An appellate court has overturned an award of $33,000 to an irrigation district for the preparation of the administrative record in a California Environmental Quality Act (CEQA) case. The court found that the district’s request for more than $8 per page for preparing the record was out of line with other CEQA cases, that the record included documents prepared after the administrative process concluded, and that the district did not justify the expense. The underlying lawsuit was filed by farmers in Stanislaus County against Modesto Irrigation District (MID), which, in addition to water, provides electricity in four counties. During late 2004, MID certified an environmental impact report and approved construction of new high-voltage transmission lines from a switching station near Westley to a substation near Modesto. The transmission line corridor traverses an orchard owned by Wagner Farms, which sued over the project’s environmental review. Wagner Farms lost its CEQA suit in Stanislaus County Superior Court, and the Fifth District Court of Appeal upheld the decision in an unpublished opinion ( , No. F049311). After the Fifth District issued its decision, MID submitted a request to the Superior Court for $33,422 for preparing the administrative record of proceedings (ROP). (It is common for the public agency being sued in a CEQA case to compile the record, as Wagner Farms requested here.) Wagner Farms opposed the requested amount, arguing that the cost was exorbitant and not supported by MID. Superior Court Judge William Mayhew awarded MID the whole amount. The case then returned to the Fifth District only on the issue of costs, and the unanimous three-judge appellate panel overturned Judge Mayhew. The district apparently based the $33,422 figure on time spent by its staff and by the EIR consultant (Electrical Consultants, Inc., of Billings, Montana), as well as actual copying costs. The Fifth District, however, noted that the price for the 4,107-page record averaged $8.14 per page. In three other published cases, the amount awarded for preparing the record ranged from about 73 cents per page in , (2004) 123 Cal.App.4th 1, to $2.61 per page in , (2005) 128 Cal.App.4th 176. Initially, the court also cited three unpublished cases where costs of between 47 cents and $2 per page were awarded; however, the court later deleted the portion of the opinion concerning unpublished cases. The costs submitted by MID appear “disproportionately high when compared to the costs awarded” in other cases, the court ruled. The court then noted that the last two pages of the administrative record contained maps drawn in March 2005. This was, according to the court, “ the board of directors and MID approved the proposed project and the final EIR in November 2004 — in fact, they were created after plaintiffs filed their petition for writ of mandate on December 22, 2004. The documents, thus, are not a reflection of the agency as they actually happened. As documents created after the proceedings were over, they cannot be considered a proper part of the ‘record of proceedings.’ “Because the documents were not a part of the actual proceedings that led to the approval of the project and therefore are not properly part of the ROP, it necessarily follows that MID’s claim for costs in preparing the ROP was excessive,” Justice Betty Dawson wrote for the court. “Furthermore, given the scant amount of evidence regarding how time claimed by MID was spent, there is no basis in the record for separating the time necessary for preparation of the ROP and the time claimed by MID that went beyond that merely related to preparing the ROP.” The Fifth District returned the case to the Superior Court, and said the lower court may — or may not — permit MID to attempt to justify its claimed expense. Attorney Michael Zischke, who was not involved in the litigation, said the court’s ruling regarding the proportionality of costs — based on a per-page amount — is important for CEQA practitioners to understand. At the same time, the court ruled that it was appropriate for a district consultant to help prepare the record, and that the consultant’s cost could be considered, said Zischke, of Cox, Castle & Nicholson. The Case: , No. F049966, 06 C.D.O.S. 11227, 2006 DJDAR 15978. Filed December 6, 2006. Modified January 5, 2007 at 2007 DJDAR 244. The Lawyers: For Wagner Farms: David M. Gilmore, Gilmore, Wood, Vinnard & Magness, (559) 448-9800. For MID: Joel S. Moskowitz, (310) 373-9790.

A controversial desert redevelopment project in California City has been invalidated by the Fifth District Court of Appeal, which rejected the eastern Kern County city’s determination that the vacant land qualified as blighted because of its parcelization and lack of road access. A few years ago, California City amended its redevelopment plan to take in an additional 15,500 acres to accommodate development of a Hyundai test track and development facility on 4,340 acres. The attorney general’s office characterized the project as a “poster child” for redevelopment abuse, and the project was commonly cited during state Capitol hearings on redevelopment reform. The Fifth District decided the case on narrow grounds, but the ruling does suggest that the skeptics were correct. “The court threw this out because they saw what was going on,” said Donald Johnson, an attorney for California City property owners fighting the project. “This is another in a long line of cases in which courts have warned about vacant land redevelopment projects.” California City determined that the area qualified as blighted under the antiquated subdivision provisions in state redevelopment law. Under those provisions, the existence of subdivided lots of “irregular form and shape, and inadequate size for proper usefulness and development that are in multiple ownership” qualified an area as blighted and urbanized. However, partly because of California City’s interpretation of the law, lawmakers last year amended the statute. Now, the existence of such parcels can be one factor in determining blight, but not the sole factor. “The repeal of the subdivision element focuses the state on urban areas, rather than on this undeveloped desert land,” said Daniel Siegel, a deputy attorney general who argued against the California City project and testified at the Legislature last year. “It was such an extreme example.” In 2002 and 2003, the 200-square-mile desert city (the third largest in the state) annexed about 29 square miles on its southern end, while detaching a similar amount of territory on the north side. The city expanded its redevelopment project area by about 24 square miles, including some of the newly annexed territory. The city also approved development of the Hyundai facility, for which the redevelopment agency assembled about 200 parcels covering 1,000 acres and agreed to split tax increment 50-50 with the Korean company over 10 years (see , May 2004). However, about 15 property owners refused to sell, so the redevelopment agency commenced eminent domain proceedings to acquire their land. In late 2002, one property owner, acting without an attorney, filed a reverse validation action challenging the city’s first redevelopment plan amendment. Eventually, lawyers got involved, a second lawsuit was filed over the second redevelopment plan amendment and the suits were consolidated. In an unpublished 2004 opinion, the Fifth District ruled that the landowner who started things had standing to pursue his challenges in court. The case then returned to Kern County Superior Court, where Judge John I. Kelly ruled for California City. On appeal, the landowners argued that the city’s redevelopment project violated numerous state laws. But the Fifth District ruled only on one issue — whether the city correctly interpreted the law’s antiquated subdivision provisions. The city had found that 80% of the land in the expanded project area consisted of lots that were of irregular form and shape and of inadequate size for proper usefulness. The lots were not particularly small, ranging from 2.5 acres to 480 acres apiece. However, they were created without provisions for roads, so many lots lacked access. The city argued that this lack of access made the lots of “irregular form and shape” and of inadequate size under Health and Safety Code § 33031 (a)(4), a section of the community redevelopment law. The court did not accept this line of reasoning. “Because a lot’s configuration or spatial contour is not altered when access to the lot is obtained, we conclude that access is not a characteristic that determines whether a lot’s form and shape is regular or irregular,” Justice Betty Dawson wrote for the court. “In other words, the might be deemed irregular under applicable standards of law if it does not have physical and legal access to a right-of-way, but that irregularity does not affect the lot’s .” Dawson continued, “ interpretation of the ‘inadequate size’ requirement so that it is satisfied by the same factor (lack of access) as that used to satisfy the ‘irregular form and shape’ requirement further illustrates that access is not a characteristic that defines the regularity of the form and shape of a lot. In other words, if one accepts the interpretation that physical and legal access to a right-of-way determine the adequacy of a lot’s size, then access is not a matter of form and shape.” The court briefly noted some of the other issues raised, including whether the record supports the finding that the area was causing a “serious physical and economic burden on the community” and whether the redevelopment plan was economically feasible. The court did not decide those issues, though. “The court,” said Deputy Attorney General Siegel, “did what was prudent. They addressed the narrowest basis of the dispute and made a decision on that basis.” Attorney June Ailin, of Aleshire & Wynder, who argued the case for property owners, said she was disappointed the justices decided the case “on such narrow grounds. They may have felt because the statute has been changed, they didn’t want to spend a lot of time on it,” she said. Because of the court’s narrow decision, and because the law on which California City relied was amended last year by SB 1206 and AB 782 (see , October 2006), the ruling may not have major implications for redevelopment in general. Still, the decision is one in a string of cases where courts have shown little patience with cities that bend redevelopment law to their liking. What will happen next in California City is unclear, as owners of five parcels have held onto their property, according to Ailin. City representatives have not been commenting publicly. A Hyundai spokesman told the that the test facility would remain in place. However, the court’s invalidation of the redevelopment plan means California City lost authority to acquire property for the test facility via eminent domain, landowner attorney Johnson noted. “The test track is built on land that Hyundai does not own and the agency cannot acquire,” said Johnson, who expects the Superior Court to dismiss pending eminent domain cases. A footnote in the Fifth District decision says, “Hyundai chose to build the facility knowing that the judgment in the consolidated cases was not final. Generally, when a party to litigation decides to proceed with a project before the judgment in that litigation is final, that party has assumed the risk of reversal.” The Case: , No. F049143, 2007 DJDAR 375. Filed January 9, 2007. The Lawyers: For Nielson: Donald P. Johnson, Kane, Ballmer & Berkman, (213) 617-0480. For California City: R. Bruce Tepper, (310) 551-6590.

The Navy is poised to relinquish about 5,200 acres within the Concord city limits. The prospect of so much land becoming available in an area where real estate is at a premium excites city officials, developers, environmentalists and city residents, all of whom have at least slightly different visions for the property. Currently, however, everyone’s vision is clouded by a controversial proposal from the Navy to transfer the territory to Shaw Environmental & Infrastructure, Inc., a Virginia-based military contractor. In exchange for the acreage, Shaw would provide the Navy with an as-yet unspecified amount of “engineering, design, procurement and construction of mission facilities, housing and infrastructure both nationally and internationally,” according to Shaw’s proposal. The Navy has never attempted such a transfer of an old base but told the City of Concord in November that a transfer is under consideration. The news infuriated city officials, who contend that a transfer at this time would skew the planning process. Congress put the “inland” 5,200 acres of the Concord Naval Weapons Station on the base closure list in 2005. (A discontiguous 7,000 waterfront acres several miles north is not slated for closure.) City officials did not expect to get the keys to the inland property: That style of base reuse has faded. These days, the military often auctions at least some of its surplus land to the highest bidder, as it did with former Marine Corps bases in Irvine and Tustin. But the auctions have been conducted after local jurisdictions completed their planning process for the old bases. Thus, buyers have a pretty good idea of what they’ll be allowed to develop and what will be required of them. Handing the base to Shaw now would create a “developer-driven process,” said Jim Forsberg, director of planning, economic development and housing for Concord. “It gives the developer a lot more sway,” he asserted. Shaw has declined to comment publicly about its proposal. The Navy was scheduled to decide how to proceed in December but pushed its deadline back to January 20, although further delays are possible. “Right now, we’re still consulting with Concord on it,” said Jill Votaw, a spokeswoman for the Base Realignment and Closure (BRAC) program management office in San Diego. Legal authority for the proposed exchange is new with the latest round of BRAC and has been used only by the Army for some small assets. “This is an unsolicited proposal from Shaw. We’re really in uncharted waters here,” Votaw said. “We might go back to Shaw and say thank you, but no thank you.” Concord is pressing hard for the Navy to do just that. “We view the exchange authority as another potential tool to be evaluated as part of the overall disposition plan for implementation after the reuse plan has been adopted, not a convenient loophole allowing the Navy to bypass the BRAC process entirely,” Mayor Susan Bonilla wrote to Wayne Arny, principal deputy assistant secretary of the Navy. “By attempting to circumvent a community-driven planning process in favor of a developer-driven process, the Navy would reduce chances for community acceptance of any resulting development proposal and commensurately increase the risk of legal challenges and ballot initiatives.” Navy officials protest that the early exchange would not necessarily harm the reuse process. “This proposal does not change the city’s roles and responsibilities to plan, zone and entitle property,” John Hill, the Navy’s base closure manager for the Concord site, told the . The city may have political momentum on its side. Sens. Dianne Feinstein and Barbara Boxer, and Reps. Ellen Tauscher (D-Alamo) and George Miller (D-Martinez) signed a letter to Arny asking that he “not select disposition methods until the reuse plan is complete.” Notably, Miller is a key ally of incoming House Speaker Nancy Pelosi. While the Navy is deciding what to do, the city is proceeding as if the military will surplus the land under the normal BRAC process. The declaration of surplus would trigger a prescriptive reuse process that includes preparation of a reuse plan, an evaluation of the site for homeless services, and environmental reviews, said Michael Wright, the city’s project manager. The city has hired a consulting team headed by Arup, and a 21-member citizens advisory commission began meeting in December. “We’re starting off into our planning process as if the Navy is going to eventually get around to surplussing the land,” Wright said. This actually will be the city’s second attempt at planning the site, which comprises about one-quarter of the 31-square-mile city. “We were the only city in the country asking the military to close a base,” Forsberg recalled. “It was 5,000 acres just sitting there. It’s been de facto closed for years.” The city saw development of the property as a way to meet regional housing mandates and entice economic development, which the city leaders consider essential because the city gets only 8% of the property tax. When the city updated its general plan a few years ago, the city designated half of the area for 13,000 housing units and 15,000 jobs, while setting aside the other half for parks and open space. “Nobody paid any attention to it because nobody believed the base would close,” Forsberg said. The City Council endorsed the plan, but when the base appeared on the closure list in 2005, “everybody freaked,” Forsberg said. The City Council yanked the base out of the general plan update in May 2006. The city at that point started a new planning process focused solely on the base. The initial result was an ill-defined vision for a “world class” plan that is economically sustainable, has a balance of uses, and maintains the community’s quality of life. In other words, the hard decisions about reuse are a ways off. Environmentalists have talked of devoting most of the base to open space, parks and wildlife habitat, while developers in a region of $600,000 houses have other ideas. City officials make clear they want to generate new tax revenue. Opening up the base to development presents Concord with a new planning opportunity, Forsberg said. The 102-year-old city of 125,000 people has not had large development sites for many years, he explained. An available 5,000 acres on the edge of town would make Concord more like a peripheral suburb. “It looks like greenfields, and it looks like brownfields. It gives us a much broader canvas on which to paint,” he said. Contacts: Michael Wright, City of Concord base reuse project manager, (925) 671-3019. Jim Forsberg, Concord Department of Planning, Economic Development and Housing, (925) 671-3383. Base Realignment and Closure program administrative office, (619) 532-0900.

Yuba County should not have permitted a sand and gravel company to expand its mine without conducting a public hearing, the Third District Court of Appeal has ruled. Yuba County had determined that Western Aggregates has a vested right to mine 3,400 acres along the Yuba River. But the county made the determination without any notification of adjacent landowners or the public, violating the Surface Mining and Reclamation Act (SMARA), the unanimous three-judge appellate panel ruled. The court said the mining company must either get a use permit from the county, or have its vested rights determined by the State Mining and Geology Board — either of which requires a public hearing. Western Aggregates operates a sand, gravel and rock mine in the Yuba Goldfields, a 10,000-acre area east of Marysville that contains perhaps the largest deposit of aggregate in the West. In an earlier lawsuit, a Superior Court ruled that Western lacked authorization under SMARA to mine the goldfields. So the county about seven years ago invited all mine operators to apply for a vested rights determination. Under SMARA, miners need not get a surfacing mining permit if they can prove that they had vested rights to conduct surfacing mining prior to SMARA’s effective date of January 1, 1976, and if there are no substantial changes in the mining operation. SMARA’s other basic requirements for a reclamation plan and financial assurance to implement that plan still apply. In May 2000, the county’s community development director found that Western had vested rights to mine aggregate on 3,400 acres in the goldfields. Western currently operates on about 1,200 acres. Neighboring landowner William Calvert and a group called Yuba Goldfields Access Coalition — which won a different lawsuit against Western over river access via a public road that Western had blocked — sued the county. The mine opponents alleged the county committed a variety of legal and procedural violations. They also argued that the county violated due process requirements of notice and hearing. Sacramento County Superior Court Judge Raymond Cadei ruled for the county on every issue except the due process claim. Although Cadei vacated the county’s vested rights determination, he stopped short of ordering a hearing. Instead, he only directed the county, if it conducted a new vested rights proceeding, to provide reasonable notice and to give the public the opportunity to be heard. The opponents and Western appealed the portions of the decision they lost. The Third District upheld the lower court’s determination regarding SMARA violations, but made clear that either the county or the state board — the choice is Western’s — must conduct a “public adjudicatory hearing.” Western argued that the determination of vested rights is a ministerial process. But, as the court explained, such a determination can be complicated. Vested rights of a surface mine fall under the “diminishing asset” doctrine, which requires that part of the same area was being mined when the law became effective, and that the area into which the owner desires to move was clearly intended to be mined when the law became effective. These are complex factual issues, the court said. “SMARA’s policy is to assure that adverse environmental effects are prevented or minimized; that mined lands are reclaimed to a usable condition; that the production and conservation of minerals are encouraged while giving consideration to recreational, ecological and aesthetic values; and that residual hazards to the public health and safety are eliminated,” Justice Rodney Davis wrote for the unanimous three-judge panel. “A public adjudicatory hearing that examines all the evidence regarding a claim of vested rights to surface mine in the diminishing asset context will promote these goals much more than will a mining owner’s one-sided presentation that takes place behind an agency’s closed doors. … A vested rights determination functions in the SMARA scheme as does a surface mining permit — it sets the tone for all that follows.” “Calvert and other property owners adjacent to Western’s vested rights-claimed mining operation are entitled to reasonable notice and an opportunity to be heard in an evidentiary public adjudicatory hearing before that vested rights claim is determined,” the court ruled. Recognizing the precedent-setting implications of its decision, the court made clear its decision “applies only to an entity claiming a vested right under SMARA to conduct a surface mining operation that is subject to the diminishing asset doctrine.” The court also said its decision is not retroactive and should apply only to cases “in which no final judgment of appeal has yet been rendered.” Western has indicated it may ask the state Supreme Court to accept the case. Barring a state high court reversal, Western’s most likely course of action would be to ask the state board to make a vested rights determination. Applying for a permit from the county would require environmental review, opening a number of sensitive subjects, including the mine’s impact on protected species of fish. The Case: , No. C047857, 06 C.D.O.S. 11174, 2006 DJDAR 15903. Filed December 6, 2006. The Lawyers: For Calvert: Theodore Franklin, Weinberg, Roger & Rosenfeld, (510) 337-1001. For Western Aggregates: Kerry Shapiro, Jeffer, Mangels, Butler & Marmaro, (415) 398-8080. For the State Mining and Geology Board: Russell Hildreth, attorney general’s office, (916) 327-7853.

A Regional Water Quality Control Board permit that mandates how Los Angeles County and 84 cities in the county manage stormwater discharges is not subject to the California Environmental Quality Act, an appellate court has ruled. The Second District Court of Appeal originally ruled that the Los Angeles Regional Water Quality Control Board had to conduct a “limited” CEQA review of the stormwater permit. But the board asked the court to reconsider, and the court changed its ruling — an extremely rare occurrence. The permit in question was issued in 2001 and has since been superceded by a new permit. However, the ruling makes clear that the regional board need not conduct CEQA review of the permit, which is more stringent than the 2001 version. The court’s ruling is important to planners because the permit has implications for planning and development activities. The permit requires the cities and county to update their general plans to include “considerations and policies” regarding management of stormwater quality and quantity. The cities and county are also required to consider stormwater quality impacts as part of CEQA reviews, and to implement programs to control runoff from construction sites and new developments. The latter requirement has resulted in new development standards for projects larger than 5 acres. Many cities and counties have battled the regional board over runoff issues since the board began cracking down on urban runoff, which is the largest source of water pollution in the state. The local governments contend the regional board’s mandates — contained in a watershed management plan for the Los Angeles Basin and the stormwater permit — would cost tens of billions of dollars to implement, making them prohibitively expensive for local governments. Courts, however, have consistently ruled for the Los Angeles board and, in similar controversies, for other regional boards and the State Water Resources Control Board (see , April 2006). The permit at issue in the litigation at hand is known as the Los Angeles County MS4 permit, or formally “Municipal Storm Water and Urban Runoff within the County of Los Angeles, and the Incorporated Cities Therein, except the City of Long Beach.” The regional board issued the five-year permit in December 2001. The National Pollutant Discharge Elimination System, a part of the Clean Water Act, provides the legal background for such permits. A coalition of 32 cities and the county sued, challenging the permit on many grounds. Los Angeles County Superior Court Judge Victoria Chaney ruled entirely for the regional board. With its amended decision, the Second District, Division Five, upheld the lower court. The Second District dealt with many of the substantive challenges in an unpublished portion of its opinion. In the published part of the ruling, the court rejected the local governments’ argument that the regional board could not issue the permit because it lacks statewide jurisdiction, and that the state board had to be part of the litigation. The court then considered the argument that because the permit implicates land use, housing, conservation and open space planning, the permit violated the separation of powers doctrine. Only cities and counties have the authority to decide on such matters, the argument went. The court approached the situation differently. “Regional boards are explicitly granted the authority to issue orders for purposes of enforcing the federal Clean Water Act,” Presiding Justice Paul Turner wrote for the court. “Federal law requires that permits include controls to reduce pollutant discharge in areas of new development and significant redevelopment — the very area where regional board review occurs. So long as the regional board’s decisions carry out federal and state water quality mandates resulting from express legislative action as the challenged orders in this case in fact do, no separation of powers issue is present.” As for CEQA, the court originally cited , (2006) 135 Cal.App4th 1392, for the proposition that limited environmental review of the permit was necessary because carrying out the permit requires significant construction and urban planning. But after granting the regional board’s request for a rehearing, the court decided that was different from this case because “the decision does not involve the issuance of a National Pollution Discharge Elimination System permit. Rather, it involves the development of a basin plan.” Under CEQA, the resources secretary has the authority to require limited environmental review of some regulatory programs, according to the court. But the secretary has never imposed the environmental review requirement on the NPDES permit system, the court ruled. The Case: , No. B184034, 2006 DJDAR 13567. Filed October 6, 2006. Modified November 6, 2006 at 2006 DJDAR 14670. The Lawyers: For the county: Howard Gest, Burhenn & Gest, (213) 688-7715. For some cities: Richard Montevideo, Rutan & Tucker (714) 641-5100. For the Regional Water Quality Control Board and state board: Richard Magasin, attorney general’s office, (213) 897-2604.

A state appellate court has reinstated a lawsuit over a proposed Wal-Mart supercenter in the City of Lodi. A trial court judge had thrown out the suit because the group Citizens for Open Government did not appeal the Lodi Planning Commission’s project approval to the City Council. Instead, Citizens for Open Government participated in an appeal filed by a different group. The trial court ruled that Citizens had not exhausted its administrative remedies, a requirement for getting into court. But the Third District Court of Appeal said the Lodi City Council’s appeal hearing amounted to an independent consideration of the proposed development, so all Citizens had to do was participate in that process. The group that filed the appeal, Lodi First, has already won a Superior Court ruling in a separate lawsuit over the city’s environmental impact report for the Wal-Mart project. The Third District’s decision means the Citizens lawsuit challenging different aspects of the EIR may go forward. The proposal for a new Wal-Mart in Lodi has been controversial since 2002, when Browman Development Company filed an application for a 340,000-square-foot shopping center to be anchored by a 230,000-square-foot supercenter on 36 acres at Kettleman Lane and Lower Sacramento Road. Opponents qualified an initiative that would have banned stores larger than 125,000 square feet, but, with the Browman application pending, voters rejected the initiative in November 2004. The following month, the Planning Commission certified an environmental impact report for the project and approved a use permit and tentative parcel map. Lodi First appealed to the City Council, which also approved the EIR, use permit and map. Lodi First and Citizens for Open Government then filed separate lawsuits. San Joaquin County Superior Court Judge Elizabeth Humphreys dismissed the Citizens action, ruling that the group had failed to exhaust administrative remedies. On appeal, the Third District first considered the city’s argument that the Superior Court ruling for Lodi First had made the Citizens lawsuit moot because the court had already set aside the project approvals. The Third District ruled that the lawsuits are different. The trial court in the Lodi First suit ruled that only the issues of potential urban decay and energy impacts needed further study. The Citizens lawsuit concerns mitigation for the loss of prime farmland, economic impacts and compliance with land use plans, the Third District noted. The Third District then considered Humphrey’s ruling. The appellate panel said that under Public Resources Code § 21177 (a section of the California Environmental Quality Act), “issues raised before a court must first have been raised during the administrative process, although not necessarily by the person who subsequently seeks judicial review.” The city argued that the group had to file its own appeal with the City Council under Municipal Code § 17.72.110. However, the court determined that the city ordinance “does not require an appeal to be filed by ‘each’ and ‘every’ person claiming to be directly and adversely affected in order for such person to appear before the City Council.” In reality, an appeal under § 17.72.110 transfers the final decision-making authority from the Planning Commission to the City Council, the court held. And, indeed, the City Council did not merely affirm the Planning Commission’s decision. The council adopted its own resolutions to certify the EIR and to approve the permit and map, the court pointed out. “City Code § 17.72.110, like the corresponding CEQA provisions, used the method of an ‘appeal’ to bring a use permit application from the Planning Commission to the City Council for its independent consideration as the final decision-maker,” Justice Tani Cantil-Sakauye wrote for the court. “At such a hearing, a person’s participation and objection regarding the city’s approval of a use permit satisfied the exhaustion of administrative remedies requirement, assuming the issues subsequently sought to be litigated were sufficiently raised before the City Council.” There was no dispute that representatives of Citizens for Open Government objected to the environmental review at every public hearing. The court distinguished its decision from that in r, (2000) 81 Cal.App.4th 577. In that case, the court ruled that opponents of a proposed lodge had not exhausted administrative remedies because, although their lawsuit addressed environmental review, the appeal of the county Planning Commission decision to the Board of Supervisors concerned only parking requirements (see t, July 2000). In addition, the local ordinances are different. The Case: , No. C051419, 06. C.D.O.S. 10420, 2006 DJDAR 14885. Filed October 11, 2006. Ordered published November 9, 2006. The Lawyers; For Citizens: Donald Mooney, (530) 758-2377. For the city: Jonathan Hobbs, Kronick, Moskovitz, Tiedemann & Girard, (916) 321-4500. For Browman Development: James Moose, Remy, Thomas, Moose & Manley, (916) 443-2745.

San Bernardino County is using redevelopment tools to help a rural community devastated by the Southern California firestorms of 2003 rebuild. The effort is one of the first times a California redevelopment agency has formed a project area specifically to aid recovery from a natural disaster. The October 2003 Old Fire essentially wiped out the community of Cedar Glen, just north of Highway 18 at the east end of Lake Arrowhead. Although the fire spared a small commercial area and some homes, the blaze consumed 336 houses and cabins, and left behind a slide-prone landscape. The redevelopment project’s priorities are to overhaul the water system, upgrade roads and help people rebuild in a more fire-safe manner, explained Kathy Thomas, San Bernardino County’s redevelopment director. Overall, the firestorms of 2003 charred approximately 750,000 acres in six Southern California counties. The fires killed 24 people and destroyed 3,600 homes in total. They were followed less than two months later by deadly mudslides in San Bernardino County. Few places were hit harder than Cedar Glen, a former weekend getaway that had evolved into a rural residential community. Because much of the area is covered with “tent lots” of 2,500 square feet, houses sat very close together amid the forest, which helped to spread the fire. In addition, nearly all roads are narrow, winding and unpaved, and the privately owned water company was unable to deliver adequate flow to firefighters. The county Board of Supervisors approved the 837-acre redevelopment project area in November 2004. Approval was controversial in part because the father of Supervisor Dennis Hansberger, who represents Cedar Glen, owns a number of parcels within the project area. Hansberger did not vote on project formation, but he has since participated in redevelopment decisions and has been the project’s champion on the board. Hansberger contends he has no conflict of interest, and county attorneys agree. Residents expressed frustration with redevelopment for a while, saying the county was moving too slowly and making too many unilateral decisions. But a personnel change that resulted in Thomas’s hiring appears to have improved communications, and on-the-ground improvements are starting to become visible. “We had a real rough start with the Cedar Glen redevelopment project,” said David Stuart, executive director of Rebuilding Mountain Hearts and Lives, a nonprofit organization formed after the fire. Contentious issues remain, but the situation is more positive now, he said. “Everything that I’ve seen out there has been for the good of the people,” Stuart said. In late 2005, the Board of Supervisors approved a $10 million loan from the general fund to the Cedar Glen redevelopment project. Between that loan, federal funds and revenues from the resale of land that the redevelopment agency has acquired through tax sales, the project will have about $17 million available, Thomas said. There are no plans to issue tax increment bonds. Of the county’s $10 million loan, $1.2 million is going for three housing programs that provide loans or grants to people who are rebuilding or making existing structures more fire-safe. Another $500,000 was designated for land acquisition, $450,000 for road and water design, and $250,000 for business assistance. Thomas estimated that the water system and roads need at least $8 million to $10 million in upgrades. The privately owned Lake Arrowhead Water Company, which serves about half of the project area, was antiquated, and the redevelopment agency is in the midst of purchasing the company out of bankruptcy. The water system will become a county special district. “There are massive, massive improvements needed,” Thomas said. The same could be said of the road system. Back in 2003, firefighters avoided some areas because the roads were not wide enough for two vehicles and lacked turnaround points. The redevelopment agency has acquired more than 100 tax-defaulted parcels, and some of those will be used to widen roads, and create turnouts and turnarounds. The county also intends to improve road drainage. Major construction on the water system and roads is scheduled to commence in the spring. Stuart said the road work is essential because some insurance companies will not provide insurance until there is a paved loop providing two routes in and out of the residential cluster. The redevelopment agency has also begun work on a lot-merger program. Although the county has eased building standards and is willing to grandfather in homeowners who are rebuilding, officials want new homes to have more defensible space around them. The area’s multitude of 2,500-square-foot lots won’t do, so the county is encouraging landowners to acquire adjacent lots and merge them. “Many of the long-time residents thought it was a good idea,” Thomas said. “The real difficulty here is, how do you help those who are landlocked or who don’t have the finances to buy the lot next to them?” Many tax-defaulted properties will become available in May, Thomas said, and the county is considering ways to give neighboring property owners first shot at acquisition. The county also is considering waiving lot merger fees if people combine only a few lots. Stuart urged the county to waive those fees, which, he said, only make rebuilding that much more difficult. Because Cedar Glen is a disaster recovery project area, the county has only 10 years to incur debt, 10 years to conduct activity, and 30 years to pay off debt, Thomas said. Those timelines are significantly compressed from typical redevelopment deadlines. Only about 35 houses have been rebuilt, and approximately 25 more have been permitted. That seems slow to Cedar Glen residents, but it is faster than the redevelopment agency anticipated. Thomas said total tax increment revenue is estimated to be $18 million to $29 million, depending on the rate of rebuilding. Bayview Hunters Point Plan Challenged Opponents of San Francisco’s 1,300-acre redevelopment project in Bayview Hunters Point have a filed a lawsuit in hopes of forcing a referendum vote on the project. The city approved the redevelopment project in May 2006 primarily to boost affordable housing opportunities (see , September 2006). Opponents filed enough signed petitions to force the project onto the ballot, but City Attorney Dennis Herrera blocked the referendum. He said that petitions were invalid because they contained only the ordinance approved by the Board of Supervisors, not the entire redevelopment plan. Redevelopment opponents, who contend the project does not reflect local desires and will increase gentrification, filed a lawsuit in mid-December seeking to force the referendum onto the ballot and to halt the city from implementing the plan until there is an election.

The Ninth U.S. Circuit Court of Appeals has blocked development of a geothermal power plant on federal land in Siskiyou County because federal agencies did not complete an environmental review of leases for the land underlying the proposed power plant. The Ninth Circuit overturned a decision by Eastern District of California Judge David Levi that an environmental impact statement (EIS) on the proposed power plant adopted in 1998 was adequate. The unanimous three-judge appellate panel determined that the power plant would not have been possible without the extension of leases to Calpine Corporation. Yet the leases were extended without environmental study. “ he agencies should have prepared an EIS at the time of the 1998 lease extensions. To allow the later 1998 EIS to compensate for the nonexistent earlier review would violate both federal regulations and our case law,” Judge J. Clifford Wallace wrote for the Ninth Circuit. At issue in the litigation is development of geothermal resources in the Medicine Lake Highlands, approximately 30 miles east of Mt. Shasta. The Pit River, Shasta and Modoc Indian tribes consider the area sacred and have conducted ceremonies at Medicine Lake for many generations. They oppose development in the area. In 1973, the Department of the Interior issued a programmatic EIS for implementation of the Geothermal Steam Act. The document provided for subsequent, or tiered, review of specific projects. Eight years later, the Bureau of Land Management (BLM) and U.S. Forest Service issued an environmental assessment (EA) for “casual” exploration of a portion of the Medicine Lake Highlands. Finally, in 1984, the agencies issued a supplemental EA for leasing part of the resource area. In 1988, the BLM entered into two 10-year leases covering 41,000 acres with Freeport-McMoran Resource Partners. The leases granted the company the right to “drill for, extract, produce, remove, utilize, sell and dispose of the geothermal resources.” The leases were granted without a review of environmental or cultural impacts. Not much happened until Freeport-McMoran assigned the leases to Calpine, which, in 1995, submitted a plan for a geothermal exploration project and development of 49.9-megawatt power plant about three miles from Medicine Lake. Calpine’s Fourmile Hill Geothermal Development Project would involve a power plant and production wells on about 50 acres, and a 125-foot-wide, 24-mile-long corridor for a 230-kilovolt transmission line. While the federal agencies were preparing an EIS for the Fourmile Hill project, the BLM extended Calpine’s lease for another five years in May 1998. As with the original 1988 leases, there was no environmental review. Four months later, the agencies issued a final EIS for the power plant project. The chosen alternative was found to have the least impact on traditional cultural values and uses. The following year, the keeper of the National Register of Historic Places determined that the Medicine Lake caldera was eligible for listing in the National Register. Also, a briefing paper prepared by federal officials recommended the power plant be rejected because no mitigation could offset significant impacts to “the very nature and intrinsic value of the Medicine Lake area.” Nevertheless, the federal agencies approved the power plant in May 2000, stating that Calpine had the right under the leases to develop the resources. Indian tribes and environmentalists appealed to the Interior Board of Land Appeals and the Regional Forester of the Pacific Southwest Regions, but both upheld the project approval. The opponents then sued, arguing that federal agencies violated the National Environmental Policy Act, the National Historic Preservation Act and other laws. Judge Levi issued summary judgment for the federal agencies. The Ninth Circuit, however, was not satisfied with the process. The project opponents challenged the review of the 1998 lease extensions. The agencies argued that the 1973, 1981 and 1984 studies were sufficient, and, alternatively, that the 1998 EIS on the power plant cured any problems. The Ninth Circuit focused on the rights granted under the leases. Citing documents of the federal agencies, the court found that the leases “grant to Calpine an absolute right to develop, subject only to procedural regulatory restrictions.” In fact, Interior Department attorneys advised in 1999 that denying the power plant project would be a taking of private property. “The lease language, and the agencies’ interpretation of the lease language, make clear that the ‘critical decisions’ here occurred when the agencies extended absolute development rights in 1988 and again in 1998,” Judge Wallace wrote. The environmental reviews conducted in 1973, 1981 and 1984 were insufficient, and the actual leases were inconsistent with those reviews anyway, the court ruled. The agencies argued that the 1998 extensions only maintained the status quo. But the court rejected that argument, finding that without the extensions, “Calpine owned nothing.” Calpine argued that preparation of the EIS on the power plant project mooted the claims over environmental review of the lease extensions — an argument Levi accepted and the Ninth Circuit rejected. “Federal regulations explicitly, and repeatedly, require that environmental review be timely,” Wallace wrote. “ he tardy EIS did not address the issue that should have been addressed in 1988 and 1998: whether the land in question should be leased at all. The 1998 EIS simply did not consider the no-action alternative.” Thus, the court ruled, the lease extensions violated NEPA. Because there was no consideration of historic sites in connection with the extensions, the agencies also violated the Historic Preservation Act, the court ruled. The court undid the 1998 lease extensions and a subsequent 40-year extension, as well as approval of the power plant project. The Case: , No. 04-15746, 06 C.D.O.S. 10253, 2006 DJDAR 14683. Filed November 6, 2006. The Lawyers: For Pit River Tribe: Deborah Sivas, Earthjustice, (650) 723-0325. For the Forest Service: Thomas Sansonetti, Department of Justice, (212) 514-2000. For Calpine: Robert Maynard, Perkins Coie, (208) 387-7508.

Developing real estate in the City of South Pasadena is a little bit like the lovemaking of porcupines: Both are activities to be approached very, very carefully. This city of 25,000 people has allowed no project of significant scale to be built in its downtown area for more than 30 years. The city's redevelopment agency has repeatedly solicited developers for projects, only to see three developers in succession ridden out of town by an anti-growth populace. The latest proposal, which may be the first in a long while to survive the city's build-nothing politics, calls for a project built at only half the density allowed under the city's own zoning. A quick glance at the geography of South Pasadena may help us understand the local fear of development. The city is a kind of island of small-town America edged between the towers of downtown Los Angeles on the south and fast-growing multi-family development in Pasadena to the immediate north. The Craftsman houses and century-old storefronts of South Pasadena could make the heartstrings of a New Urbanist go zing. The city is also an affluent place with excellent schools and limited urban ambitions. Preserving the small-town atmosphere from the predations of corporate America, on one hand, and Caltrans, which wants to extend the 710 freeway through the center of town, are the main concerns here. Still, South Pasadena's tiny downtown could use some help. Local shoppers must often go to the big city for basic needs, and local teenagers have little beyond an aging movie theater and an ice-cream parlor to entertain them. In 2004, the city officials bit a bullet and issued a request for qualifications (RFQ) to develop a project on three discontiguous, city-owned parcels, plus an undetermined number of additional vacant properties if their owners would agree to sell. The redevelopment agency has stated publicly it will not use its eminent domain powers. As it turned out, two private landowners agreed to sell their parcels for the project, making a total of five parcels available. Although the city has attracted some big developers in the past, the winner of the RFQ process was a small developer, Torrance-based Decoma. The developer had recently built a small loft building in the city and had a good working relationship with staff, according to Decoma principal Marinel Robinson. Eager to head off controversy, the city conducted two sets of public meetings starting in 2005. One set of meetings centered on the development proposal and what local residents want, and do not want, to see in downtown South Pasadena. Another set of hearings focused on architecture. While a number of people gave voice to familiar concerns about traffic and density, the hearings produced a number of suggestions that were integrated into the final program. Among the accepted suggestions were a six-lane bowling alley, a concession to high-school students who asked for a local hangout. The developer also set aside 12 out of 60 new residential units for seniors. The developer also agreed to build a new town square, to be owned by the city. To minimize the number of families and the impact on local schools, Decoma instructed its architect, Kaplan McLaughlin Diaz (KMD), to redesign the units as lofts and one-bedroom units more suitable for singles than households with children. Existing downtown tenants will not be forced out of the city: The plan allows 18 existing merchants to become tenants in the new buildings, while creating space for another 15 stores or restaurants. As a further concession to a community that calls itself "the city of trees," Decoma agreed to line the project with 50 to 60 new street trees. Developer Robinson seems keenly aware of local preferences for keeping density low. Although zoning allows her to build up to 45 feet in height, the average building in the proposal is 35 feet high, according to architect Jim McKenzie, the director of the Los Angeles office of KMD. Much of KMD's planning work was done by architect Denise Orr, who has since left the firm but remains active in the project. "The project went through four or five iterations, and each of those had four or five versions," she recounted. After completing much of the basic design of one scheme, the architects got a telephone call from the developer telling them to scale down the project even further to make it politically acceptable. Robinson said the public meeting process was punishing. Alarmed by the wave of insensitive, big-box construction around them, "people just don't believe developers can work with communities any more," she said. On the other hand, "if the project is built responsibly, 50 to 100 years from now, it will not be an eyesore." Public subsidies were notably small in the financing for the $50 million, 145,000-square-foot South Pas Towne Square. The city contributed only $1.8 million toward its own redevelopment effort, primarily for public parking. Providing $8.8 million in equity was Genesis Real Estate Fund II, a unit of Roy Disney's Shamrock Capital Advisors, a fund that looks for "risk adjusted" investments with the potential of helping the local economy. The rest of the financing came through conventional lenders, according to Decoma. The project has started the environmental review process, and Decoma hopes to break ground during early 2008. South Pas Towne Square is a case study in how to build small downtowns without throwing oneself to the mercy of giant retail chains. In this case, an unconventional and patient developer was able to cut a deal with the city, in part because high lease rates in an affluent city are enough to make the project "pencil out." Less affluent or more tax-hungry towns, however, might be quicker to cave in to big retailers — and quicker to lose some of the character they most value in their own communities. Developers who lie down with these slow-growth cities, however, may find themselves getting up in the morning with a few porcupine quills in their skin.

Finally heeding a message of alarm that experts have been sounding for a decade, California voters in November authorized an unprecedented investment in the fragile network of levees that protects homes, farms and critical infrastructure in the Central Valley from catastrophic flooding. Between Proposition 1E, which authorized $4.1 billion for levee improvement, and Proposition 84, a water bond that included $800 million for flood-control projects, the levee system stands to get a $5 billion upgrade. The investment comes not a moment too soon. Flood experts have long warned that California faces a potential disaster in the Central Valley, where 1,600 miles of levees protect about 400,000 people living in and around Sacramento, while another 1,100 miles of levees protect farmland, homes and critical infrastructure in the Sacramento-San Joaquin Delta. Those experts have had trouble getting anyone to listen. But when the levees protecting New Orleans failed catastrophically in the wake of Hurricane Katrina in 2005, flooding 85% of the city and killing more than 1,000 people, the devastation finally focused public attention on the substandard condition of California’s flood system. The result: 64% of voters approved the levee improvement bond. But apparently not everyone received the same message. Four days before the November election, an environmental group filed an appeal with the Delta Protection Commission to halt a large development planned in the Delta flood zone. Yolo County approved the project, proposed by Clarksburg Investment Partners LLC and 44 Willow Point LLC, on October 24, allowing construction of 162 homes on the old Delta Sugar mill property in Clarksburg, a small town on the bank of the Sacramento River. The plan also designates 25 acres for commercial use and 30 acres for industry. “To put that many families directly in the floodplain is just indefensible,” said Kate Pool, a spokeswoman for the Natural Resources Defense Council, which filed the appeal. “Have we learned nothing about planning in lowlands since the disaster of Katrina?” The Delta Protection Commission scheduled a January 25 hearing on the appeal, and told Yolo County to halt the project in the interim. Like New Orleans, much of the Sacramento-San Joaquin Delta is below sea level and sinking. And like New Orleans, the bowl on the inland edge of San Francisco Bay is rimmed by a network of protective levees buffeted by storms and tides. There’s no big city in the Delta, but the levees there protect something critical to much of the state’s urban population: two huge pumping plants, one operated by the state and the other by the federal government. Located at the south end of the Delta, those pumping plants send water south in aqueducts to irrigate nearly 4 million acres of cropland in the San Joaquin Valley and to meet the residential and industrial needs of two-thirds of California’s population. While the vulnerability of the Delta pumps has statewide significance, cities in the Central Valley outside the Delta are vulnerable to local flooding and rely on an aging system of protective devices that experts warn is inadequate. Judged by the level of protection provided by levees and dams, Sacramento faces the highest risk of flooding of any major American city, according to the Sacramento Area Flood Control Agency. The Clarksburg development would be squarely in the valley’s danger zone, protected by flood-control levees. At issue in the NRDC appeal, which was filed on behalf of the group by Earthjustice attorneys, is whether the project site lies within the “primary zone of the Delta,” as defined by the Delta Protection Act. That legislation was adopted in 1992, designating primary and secondary zones in the Delta, establishing the Delta Protection Commission and requiring development of a land use and resource management plan for the primary zone (see , June 2004). That zone encompasses about 500,000 acres in the heart of the Delta. Because the primary zone is vulnerable to flooding and includes productive farmland and wildlife habitat, urban development is prohibited unless the proponents can demonstrate that their projects will not result in loss of wetlands or riparian habitat, won’t degrade water quality, won’t interfere with migratory birds or public access, won’t harm agricultural operations, and “will not expose the public to increased flood hazards.” The Delta secondary zone, consisting of about 238,000 acres, encompasses the remainder of the legally defined Delta region and has less stringent controls. All local agencies whose jurisdictions overlap the Delta were required to amend their planning documents so they are consistent with the Delta Protection Act. Those include the counties of Yolo, Contra Costa, Sacramento, San Joaquin and Solano, as well as at least nine cities. Clarksburg is one of several unincorporated communities in the Delta, and the sugar mill development falls under Yolo County jurisdiction. The Delta commission arbitrates disputes over whether the actions of local agencies conflict with the Delta plan. The mill was constructed in 1934 to process sugar beets and ceased operation in 1993. The current owners have transformed part of the brick mill complex into winemaking and tasting facilities, plus offices, shops and other commercial ventures. Lawyers for Yolo County and the developer have argued that, although the site is technically within the Delta primary zone as shown on official state maps, the Delta Protection Act exempted previously developed areas from its restrictions on urban expansion. In its appeal, the NRDC says the exemption was intended to apply only to property within city limits, and that the urban footprint of unincorporated Clarksburg does not count. The larger issue at stake, according to the NRDC, is that the project would result in additional residents moving into a floodplain protected only by a century-old earthen levee that even the county acknowledges is likely to fail. Along with the 105-acre development, the project would include construction of a wastewater-treatment facility that also would be at risk of flooding. The sugar mill project is only the second appeal the Delta Protection Commission has ever been asked to consider, which is somewhat remarkable given the pace of floodplain development in the Sacramento region over the past decade. Much of the growth, however, has taken place outside the Delta proper. “While development in the primary zone has been moderate and consistent with the provisions of the management plan, activities in the secondary zone, have continued to increase at a significant rate,” the commission noted in its 2005 annual report. “Thus, the potential for development activities in the secondary zone to impact the primary zone continues to be of increasing concern.” Documents related to the sugar mill project and the appeal, including filings by NRDC, Yolo County and the developers, are at www.delta.ca.gov/Default.asp .

A ruling from the State of Washington by the Ninth U.S. Circuit Court of Appeals suggests that local governments in California may want to review their sign ordinances. The court struck down the City of Redmond’s ordinance banning portable and offsite signs because the ordinance had content-based exceptions. Those exceptions rendered the ordinance invalid because they showed that the regulation was more extensive than necessary to promote the stated public interests of safety and aesthetics, according to the Ninth Circuit. Beginning in late 2002, Dennis Ballen, the owner of Blazing Bagels, had an employee stand on a sidewalk while wearing a sign that said, “Fresh Bagels — Now Open.” The city notified Ballen in June 2003 that the sign violated the city’s portable and off-site sign ordinance, and the city ordered Ballen to cease and desist. Instead, Ballen sued under federal civil rights law, 42 U.S.C. § 1983, and he won a ruling by Western District of Washington Judge Marsha Pechman. He also received $165,000 in attorney fees and costs. The city appealed, and the Ninth Circuit upheld the ruling and the monetary award. The Ninth Circuit noted that commercial speech enjoys limited First Amendment protection. The U.S. Supreme Court established a four-prong test for determining the validity of restrictions on commercial speech in , 447 U.S. 557 (1980). A regulation’s validity depends on (1) whether the speech concerns a lawful activity and is not misleading, (2) whether the asserted government interest is substantial, (3) whether the regulation directly advances that interest, and (4) whether the regulation is not more extensive than necessary. Both sides conceded the first two prongs had been satisfied. The Ninth Circuit, though, determined that the ordinance failed to satisfy the fourth prong. The city’s ordinance exempted 10 categories: banners on the Redmond Way railroad overpass, construction signs, celebration displays, banners in the city center neighborhood, major land use action notices, political signs, real estate signs, temporary window signs, kiosk placards, and signs related to temporary and secondary uses of schools, churches and community buildings. “Different signs are treated differently based entirely on a sign’s content,” Judge Richard Tallman wrote for the Ninth Circuit. “The city has failed to show how the exempted signs reduce vehicular and pedestrian safety or besmirch community aesthetics any less than the prohibited signs.” Tallman continued: “While some of the ordinance’s content-based exceptions are reasonable — political signs are subject to strict scrutiny, construction signs promote traffic and pedestrian safety, banner displays may enhance community aesthetics — others compromise the city’s interests. More specifically, ubiquitous real estate signs, which can turn an inviting sidewalk into an obstacle course challenging even the most dextrous hurdler, are an even greater threat to vehicular and pedestrian safety and community aesthetics than the presence of a single employee holding an innocuous sign that read: ‘Fresh Bagels — Now Open.’” The city could impose time, place and manner restrictions on all signs, or it could restrict signs with live people holding them, according to the Ninth Circuit. But Redmond’s ordinance “is not a reasonable fit between the restriction and the goal.” As for the monetary award, the Ninth Circuit ruled that Ballen was entitled to the money under 42 U.S.C. § 1988 and that the lower court did not abuse its discretion in determining the amount. The Case: , Nos. 04-35606, 04-35758, 06 C.D.O.S. 8740, 2006 DJDAR 14065. Filed September 15, 2006. The Lawyers: For Ballen: Steven Simpson, Institute for Justice, (703) 682-9320. For the city: J. Zachary Lell, Ogden, Murphy, Wallace, (206) 447-7000.

The First District Court of Appeal has thrown out the City of American Canyon’s approval of a Wal-Mart supercenter because the city did not comply with the California Environmental Quality Act and violated its own zoning ordinance. Without conducting additional environmental review, the city permitted the Wal-Mart project as a minor change to an earlier approved mixed-use project. However, the court found that the city incorrectly described the size of the Wal-Mart project in what the court suggests was a deliberate attempt not to trigger environmental review and the zoning ordinance requirement for a “major modification application.” In 2003, Lake Street Ventures (later succeeded by Napa Junction I, LLC) proposed a 40-acre project on Highway 29 in American Canyon, a 15-year-old city between Napa and Vallejo. The project consisted of a hotel, about 200 apartments, a 3-acre park, and retail space. Phase one would consist of the hotel, housing and approximately 32,000 square feet of retail space. Phase two would add about 165,000 square feet of retail. In December of 2003, the City Council adopted a mitigated negative declaration for the project, and approved zoning ordinance and map amendments, a general plan amendment and a tentative subdivision map. Seven months later, Wal-Mart applied for a design permit and sign program. The company proposed building a supercenter of 173,000 square feet, plus a 12,000-square-foot outdoor garden center and 7,600-square-foot seasonal sales area in the parking lot. Various groups quickly formed to fight Wal-Mart, but the Planning Commission approved the design permit and sign program without further environmental review. However, the Commission limited hours of operation to 6 a.m. to midnight. Wal-Mart wanted a 24-hour store, so it appealed to the City Council. Project opponents also appealed, and the City Council gave Wal-Mart what it wanted. The groups American Canyon Community United for Responsible Growth and Citizens Against Poor Planning sued, alleging the city violated CEQA and the local zoning ordinance. The lawsuits were combined, and a Napa County Superior Court judge ruled for the city. The case then went on appeal to the First District, Division Five. Wal-Mart opponents argued that the supercenter was a new project that should have triggered a fresh environmental review. The First District rejected that argument, instead ruling that Public Resources Code § 21166 and CEQA Guidelines § 15162 apply because the supercenter was a change to an already approved project. The court found that the Wal-Mart plan was substantially larger than the originally approved project — despite city staff reports that the Wal-Mart would actually be smaller than the original project. The city had excluded 38,000 square feet of stockroom, employee use area and seasonal sales space and said the Wal-Mart project amounted to only 154,000 square feet. In court, the city and Wal-Mart argued that the 154,000 square feet figure was consistent with the definition of “gross leasable area” in the general plan. Based on this square footage, the city determined the Wal-Mart store was not a substantial change from the original project and would need no supplemental environmental review. But the court found that there was no reason to redefine the project this way, and that it did not meet the general plan definition anyway, because the general plan speaks to “total gross floor area designed for tenants’ occupancy and exclusive use.” “By making adjustments in the square footage of the supercenter proposal and then comparing that adjusted square footage to the unadjusted square footage of retail space in the original project, the city makes an inapt comparison,” Justice Linda Gamello wrote for the court. “The city cites no evidence and makes no argument to justify using different methods of calculating the square footage of the supercenter and the other retail spaces. Absent such a foundation, the city’s comparison is distorted and cannot support the conclusion that the square footage of the project’s retail component did not materially change.” The city did prepare a brief, revised traffic study — based on 154,000 square feet — that concluded the daily peak hour trips generated by Wal-Mart would be 1,207, compared with 1,273 estimated in the original project’s mitigated negative declaration. Again, the court rejected the city’s description of the project size. “Nothing in the record explains the city’s use of 154,074 for the square footage of the supercenter in the revised trip generation analysis. The analysis itself is a one-page document consisting of two tables and footnotes, none of which explains how the relevant square footage of the supercenter was determined,” Justice Gamello wrote. “The staff report to the City Council makes the naked assertion that 154,074 square feet was used because the storeroom and employee space ‘will not generate vehicle trips.’” The city’s low calculation “fatally undermines its conclusion that the supercenter proposal would have no significant effects on traffic requiring supplemental environmental review.” The court also accepted the opponents’ argument that the city failed to consider the Wal-Mart project’s potential to cause urban decay outside the city limits. The city and Wal-Mart countered with a city manager’s cost/benefit analysis that was limited to the city. “Other evidence in the record strongly suggested the supercenter might have substantial extraterritorial effects,” Gamello wrote. “Appellant’s expert predicted that the supercenter would cause both a Wal-Mart discount store and a Food-4-Less grocery store in Vallejo to close. Because those stores are co-anchors of a shopping center, the expert opined that their closure would likely lead to urban decay.” The court further advised the city that, when it reconsiders the project, it should take into account the impacts of reasonable foreseeable development, as the supercenter proposal reserved two other areas in phase two for future development. As for the zoning violation, the court cited the city zoning ordinance, which requires a major modification application for an increase of more than 5% in a project’s square footage. Again rejecting the city’s description of a 154,000-square-foot project, the court determined the Wal-Mart project was an increase of at least 6.5%. The court directed the city to comply with CEQA and its own zoning code, and asked the Superior Court to consider halting construction or retail activity until the city complies with CEQA. In fact, construction has stopped on the nearly completed supercenter. The Case: , No. A112088, 06 C.D.O.S. 11552. Filed November 13, 2006. Ordered published December 19, 2006. The Lawyers: For ACCURG: Steven Herum, Herum, Crabtree & Brown, (209) 472-7700. For the city: William Ross, (650) 843-8080. For Citizens Against Poor Planning: Timothy M. Taylor, Somach, Simmons & Dunn, (916) 446-7979. For Wal-Mart: Judy Davidoff, Steefel, Levitt & Weiss, (415) 788-0900.