No single resource has had more of an influence on California's development patterns than water. The essential liquid has been pivotal to a range of historical and political conflicts, from the pillaging of the Owens Valley by Los Angeles to the damming of the Hetch Hetchy Valley by San Francisco. The U.S. Supreme Court has had to mediate disputes involving California and its neighboring states over Colorado River water. As recently as the 1980s, droughts were scary enough that even normally anti-growth Santa Barbarans voted for two major new supplies: state water and desalinated seawater. Other thirsty coastal communities closely watched Santa Barbara's experience with building a desal plant. Unfortunately, Santa Barbara's experiment — built at a cost of $34 million and employed for only three months during 1992 — is considered by advocates as the black eye in the desal water supply trend, though city officials still call the plant a "drought supply." But Santa Barbara's expensive desal story overshadows what has really been happening during the last 10 years. The cost of desal has dropped by 50%, the technology for developing efficient filter membranes has improved greatly, and the demand for new water sources has remained as urgent as ever. And for many communities in the state, desal has emerged as a leaner and viable alternative to new dams, reservoirs and pipelines. Counter to popular belief, most desal plants operating in California are not by the sea, and they do not use seawater. Instead, most plants treat "brackish" water —- groundwater that has high levels of dissolved solids due to seawater intrusion or other contamination, or even sewer effluent. Three such plants have come online in since 1998 in Riverside, San Bernardino, and San Diego counties. The product is typically blended with other sources — usually imported water. These reverse-osmosis systems require far less expensive filter membranes than do plants that treat seawater. Furthermore, they can avoid complicated coastal resource-related permits. Casey Jaworksi is a water engineer for the city of Oceanside, a city whose experience with desal operations is typical in California today. During the 1960s, Oceanside stopped using local groundwater because it had become contaminated by seawater intrusion, he said. Usually induced by over-pumping by agricultural users, seawater migration into underground aquifers has emerged as a problem up and down the California coast. In 1994, Oceanside opened a desal plant three miles inland from its sandy beaches, Jaworski explained. Using a reactivated well site, the plant immediately began supplying 2 million gallons per day, 7% of the city's demand. A current expansion of the plant will yield 6 million gallons a day, thereby handling 15% of the projected local demand. The project was spurred by financial incentives offered by the nation's largest water supply agency, the Metropolitan Water District of Southern California. The Met offers $250 per acre foot subsidy for its member agencies that produce from local supplies. Immediately south of Oceanside, the City of Carlsbad is involved in the better understood, albeit rarer, type of desal plant, the kind that actually uses seawater. In conjunction with officials from the San Diego Water Authority, Carlsbad is considering entering a deal with Connecticut-based Poseidon Resources to develop seawater desal operations at the Cabrillo power plant in Carlsbad. A second plant would be developed at a power plant in Chula Vista. Proponents say that Carlsbad's Cabrillo facility alone would produce 9.3% of San Diego County's domestic supply. The proposed plant would use the same technology as a facility scheduled to go on line in 2003 in Tampa, Florida, another fast-growing region with water demand pressures and supply constraints. In this new generation of seawater desal technology, the plant is coupled with an existing power plant, which already has seawater intakes for cooling. The desal plant diverts some of this supply and processes it through the latest filtering membranes. It then discharges the concentrated remains with the power plant supply effluent. The Tampa plant, which will produce 25 million gallons per day, will be the largest such plant in North America used for domestic supplies. Even though the cost of seawater desal is becoming competitive with developing other surface water sources, obstacles remain. Environmental concerns about discharging hyper-salted waste byproduct into the ocean is one hurdle. The reliance on electric power to drive the filtration is another. Such impacts, however, need to be weighed against the formidable environmental challenges of developing new reservoirs and pipeline systems. The trend is clearly working against the latter. Globally, desal is viable where other more traditional sources are either depleted or otherwise unavailable, according to water engineer Ben Movahed, of Watek Engineering in Maryland. Island and desert regions are where most seawater systems operate. "If you have other sources, you want to use those. Desal is a system of last resort," Movahed said. So does the emergence of desal in California's urban coastal communities suggest that the region has reached a holding capacity? With popular support and political stomach for 1950s-era public works plumbing projects absent, the ocean may represent that last resort. -------------------------------------------- Water Costs to Consumer, per 1,000 Gallons Existing traditional supply: $0.90-$2.50 Brackish: $1.50-$3.00 Seawater: $3.00-$8.00 Traditional + brackish $1.20-$2.75 Traditional + seawater $1.10-$3.05 (source: American Membrane Technology Association) ----------------------------------------------

Although they cannot be false and misleading, ballot arguments need not be relevant, the Fourth District Court of Appeal has ruled. The panel issued its opinion in a lawsuit challenging the title of, and ballot arguments for, a City of Huntington Beach measure on the March ballot that would impose a tax on a power plant. The unanimous three-judge panel reinstated a number of the city's ballot arguments that a trial court had struck down. However, the appellate panel removed a few of city's arguments as false and misleading, and the court slightly modified the title of the measure. "In the political arena, after all, one person's relevant argument is another person's nonsense. Only when there is no relationship to the measure does the trial court have the authority to strike it," Justice David Sills wrote. Huntington Beach has had a 5% tax on utilities — including natural gas, electricity and cable television — since 1970. The ballot measure would extend the tax to AES Corporation's wholesale purchase of natural gas to fire an electricity generating plant. The city proposed the tax, which would raise about $2 million a year for a proposed "infrastructure fund," shortly after the California Energy Commission allowed AES to restart two units of the plant despite local objections. AES President Ed Blackford challenged the title of the ballot measure, the ballot argument and the city's rebuttal. In December, Orange County Superior Court Judge Derek Hunt ruled in favor of Blackford. One week later, Hunt backed away from some of his initial decision. Both the city and Blackford appealed. The Fourth District refused to strike anything as irrelevant. However the court replaced the word "exemption" in the measure's title with "exclusion," so the title became, "Amendment of Utility Tax by Removing Electric Power Plant Exclusion." The court ruled that the word "exemption" connoted "unfair influence and special treatment," which amounted to advocacy in what should be a neutral title. The court also struck all or portions of five ballot arguments submitted by the city because the court held that they were false or misleading. For example, the city's argument said the measure would only require the power plant to pay the same tax that all residents pay. The court ruled, "It gets hit with Huntington Beach's 5% utility sales tax on its utility bills the same as everybody else does. What it doesn't pay is a tax that only it could pay. So to say that AES is the only business that does not pay ‘this tax' is to mislead." The court also removed as false a sentence claiming AES refused to sign a contract for sale of electricity solely in California. The Cases: Huntington Beach City Council v. Superior Court of Orange County; Ed Blackford v. Superior Court of Orange County, No. G030075, 02 C.D.O.S. 205, 2002 DJDAR 261. Filed January 8, 2002. The Lawyers: For Huntington Beach: Gail Hutton, City Attorney, (714) 536-5555. For Blackford: Donald R. Brown, Manatt Phelps & Phillips, (310) 312-4318.

City leaders in Azusa believe they have their community on a more prosperous track after years of political fighting and questionable land use decisions. Downtown redevelopment is finally taking hold, builders are constructing upscale houses, and an exhaustive planning process for a prized 400-acre parcel appears to be settling old disputes. Not everything is rosy in the city of 45,000 at the eastern end of the San Gabriel Valley. Incomes of residents are among the lowest in the valley, years of cheap construction have given parts of town an undeniably tacky appearance, and not everyone supports the new developments. Still, people inside and outside of City Hall believe the town, in general, is headed in the right direction. "They are not stuck in some endless downward spiral where nobody really cares," said Dena Belzer, a principle with Strategic Economics in Berkeley who has studied suburbs extensively. "No one's trying to invent it as something else. They're just trying to do what they do better." Many inner-ring suburbs, including Azusa, have gotten stuck in downward spirals, conceded Rick Cole, who became city manager in 1998. "The challenge is, what do older suburbs become?" Cole said. "Do they become like central cities without the stadiums and cathedrals and museums? Do they just provide more and more low-end housing, with more crime and school test scores that continue to spiral downward?" Throughout much of the 1980s and 1990s, other San Gabriel Valley suburbs — including Pasadena, San Marino, Sierra Madre, Arcadia and Monrovia — gentrified. They suffered during the aerospace industry downtown, but their overall fortunes headed in the right direction, and they have become stable, desirable, inner-ring suburbs. But Cole, who earned a reputation as a New Urbanist while serving as Pasadena's mayor, remembers the Colorado Boulevard of the 1970s. Far from the being the heart of today's trendy Old Town Pasadena, Colorado Boulevard 30 years ago was lined with second-hand stores, and the street was lifeless at night. With incremental improvements, good planning and public investments, Pasadena capitalized on its strong sense of place and righted itself. Cole does not picture Azusa becoming "another Pasadena," but he sees no reason why Azusa cannot become equally desirable. Azusa lacks Pasadena's famous Arroyo, but it has some similar assets — well-kept neighborhoods of older homes, a decent job base, proximity to other employment, and a spot at the base of the scenic San Gabriel Mountains. An ugly political history During the 1980s and much of the '90s, Azusa politics was cutthroat and often centered on development disputes. Turnover on the City Council and inside City Hall was rapid. The conflict peaked during December 1995 with an initiative to permit casino gambling. Voters rejected Proposition A by more than two-to-one, but the fight split the community deeply. In 1999, the Azusa City Council approved a 1,600-house subdivision on about 400 acres owned and still used by Monrovia Nursery. Again, voters had their say, defeating the project in a referendum later that year. The project's defeat opened the door for the city and Monrovia Nursery to start fresh on planning for prime real estate. The lengthy and public planning process that has attracted hundreds of participants could be considered symbolic of Azusa's new approach. During the early 1990s, nursery owners revealed that they wanted to sell the property for development. At the time, developers and community leaders believed the only option for development was lower-end, single-family houses. Azusa Mayor Christina Cruz Madrid recalls the proposed project as "worse than what we have now — future ghettos." With Madrid dissenting, the City Council approved the project anyway. This time around, the city is including detailed planning for the nursery site in a broad revision of the 20-year-old general plan. The city has conducted public forums regarding the nursery property, as well as a design competition. Last December, the city hired the planning team of EDAW Inc. and Maryland's Torti Gallas and Partners. "We generally would not work on a 400-acre site. It's not big enough," said Steven Kellenberg, a principal in EDAW's Irvine office. The company took interest because Azusa clearly wants a project that is "a level above," he said. "The site is very interesting for a couple of reasons," Kellenberg said. "It's an infill site of a significant size in an area where there is a very strong market demand for housing. The second thing is, it's a heritage site." Kellenberg said planners responded well to the four basic principles outlined by city officials for the project: a circulation system that connects with the rest of town; open space and parks that benefit all city residents; a mix of housing types, including affordable units; and an activity center around a future Blue Line rail station. Planners conducted a public workshop in January, and Kellenberg hopes to release some concrete plans early this spring. "I think we could do something that is really a benchmark for the region," he said. Although Monrovia Nursery is providing $350,000 for the planning process and company CEO Miles Rosedale endorses the city's approach, Azusa officials insist that it is not a developer-driven effort. The city is not preparing a specific plan for the site. Instead, the general plan and zoning will be specific enough that developers can go straight to the tract map stage, Cole said. The goal is to end up with a "neo-traditional" development that emphasizes pedestrian activity, a mix of housing styles and public transit. Rosedale said the company hopes that the Azusa planning effort will lead to similar development on the 200 acres of nursery property in Glendora. Mayor Madrid said the project will never receive unanimous support in the community, but she believes people can reach consensus on the major issues. Madrid insists that the project incorporate open space for wildlife and public gatherings. Starting with the basics Cole began laying groundwork for the nursery site planning process well ahead of time. When he arrived nearly four years ago, he found "an incredible, untrustful cynicism" among city residents. To combat that, he and other city leaders began tackling small problems — not simply to make small improvements, but also to gain credibility. The city provided money to upgrade a rundown park in a poor part of town. The city tackled a long-standing day-laborer problem by building a bus-stop type facility away from residences and businesses where workers and employers can meet. And the city implemented a campaign to plant thousands of street trees. "You can't do a big, ambitious planning project unless you can show results," Cole explained. "It's not magic. It's hard work and incremental improvements." Downtown redevelopment, which has a long and checkered past, appears to be advancing. The city spent $1.8 million on streetscape improvements, which helped entice dozens of businesses to fill vacancies on Azusa Avenue. Last November, voters approved a $5.5 million bond to build a new library on the edge of downtown. Two small, mixed-use downtown redevelopment projects are also in the hopper. At the city's insistence, a new downtown Sav-On drugstore is not simply a faceless box; instead, the blank walls are set back from the street and an attached restaurant with patio seating faces Azusa Avenue. Cole and other believers also convinced developers to build something other than stereotypical, lower-end single family homes. Several small projects of houses selling for $250,000 to the lower $300,000s have proven popular. While still suburban and automobile-dependent in nature, the new projects have incorporated some neo-traditional elements such as street trees and homes with front porches. One development now under construction takes Azusa housing up another notch. Standard Pacific's 327-unit Mountain Cove subdivision will offer homes ranging from about $350,000 to more than $500,000. They are the most expensive houses ever built in Azusa, and many people, including Cole, see Mountain Cove as another step in the city's comeback. Others are not so sure. The project is decidedly not New Urbanist — it will be gated, it contains no affordable units and it is isolated from the rest of town. Environmentalists protested the project, and some people raised concerns about potential San Gabriel River flooding. "It's a very sensitive area," said Mayor Madrid, who cast the lone dissenting vote on Mountain Cove. "It should not have been in the 100-year floodplain. It should not have been in undisturbed areas. It should have been less dense and should look like its part of the national forest — and not like something that is part of Irwindale and is plopped down there." Cole defended the project design as sensitive and said gates were needed because Mountain Cove is along Highway 39, which provides heavily used access to the nearby Angeles National Forest. And, he said, farming, paintball games and other uses had already degraded the site. The next phase Arguments over half-million-dollar houses suggest that Azusa's problems are becoming the sort that most cities like to have. Belzer, who did baseline economic studies for Azusa's general plan update, said the city can benefit from the San Gabriel Valley's strong local economy and lack of available land. "I think that Azusa needs to continue to work on it's physical plant, if you will, so that it seems like a nice place to live," Belzer said. The city also should ensure that new industry and jobs match the available housing, she recommended. "I think one of the reasons Azusa is now coming back is because the city is working hard to keep its blue-collar work force," she added. Contacts: Christina Cruz Madrid, Azusa mayor, (626) 334-0954. Rick Cole, Azusa city manager, (626) 812-5238. Dena Belzer, Strategic Economics, (510) 647-5291. Steven Kellenberg, EDAW, (949) 660-8044. Miles Rosedale, Monrovia Nursery, (626) 334-9321.

An Orange County ballot initiative that sought to block the development of a civilian airport at the closed El Toro Marine Corps Air Station has been thrown out by a state appellate court. The court ruled that Measure F from March 2000 interfered with essential governmental functions, crossed the line into administrative activities, and was vague. The unanimous three-judge panel of the Fourth District Court of Appeal, Division One, upheld an earlier ruling by Los Angeles County Superior Court Judge James Otero (see CP&DR Legal Digest, January 2001). "Measure F is an unworkable and excessive exercise of the initiative power," Justice Richard Huffman wrote. Measure F was the third initiative addressing reuse of El Toro, a 4,700-acre plot of flat land in unincorporated Orange County and the City of Irvine (see CP&DR Economic Development, May 2001; Insight, April 2000; Local Watch, November 1999; Base Reuse, December 1994). The first initiative was the voter-approved Measure A in 1994, which designated El Toro as an airport in the county's general plan. Two years later, voters rejected Measure S, which sought to repeal Measure A. Since then, the county Board of Supervisors, which is divided 3-2 on the issue, has spent millions of dollars planning an El Toro airport that could handle at least twice as many annual flights as nearby John Wayne Airport. But El Toro reuse is extremely controversial — several communities near the base have incorporated as cities primarily to fight the airport plan — and opponents qualified Measure F, the "Safe and Healthy Communities Initiative," for the March 2000 ballot. The complex initiative required two-thirds voter approval of any plan to site an airport, jail or hazardous waste dump. Everyone conceded that the proposed El Toro airport was the target of Measure F, and 67% of voters approved it. Airport supporters immediately sued. The trial court granted a stay, Measure F never took effect and the county has continued with airport planning. In December 2000, Judge Otero ruled Measure F was unconstitutional. Airport opponents, who defended the lawsuit in place of the county, appealed. But the Fourth District said Otero got nearly everything right. The state Supreme Court upheld the right of citizens to amend general plans via initiative in the landmark case of DeVita v. County of Napa, (1995) 9 Cal.4th 763 (see CP&DR Legal Digest, April 1995). The court in DeVita also upheld use of an initiative to establish a subsequent vote requirement for certain, future land use decisions. But the Fourth District held that Measure F was a different creature than the Napa County initiative reviewed in DeVita because Measure F "is not an act that directly amends the general plan or provides other substantive policy," Justice Huffman wrote. "Rather, it essentially imposes procedural hurdles upon the planning process." The court held that Measure F interfered with two essential government functions, namely, land use planning and fiscal management. For example, Measure F requires the Board of Supervisors to conduct public hearings in every city potentially affected by a proposed airport, jail or hazardous waste dump. The initiative also could be read to require public votes other than a final one on project development because the initiative requires votes on "any act by the county to approve" a project. The initiative also barred the county, with certain exceptions, from spending money for such projects unless voters approved. "Measure F … essentially restricts the Board from carrying out a legislative policy already set by the voters when they enacted Measure A," Huffman wrote. The appellate panel also ruled that Measure F trod on administrative acts, which are not subject to initiative and referendum. "There is no overt statement that the previous legislative policy declared by the prior initiative will be changed, but the manner in which Measure F would restrict the Board's administrative discretion with voter approval requirements places the subject initiative firmly within the administrative category of voter enactments which are not permitted," Huffman wrote, citing City of San Diego v. Dunkl, (2001) 86 Cal.App.4th 384. "It is clear from the language of Measure F that it is an effort to administratively negate otherwise valid planning activities that have not yet been fully carried out pursuant to Measure A. Accordingly, it is not a valid subject of an initiative measure," Huffman wrote. Furthermore, the court ruled, the initiative was "so vague as to be an unworkable interference with the Board's duties." Restrictions on spending "clearly circumscribe the discretion of the Board, but it is not possible to tell to what extent," Huffman wrote. "Who is to decide what spending is necessary, or for what purposes that are sufficiently related to the project?" The court further held that Measure F appeared to violate the "single-subject" rule that applies to initiatives. And it appeared to be a local initiative that addresses matters of statewide concern — the planning of a large airport — which violates the state constitution. Airport opponents vowed to seek state Supreme Court review of the decision. Additionally, Orange County voters are scheduled to vote on El Toro again in March. Among other things, Measure W would, in fact, repeal 1994's Measure A. The Case: Citizens for Jobs and the Economy v. County of Orange, No. D037543, 02 C.D.O.S. 115, 2002 DJDAR 137. Filed January 4, 2002. The Lawyers: For CJE: Dana Reed and Bradley Hertz, Reed & Davidson, (213) 624-6200. For the county: Benjamin de Mayo and Thomas Agin, assistant county counsels, (714) 834-3300. For airport opponents: Steven Mayer and Richard Jacobs, Howard, Rice, Nemerovski Canady, Falk & Rabkin, (415) 434-1600.

County officials are questioning the state's housing allocation process, which often requires counties to plan for thousands of housing units even as they are also planning to protect agricultural land and open space. Does it make sense, they ask, for a county with limited infrastructure to plan for urban growth when incorporated cities are better positioned to handle new development? The issue has arisen recently in Napa, Sonoma, and Solano counties. All three are semi-rural counties on the edge of the Bay Area whose local governments were required to submit draft housing elements to the state on January 1. And, to varying extents in all three counties, growth is directed to incorporated cities — away from farmland and open space. In Napa, county officials are currently meeting with city officials to see if they can agree on shifting housing allocations. Said Napa County Supervisor Bill Dodd, "Consider the fact that we're an agricultural county, and the fact that the state always laments the loss of agricultural land, and the fact that HCD equates agricultural land and open space as land available for housing. There is a huge disconnect there." Alex Amoroso, senior planner for the Association of Bay Area Governments (ABAG), which allocates fair-share housing goals for the nine-county region, understands what Dodd is saying. During the Bay Area's next round of housing element updates, planners need to weigh agricultural and open space needs, he said. ABAG will have to begin the next round soon, as housing elements must be updated every five years under state law. "I think that the unincorporated planning issue is something that we need to address, just because more and more counties are moving toward slow growth," Amoroso said. Julie Bornstein, director of the state Department of Housing and Community Development (HCD), said the allocation of housing targets within a region is up to the local council of governments (COG), such as ABAG. State housing officials do not necessarily care how a COG divvies up the number of units for which the state says a regional must plan, she said. "From the state's standpoint, we would hope that additional housing units would be accommodated where there is some infrastructure," Bornstein said. "We want to discourage sprawl and encourage preservation of farmland." The state and regional housing allocation processes are among the topics of discussion for a housing element reform working group that is meeting in Sacramento (see , November 2001, in the Archives). The working group, headed by Assemblymembers Alan Lowenthal (D-Long Beach) and Patricia Wiggins (D-Santa Rosa), has been meeting since the close of the 2001 legislative year and includes representatives from across the spectrum — local government, developers, environmentalists and housing advocates. The participants have not yet reached many agreements, but some hope that a legislative package emerges from the working group later this year. The legislation would likely include increased enforcement of housing element compliance, and measures to make the housing element law work better for local governments, according to sources at the Capitol. The Napa County experience Officials in Napa County and their neighbors in Sonoma and Solano counties contend the housing element law does not work well from them. With guidance from Wiggins, Napa County established a committee of two county supervisors and two representatives from each of the five cities in the county. The committee has met only a few times since forming in late 2001. The idea is to think up ways for the cities to relieve the housing burden on unincorporated Napa County, and for the county to compensate the cities for taking additional housing. During the regional housing needs determination, ABAG assigned unincorporated Napa County 1,969 housing units, or 28% of the county's overall allocation. Yet the only county areas with much infrastructure are the small communities of Coombsville near Napa, and Angwin outside of St. Helena, and around the Napa County Airport between Napa and American Canyon. Furthermore, Napa County has a number of policies — some of which voters imposed — that protect farmland and the watershed from development. The most likely place for housing development in unincorporated Napa County is in the pastures near the airport, where the county has struggled since the 1980s to build an industrial park (see , September 2001, in the Archives). Supervisor Dodd, however, said planning houses near the airport "is the worst kind of planning." So one possible solution would be for the cities of Napa and American Canyon to annex industrial land near the airport in exchange for accepting more housing units. Napa Vice Mayor JoAnn Busenbark said the cities are not willing to "bail out" the county, but they are willing to address long-term land use planning. Napa, Yountville, St. Helena and Calistoga all rely heavily on the wine industry and related tourism. "It's got incredible potential because of the players around the table," Busenbark said of the new committee. "It's driven by this really intense desire to save our piece of the world." Amoroso said ABAG is watching the Napa County working group. The goal of the state housing element law is to divide the housing burden evenly across a region, but it is fine if local governments want to redistribute the housing numbers within their sub-region, he said. Solano County may attempt an approach similar to Napa County's Plenty of room for jobs Sonoma County officials have strongly criticized the ABAG regional housing needs determination. In fact, ABAG assigned unincorporated Sonoma County 6,800 housing units — about 30% of the county's entire allotment and more units than any other unincorporated county in the Bay Area. Yet the vast majority of development in Sonoma County is in the nine incorporated cities, all of which have growth boundaries. Sonoma County officials, like their counterparts in Napa, Solano and some other counties, argue that regional planners and state officials refuse to recognize growth-control policies aimed at protecting valuable farmland and open space. "I don't think we can make the numbers they want without busting our general plan," Sonoma County Supervisor Tim Smith told the Santa Rosa . But some people say counties are willing to fight only selected growth battles. "Some of those counties that are not set up well to deal with the housing issue are set up quite well to deal with the business end of things," Amoroso said. The ABAG housing determination was based primarily on projected growth in jobs and households within a jurisdiction, he noted. Businesses located in unincorporated Napa and Sonoma County, for example, continue to hire many thousands of farmworkers, winery workers and resort employees. Some environmental groups also question the counties' priorities. Unincorporated Sonoma County's regional housing allocation sounds daunting "if you think of large-lot, single-family houses," said Janet Stone, the livable communities program director for Greenbelt Alliance. The county, however, could meet its allocation of 1,300 very low-income units with about a dozen apartment complexes of roughly three acres apiece in unincorporated communities that already have some infrastructure, she said. "There is no reason why these areas couldn't accommodate compact housing development," Stone said. David Grabill, an attorney for Sonoma County Housing Advocacy Group, said hundreds of acres within the urban growth boundary for Santa Rosa are available for housing development. Some of the land is within the city's sphere of influence and some is outside. The real issue is a decade-old county policy that directs multi-family developments to cities. "The county is reluctant to allow apartment development in unincorporated areas, although they have to do it," said Grabill, whose suit over the county's previous housing element resulted in a court order that severely restricted subdivisions and rezonings. "They have the ABAG numbers, just like all the cities do. If the county doesn't provide its share, that just puts more pressure on the cities to provide lower-income housing development." After months of wrangling, county officials adopted a housing element that they say accommodates the mandated 6,800 units. In fact, said Deputy Planning Director Pete Parkinson, the county did not have to rezone any land because there are adequate sites available in existing unincorporated urban service areas. The county will consider residential projects close to those urban service areas if some development already exists, he said. The housing element approved by Sonoma County supervisors in late January allows affordable housing developments of up to 20 units-per-acre in commercial and industrial zones, contains provisions for inclusionary zoning, relaxes the regulation of second units, offers density bonuses of up to 100%, and calls for linkage fees on commercial development to fund housing programs. The provision of sewer service remains a significant problem, Parkinson said, because the largest unincorporated urbanized areas are served by the City of Santa Rosa, which is not willing to provide unlimited hookups. Small sanitation districts elsewhere have minimal capacity, he said. The cost and time required to build new wastewater treatment plants is potentially prohibitive, he added. Statewide implications The battle that Napa, Sonoma and Solano counties have fought is likely to reach far outside the Bay Area in coming years, when other regions complete the regional housing allocation process. Some rural counties welcome housing growth in unincorporated territory, while others — especially some counties in the Sierra Nevada foothills and along the coast — do not. "I think the state has a real challenge, and that's not lost on me," Napa County Supervisor Dodd said. "The point of this is not to be critical of the state … we're frustrated. We need to make sure that the agricultural nature of Napa County is as important to the state as it is to us." Dodd even suggested rethinking the regional approach to allocating fair-share housing units. The Solano county cities of Fairfield and Vallejo are located within a 20-minute drive of many Napa County job sites, he pointed out. "Isn't it more important to make sure you have homes available within a certain proximity to jobs, so that jurisdictional lines are not the issue?" Dodd asked rhetorically. Jurisdictional lines, however, present an issue that is unlikely to go away. Amoroso said that while ABAG might be willing to let a county and its cities reallocate housing units, no one is going to accept moving fair-share allocations across county lines. The issue that some people are avoiding is density, said ABAG's Amoroso. Protecting farmland and open space for the long-term requires building denser cities, he said. "What it all comes down to is, we're not building enough housing," Amoroso said. Contacts: Julie Bornstein, Department of Housing and Community Development, (916) 445-4775. Alex Amoroso, Association of Bay Area Governments, (510) 464-7955. JoAnn Busenbark, Napa vice mayor, (707) 258-7876. Bill Dodd, Napa County supervisor, (707) 259-8278. Janet Stone, Greenbelt Alliance, (415) 398-3730. David Grabill, Sonoma County Housing Advocacy Group, (707) 528-6839. Pete Parkinson, Sonoma County Permit and Resource Management Department, (707) 565-2563.

WASHINGTON _ Lake Tahoe area property owners seeking compensation for a moratorium on development first enacted two decades ago received a mixed reaction on January 7 from the two Supreme Court justices who hold the critical votes for their claims. Justices Sandra Day O'Connor and Anthony M. Kennedy peppered veteran Santa Monica property rights litigator Michael Berger with critical questions about the potential impact of forcing governments to pay landowners for any delay in acting on land use applications. But O'Connor and Kennedy later indicated sympathy for the plight of hundreds of landowners unable to develop their land since the adoption in 1981 of what was depicted as a temporary planning measure to help protect Lake Tahoe from environmental degradation. "It's been 22 years for some of them," O'Connor said. "Is there any end in sight?" The two centrist-leaning conservatives are expected to hold the balance of power in the latest, ideologically drawn property rights dispute at the high court. The court in the past decade has given property rights advocates a series of victories, sometimes on 5-4 votes pitting the court's conservatives � including O'Connor and Kennedy � against the four liberal justices. The new case pits a coalition that once had 700 Tahoe area landowners who adopted the environmentally attractive name Tahoe-Sierra Preservation Council against the two-state Tahoe Regional Planning Agency (TRPA), which Congress created in 1969. The agency has struggled since 1981 to devise and implement a plan to safeguard the crystal blue lake from what scientists say would be irreversible damage from sediment and runoff due to development. The landowners, now numbering about 400, have been in federal court since 1984 but have nothing to show for what Berger called the "Dickensian" litigation. The Ninth U.S. Circuit Court of Appeals has issued three rulings rejecting arguments that the initial moratorium on two plans adopted by TRPA in 1984 and 1987 amounted to an unconstitutional taking of the landowners' property without compensation (see CP&DR Legal Digest, July 2000). In appealing the Ninth Circuit's most recent decision of June 2000, Berger asked the high court to rule on all three of the agency's edicts. But the justices narrowed the case to the initial, 32-month moratorium. Berger opened the hour-long argument by insisting that the moratorium amounted to a "per se" taking because the landowners were denied "all economic use" of the land. But O'Connor and Kennedy both challenged Berger on the implications of requiring compensation for any government delays, however brief, on land use decisions. "What about your basic zoning law?" O'Connor asked. "Is that an immediate taking?" Kennedy made the dispute current by asking Berger whether New York City would face a takings claim if it imposed a one-year moratorium at the World Trade Center site while trying to come up with the best plan for development. When Berger answered yes, Kennedy was evidently disturbed. Later, when Berger appeared to backtrack from that position, Kennedy jumped in and asked whether he was changing his previous answer. Berger, however, appeared certain of support from two of the court's conservatives: Chief Justice William H. Rehnquist and Justice Antonin Scalia. "It doesn't seem fair to me to say these people should bear the burden of preserving the lake," Scalia said. "This was a general social problem for which the entire society should pay." Court watchers also assume that Justice Clarence Thomas will side with the landowners. Thomas, as usual, asked no questions during the argument. In an unusual twist, the two lawyers defending the regulatory agency before the high court were themselves both conservatives: John G. Roberts, a Washington attorney whom President Bush has nominated for the District of Columbia Circuit Court of Appeals, and Solicitor General Theodore Olson, supporting TRPA as a friend of the court. Both Roberts and Olson contended that recognizing the landowners' claim for the period of the moratorium could cripple orderly land use decision-making. "This was government acting the way we want it to act," Olson said of the moratorium. "Before we destroy the lake, let's stop and solve the problem that every landowner wants to solve." Instead of viewing the moratorium as a per se taking, Roberts and Olson argued, the ordinance should be evaluated under a three-part test set out in a 1978 Supreme Court decision, Penn Central Transp. Co. v. City of New York, 438 U.S. 104. Under that test, a takings claim is evaluated on the purpose of the government action, the economic effect on the landowner, and the effect on "reasonable investment-backed expectations." When a court applies the Penn Central test, the government agency usually wins. In questioning Roberts, O'Connor and Kennedy both voiced concern that landowners could be subjected to extended or repeated "temporary" moratoria. What about a 10-year moratorium, O'Connor asked. Roberts insisted that the duration of any restriction should merely be one factor in a Penn Central analysis, but he eventually conceded that at some point a "temporary" moratorium might go on for too long. Liberal justices John Paul Stevens, David H. Souter, Ruth Bader Ginsburg, and Stephen G. Breyer all appeared to support the agency's argument that the stiff Penn Central test should apply. However, Breyer did ask at one point whether the landowners should not have "some remedy at law." In his brief rebuttal, Berger returned to the landowners' plight. "These people are being asked to make a sacrifice on behalf of the greater public good," Berger said. "It's part of a public project to have this freeze on use, and the public ought to be paying for it, not the owners who are frozen out." Lawyers from opposing interest groups had differing predictions after the arguments. Richard Samp, legal director for the conservative Washington Legal Foundation, which filed a friend of the court brief for the landowners, forecast a pro-property rights ruling. He said Kennedy appeared to be a "solid" vote for their position and O'Connor "clearly wants to vote , but she dislikes per se rules." But Timothy Dowling, chief counsel of Community Rights Counsel, who authored a brief for state and local governments supporting TRPA, said he was "cautiously optimistic" about the case. He said "the swing justices" appeared to be drawn to O'Connor's position in an earlier case favoring a Penn Central approach in most takings cases. As for Kennedy, Dowling said that he was "harder to read," but that his World Trade Center hypothetical "recognized the broad implications of a ruling" in favor of the landowners. Both lawyers, however, predicted a narrow ruling. "It's going to be a narrow decision whatever they decide," Samp said. "That has been the practice of the court in these cases," Dowling said. "I'd welcome a narrow victory for the agency, something to break the record of defeats in recent cases." The Case: Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, No. 00-1167. The Lawyers: For Tahoe-Sierra Preservation Council: Michael M. Berger, (310) 449-1000. For Tahoe Regional Planning Agency: John G. Roberts Jr., (202) 637-5810. Kenneth Jost, a former editor of The Los Angeles Daily Journal, is a staff writer for Congressional Quarterly and author of The Supreme Court Yearbook (CQ Press).

Local growth controls are not as important in creating California's high housing costs and slow production as market forces and state fiscal policies, according to a new report by the Public Policy Institute of California (PPIC). Authors Paul Lewis and Max Neiman further found that local ballot measures are even less of a factor in the housing shortage than policies adopted by city councils. Lewis and Neiman surveyed almost 300 city planning officials across the state for the report that was released in late January, "Cities Under Pressure: Local Growth Controls and Residential Development Policy." Lewis and Neiman found that overt growth controls are rare. For example, only 14% of cities link new construction to concurrent capital improvements. And only 6% of cities cap annual building permits or restrict growth to already developed areas. Most growth-management policies that cities have adopted are understandable responses to conflicting pressures applied to city officials, according to the report. The authors reported that two widely accepted local policies do help limit housing: low-density zoning and restrictive building codes. On a broader scale, the system of funding local governments that emphasizes sales taxes and de-emphasizes property taxes is a disincentive for cities to approve new housing, according to the report. Inadequate infrastructure — especially roads — as well as rapid population growth and construction defect liability are also factors that constrain housing construction. Lewis and Neiman detected major regional differences. In the Bay Area, cities have more growth-control policies, and residential growth decisions are often controversial. Southern California and Central Valley cities have fewer growth-control policies and see far fewer disputes over new home construction. The report is available at the PPIC website, www.ppic.org Outgoing Assembly Speaker Robert Hertzberg (D-Los Angeles) has promised to introduce legislation this year based on the recommendations of the Speaker's Commission on Regionalism, but said he does not yet know which recommendations he will move. The commission, chaired by Nick Bollman of the California Center for Regional Leadership (CCRL), presented the recommendations to Hertzberg at CCRL's "Civic Entrepreneur Summit" in Berkeley in mid-January. Included in a large package of wide-ranging reforms were: *The creation of a permanent state entity to assist poor regions. *The creation of a Cabinet-level agency dedicated to work force investment (a proposal already in Gov. Gray Davis's budget this year). *A constitutional amendment to prevent the state from further raiding local governments' property tax revenues. *A system to encourage regional tax sharing by requiring local governments in each region to choose from a menu of tax distribution reforms. *The integrating of school and university construction with local planning. Hertzberg did indicate that fiscal reform lies at the heart of his regional agenda. "The only way to get to the core of this issue is to restructure the money," he said. The commission's report is available at http://www.regionalism.org/pdf/finalreport.pdf The City of Garden Grove in late January placed an emergency moratorium on new cyber cafes because of concerns over violent crime. The City Council approved a 45-day moratorium, which officials expect to extend, to give officials time to draft operating regulations for existing cyber cafes. Those measures could address hours of operation, age and number of employees, surveillance cameras, limits on school-age children, window tinting and security guards, said Community Development Director Matt Fertal. "What we'll bring back in 30 days will be somewhere between what the police department wants and what the businesses want," Fertal predicted. City planners also are trying to decide where cyber cafes fit into the current zoning ordinance. Prior to the moratorium, the city did not regulate the businesses at all. The city could classify cyber cafes as arcades, which are limited to a certain commercial zone and require a conditional use permit, Fertal said. Cyber cafes rent computer time for about $2 an hour and have become quite popular. Garden Grove has about 18 such businesses, some of which are open as late as 4 a.m. Police and some neighboring business owners complain that cyber cafes attract gang members late at night. Since November, there has been a stabbing death and a separate assault on two teenagers outside of Garden Grove cyber cafes. A few other cities in Orange County regulate cyber cafes, but business owners fear Garden Grove could set a tight new standard that other jurisdictions would emulate. A long-range development plan and environmental impact report for the proposed University of California, Merced, campus received approval from the UC Board of Regents in January. University officials hope to break ground on the 10th UC campus in May and begin conducting classes in fall of 2004 (see CP&DR Public Development, April 2001, available online at the "Archives" on http://www.cp-dr.com). However, some environmentalists are not satisfied with aspects of the long-range development plan, including the loss of vernal pool habitat and farmland. They suggested that a lawsuit is likely. Also at their January meeting in Los Angeles, the regents approved the purchase of 7,030 acres of land about 2.5 miles northeast of Merced from the Virginia Smith Trust. The university agreed to protect 5,030 acres as vernal pool habitat for the endangered fairy shrimp, and set aside 750 acres for natural resource research. The campus will be built on the remaining 1,250 acres. The regents also approved a 50/50 joint venture between UC and the Smith Trust to develop a new community on 1,240 acres just south of the planned campus. The U.S. Army Corps of Engineers relaxed its wetlands regulations in January. The agency eliminated the mandate that a developer replace wetlands on a one-for-one basis. Instead, the Corps of Engineers will only require that overall development within a Corps of Engineers district result in no loss of wetlands within the district. The Corps of Engineers also dropped a rule that limited the filling of seasonal streams to 300 lineal feet. Under the new regulation, builders may fill up to a half-acre (approximately 21,000 square feet) of any seasonal watercourse. The Corps of Engineers also relaxed some floodplain development rules. The Corps of Engineers did not change the requirement that any development affecting at least half an acre of wetlands receive an individual permit. The agency characterized the changes as "minor." Environmentalists were upset with the amendments, while builders offered mild praise. Regional water quality control boards in Southern California have continued to adopt new standards regarding stormwater runoff (see CP&DR Environment Watch, August 2001, March 2000). In December, the Los Angeles regional board — which governs Los Angeles and Ventura counties — approved amended regulations. In January, the Santa Ana regional board approved regulations for northern Orange County. The San Diego board is expected to adopt new stormwater rules for southern Orange County this month. The regulations are similar but not identical. All of them call for new development to have facilities that help slow down and treat stormwater, often through the use of small containment basins, grassy swales or mechanical filters. The idea is to reduce pollution and sediment levels in streams, rivers and coastal waters. In general, builders and inland cities criticized the regulations as unnecessary and expensive, while environmentalists and coastal cities applauded the regulations. Both sides agreed that the Santa Ana board's regulations were the weakest. The State Controllers' office has filed a lawsuit against the Town of Tiburon for failing to submit annual redevelopment agency reports. According to state officials, Tiburon did not file reports for the 1997-98 and 1998-99 fiscal years — and still had not as of January despite warnings from state officials. The lawsuit is believed to be the first filed against a city for failing to file the annual financial reports. The city could be fined up to $10,000 for each violation. Is "smart growth" a labor issue? Yes, according to the AFL-CIO, which has adopted an "urban sprawl and smart growth" resolution. The measure directs union leaders "to actively engage in the emerging public and political debates surrounding urban sprawl and smart growth, asserting labor's rightful role in the national debate about the future of America's cities for the benefit of all working families." Among those hurt by current trends, according to the AFL-CIO, are unionized grocery retailers that cannot compete with Wal-Mart, inner-city residents who have seen hospitals and public services close, downtown janitorial unions, and unionized public employees. San Bernardino County and the City of Redlands reached an agreement on the development of the infamous "Donut Hole" in January. The county Board of Supervisors and the City Council both approved an agreement that allows development to proceed on the 1,100-acre island of unincorporated territory inside Redlands. Under the agreement, the city will provide water and sewer services, through an intermediary county entity, to the property. The city and county will share sales tax revenue from the Donut Hole, with the county's share gradually shrinking to zero in 10 years. The agreement appears to end years of acrimony over control of the land involving the city, the county and Majestic Realty, which wants to build a shopping mall on the Donut Hole's citrus groves (see CP&DR Deals, June 2001; Local Watch, November 1998; Legal Digest, November 1997, available online at the "Archives" on http://www.cp-dr.com). The battle even reached the state Legislature, which passed a law in 2000 that removed the Donut Hole from the city's sphere of influence. Immediately after the city and county approved the agreement, some Redlands residents began talking about a ballot measure to block development on the site. Western Placer County could become home to metropolitan Sacramento's first large Indian casino. A U.S. Interior Department official announced in early January that the agency would accept 58 acres west of Lincoln in the Sunset Industrial Area into trust for the United Auburn Indian Community — despite opposition from U.S. Rep. John Doolittle (R-Rocklin) and some local government officials. With the federal government taking the property into trust, the Indians would be free to pursue their plans for a 200,000-squre-foot casino, restaurant and office complex — which is not subject to local government approval. Tribe representatives have talked with local officials for years about funding road improvements and emergency services to the area. Federal officials cited the tribe's outreach as one reason for approving the proposal. Only days after affirming a Clinton-era plan for managing 11.5 million acres of national forest land in the Sierra Nevada, the Bush administration begin backing away from the plan. In late December, U.S. Department of Agriculture Undersecretary for Natural Resources Mark Rey issued the final ruling in support of the Sierra Nevada Framework (see CP&DR In Brief, January 2002; Environment Watch, March 2001, available online in the "Archives" at http://www.cp-dr.com). But days later, Jack Blackwell, the newly appointed regional forester for California, announced an "action plan" to reconsider many controversial issues in the framework, which was eight years in the making. Blackwell's plan calls for reviewing limits on logging trees larger than 30 inches in diameter, standards for ski area and vacation home construction, and restrictions on grazing near streams. Environmentalists quickly condemned the proposed action plan, while loggers, ranchers and ski resorts welcomed the announcement. Los Angeles Mayor James Hahn in January pledged to create one of the biggest local housing programs in the county. Money for the proposed $100 million housing trust fund would come from federal grants, tobacco industry settlement payments, proceeds from the sale of city properties and property tax increment. According to housing experts, the city needs to build about 4,000 reasonably priced units each year to meet demand. Elk Grove became the third city in Sacramento County to provide financial support for the Rancho Cordova incorporation drive. In January, the Elk Grove City Council pledged $35,000 to help pay for an environmental impact report. Citrus Heights already gave $35,000 to the Rancho Cordova cityhood proponents, and Galt provided $5,000. Incorporation of Rancho Cordova, a few miles east of Sacramento along Highways 50 and 16, could reach the ballot in November.

A story on Page 1 of our January edition about the impact of new state redevelopment laws on the San Jose Redevelopment Agency contained several errors that may have mischaracterized the agency's $350 million bond issue. CP&DR suggested that the agency would likely not be permitted under state law to receive property tax increment in order to make debt payments past 2019. This was an error. Under the provisions of AB 1290 from 1993, redevelopment agencies may receive property tax increment for the purpose of repaying debt for up to 50 years after the creation of individual project areas, even if those areas later become part of a merged redevelopment project. The San Jose Redevelopment Agency created a merged area in 1981 from the project areas that existed then, and subsequently added several other newly created project areas to the merged project. According to the agency's Preliminary Official Statement for the bond issue, only two project areas in the merged project will see their ability to collect tax increment and repay debt terminated in 2019 – Park Center and San Antonio Plaza. The remainder will terminate at various dates between 2024 and 2044. For example, the Rincon North and South project area, which generates the most tax increment ($50 million in 2001-02), will terminate in 2032, the year that the new bond issue is scheduled to mature. According to the Preliminary Official Statement, the agency's tax-increment revenues will decline over time as these individual project areas reach their termination dates. However, according to the document, the agency will have approximately $1.40 in tax increment revenue for every $1 in annual debt service (including previous bond issues as well as the 2002 bond issues) each year until the bonds mature in 2032. The Preliminary Official Statement is available at www.emuni.com. CP&DR also erred by failing to report that the San Jose Redevelopment Agency bond issue received high ratings from all major bond ratings agencies, including Moody's (A2), Standard & Poor's (A), and Fitch (A). CP&DR also erred in reporting the date of the bond issue and the date of the bond's maturation. The date of the bond issue was January 15, not January 8 as we reported, and the date of the bond's maturation is 2032, not 2033 as we reported. Since our story appeared, the city's redevelopment agency has successfully sold the bonds. California Planning & Development Report takes great pride in providing its readers and subscribers with accurate information about events that we cover. We regret these errors, and we believe it is important to correct them.

California's housing shortage is usually represented by the number of single-family detached and multi-family housing units and their relative affordability. This characterization leaves out other important factors, such as the range of household sizes and types, lifestyle and location preferences. Another missing element is household wealth that accumulates through home ownership and the influence of the mortgage interest income tax deduction on home-buying decisions (including purchasing a second home). When one compares types of households to size and types of units, it appears that the market may not be providing the size and types of housing California's populace wants. The underlying assumption is that small households without children under age 18 would generally prefer smaller units in multi-family developments, while larger households would prefer single-family houses. That is a gross generalization; income, personal preferences, and housing units that are actually on the market at any one time are also factors when people choose their residences. But follow along for the sake of argument while I track households to housing units since 1990 at the state level. The table below shows that the number of households created between 1990 and 2000 was 90,000 more than the number of housing units. Those 90,000 households used up most of the vacant inventory generated by the late 1980's surge in apartment development. During the 1990s, the median number of rooms per unit and persons per household each increased slightly, seemingly showing that units and households were well matched. The types of units constructed also show little change, with a small increase in the percentage of units that are single-family dwellings offsetting a small decline in the number of units in structures with 10 or more units. But, consider the numerical increases in the two extremes of unit and household types. Families with children increased by 741,829, which roughly matches the increase of 777,617 single-family dwellings. The remaining 379,835 increase in one-person and all other households squeezed into the 254,050 new non-single-family dwellings, plus the vacant inventory. Nationally and in California, developers continue to build single-family dwellings, and those houses are getting larger, which is one reason that they cost so much. In 2000, 78% of all non-public housing starts in the nation were single-family dwellings. Nationwide between 1970 and 1999, new units with four or more bedrooms increased by 42%; median floor area increased by 46.5%; and the number of units with 2.5 or more bathrooms increased by 244%. And in the West, developers are building these larger houses on smaller lots. In 1997, the median single-family dwelling lot size in the Western states was 0.23 acres — one-third smaller than the national median of 0.35 acres. Given these data and the underlying assumptions, there appears to be a divergence between what developers are building — namely, large single-family houses – and what people need from the housing market. The majority of California households are without children (61% according to Census 2000), and they may prefer alternatives to large single-family structures if the market provided more choices. And this segment of the population is likely to grow as the baby-boomers age and their accumulated wealth and tax laws suggest a growing second-home market. Even the for-sale market could meet what appears to be a growing demand for housing alternatives. For example, a small four-unit condominium project developed on two small single-family lots could be of greater value than two typical single-family houses (with postage stamp yards). If each condo was worth $250,000, the total market value of $1 million would be $200,000 more than the value of two $400,000 single-family units. Instead of responding to what people need, we are heading down a path that pits ever-increasing costs of large single-family dwellings against the incomes of one- and two-person households. The small household may be the next market segment to decline now that the vacant inventory is depleted. Maybe it's time to invest in a roommate matching business. California1990Dist.2000Dist.Change Year-Round Housing Units11,182,88212,214,5491,031,667 9.2% 10 or more units 1,899,93417.0% 1,984,72916.2% 84,795 4.5% 2-9 units, mobile homes, RVs, etc. 2,351,99921.0% 2,521,25420.6% 169,255 7.2% SFD and 2-4 units 6,930,94962.0% 7,708,56663.1% 777,61711.2% Median number of rooms per unit 5.3 5.4 0.1 2.5% Households (occupied units) 10,381,20611,502,8701,121,66410.8% 1-person 2,429,86723.4% 2,708,30823.5% 278,44111.5% All Others 4,123,25839.7% 4,224,65236.7% 101,394 2.5% Families w/related children < age 18 3,828,08136.9% 4,569,91039.7% 741,82919.4% Median persons per household 2.8 2.9 0.1 3.9% Sources: 1990 and 2000 Censuses, Statistical Abstract of the United States: 2000.

The Third District Court of Appeal has allowed a California Environmental Quality Act suit to proceed even though the plaintiffs did not name every entity involved in the proposed project. The court held that the lawsuit over the environmental impact report for a water transfer in San Joaquin County named defendants that have an economic interest in the project "and can be expected to argue vigorously in favor of the adequacy of the EIR." The court overturned a trial court judge's decision to throw out the lawsuit for failing to name as defendants the agencies that would purchase the water. In April 1997, Oakdale Irrigation District, South San Joaquin Irrigation District and Stockton East Water District entered into an agreement with the City of Stockton, Lincoln Village Maintenance District, Colonial Heights Maintenance District and Central San Joaquin Water Conservation District. The agreement called for the two irrigation districts to sell between 8,000 and 30,000 acre-feet of water to the city and two maintenance districts via facilities owned by Stockton East. The amount would vary annually depending on inflow to New Melones Reservoir in the Sierra Nevada foothills. The irrigation districts served as the "lead agency" for CEQA purposes, and they adopted an EIR in July 1999. Four organizations — Deltakeeper, San Joaquin Audubon Society, California Sportfishing Protection Alliance and the Sierra Club — filed a lawsuit claiming that the EIR failed to address adequately the impacts of the water transfer project. The lawsuit named the two irrigation districts and Stockton East Water District as defendants. In December of that year, the defendants argued that the lawsuit did not name necessary and indispensable parties — the city, and the two maintenance districts that would receive the water. The defendants also said it was too late under CEQA for those entities to be sued, and, thus, the lawsuit should be dismissed. San Joaquin County Superior Court Judge Bobby McNatt agreed and dismissed the lawsuit. On appeal, the case turned on the interpretation of a "necessary party" and an "indispensable party" under Code of Civil Procedure § 389. A unanimous three-judge panel of the Third District ruled that the unnamed agencies were neither necessary nor indispensable, and the court reinstated the lawsuit. As for necessary parties, the issues were whether the defendants could receive full relief, whether any of the parties faced the possibility of inconsistent liabilities, and whether the unnamed parties would be able to protect their interests. The court held that the irrigation districts and Stockton East could receive full relief because resolution of the adequacy of the EIR would settle the question, and the statute of limitations barred further litigation. The court also held that no agency would face inconsistent liability because the April 1997 agreement allowed any of the agencies to back out if the EIR was held inadequate. The court spent most of its time addressing the final question of whether the irrigation districts and Stockton East could protect all the agencies' interests. The court said yes. "Plaintiffs timely named as defendants three parties to the agreement, all of whom have a strong interest in upholding the EIR so as to obtain the benefits of the agreement. A party's ability to protect its interest is not impaired or impeded as a practical matter where a joined party has the same interest in the litigation," Justice Coleman Blease wrote for the court. Furthermore, Blease noted, under a separate agreement among Stockton East, the city and the two maintenance districts, all of the agencies have a vote in how to defend lawsuits, and that vote is binding on all parties. "By this means the non-joined parties have the right to participate in and control the CEQA litigation through a collective decision which binds a named party to the action," Blease wrote. As for the question of indispensable parties, the court agreed with the defendants that in most cases all parties to a contract would be considered indispensable for litigation purposes, but not in every case, including this one, the court held. " he rights asserted in this litigation are independent of the contractual rights to water established in the agreement," Blease wrote. The court further held that the city and two maintenance districts were not indispensable because "they would have been limited at trial to the same legal arguments presented by the lead agencies and Stockton East, that the lead agency's certification of the EIR was supported by substantial evidence." Finally, the court ruled that upholding the trial court's decision would violate the spirit of CEQA. "Were we to find city, Lincoln Village and Colonial Heights to be indispensable parties, the adequacy of the EIR would escape scrutiny. Such a harsh result is unnecessary where other parties have a unity of interest in the CEQA litigation," Blease wrote. The Case: Deltakeeper v. Oakdale Irrigation District, No. C035745, 01 CDOS 10703, 2001 DJDAR 13323. Filed December 26, 2001. The Lawyers: For Deltakeeper: Rose Zoia, Brandt-Hawley & Zoia, (707) 938-3908. For OID: Tim O'Laughlin, O'Laughlin & Paris, (530) 899-9755. For Stockton East Water District: Jeanne Zolezzi, Herum, Crabtree, Dyer Zolezzi & Terpstra, (209) 472-7700.

Early this spring, University of California, Santa Cruz, officials intend to release a draft plan for new facilities that will greatly expand the school's marine biology research capabilities. Opposition to the project has come from nearby residents and some City of Santa Cruz officials. Opponents dislike the housing because of traffic and environmental impacts on the site. The rancor, however, appears to have diminished from the past, when several different private landowners tried to develop the site but crashed into Santa Cruz's slow-growth politics. Ironically, however, the city and community appear to have less control over the site now that the university has bought it from private landowners. University officials plan to build about 290,000 square feet of research space and support facilities, about 80 housing units, dormitory rooms for about 140 students, and 10 overnight beds for faculty members on portions of a 100-acre oceanfront site. The Long Marine Laboratory expansion will complement UCSC's existing marine laboratory, as well as research centers at the site run by the National Marine Fisheries Services and the state Department of Fish & Game. School officials see the facility as one bookend — with Monterey Bay Aquarium as the other — around the Monterey Bay National Marine Sanctuary. The university's latest move comes after a lengthy battle between city officials and Wells Fargo bank, which owned approximately 60 acres of the site known as Terrace Point. The spectacular parcel lies at the northwest edge of Santa Cruz, just off Highway 1. Wells Fargo acquired it in foreclosure during 1989, after the previous owner failed to receive approval for a development. In 1994, Wells Fargo proposed a specific plan that called for a marine research center and about 300 homes. As with previous proposals, this one received an outpouring of opposition from residents and City Hall. Wells Fargo withdrew the draft specific plan and hired a team of respected consultants to craft a new plan, according to Larry Mintier, of J. Laurence Mintier & Associates in Sacramento. The team included Mintier, UCSC Environmental Planning program founder James Pepper, architect Matthew Thompson, former Santa Cruz City Attorney Gerald Bowden, and local biologists and engineers. The city had annexed the land in the 1960s. During preparation of a general plan in the 1970s, development of the site was so controversial that officials left a "white hole" on the land use map, recalled Bowden, who was a member of the city Planning Commission and chairman of general plan committee at the time. Over the years, a number of people tried to develop the site, but they got nowhere, said Bowden. Eventually, the city adopted its own specific plan for the site. "It was practically a development proposal. It gave the number of units and the number of low- and moderate-income units, the mix of uses," Bowden said. The Wells Fargo consulting team relied on that specific plan when drafting its proposal. "The bank said, we don't care — just give us something the city will approve," Bowden said. Over the course of 3 1/2 years, the team prepared three new specific plans and two full environmental impact reports, Mintier said. The final plan called for about 175 housing units — including townhouses for scientists and short-term rentals for graduate students — a public-private marine research facility, a 30-room inn, a restaurant and a public park. Mintier said the proposal matched the city's general plan. But the proposal went nowhere. City planners said they could endorse only about 80 homes on the site, even though the general plan called for about 200, Mintier recalled. The Planning Commission recommended no housing at all. The consulting team saw that the city was never going to approve the project. "It was such a nightmare. We were all so discouraged," said Mintier, who has prepared more than 30 specific plans, master plans and general plans. "At the same time, all of us agreed it was the best project we'd ever worked on, and it was the best client we ever had." Bowden said the whole mess was a failure of the planning profession. During endless negotiations, the city's planners refused to abide by the general plan, and instead took a political approach, he charged. "At least the planners ought to have the guts and the integrity to say, ‘This is the general plan. We don't make up the rules as we go along here. Now, it's up to you — the elected official — to decide,'" Bowden said. Santa Cruz Councilman Keith Sugar, who took office at the tail end of the Wells Fargo development conflict, has no sympathy for Wells Fargo and its consultants. "As bad as the university's proposals are, the Wells Fargo proposals were far more intensive. I'm happy they're gone," the councilman said. A land use law instructor at Santa Clara University law school, Sugar said he uses the project in class as an example of bad planning. In 1999, Wells Fargo gave up and sold the site to the University of California, which is not subject to local land use regulations — an irony lost on few people. "The city lost every scrap of control it had," Bowden said. "It could have conditioned the crap out of Wells Fargo. Now, it won't even see an application." Sugar and some other city officials are not so sure. He believes the Coastal Act provides a basis for the city to get involved. "It is questionable whether or not the city has jurisdiction over university lands in the coastal zone," he said. "Their plans to develop this parcel are anything but a done deal." Charles Eadie, UCSC director of campus and community planning, said the Coastal Act requires UC to prepare a coastal long-range development plan, which is the equivalent of an LCP, and the city has no jurisdiction. Still, UC officials have tried to include city officials and neighbors in the planning process during the last year and a half, he said. "We had a lot of work to do to dispel the notion that we weren't just going to go ahead with the Wells Fargo plan," Eadie said, a former Santa Cruz city planner. "We think we've had a good, collaborative relationship with the city at the staff level and with the City Council representatives." Housing remains the stickiest issue. Residents of the oceanfront DeAnza Mobile Home Park next to Terrace Point continue to protest any plans to build new residences, and at least some members of the City Council reportedly remain dead set against housing on the site. But Eadie said planners are trying to be sensitive, and they have designated a 500-foot buffer around the housing site. But, he added, housing is essential. "It's terribly difficult to get in for six months to one or two years, and have them wade through the local housing market. That's pretty daunting," he said. Indeed, the rental vacancy rate in Santa Cruz typically hovers around 1%. And in January, the National Association of Home Builders declared Santa Cruz as the least affordable housing market in the country, with only 6.9% of locals able to afford the median-priced home. Besides the housing, UC plans to build a 250,000-square-foot marine research facility, about 21,000 square feet of support facilities such as an auditorium and workshop space, and about 20,000 square feet of equipment storage and maintenance facilities. Even with the housing and existing research facilities, the 76 buildable acres on the site will have only about 520,000 square feet of buildings. Much of the site will remain open space, although UC officials and Coastal Commissioner staff members disagree on wetlands delineation, which could affect building envelopes. Sugar said UC does not need the project because about a dozen similar research facilities already line Monterey Bay. Rather than continuing to expand, the school should focus on housing more of its current students, which would help ease the city's housing shortage, said Sugar, who fought Terrace Point development as a Sierra Club attorney before winning a City Council seat. "It's farcical to develop the least remaining coastal prairie terrace in the City of Santa Cruz. I think it should remain undeveloped," Sugar said. Characterized by grasslands and oak woodlands, coastal prairie terraces have exceptional habitat values, he said. University officials expect to release a draft plan in March, with an environmental impact report following soon thereafter. The project requires Coastal Commission approval. Cost estimates are not available, but Eadie said the research facilities alone could cost $75 million to $100 million. "It's going to take maybe 10 to 15 years to raise the money and build the individual components," he said. Contacts: Charles Eadie, UC Santa Cruz, (831) 460-3572. Keith Sugar, Santa Cruz city councilman, (831) 420-5020. Larry Mintier, J. Laurence Mintier & Associates, (916) 446-0522. Gerald Bowden, Dawson, Passafuime & Bowden, (831) 438-1221. UC project website: http://www2.ucsc.edu/ppc/planning/lml.html

California has plunged into recession. We are faced, as always, with a chronic backlog of infrastructure projects necessary to accommodate our growing population. We could certainly use some kind of economic stimulus. But the state faces a $12.4 billion budget deficit, according to the Legislative Analyst's Office. And by conventional measurements, the state's debt load is just about topped out. About 5% of the state's general fund – close to $5 billion a year – is being spent to service general obligation debt. Yet interest rates are lower than they have been in decades. So there is a lot of talk around California these days about taking advantage of the situation by refinancing existing debt or by getting voters to approve new bonds. State Treasurer Phil Angelides has even proposed to President Bush that the federal government guarantee state and local bonds, which would permit California's public pension funds to buy those bonds, thus priming the pump. The "infrastructure crisis" has become a cliché in California. From the '50s through the '70s, we built a huge amount of public infrastructure that did a good job of accommodating a state of perhaps 20 million to 25 million people. Now we're at 34 million people and counting – and the common perception is that we have not built much of anything during the last 25 years. So, the argument goes, it's probably time to dump $100 billion or so into the next generation of infrastructure. But it is not that simple. First of all, it is not clear that we have the capacity in California today to build all this stuff even if we wanted to. Caltrans has had a tough time actually getting projects designed and built – not for lack of money, but for lack of skilled personnel and absent a culture focused on getting things built. Second, it's not clear what we should build even if we could build it. The days of cheap land and wide-open construction are long gone, and there is little consensus on what pieces of infrastructure should be built and where they should go. Finally, there is the question of how we pay for this stuff. A great deal of the transportation funding still comes from the federal government and from special funds, such as the gas tax, earmarked for transportation. Beyond that, the infrastructure issue is largely a question of whether the state's voters are willing to approve bond measures. They have done so in record amounts during the last four years, but, given the recession and the budget deficit, it is not clear that they will keep it up. Public support for bonds is usually a function of the economy. During the boom of the late 1980s, Californians passed almost $20 billion in bonds. But during the big bust of the early '90s, state bonds were iffy propositions at the ballot box. From 1990 through 1994, voters turned down almost as much in bonds ($10.3 billion) as they approved ($10.9 billion). Bonds got especially hammered in the depths of the recession during 1994, when $6 billion worth were defeated and only a $900 million school bond passed. Since then, economic times have been better – and the Legislature has been smarter about what plays well with the voters. (Almost all bonds that appear on the ballot must win legislative approval first, and there is considerable horse-trading in Sacramento about which bonds reach the electorate.) From 1996 through 2000, voters approved about $20 billion in bonds and defeated only $220 million – this last being the "crime lab improvement" debacle in March 2000. To a large extent, the success rate has gone up because legislators have become more daring in throwing the "big-dollar bomb." Up until 1992, no single bond ever appeared on the ballot for as much as $1 billion. In recent years, however, we've seen a $9.2 billion school bond, a $2 billion seismic retrofit bond, and two $2 billion natural resources bonds. All of those multi-billion-dollar bonds passed. The single biggest reason for the uptick in bond successes, however, is the fact that voters love schools. Combined, K-12 education and higher ed account for more than half of the $40 billion in state bonds passed since 1982. And K-12 remains the most popular type of bond. Over the past 15 years, voters have approved $16 billion in K-12 bonds and rejected only the $1 billion on the ballot in 1994. During the next few years, however, the state's biggest infrastructure needs may lie in other areas – parks, housing, transportation, and the like. This is the kind of infrastructure that will shape the future of our state most profoundly, yet the electoral record for these issues is mixed. Despite the passage of Propositions 12 and 13 (land and water bonds totaling $4 billion) in March of 2000, park and natural resources bonds don't always do well. Before Propositions 12 and 13, California had seen only one major park bond issue pass since the mid-80s – $770 million back in 1988. Similarly, housing bonds and bonds aimed at rail construction have had mixed success. Housing bonds have a 50-50 track record (unless you count veterans' bonds, which always pass). State rail bonds, too, have lost as often as they've won. This record reflects the recession-era failures of rail bonds proposed by the Planning and Conservation League that reached the ballot by initiative rather than going through the Legislature. The legacy of those efforts is that, despite a lot of talk among "smart growthers" and the pavement crowd alike, we have not seen a transportation bond on the state ballot since 1994. Simply put, the bonds that could be leveraged to plan a different kind of California are politically riskier. They don't get on the ballot very often, and they frequently lose during a recession. Are we headed for another downturn in bond enthusiasm – especially for the riskier, planning-oriented bonds? A good "leading indicator" on that trend is probably Proposition 40, the $2.6 billion park bond on the March ballot. Proposition 40 has polled well, and it comes on the heels of the success of Propositions 12 and 13. But it is not clear whether a park bond can make it during a recession on the heels of a war. If Proposition 40 does pass, that may open the door for more planning-oriented bonds, such as the housing bond proposed by Senate Pro Tem John Burton in SB 1227. But a Proposition 40 defeat might end the enthusiasm for state bonds for a while. Or a loss might encourage a trend toward using schools as housing and as parks because school bonds could be the only ones voters are willing to support.