, Luce, Forward, Hamilton & Scripps, (619) 699-2406. For Rados Bros.: Roscoe Keagy, Asaro, Keagy, Freeland & McKinley, (619) 297-3170

Development pressure in the Martis Valley, just north of Lake Tahoe, is as great as anywhere in the high Sierra. Straddling the Placer and Nevada county line about 25 miles west of Reno, the area appears to be evolving into a high-end resort destination. Several thousand homes and vacation units are proposed in unincorporated Placer County and the Town of Truckee, as are at least half a dozen golf courses. To address the growth, Placer County has updated the 1975 Martis Valley Community Plan. The planning effort was intended to examine services and infrastructure for the anticipated growth, but it has evolved into a land use argument, county Planning Director Fred Yeager said. Indeed, environmentalists and some homeowners complain that Placer County should not have used the 1975 plan as a starting point and instead should reconsider how much development is appropriate. In the meantime, Truckee, in Nevada County, is growing so quickly that city officials believe the town could reach the 20-year growth projection in the 1995 general plan years ahead of time. The Martis Valley first gained notoriety - at least among Anglo settlers - in 1846, when the Donner Party bogged down at the valley's western edge. Despite the area's intense winter weather, Truckee became an established mining and timber town before the turn of the century. By the 1960s, the area had begun to attract development in the form of resorts and second homes, for which Interstate 80 provided year-round access. Nevada County approved the 4,000-lot Tahoe-Donner subdivision on the steep hillsides a few miles from downtown Truckee in the 1960s. Northstar Resort - one of the few Sierra Nevada ski resorts on private property - opened about 10 miles south of Truckee in Placer County in 1972. Development continued at such a rapid pace that growth was a central issue in Truckee's 1992 incorporation election. Martis Valley development exploded during the mid- and late-90s. In 1995, Placer County approved the Lahontan subdivision, which set a new standard for the area. The 730-acre, 540-lot subdivision featuring its own golf course, and hiking and cross-country ski trails is filling almost exclusively with $1 million to $2 million homes. By 2000, housing starts in Truckee had jumped 50% to about 400 annually. The dot-com crash appears to have slowed the market, as construction of million-dollar speculative houses has dried up. But no one believes the development pressure will go away. "Location, location, location," said Barbara Green, a Nevada County supervisor and Truckee real estate agent. "We are so close to Lake Tahoe - only 15 miles away. Yet we are on the interstate, so you can get to Reno or to Sacramento. ... It's a beautiful area and it's so much easier to build in than the basin." The Tahoe Basin has been limited to 300 residential building permits a year since 1987, so Martis Valley has accommodated some of the pent up demand. But Placer County's Yeager is one of many who believe the Martis Valley has become its own attraction. "It seems to be a very popular place for development interests to pour a lot of money into," Yeager said. Planning process expands In fall of 1998, Placer County began its update of the 1975 community plan, which allowed development of roughly 12,000 housing units. The demand predicted at that time never materialized, and the Placer County territory has only about 2,300 units built. But county leaders saw growth finally arriving, and they were concerned about the provision of water, sewage treatment, roads and other facilities. Supervisors authorized a review of the plan based on services, with no intent of changing land use designations unless landowners asked for downzones. Planners soon found that provision of services was not a big problem, but homeowners, environmentalists and affordable housing advocates demanded a broader discussion. "We thought it might be a relatively simply process because we were not going to mess with the land use," Yeager recalled. "But it has become this big land use debate." The preliminary draft plan released in January allows for about 7,800 housing units and some level of commercial development. Environmentalists quickly attacked the plan as insensitive to area and to community desires. The area's biggest developer supports the plan. Truckee officials are reserving judgment. "The plan is not a fitting vision for Martis Valley," said Tom Mooers, executive director of Sierra Watch, a two-year-old environmental group formed "to protect the Sierra Nevada from irresponsible urban and resort development." Mooers pointed out that the plan calls for widening Highway 267 - the main north-south route - to four lanes, as well as construction of another bridge over the Truckee River and nearby railroad tracks, and a second four-lane arterial. "That has sort of sounded an alarm bell among people that this plan would really change the Martis Valley and the whole region," Mooers said. "The more people find out about this Martis Valley proposal, the more opposition seems to grow." Mooers and Supervisor Green both question Placer County's planning process. "It's really too bad it wasn't a regional planning process," said Green, who attended nearly every meeting of Placer County's 12-member advisory committee, made up mostly of landowners and service providers. "The plan is all in Placer County, but the Martis Valley is in two counties. The impacts are mostly on Truckee," she said. Placer County offered Truckee officials a seat on the advisory committee, but town officials declined because they were uneasy about participating on a "citizens committee," said Truckee Community Development Director Tony Lashbrook. Town officials and Placer County have communicated during the planning process, but the town has not had a great deal of input. Roger Lessman, managing partner for East West Partners Tahoe' operations, whose firm has formed a joint venture with the owners of Northstar to build out the resort's 30-year-old master plan, said the proposed community plan is good for the valley. The plan downzones some property, encourages infill, and prohibits development in scenic areas, he said. Lessman decried the "hysterics" that have arisen regarding the plan and area development. Some issues, though, are more than growth versus no growth. For example, Truckee officials fear that Placer County wants Truckee to provide the region's affordable housing. The draft community plan emphasizes large-lot, single family-homes and resort housing. "Except for a little bit at Northstar, we don't see any of those units targeted for workers," Lashbrook said. "If they have room for 5,000 housing units, some of them should be affordable." Yeager conceded that affordable housing is "a terrible problem." The area's median home price increased more than 50% from 1998 to 2001, and few houses are available for less than $300,000. But Placer County officials find themselves in a tough spot. In December, the Board of Supervisors approved a 96-unit, 380-bed worker housing development on about six acres at Northstar. Sierra Watch, other environmental groups and a collection of Northstar homeowners fought the proposal, saying it was the wrong site for high-density development. The homeowners have since sued the county. Yeager said that the county is working with a nonprofit housing developer and that planners would soon propose that all development contain an affordable housing component. Even though the draft community plan addresses only Placer County, it assume that Truckee will remain the area's commercial hub - a concept that no one appears to dispute. But Sierra Watch's Mooers argued that the plan's standards are so loose that up to 6 million square feet of commercial development could be built. Yeager said the county could use the sales tax revenue that retail development would generate but large-scale commercial development is neither envisioned nor appropriate. Placer County officials intend to release the official draft community plan this spring, followed by an environmental impact report. New developer makes a mark After arriving in the Martis Valley only few years ago, Colorado resort developer East West has become a major player. East West plans to build 2,200 units at Northstar and overhaul the resort's commercial village. It has two proposals on 1,700 acres in Truckee - Gray's Station, which would have 500 market-rate homes, 100 affordable units, a small commercial area and a golf course, and Old Greenwood, which would have 260 houses and time-share units (now called "fractional" units) along with another golf course and tennis and pool facilities. Development on the Gray's Station site was controversial for years, but East West has shrunk the retail component to reduce opposition. East West's Lessman said that Sierra Nevada ski resorts generally lack the amenities that have made Colorado resorts popular, year-round destinations. Most Sierra Nevada resorts built out during the 1960s and 1970s, "but the market has changed," he said. Northstar is one of the few that has land for new, up-scale facilities. The largest Martis Valley projects now under review by Placer County are Eaglewood, a 475-acre development of 430 homes and 40 units of employee housing, plus a golf course and small commercial village; Hopkins Ranch, an 87-home golf course development; and some of East West's development at Northstar. However, the biggest project - a new ski resort, 1,360 housing units and a commercial area - appears dead for now. Sierra Pacific Industries, which owns 8,000 acres, or one-third of the community plan area, has reportedly dropped the proposal after meeting stiff resistance from county planners because the property is in a timberland production zone. Truckee is also reviewing early plans for a power center on 90 acres of commercial property near the airport, a couple miles south of downtown. One major change Lashbrook has seen during his eight years as Truckee's chief planner is increased interest in attached-unit housing. In that period, the price of a vacant lot in Tahoe-Donner has increased five-fold to about $150,000, making townhouses more appealing. Contacts: Tony Lashbrook, Truckee community development department, (530) 582-7876. Fred Yeager, Placer County planning department, (530) 889-7470. Barbara Green, Nevada County supervisor, (530) 265-1480. Tom Mooers, Sierra Watch, (530) 265-2849. Roger Lessman, East West Partners, (530) 587-2222. Martis Valley Community Plan online: http://www.placer.ca.gov/planning/martis-vcp/martis-valley-community-plan.htm

Can this marriage be saved? She — let's call her "L" — was a young, slightly naive city of 122,000 people in the high desert region of Los Angeles County. She loved her biggest retailer, Costco, very much. In their 13 years together, Costco had been a good provider, bringing about $470,000 annually to the city's general fund of $33 million. "L" vowed she would always be faithful to Costco, no matter the cost, no matter how much it hurt. Now, Costco was one of those discount retailers with that bad-boy, big-box look that drives small-town city councils wild. He was not into architecture or decorating, to put it mildly. That's why prices were low, Costco would say gruffly. He just put the merchandise on the concrete floor, and people lined up to buy it. A lot of it. At first, the marriage between Costco and Lancaster — oops, I mean "L" — appeared to be going well. "L" figured that if she and Costco stayed together, he could bring in something like $62 million during the next 30 years or so. But Costco was restless. He wanted more. He thought his 131,154-square-foot house was too small, and he wanted a bigger one. About 148,000 square feet, plus a gas station, would do. It also turned out that Costco had a roaming eye — or so he said. If he didn't get his way, he would leave "L" for her sister, Palmdale, the other sizeable town in the Antelope Valley. Of course, he hinted that he didn't really want to go. But when a retailer gets its heart set on a gas pump island, well, something has to give. "L" was frantic. She did not want to lose Costco for any reason, and was prepared to pay any price. If Costco wanted a bigger home, she would get him one: First she tried to condemn the neighboring merchant at Costco's old place. But the merchant, 99-cent Only Stores, sued the redevelopment agency, arguing that helping Costco was not a legitimate public reason to close another business. "L" looked at the old Sears lot, but it was too small for Costco, who apparently had very large feet (at least, he seemed to require a very big footprint). Eventually, "L" would provide 14 acres of her own land, plus another five acres of Lancaster City Park, infuriating local picnickers. Costco was sorry, to be sure, but 100 trees had to taste the chainsaw to make room for aisles of fertilizer spreaders, jumbo diapers and Britney Spears lunch boxes. The tearful city said she had to give up the parkland to preserve her "lifestyle." Apparently lolling in the shade at Lancaster City Park was not part of that lifestyle. Instead, she had her eye fixed on his rich streams of sales tax revenue and redevelopment tax increment. She hoped to reap $60.16 million in sales tax revenues, and another $2.2 million in tax increment, from the new Costco store and the old Costco store after it was reoccupied by another tenant during the life of the redevelopment project. "L" wanted everybody to feel good, and she figured out a clever way to help, at only a moderate cost to herself. Here is how the deal works: Lancaster will sell nearly 14 acres to Costco for $3.275 million. When construction on the new store is done, the city will buy Costco's old building for $6.275 million, using the $3.275 million from Costco, plus $3 million of redevelopment money, which the city plans to recoup by selling the building to the owner of Costco's former shopping center. In addition, the redevelopment agency will pay the city $589,000 for the parkland-turned-discount-store-parking lot. Furthermore, the agency has agreed to pay $610,000 for 26 acres of former ranchland on the other side of the town that can be used to enlarge another existing city park. The city will essentially subsidize the construction of the new Costco store in the following way: The store's annual sales tax payments to the city are to be frozen at $470,000 annually, which is the sum that Costco generated at the old store. Costco can keep all the money above $470,000 that otherwise would have gone to sales tax, until those revenues have effectively reimbursed Costco for the full cost of building the new store, estimated to be between $8 million and $9 million; the city expects this process to take five to seven years. Now, state law forbids redevelopment agencies from attempting to lure away another city's retailer with cash and other incentives. But don't worry. That is not happening here. Lancaster is paying money and giving away precious open space to prevent a retailer from going through with a threat to leave Lancaster for another city. See the difference? It's perfectly legal, even if it is no less objectionable. True, Lancaster has replaced its lost parkland with newly acquired property in another part of town. That does not set things entirely right. Open space is not a neutral condition whereof a loss on one side of town can be offset by a gain in another. Every part of the city needs open space, and Lancaster City Park is permanently diminished by this deal. It is a frightening precedent to begin thinking of parks as land banks for future redevelopment deals. Deals like that of Lancaster and Costco put one form of desirable land use — redevelopment — into conflict with the equally desirable goal of open space preservation. Once again, the drive to "do the deal" wins out over a larger planning vision. And was the deal even worth doing? Let me put forward the heretical notion that the parkland sacrifice was unnecessary. Costco would not have opened a store in the first place if Lancaster were not inherently a good trade area. If the city said no to Costco's latest demands, the store would threaten and fume, and go on doing business in Lancaster anyway — because it is profitable. As for going to Palmdale, don't think for a second that Costco will not open a store there the moment that market demographics justify it. For the time being, honey, he's not going to leave you because he loves you — for your money. You would be surprised how many marriages are held together by that stuff.

Perhaps no legislative proposal in recent memory has cut closer to the bone of California's state-local governance problems than AB 680, Assemblyman Darrell Steinberg's proposal to create a tax-sharing system for metropolitan Sacramento. And there's one simple reason for that: While tax-sharing has been discussed in legislative circles for close to 20 years, Steinberg's bill is the only one that has ever actually gotten very far. Despite intense opposition from most Sacramento suburbs and the League of California Cities, Steinberg's bill has passed the Assembly – a remarkable achievement apparently due in part to the assemblyman's rising stature in the Legislature. The bill proposes altering the sales-tax distribution formula for metro Sacramento in exactly the way that good-government reformers often call for. It would allow all jurisdictions in the region to hang on to their current sales-tax base, but it would distribute future growth in a different way. A third would go to the jurisdiction where the retail transaction takes place. But another third would be distributed based on population and the final third would be distributed to jurisdictions that meet certain housing and planning goals. It's hard to imagine that Steinberg's bill will survive the legislative session. Nevertheless, the mere fact that Steinberg's bill is still alive suggests that something is different in the Capitol these days. With more and more ex-local officials populating the Legislature, it may well be that the Capitol will begin to serve more frequently as a proxy for regional government, as it has in smaller states. Part of the reason why this happens is that it's really hard to broker a productive regional conversation at the regional level. Regionalism is tricky in any metropolitan area with a dominant central city and a series of smaller suburbs. It is virtually impossible for any central-city politician to promote regionalism without being accused of trying to cut a sweet deal for the central city. This is exactly what is happening to Steinberg, a former Sacramento city councilman. He's not the first one to suffer this fate. It's exactly the same thing that happened to William Johnson, the mayor of Rochester, N.Y. In national circles, Johnson is regarded as an enlightened paragon of regionalism and "smart growth." Back in metropolitan Rochester, however, he is often accused of appropriating these agendas to channel wealth from the ‘burbs back to the once-proud central city, whose population has dropped so much that Rochester is now about the same size as Fremont and Huntington Beach. Given that political reality, many central-city politicians will tell you that if they want to promote regionalism they have to do it sideways, by whispering in the ear of suburban mayors and asking them to carry the torch instead. But this brings its own risk with it. For a suburban politician, it's almost impossible to promote regionalism without being accused of seeking to dilute central city (often meaning minority) political power. That's why so few metropolitan areas in the United States have merged their central city and central county. Indianapolis has a city-county "Unigov," and Louisville, Kentucky, will merge with its surrounding county next year – but those are rarities. Sacramento city and county have never done so despite repeated discussions. The hue and cry from suburban Sacramento over the Steinberg bill sounds typical on the surface. Republican Assemblyman Dave Cox, who represents most of the eastern suburbs, complained that the bill allows the Legislature "to impose our will" and therefore "wipes out local control." William Kristoff, the mayor of West Sacramento, came out against the bill because, he said, "it creates winners and losers." These comments are probably good politics in the ‘burbs, where the appearance of local control is really important. But they conveniently ignore an undeniable reality: The Legislature has already imposed its will on local governments, and the system already creates winners and losers. The state's tax distribution system is not a level playing field. It rewards jurisdictions for luring retail transactions inside their boundaries and, combined with Proposition 13, penalizes them for approving most housing development. This is not a deliberate state policy, but it is the net effect of all the tax laws currently in place. Furthermore, the state has created a series of other "default" mechanisms that allow some cities to gain a financial advantage over others. For example, because there is no other method for adjacent jurisdictions to negotiate with each other over "impact mitigation" from development projects, the cities feeling "impacted" – especially by traffic – often sue under the California Environmental Quality Act. And they often settle out of court for road money. Thus, CEQA becomes a method of transferring funds from one jurisdiction to another – but, in most cases, only from jurisdictions accepting development to jurisdictions smart enough to hire good CEQA lawyers. A similar series of games can be played with redevelopment. At least Steinberg's bill forces many people to acknowledge the fact that the state's tax distribution system and other state processes create a de facto regional planning system that already circumscribes local control. And the Sacramento debate has raised another important – and increasingly relevant – point about regionalism: It is rarely a central-city-versus-suburb debate anymore because suburbs themselves are so different. Claiming that the Steinberg bill was, in fact, a central-city power grab, political columnist Dan Walters pointed out that the bill is unlikely to hurt the already-tax-rich suburb of Roseville, which would be held harmless – but it might hurt emerging close-in suburbs such as West Sacramento and Elk Grove, which hope to grow their sales tax base considerably in the future. Meanwhile, Mayor Kristoff of West Sacramento expressed support for a financial assessment on long commutes – a proposal that would probably help his city but harm a distant suburb, such as Rocklin. Steinberg's bill will have a tough time in the Senate, where the lobbying will be even more intense. The bill's chances were not helped when the Legislative Counsel issued an opinion in February that said the state constitution required the region's voters to approve the tax-sharing plan. Steinberg disagreed with the opinion, although he did not dismiss putting the issue on the ballot. The Legislature is not a perfect proxy for regionalism because Assembly districts in California run to 400,000 people, which makes them much larger than the typical city. (Sacramento, by coincidence, is about 400,000 people, meaning Steinberg really is the city's assemblyman.) But the Capitol's role in this debate might grow, for the simple reason that local interests in the regionalism debate are getting more diverse and regionalism really has no other political forum to gravitate toward. Of course, regionalism would get a big push if California's governor were truly interested in it. It's hard to imagine the ever-cautious Gray Davis taking real interest in this bill. The political equation could have been altered by a Gov. Richard Riordan. After all, he is simultaneously an elderly white Republican and the former mayor of a mostly minority central city – meaning he might have been inoculated enough (or conflicted enough) to take on the issue. However, the man who beat Riordan in the GOP primary earlier this month, Bill Simon, has shown even less interest in land use planning than Gov. Davis.

A sanitation district has exclusive jurisdiction to provide sewer service to an area annexed by Corona, and the city cannot interfere with that right, the Fourth District Court of Appeal has ruled. The lawsuit was forced by the Riverside County Local Agency Formation Commission's decision 16 years ago not to decide who would provide sewer service to the area. Formed under the Sanitary District Act of 1923 (Health & Safety Code § 6400 et seq.), the Home Gardens Sanitary District has provided sewer service to the area near the intersection of Magnolia Avenue and East Sixth Street since 1963. In 1986, the Riverside County LAFCO approved Corona's application to annex the territory. LAFCO identified the potential for the duplication of sewer services by Home Gardens and the city, but LAFCO simply suggested that the two entities work things out. They didn't. Instead, the city in 1999 adopted a policy for the area that said a property could connect to the district's sewer only if the property fronted on a street with a district sewer line, if there were no city sewer line in that street, and if the district had signed an interagency agreement with the city. Otherwise, the city required the property to connect to the city's sewer line. Home Gardens sued, and Riverside County Superior Court Judge Sharon Waters struck down the city policy. Judge Waters also ruled that both the city and Home Gardens have the right to provide sewer service to the area. Both sides appealed. A unanimous three-judge panel of the Fourth District, Division Two, upheld Waters decision to invalidate the city policy. But the appellate court went further and ruled that Home Gardens has the sole right to provide sewer service to the area. In the published portion of its opinion, the appellate court addressed three questions: Was the lawsuit filed too late? Can the city interfere with the district's exercise of statutory powers? Does the district have the exclusive right to provide sewer service? The city argued that Home Gardens filed the lawsuit way too late because LAFCO decided the matter years ago. But the court held that the challenge was not untimely because "LAFCO ducked the issue by leaving it to the city and the district to resolve." Thus, the lawsuit was not contesting a LAFCO decision because there was no LAFCO decision. On the second question, the city argued that its police powers allow it to decide how sewer service is provided within the city limits. Again, the court disagreed. Home Gardens "is a creation of state law and is exercising the authority conferred by state law to collect and treat sewage," Justice Art McKinster wrote for the court. "Any attempt by the city to exercise its police powers in a way that limits the district's statutory authority conflicts with state law and is void." The city pointed to a similar dispute decided in favor of a city in City of Fresno v. Pinedale County Water Dist., (1986) 184 Cal.App. 3d 840. However, the result there was different because Fresno is a charter city and Corona is not, the court held. As for exclusivity, the court again noted the superiority of state law over local ordinances. "State law authorizes the district not only to construct its sewers in any public street, but also to ‘compel all residents and property owners in the district to connect their houses and habitations and structures … with the sewers.' Here, the district has constructed those sewers and has adopted that requirement. Its decision that it will be the sole provider of sewer service within its boundaries has the force of state law," McKinster wrote. The Case: Home Gardens Sanitary District v. City of Corona, No. E029777, 02 C.D.O.S. 1467, 2002 DJDAR 1777. Filed February 11, 2002. The Lawyers: For Home Gardens: Alan Burns, Harper & Burns, (714) 771-7728. For Corona: Victor Wolf, Best, Best & Krieger, (909) 686-1450.

San Mateo County must approve plans for expansion of San Francisco International Airport before the project is considered by a state panel that decides on development along San Francisco Bay, according to a state Attorney General's opinion. The airport is on land owned by San Francisco in San Mateo County, and San Mateo County officials have often chafed at the lack of authority they have over SFO development. In recent years, SFO planners have inched forward on construction of new runways in the bay. The airport's current runways are too close together for two planes to land simultaneously in the fog, a limitation that makes flights to and from San Francisco among the most delayed in the country. The new runways would be far enough apart for two planes to land at the same time when the fog rolls in. When SFO initially started planning the runway expansion, San Francisco disputed San Mateo County's jurisdiction because the site of the proposed runways is public trust land in the bay, which is under the jurisdiction of the Bay Conservation and Development Commission (BCDC). However, state legislation approved last year (SB 244, Speier) made clear that the runway proposal would need San Mateo County's approval. The BCDC asked the Attorney General if San Francisco must get San Mateo County approval for the project before bringing it to the Commission. The BCDC also asked if it could waive or postpone the requirement for San Mateo County's approval. The opinion authored by Deputy Attorney General Gregory Gonot said San Mateo County gets to decide before the BCDC does, and that there is nothing the BCDC can do about it. The most important aspect of the opinion is that it resolved where BCDC fit into the procession of public agencies that must decide on the project, said Michael Murphy, San Mateo chief deputy county counsel. "The Commission's decision," Gonot wrote, "concerning whether San Francisco Bay should be subject to the placement of fill for a particular project must be based upon as complete a record as possible. If discretionary approvals by other local or regional governments have not been given, the Commission cannot make an informed decision as contemplated by the Legislature." Gonot cited Government Code § 66632, as well as §10311 of title 14 of the California Code of Regulations, which clearly state that the BCDC "may not waive or modify … the requirement that a permit application must obtain all local discretionary governmental approvals." According to Gonot, San Mateo County has both "jurisdiction" and "discretionary approval" over the project under §§ 21001-27007 of the Public Utilities Code, portions of which SB 244 amended. " he board of supervisors of the county is required to conduct a public hearing on the proposed airport expansion plan and approve or disapprove the plan. This approval process meets the traditional definition of having ‘jurisdiction,'" Gonot wrote. "Moreover," he continued, "the county has ‘discretionary approval' over the proposed project. … Determining whether the proposed airport expansion would be in the best interests of the county presents the same type of issues as presented in other land use regulatory decisions made pursuant to local police power authority." The opinion, combined with last year's legislation, make certain that San Francisco cannot move forward on the runway project without San Mateo County's approval. "It's been difficult because of their exemption from local building and zoning regulations," said Murphy, the county lawyer. "There have been disputes in the past over whether a specific undertaking is covered by county regulations." Not addressed in the opinion are all of the other state and federal agencies that must also review the SFO runway project, and where those entities fit into the decision-making procession. Also, San Francisco voters approved an initiative last year that requires all city projects involving the fill of more than 100 acres of bay to receive voter approval. The proposed runways would fill about 900 acres. Opinion No. 00-1212 was filed January 11, 2002. It can be found at 02 C.D.O.S. 355, and 2002 DJDAR 507.

A county can require an applicant for a development permit to indemnify the county in any attempt brought by a third party to void the permit, according to an opinion from the Attorney General's office. The specific question raised by state Sen. Wesley Chesbro (D-Arcata) is whether a county can require an applicant for a coastal development permit to sign an agreement to defend, indemnify and hold harmless the county in an action filed by a third party. The opinion authored by Deputy Attorney General Gregory Gonot, however, appears to apply to all discretionary development permits, not only coastal applications. Regulation of land development is an exercise of the police power of a county or city, Gonot explained. The police power allows local government to impose development fees, which relate to the impact of a development and the cost to the community. Local governments also can impose regulatory fees, such as the reasonable cost of processing permit applications or the cost of administering an ordinance. The costs included in regulatory fees can include all incidental costs for issuing a permit. Gonot cited United Business Com. v. City of San Diego, (1979) 91 Cal.App.3d 156), which built on an earlier state Supreme Court ruling. The court in United Business ruled that regulatory costs are not "simply those which arise directly in the enforcement of the regulatory provisions themselves. The license fee may properly be fixed with a view to reimbursing the city, town or county for all expense imposed upon it by the business sought to be regulated." Wrote Gonot, "Here, the indemnity agreement is exacted by the county to cover litigation expenses associated with the issuance of a coastal development permit." In Topanga Assn. for a Scenic Community v. County of Los Angeles, (1989) 214 Cal.App.3d 1348, the court ruled that a similar indemnity requirement was an issue of public policy and that challenges should be addressed to the legislative body, not the courts. "Accordingly," wrote Gonot, "we view it as a matter of public policy for a county to determine whether the litigation costs associated with the granting of a coastal development permit should be borne by the permit holder or by the general taxpayers of the county. A court will not interfere with a county's decision in this regard." Opinion No. 01-701 was filed February 4, 2002. It can be found at 2002 DJDAR 1721

Population projections beget households, households beget units and units beget Regional Housing Needs Assessments (RHNA) and those infamous housing elements. The current round of housing elements is based on the state Department of Finance (DOF) Demographic Research Unit's County Population Projections with Age, Sex and Race/Ethnic Detail:1990-2040. Since these population projections were completed in 1998, updated information – especially Census 2000 data – will beget new population projections that are likely to show significantly lower population increases by 2020, and, thus, the need for fewer housing units than projected. There are three reasons why the next round of projections should show lower future populations. The first is that the unadjusted Census 2000 count for California was 782,000 fewer than DOF's 2000 projection, or 2.5% less than expected. If the new set of projections uses this lower ‘benchmark,' the forecast 2020 population is reduced by 1 million (782,000 compounded at a rate of 1.33%). The second reason is that births to Hispanic women age 15-19 are less than projected. Because Hispanic births are the largest driver of natural population growth within the state, the impact of using new, lower birth rates in new projections should be significant. Demographers now think that the sharp increase in Hispanic births during the late 1980's may have been a ‘spike' resulting from the 1986 Immigration Control and Reform Act. More than 95% of the California's legalized population was Mexican or Central American with a median age of 32. Demographers speculate that with legalization came family reunions and a desire to "beget." More recent data show a decline in births of Hispanic women age 15-19 compared with the rates embedded in the 1998 projections. Should that lower rate continue, the Hispanic and the state's 2020 population is reduced by upwards of one million compared with the current DOF projections. Together, the lower Census 2000 count and the reduced Hispanic birth rate could bring a 2020 population projection that may be 2 million people fewer than the current projection of 45,450,000. The reduction would be proportionally greater in areas with large Hispanic populations, both now and in 20 years. The final factor behind lower future populations is more speculative and based on research and analysis that we at Solimar have completed on "ballot box zoning," urban growth boundaries, environmental restrictions (habitat protection, water availability, air quality impacts) and open space acquisition. All four trends make development difficult and more expensive and, coupled with our already high housing costs and current recession, might force a decline in migration to California — perhaps even more so than what DOF assumed in making its 1998 projections. According to DOF, net migration accounted for more than half of last year's population growth, which DOF officials view as a temporary situation that should have already declined. If net migration does fall and is captured in the next DOF projection, the result would further contribute to lower population projections. There is still the unresolved problem of the Census 2000 undercount, and the question of whether to add an estimated undercount figure. The initial Census 2000 undercount estimate for California was about 500,000, but the Census Bureau later rescinded the figure as unreliable. Two lower courts have decided against the Bush administration's claim that the adjusted numbers were protected by an exemption for information that is part of the decision-making process. Nevertheless, the official Census 2000 figure remains 33.8 million — well below what DOF and most other demographers anticipated. The next round of housing elements may not be as painful if the allocations are relatively lower. That is the good news for those many planners and elected officials who love to hate the RHNA process. The bad news is these projections only buy a few years' respite. The state's population will still continue to increase into the foreseeable future.

Counties do not have the authority to recover the cost of investigation and criminal prosecution of code infractions, the Fourth District Court of Appeal has ruled. The court held that cities do have the power to recover the costs of criminal code enforcement activities, but state law treats counties differently. "We must conclude that counties — unlike cities — do not presently have the power to ‘fix' fines, penalties and forfeitures for criminal violation of their ordinances, but are relegated to the fines and penalties set by general statute, except where the Legislature has expressly bestowed on the counties the power to impose additional penalties," Justice James Ward wrote for the court. In the area of code enforcement, the Legislature has not made such an exception. The decision came in a case from San Bernardino County. In August 2000, a San Bernardino County court found William Thomas Minor Sr. guilty of three infractions of the county code. The county prosecuted Minor because he failed to clean up his rural property, on which he operated an unpermitted hog farm, had accumulated a great deal of trash and inoperative vehicles, and had built unpermitted, substandard structures. The court ordered Minor to pay the county's Land Use Services Department $1,014 — equal to 19.5 hours of a code enforcement officer's time spent investigating the case, seeking compliance and preparing for trial. Minor appealed the conviction and fine to the San Bernardino County Superior Court's Appellate Division, which upheld the conviction but ruled that no statute authorized the county to recover the costs of criminal law enforcement in this instance. The Fourth District decided to review the case on its own motion and reached the same conclusion. As a general rule, the court held, government may not recover the cost of law enforcement unless authorizing legislation provides for the recovery. "Law enforcement is a quintessentially government function, and the government commands the requisite revenue to provide such services through the taxing power," Ward wrote. "It should come as no surprise, therefore, that the costs of law enforcement, carried out by the counties as an arm of the state, should be borne by the counties." A San Bernardino County ordinance that authorizes the county to seek reimbursement for code enforcement prosecution conflicts with the state's general law, the court ruled. However, the law in question, Government Code § 36901, explicitly authorizes cities to set penalties for violation of penal ordinances. Legislative control over counties, which are "mere political subdivisions of the state," is greater than over cities, the court noted. The county argued that the general law preemption only affects matters of statewide concern, and the county's recovery of code enforcement costs is not a statewide issue. But the court flatly rejected this argument. The county also argued that the recovery ordinance is a zoning ordinance. The court was skeptical but said it did not matter even if the ordinance in question were a zoning ordinance. Again the court pointed to the difference between how the Government Code treats cities in § 36900, and how the Government Code handles counties in § 25132. Both sections set the maximum criminal penalties for code violation infractions and misdemeanors. Ward quoted the lower court ruling, which cited § 36901: "‘The city legislative body may impose fines, penalties, and forfeitures for violations of ordinances. It may fix the penalty by fine or imprisonment or both.' … Even if we interpret § 36901 as authorizing cities to force criminal defendants to repay code enforcement costs, (an interpretation that is by no means obvious), no analogous statute exists empowering counties to impose ‘fines, penalties, and forfeitures.'" The court concluded that the state law was unfair, but, "we must reluctantly conclude that the county's remedy lies with the Legislature, and not with the courts." The Case: People v. Minor, No. E030458, 02 C.D.O.S. 1381, 2002 DJDAR 1655. Filed February 8, 2002. The Lawyers: For People: Matthew Marnell, San Bernardino Deputy County Counsel, (909) 387-5455. For Minor: Linda Rose Fessler, (714) 967-0967.

The Sacramento Regional County Sanitation District has adopted a sewer hookup fee schedule that increases rates for development on the urban fringe, but decreases the fees in existing urban areas. Previously, the Sanitation District charged all new homes the same amount for a sewer connection — $3,500 — regardless of a structure's location. Under the new plan, a home in a fringe areas such as North Natomas and portions of Elk Grove, Folsom and Orangevale would be assessed $5,850 by 2004. The fee for a home in more urbanized areas almost immediately dropped to $2,350. Backers of the plan, including environmental organizations and some Sacramento city and county leaders, said it would discourage greenfield development and encourage infill. The Building Industry Association of Superior California lobbied against the fee schedule, saying there was no basis for the decision. Monterey County supervisors approved one moratorium on new subdivisions in one part of the county, and extended an existing subdivision moratorium elsewhere. In late January, the Board of Supervisors imposed a moratorium on new subdivisions in Carmel Valley, east of Monterey, because of congestion on Carmel Valley Road. Officials said the moratorium would remain in place until the county upgrades the road and updates the general plan and Carmel Valley master plan. The moratorium does not affect building permits for already approved projects. Also in late January, supervisors extended for another six months a moratorium for an area north of Salinas that is critically short of water. The North County moratorium was already in place 18 months when supervisors extended it. Area residents and farmers rely on wells, but experts say the groundwater is being depleted. Thus far, no project to pipe water into the area has moved forward. As expected, an environmental impact report for the planned University of California, Merced, campus has been challenged in court. Three groups — Protect Our Water, the San Joaquin Raptor Rescue Center, and the Central Valley Safe Environment Network — filed the suit in February over the EIR approved one month earlier by UC regent. The environmental groups argue that UC segmented the review process rather than examine the entire 2,500-acre campus and new community as one project. Officials at UC defended the EIR on the proposed campus and said it was significant that no major, mainstream environmental group filed the lawsuit. The Merced County Board of Supervisors is scheduled to consider an EIR for the university community later this year. A Southern California developer pleaded guilty in February of attempting to bribe the mayor of Huntington Park. Harry Hwang of Huntington Park is scheduled to be sentenced in April on two counts of bribery. Huntington Park Mayor Richard Loya contacted the FBI last year when Hwang offered a bribe to get Loya's vote for a proposed retail and entertainment center, and for a city subsidy for the project. Hwang offered to launder political contributions for Loya, said he would pay for a Mexican vacation for the mayor and his wife, and even offered employment after Loya completed his term of office. In August, FBI agents videotaped Hwang handing Loya $4,000 in cash outside a hotel in downtown Los Angeles. Federal prosecutors cut the plea deal with Hwang, but the federal investigation into alleged corruption in Huntington Park is ongoing. California's High-Speed Rail Authority could be back on track next fiscal year. The 2002-03 budget proposed by Gov. Davis contains the full $8.46 million requested by the Rail Authority. Last year, the Rail Authority requested $14 million but received only $1 million (see CP&DR Public Development, December 2001). The agency, which is planning high-speed rail lines connecting San Diego, Los Angeles, Riverside, Sacramento and the Bay Area, cobbled together about $4 million from various federal sources and unused state monies to keep the effort going. If it receives the requested $8.46 million, the Rail Authority could complete an environmental impact report by mid-2003, according to officials. The governor has given mixed signals about the proposed high-speed train. Some people speculate that the September 11 terrorist attack may have caused him to reconsider the program in a more favorable light. The project has considerable support in the Legislature, especially from Central Valley representatives. Two architects who had big plans for establishing a jazz district in downtown Oakland during the 1980s have had a jury's award of damages tossed out. The architects, brothers Glenn and Richard Storek, had won a $41.8 million verdict against Citicorp Inc., which pulled funding for the project at the last minute. An Alameda County jury found that Citicorp committed fraud. But in an unpublished opinion issued in February, the First District Court of Appeal reduced the jury's award of damages to $900,001. The ambitious project called for redeveloping a stretch of Old Oakland with jazz clubs, restaurants and offices. The deal was to be financed with $30 million of municipal bonds and a $9 million loan from Citicorp. Development got started, but Citicorp refused to pay the last $1 million of the loan because of project cost overruns. The project stalled and Citicorp foreclosed. The Storeks sued and, after one jury deadlocked, they won the second trial. The appellate panel still ruled for the Storeks but found that there was no causal connection between the alleged fraud and the damages they suffered. A U.S. District Court decision issued in February could serve as a major setback to the CalFed project that seeks to restore the health of the Bay Delta. Fresno District Court Judge Oliver Wanger ruled that the Department of the Interior was measuring water incorrectly, and Central Valley farmers were entitled to water that federal officials have been devoting to environmental purposes. Under CalFed legislation, 800,000 acre-feet of water is to be dedicated for restoration of Bay Delta water quality and habitat every year. About half of that water would have been delivered to farmers. In exchange for giving up that water, farmers received a guarantee that additional water would not be diverted. However, in wet years, Interior was deducting water that refilled reservoirs from the amount dedicated to the environment. The Westlands Water District and other irrigation agencies argued that because of this approach, as much as 1.1 million acre-feet of water was going to environmental purposes, when the extra 300,000 acre-feet should have been made available to agricultural customers of the Central Valley Project. Wanger agreed. Environmentalists said the ruling was a setback for endangered species of smelt and salmon. The way federal biologists interpret Wanger's decision appears to be key. An appeal of the decision is likely. Mendocino County is in an uproar over a proposal by an entrepreneur to collect water from two rivers in giant plastic bags, and pull the bags with a tugboat to San Diego. As of February, Ric Davidge of Anchorage, Alaska-based Water World SA had an application for 20,000 acre-feet of water rights to the Gualala and Albion rivers pending before the State Water Resources Control Board. The proposal calls for burying a device like a cistern at the mouth of each river. A pipeline would carry freshwater from the collection points to plastic bags floating offshore. "There will be no loss of water table in the river, or in its associated ground water systems," Davidge told the Santa Rosa Press Democrat. The Mendocino County Board of Supervisors is already on record against the proposal. Sonoma County supervisors, state Sen. Wes Chesbro (D-Arcata) and Assemblywoman Patricia Wiggins (D-Santa Rosa) also have taken a stand against the concept. They say the proposal would set back efforts to restore endangered species habitat along the North Coast.

To critics of state and federal water policy in the California, the Westlands Water District symbolizes just about everything that could possibly go wrong with public management of this precious resource. But an $800 million deal that could retire one-third of the farmland in the huge water district might lay to rest one of the most vexing problems associated with Westlands while also ushering in a new era in Western water and land-use practices. Encompassing 604,000 acres on the west side of the San Joaquin Valley, Westlands occupies a 70-mile-long strip paralleling Interstate 5 from Mendota on the north to Kettleman City on the south. The district receives only about 7 inches of rain annually, but still manages to produce $1 billion a year in agricultural products. The catalyst for this arid-land alchemy is familiar throughout the West: provision of huge amounts of cheap water through an expensive taxpayer-supported project. In the case of Westlands, that catalyst is the Central Valley Project (CVP), a system of 20 dams and 500 miles of canals and aqueducts built and operated by the U.S. Bureau of Reclamation (USBR). The CVP irrigates more than 3 million acres of farmland in the Central Valley and provides domestic water to about 2 million urban residents. Westlands is the nation's largest irrigation district and the CVP's largest customer, with contracts for 1.15 million acre-feet of water a year. Established in 1952, Westlands signed a contract for CVP water in 1963 and a billion-dollar-a-year agricultural empire was established. But Westlands almost immediately began to run afoul of the immutable laws of nature. Thanks to inconvenient geology, which is rapidly helping irrigation transform the valley into a salt-laden wasteland, negotiations are underway that could result in the federal government spending as much as $805 million to buy out owners of 200,000 acres of Westlands farmland — and retire it. The geology is fairly simple to understand. As recently as 600,000 years ago, the San Joaquin Valley was a vast, shallow lake. Over millennia, sediments drifting to the bottom of that lake created a thick bed of clay, subsequently buried by debris eroding off the Coast Ranges and the Sierra Nevada. Farmers till the relatively young erosional debris and plant crops in it; the older clay layer traps and holds groundwater just beneath the surface (hydrologists call this "perched" water). Irrigation runoff — which becomes salty during its passage through the valley's saline soil — percolates into the shallow "perched" aquifer and cannot escape. Over time, the level of saline water has risen until it has begun flooding crop roots from below. Thousands of acres of farmland in the southern San Joaquin Valley have become too salty to farm because of this phenomenon. The problem was identified half a century ago, and the proposed solution was to drain the salty water from the valley and dump it in the Sacramento-San Joaquin Delta, where it eventually could mingle with the seawater of San Francisco Bay. The Bureau of Reclamation began construction of the 188-mile drain canal in the early 1970s but growing opposition from the Bay Area halted it in 1975 after only 85 miles had been built. The unfinished drain terminated near Los Banos in Kesterson National Wildlife Refuge, which had been established jointly by the Bureau and the U.S. Fish & Wildlife Service in 1970 to accommodate irrigation drainage and replace waterfowl habitat lost to farming and urbanization. In 1983, however, biologists and refuge workers noticed that ducks, coots, grebes, and stilts born at Kesterson were emerging from their eggs with deformed beaks, missing wings, twisted legs and misshapen skulls. Many died shortly after hatching. Lab tests by Fish & Wildlife determined that the epidemic of death and deformity was the result of unusually high concentrations of selenium, an element that occurs naturally in the Westlands Water District soil (and is widespread throughout the Southwest). An essential nutrient that is toxic in high doses, selenium was picked up by the irrigation runoff flowing from Westlands into the drain, and grew more concentrated in Kesterson as water in the refuge's shallow lake and bordering marshes evaporated under the fierce Central Valley sun. The Bureau of Reclamation shut down the drain in 1986. Since then, most of the salty, selenium-rich water draining off Westlands farms has had no place to go. Political pressure from downstream communities has blocked any solution that would send the contaminated runoff somewhere else. Alternatives that would keep the drainage in the valley — such as filtering the tainted runoff, sending the water to evaporation ponds and hauling the brine to landfills — would cost more than the land in the irrigation district is worth. A federal report released last month suggested that such treatment could cost as much as $3.8 billion. That same report estimated the proposed land buyout by the federal government — which a court ruled two years ago must solve the problem because it never built the drain it had promised (see CP&DR Legal Digest, March 2000) — would cost "only" $805 million. Agriculture-dependent Central Valley communities are understandably anxious about the economic impacts of taking so much land out of production. But retirement would serve many goals. It would solve the drainage problem for at least part of the valley. It would enable habitat restoration for plants and animals endangered by agricultural activities. And it would free up a third of the water being used to irrigate Westlands farms. Thirsty urban agencies would pay premium prices for that water, which Westlands will continue to control under its long-term CVP contracts. With agriculture consuming more than 80 percent of California's developed water, it wouldn't take too many deals of that sort to shift enough water from farms to cities to address the state's growing imbalance between demand and supply. And by eliminating crops from all that flat land in the I-5 corridor, conveniently near the booming communities of the Central Valley, the deal suggests a way to shift urban development pressure from truly prime cropland to problematic acreage that probably should not have been farmed in the first place. Contacts: Westlands Water District: (559) 224-1523. U.S. Bureau of Reclamation: (559) 487-5039. U.S. Fish and Wildlife Service: (209) 946-6400.