The California Supreme Court has ordered the publication of another round in the litigation involving a doughnut shop owner and the City of Hawaiian Gardens. In an opinion issued in June 2002 — but not ordered published until late May of this year — the Second District Court of Appeal overturned a lower court, which dismissed the doughnut shop owner's inverse condemnation lawsuit. The appellate panel ruled that the shop owner should have had the opportunity to amend his lawsuit to prove his case. The court, however, did now determine whether or not the shop owner deserved compensation for inverse condemnation. Last year, the state Supreme Court ordered publication of the Second District opinion in a related case, , 101 Cal.App.4th 1317, (see , October 2002). In that case, the appellate court ruled that the doughnut shop owner, Veisna Kong, was eligible for relocation benefits as a "displaced person" even though he remained in business for six years on property the city acquired under threat of eminent domain. In this separate lawsuit alleging inverse condemnation, Kong sought damages for losing business goodwill, improvements to his shop and inventory. He also sought precondemnation damages, alleging the city behaved inappropriately before acquiring the property. The city acquired the property where Kong was the sublessee in 1993 and sold it the following year to Dr. Irving Moskowitz, who eventually developed a casino. Kong continued to operate his doughnut shop in the same location until late 1999, when Moskowitz evicted him so he could demolish the building and construct a parking lot for the casino. Los Angeles County Superior Court Judge Bruce Mitchell sustained the city's demurrer, indicating that he agreed with the city that Kong had not made enough of a case for the litigation to continue. Judge Mitchell refused to let Kong amend his complaint and the judge dismissed the lawsuit. Kong appealed and the appellate panel overturned Mitchell. Kong "has demonstrated that there is a reasonable possibility that he can cure the defects" in his lawsuit, the court ruled. "Consequently, he must be afforded leave to amend his complaint." The city argued that there was no connection between its purchase of the property and Kong's displacement from his place of business. Kong continued to do business at the location for six years after the city acquired the property, which was longer than his original sublease, the city noted. But, as in its ruling regarding displacement benefits, the court held that it was the agency's initial acquisition of the premises that resulted in Kong getting evicted. The Case: , No. B146142, 2003 DJDAR 5487. Filed June 13, 2002. Ordered published, May 21, 2003. The Lawyers: For Kong: Anthony Parrille, (626) 294-0010. For the city: M. Lois Bobak, Woodruff, Spradlin & Smart, (714) 558-7000.

The Sonoma County Water Agency's environmental impact report for a project to increase the agency's withdrawals from the Russian River has been thrown out by the First District Court of Appeal. The EIR's analysis of cumulative impacts and project alternatives, and the document's description of the environmental setting were all inadequate, the court ruled. The primary flaw was the agency's failure to consider that the Russian River is likely to have less water in it in the future because various agencies and Pacific Gas & Electric Company are pursuing a plan to decrease diversions from the Eel River to the Russian River. Most of the summertime flow in the Russian River is actually water that has been diverted from the Eel. " he agency's failure to consider the impact of the potential curtailment of water from the Eel River has resulted in an EIR that fails to alert decisionmakers and the public to the possibility that the agency will not be able to supply water to its customers in an environmentally sound way," Justice Sandra Margulies wrote for the court. The plan to decrease diversions from the Eel River to the Russian River had advanced to the point that work had begun on an environmental impact statement. That fact alone made the cut in diversions a "reasonably foreseeable future project" that the EIR had to discuss in the project setting and in the analysis of cumulative impacts, the court ruled. Water has been a big issue in Sonoma County for decades, and the Sonoma County Water Agency — which serves 500,000 customers in unincorporated Sonoma and Marin counties and in eight cities — is the biggest player. The agency has the rights to 75,000 acre-feet of water a year from the Russian River, of which the agency uses about 55,000. To meeting growing demand, the agency proposed to increase its Russian River take to 101,000 acre-feet annually and to expand storage capacity. At the same time the agency was considering its plan, the Federal Energy Regulatory Commission (FERC) was reviewing a "consensus recommendation" from the U.S. Fish and Wildlife Service, the California Department of Fish and Game, the National Marine Fisheries Service and PG&E to reduce by 22% the diversion of water from the Eel River to the Russian River. Since 1965, PG&E has had a license to divert between 159,000 acre-feet and 181,000 acre-feet per year from the Eel for hydroelectric plants elsewhere. Most of that diverted water ends up in the Russian River. Those diversions have harmed fish in the Eel River, including some species of salmon that are now endangered. The Sonoma County Water Agency gave FERC an alternate proposal for curtailing the diversion by only 10%. The proposed 22% reduction would have severe environmental consequences, including the potential for dewatering part of the Russian River during critically dry years, the agency told FERC. However, in its EIR for the proposal to take more water from the Russian River, the agency "made only a summary reference to the pending FERC proceedings," according to the court. So environmental organizations sued, arguing that the EIR was inadequate and that the agency had broken some planning laws. Sonoma County Superior Court Judge Lawrence Antolini ruled for the county. But the First District overturned Antolini's decision regarding the EIR. The court was clearly distressed at the agency's failure to address the proposals to reduce water flowing into the Russian River — proposals that the agency argued were speculative, and, therefore, not in need of consideration under the California Environmental Quality Act (CEQA). "The record tells a far different story from the one the agency relates in its EIR," Justice Margulies wrote. "Although the agency euphemistically describes the flow proposals before FERC as ‘modifications,' every proposal before FERC — including the agency's own — posits a decrease in the amount of water available to the agency to supply its customers' needs at a time when the agency is seeking to increase the amount of water it takes out of the Russian River." In fact, one month before certifying its EIR, the agency sent a letter to FERC describing the enormous environmental and economic consequences that the proposed 22% reduction in diversions would have. Yet, the "EIR completely fails to alert the public and the decisionmakers to the cumulative impact of Eel River curtailments pending before FERC and increased Russian River diversions proposed in the project," Margulies wrote. "CEQA requires more than this." Because the EIR's discussion of cumulative impacts was deficient, the section regarding alternatives was also lacking. "Alternatives that would reduce the agency's reliance on water from the Eel River would be among the alternatives that must be considered by the agency in the event it determines that the cumulative impact of the project and the FERC proceeding is significant," the court ruled. The court also ruled that the environmental setting in the EIR was deficient because of the failure to discuss in detail the proposed diversion reduction and the condition of the Eel River water supply. The court rejected environmentalists' arguments that the EIR had to address the water agency project's impacts on the Eel River because, the court held, the project would cause no significant impact to the Eel. The court also dismissed arguments that the EIR's discussion was growth-inducing impacts was inadequate. And the court rejected arguments that the project violated some state laws regarding general plan consistency and compliance with local zoning ordinances. In a short concurring and dissenting opinion, Justice Douglas Swager said that the two-justice majority was wrong about impacts to the Eel River. Until there is an adequate description of the environmental setting, "it is premature to find that the project has no significant impact on the Eel River," Swager wrote. He agreed with his two colleagues on the rest of the issues. The Case: , No. A098118, 03 C.D.O.S. 4165, 2003 DJDAR 6532. Filed May 16, 2003. Modified June 13, 2003. The Lawyers: For Friends: Stephan Volker and Eileen Rice, (510) 496-0600. For the agency: Jill Golis and Sheryl Bratton, deputy county counsels, (707) 565-2421.

Commercial real estate has given rise to a number of insipid sayings. The most notorious, of course, is "location, location, location," which are the "three most important things in real estate." Another familiar adage is one about projects not succeeding without sufficient parking. Less often heard, if not less important, would be the admonition, "Don't be the first to build something in places where the rules are unclear." In particular, consider your options carefully before volunteering to be the trial balloon for building a major project on environmentally sensitive land, especially when the government has not decided exactly how it wants to mitigate such projects. The experiences of two developers — one a large-scale master plan developer and the other a smaller, apartment developer — are snapshots of the uneasy relationship between home building and environmental policy in North San Diego County at a time when newly minted environmental laws are racing to keep pace with rapid home building. In some instances, regulators do not have mitigation standards or other conservation practices in place, and must negotiate each of these environmental issues separately with developers. Consider the case of Morrow Development, a Carlsbad-based home builder that spent nearly 20 years negotiating a development agreement with the city. The site of Villages at La Costa offers gorgeous views of rolling landscape and dramatic valleys in the inland portion of the San Diego County city. On this 1,866-acre site, the developer proposed building more than 3,000 homes, mostly single-family homes, in four-master-planned "villages." The area is also habitat for the elusive gnatcatcher and about 60 other species. In 1990, the U.S. Fish and Wildlife Service added a another layer of complexity to the negotiations by declaring the area part of the 800,000 acres of protected gnatcatcher habitat in Southern California. In 1995, the company, the city, and Fish and Wildlife agreed on a habitat conservation plan for Villages at La Costa that set aside 835 acres as permanent habitat. The developer also acquired 200 acres of adjoining land, which was combined with additional mitigation lands from other developers to form a 1,500-acre reserve. Shortly after, Morrow donated the land to the Batiquitos Lagoon Foundation, an environmental group that had fought the project in earlier years. Not until October 2001, however, did the project win the approval of the Carlsbad City Council. "That deal has been the hallmark" in local land-use negotiations, said Jack Henthorn, former Carlsbad housing and redevelopment director who is now a private consultant. The deal was all the more impressive, he added, because "the regulatory environment changed as the approval process was going forward." A smaller project is the 20-acre Summit at Carlsbad, where Pacific Properties and Development of Las Vegas plans to build 146 apartment units in 11 buildings. Unlike the Villages at La Costa, the Summit property was not gnatcatcher habitat but was former farmland. The acreage, however, lay between two designated habitats, and the city wanted to create a corridor to bridge the two. "When this project was originally proposed," said Henthorn, who consulted on the project," the Carlsbad Habitat Management Plan was still evolving, and there were no clear regulations as to deal with this issue." Pacific Properties acquired the site from another developer in 2000. "They just got tired and ran out of money," said Jim Stockhausen, executive vice president for Pacific Properties. Even though the site contained no gnatcatcher habitat, Henthorn said, "it was a critical link in the habitat management plan for the northern San Diego County area." Environmental regulators had limited jurisdiction over the site, because the site was not officially habitat. Yet the homebuilder continued to negotiate with the city's environmental staff, as well as with Fish and Wildlife, the California Department of Fish and Game, and the Multiple Habitat Conservation Program, an inter-jurisdictional entity that monitors habitat. Furthermore, the presence of degraded wetlands, which required mitigation, brought the U.S. Army Corp of Engineers into negotiations. The developer eventually agreed to devote 60% of the site to open space. "Through that process, we were able to identify what we called the ‘habitat line,' within which development would take place while the area outside that line would then be available to meet the agency's required linkage," Henthorn said. By doing so, he added, "we have created an opportunity for the gnatcatchers to facilitate their crossing of a north-south corridor between Carlsbad and Oceanside bifurcated by Highway 78." Although the area was zoned for single-family housing, the developer decided to build a multi-family complex instead, in exchange for a modest 2% increase in density. In a quid pro quo, the developer set aside 20% of the project for low- and moderate-income renters, rather than the standard 15% required by the city. The project exists within an eight-acre footprint, with units clustered in three-story, walk-up buildings, leaving the rest of the property as the gnatcatcher highway. After five years of negotiation, the developer had received all of the state and federal agency endorsements, and the city approved the project earlier this year. The interesting part of the process," Henthorn said, "is that it shows that when agencies and builders can sit down and clearly communicate what their respective needs are — even in this situation, where there were no regulatory restrictions — we were able to meet the needs of the agencies to create this linkage." What made the process work, he added, was "the builder's willingness to redesign the project and to come up with a design that met with both the builder's needs and agencies' requirements." Compared with the nearly 20 years that Morrow spent getting permits for La Costa, five years may not seem so bad. "I believe we could have done it half the time," Pacific Properties' Stockhausen said a little ruefully. On the other hand, he added, "I'm told that five years is about standard for Carlsbad."

Buildout is a funny term. It is the word that most planners use to describe what their town would look like once everything that is called for in the general plan has been built. In today's world, buildout is easily quantified. Most cities and counties can point to their general plan and identify precisely how many houses and how many square feet of commercial and industrial space buildout involves. In California, where the Department of Housing and Community Development (HCD) is always bird-dogging local governments about their housing elements, buildout can mean a very precise calculation of the jurisdiction's capacity to absorb both single- and multi-family residences. But do communities actually reach buildout? What happens to this theoretical capacity to absorb development when real applicants propose real projects and those projects are reviewed by real planners and real planning commissions and real elected officials? Considering the fact that communities base so many other policies on buildout — housing elements, infrastructure capacity and financing, parks and recreation needs, school needs, and so forth — this is not an insignificant question. And in a state that seems to be in perpetual crisis on both housing production and infrastructure finance, it is nothing less than a major public policy issue. Oddly, there has been little research over the years on the question of whether communities actually hit buildout. But the research that has been conducted has all reached the same conclusion: No, especially regarding housing. In general, housing gets constructed at considerably less than the buildout capacity contained in the general plan. One report by our company, Solimar Research Group, estimated that in Ventura County housing gets constructed at somewhere between 55% and 80% of capacity; a similar analysis done many years ago for metropolitan Portland came up with a figure somewhere in the neighborhood of two-thirds. A follow-up study just released by Solimar and Reason Public Policy Institute, which looked at six different case studies in Ventura County, found a wide variety of reasons for this phenomenon. (The report is available at www.solimar.org ) In some cases, neighbors objected to the proposed development. In other cases, it was clear that the city never really intended to permit what the general plan called for. In still other cases, developers were responding to changing market conditions. In the case of one project in the City of Fillmore, the general plan called for single- or multi-family units at 7 to 11 units per acre. But when the city signaled its desire to have a single-family project built, it turned out that the required minimum lot size was 6,000 square feet, making it impossible to hit the minimum density in the general plan. Eventually, the city allowed lots of smaller than 6,000 square feet, but other concerns — such as the desire for a linear park along the Santa Clara River — ate into the project's density, which dropped to fewer than 6 units per acre as a result. In the case of a project in Camarillo, it was not city regulations but legal liability that caused the density decline. The city was more than happy to process an attached condominium project at approximately 10 units per acre. But the developer eventually chose to build detached condominiums instead — partly to respond to market demand for single-family-style units and partly to avoid construction defect liability issues. The resulting project was only 8 units per acre. No matter how you look at it, one thing is clear: The buildout number in the typical general plan is a ceiling, not a floor. You can see this in the way most general plans approach density. A particular parcel might be designated for "medium density," which might mean a range between 4 and 8 units per acre. So, a project approved at 4 units per acre might either be achieving 100% of buildout or only 50%, depending on how you want to look at it. In many cases, environmental review and other factors will drive down densities, as the process of minimizing impacts, creating mitigations and assuaging neighbors' worries often downsizes a project and causes the jurisdiction to devote some project land to things besides housing. This whole process causes a couple of problems in a state like California. The first one, obviously, is the fact that it may drive down housing production. California seems to have a bottomless demand for housing and prices are rising rapidly. On a statewide level, production is clearly not meeting demand — which is part of the reason why HCD hammers the local governments on production as well as affordability. From that perspective, using the general plan as a ceiling rather than a floor doesn't make things any better. The second issue has to do with infrastructure finance. Because most communities now operate on a "pay as you go" basis regarding infrastructure, many fee and assessment systems are based on buildout. In simple terms, many cities calculate the cost of road, water, and sewer infrastructure required by the buildout and then divide that cost by the number of housing units (or some other measure of buildout) in determining fees and assessments. What happens when buildout goes down? Well, some demand for infrastructure goes down -- but other costs might stay the same, such as the cost of building arterial roads to the new subdivisions. In other words, if buildout doesn't materialize as expected, there might be a revenue shortfall for infrastructure. In other parts of the country — including Oregon and Maryland — the public policy solution to this problem has been to create minimum densities. In other words, create a "floor" for development as well as a "ceiling." This is a tempting solution, but it is probably not realistic in California, where land cost and other pressures have already created fairly high single-family densities in most places. The Maryland minimum densities are laughable by California standards -- two to four units per acre, on average. Even after being shrunk by the approval process, most California subdivisions come in at higher densities than that. Another possible solution — one that the new Solimar report advocates — is better and more expanded use of specific plans. General plans are by nature vague and broad. And it is difficult to achieve true community buy-in for a 20-year plan. A specific plan, on the other hand, is usually used to plan out the precise development of a definable geographical area over a short period of time — say, a neighborhood or district over a five-year period. The Solimar/Reason reports have found that this is a double-edged sword. On the one hand, a specific plan process may reduce densities from what the general plan calls for. On the other hand, projects in specific plan areas are usually approved at 100% of their specific plan densities, so the infrastructure finance plan is likely to line up with actual infrastructure needs. While buildout is not always what it appears, there are tools available, such as specific plans, that make hitting a reasonable buildout level more likely. These tools could protect communities and accommodate a more predictable level of growth.

The City of Buena Park has successfully defended a lawsuit against city ordinances that prohibit long-term occupancy of motel rooms. The Fourth District Court of Appeal ruled that the ordinances were not unconstitutional takings and did not deprive the motel owners of equal protection. In August 1996, the city adopted ordinance No. 1340, which prohibited motel owners from renting a room to the same guest for 30 or more consecutive days. The city adopted the ordinance after a neighborhood improvement task force found unsanitary conditions and vermin in motel rooms rented to long-term guests. Under the ordinance, hotels and motels with at least 75 rooms and a restaurant on or abutting the premises may apply for a conditional use permit allowing stays longer than the 29-day limit. But the city found that motel owners were circumventing the 29-day limit by renting rooms to people for 29 days and then allowing them to check out for one day while leaving their belongings behind. Some motels also allowed multiple people staying in the same room to register under different names. So the health and safety issues persisted In late 1999, the city attempted to close the loopholes by adopting ordinance No. 1399. The new law prohibited motel owners from renting a room to the same guest for more than 60 days within a 180-day period. In March 2000, the Buena Park Motel Association and 12 of its members — ethnic minorities who own and operate small to medium-sized motels — sued the city. They argued that the ordinances were an irrational and unreasonable exercise of the city's police power. The ordinances were an unlawful taking of private property without just compensation and a violation of the motel owners' right to equal protection under the law, they argued. Orange County Superior Court Judge Thomas Thrasher ruled for the city, finding that the lawsuit against the 1996 ordinance was too late, and that the second ordinance constituted a valid exercise of the city's policy power. The motel owners appealed, but they got no further with the Fourth District. Although the statute of limitations for challenging zoning regulations is 90 days, the motel owners argued that they could still challenge the 1996 ordinance state laws permitting the city to levy transient occupancy taxes preempted the local ordinance. The Fourth District rejected the argument, saying it would apply only if the state law fully occupied the area of law, which was not the case. The motel owners also pointed to the U.S. Supreme Court decision in , (2001) 533 U.S. 606 (see , August 2001). In , the court held that there was no expiration date on the constitution's takings clause and that a property owner could seek compensation for a pre-existing regulation. But the Fourth District said no. " ven if we construe as permitting a recent purchaser of private property to circumvent the statute of limitations to challenge a pre-existing zoning ordinance, the case does not apply to the facts at issue here," Justice William Rylaarsdam wrote. "There simply is no evidence in the record that any of the plaintiffs purchased their property after ordnance No. 1340 took effect." The hotel owners' challenge to the ordinance adopted in 1999 was not too late, but the court upheld the validity of the measure. The court ruled that the ordinance was not arbitrary and unreasonable, and, importantly, that it would not deprive them motel owners of all economically viable use of their properties. The motel owners had testified that 35% to 70% of their guests stayed for fewer than 30 days. The motel owners have some flexibility under ordinance 1399 to allow extended stays over the course of 180 days, the court noted. Some of the motels could be modified to meet the criteria — more rooms and a restaurant — for a conditional use permit. And some guests "may elect to remain in the city and move from motel to motel," Rylaarsdam wrote. " he city balanced plaintiffs' right to use their property for extended stays with the public's interest in having all motel rooms regularly cleaned. Thus, we conclude the restrictions imposed by ordinance No. 1399 substantially advanced the city's interest in maintaining sanitary, pest-free conditions at the motels," the court ruled. The court quickly dismissed the argument that the city was discriminating against the motel owners because of their ethnicity. The motel owners conceded during oral argument they had no evidence of this, according to the court. Plus, the ordinance was "appropriately directed at the use of motel rooms" and not at the owners or users. The Case: , No. G029819, 03 C.D.O.S. 4531, 2003 DJDAR 5775. Filed May 9, 2003. Ordered published May 29, 2003. The Lawyers: For the motel association: Frank Weiser, (213) 384-6964. For the city: Quinn Barrow, Richards, Watson & Gershon, (213) 626-8484.

San Francisco International Airport officials will celebrate the opening of a new Bay Area Rapid Transit (BART) train connection this month while lamenting the delay of an unrelated plan to expand runways. The BART extension to the airport is scheduled to open June 22, five and a half years after construction began, and more than 40 years after an airport-BART connection was first proposed. The train system will stop at the airport's international terminal, and continue to a new transit hub in the nearby San Mateo County city of Millbrae. Inside SFO, an automated people mover that resembles a monorail will ferry passengers to other terminals once they get off BART. The new BART extension includes four stations on 8.7 miles of track. Besides SFO and Millbrae, the new stations are in South San Francisco and San Bruno. The new stations link to a system that already barely crosses the San Mateo County line to Colma and Daly City. At the Millbrae station, BART trains will meet passengers arriving on the Caltrain line, a heavy rail system serving the San Francisco Peninsula. Caltrain passengers can then transfer to BART if they wish to go to the airport. Passengers will walk directly across the tracks to catch their trains in what is supposed to be a seamless transit web. Every time a Caltrain pulls into Millbrae, a BART train will be there to meet it on the same ground level platform, according to Molly McArthur, manager of community and government relations for BART. The new station is close to Highway 101, which is often clogged with airport traffic. The Millbrae transit center is expected to eliminate 10,000 daily vehicle trips to the airport, and to be BART's busiest station. By 2010, 70,000 passengers a day are expected to ride the new BART extension, about one-quarter of them to and from the airport. The 8.7-mile extension cost a total of $1.5 billion to build. Of that amount, $750 million came from federal funds, with the rest from state and local funds. The 64,000-square-foot Millbrae station is the first link between BART and Caltrain, a commuter rail service that runs about 70 from San Francisco through San Jose to Gilroy. The new Millbrae train station will have 3,000 parking spaces, which is on par for BART stations in outlying communities. It will also have connection to local buses. BART, which was originally expected to serve as a train system for the entire Bay Area, transports passengers in Contra Costa, Alameda, San Francisco and San Mateo counties. With the new airport extension, BART will have 104 miles of track, said BART spokesman Ron Rodriguez. Santa Clara County voters approved a ballot measure in 2000 to bring the train system to their county via the East Bay as well. Local officials are hoping to secure federal funding for that extension this year, with construction expected to start in several years. While the new SFO BART extension is celebrated, plans to extend runways at the airport appear to be foundering. A fter spending at least $74 million on studies to look at building new runways � and possibly extending them into San Francisco Bay � the San Francisco Board of Supervisors indicated during meetings in May that it would not provide additional funding for the project. The airport said it needed $3.5 million for the remainder of this fiscal year, and $5 million for next year to pay staff, complete environmental studies, and maintain an option on wetlands in the North Bay that could serve as mitigation. Seeing the handwriting on the wall, the airport dropped its funding request in late May. The Board of Supervisors includes many members who took office since the airport expansion plans were announced. Voters approved a ballot measure in November 2001 that would require voter approval of any city project filling at least 100 acres of the bay � namely the airport runway project. SFO Spokesman Mike McCarron said the project is not dead. "It's going to be put on hold for a couple of years," he said, citing the economy and decreased passenger levels at the airport. The airport extension project has been opposed by environmental groups, who do not want to see landfill in the bay. But the project was strongly pushed by San Francisco Mayor Willie Brown and was supported by local members of the business community. When the plan was unveiled in 1998, an airport spokesman said the new runways were needed by the year 2010. The airport's runways are 750 feet apart; however, the Federal Aviation Administration requires a separation of 4,500 feet between planes during poor weather landings. Flight delays at the airport during foggy and stormy weather are legendary. Felicia Borrego, political director of the environmental group Save the Bay, said the environmental arguments against the expansion have always been "compelling," but she agreed with McCarron's assessment that the poor economy had stalled the project. United Airlines, the airport's largest carrier, is in bankruptcy and has cut flights as it struggles to regain profitability. The airline reported losing $1.34 billion during the first quarter of this year. Borrego's group had urged the airport to consider other alternatives to new runways, such as more sophisticated radar technology for landing planes. As originally proposed, two new runways would replace two of the airport's four existing runways. Early proposals called for up to two square miles of landfill in the bay to accommodate the new runways, which would cost as much as $3.5 billion to build and take eight to ten years to complete (see , February 2001). At one point, airport officials hoped to restore salt production ponds on the bay south of the airport to mitigate the damage caused by the fill. But that plan was unlinked from the airport runway plan, and 16,500 acres of salt ponds were purchased for restoration earlier this year by the state and federal governments and a group of private foundations. Contacts: Ron Rodriguez, Bay Area Rapid Transit spokesman, (510)464-6000. Molly McArthur, BART manager of community and government relations, (650) 689-8411. Mike McCarron, San Francisco International Airport spokesman, (650)821-5019. Felicia Borrego, Save the Bay, (510)452-9261.

The story of Pinocchio is a variation on the Pygmalian myth: Fashioning a fantasy companion with one's own hands, and then bringing the inanimate object to life. In the case of Pygmalian, the sculptor was able to bring to life the statue of a beautiful woman. In the case of Pinocchio — a theme that gets obscured in the popular Disney version by cinematic details like telescoping noses and boys turning into donkeys — is the poignant wish of Geppetto, the lonely wood carver, who wishes that a wooden marionette can become "a real boy." While retail development may seem less poignant than making fantasy children out of wood, the notion of the town center is another manifestation of the Pygmalian myth: The idea that developers can create instant shopping streets that will be accepted as the genuine urban article. So-called town centers are essentially outdoor shopping mall, with more or less the same mix of tenants as the interior variety, but look and feel very much like city streets. The town center concept has spread far beyond California to become a national phenomenon. Cities that had lacked downtowns — including Santa Clarita, Thousand Oaks and Emeryville — awoke one day to find that a little bit of San Francisco's Maiden Lane, or Palo Alto's University Avenue, or Los Angeles' Montana Avenue had seemingly sprung up like giant, stucco mushrooms in their pedestrian-bereft cities during the night. Sometimes town centers fit into existing urban grids. At other times, these developments stand alone in suburban isolation. Predictably, such streets have their critics, who cavil about "inauthenticity" and "Disney-fication." Admittedly, just as kosher-style hot dogs are not genuinely kosher, many town centers are more urban in style than substance. With their manufactured cheerfulness, non-specific nostalgia and vaguely "traditional" architecture, town centers are easy marks for the authenticity police. In fairness, some genuine historic districts, like San Diego's Gaslamp District and Old Pasadena, are so covered in town center-style signage, neon and other types of marketing bric-a-brac that they are indistinguishable from the cheap imitations. But what if the authenticity police were wrong, or at least not entirely right? They are correct insofar that many town centers are phony, saccharine and "timeless" in a retro kind of way. But those who are sticklers for realism may be missing the larger point that instant downtowns like Santana Row in San Jose or Bay Street Emeryville have the potential to mature gracefully and merge into larger urban patterns. As we wrote a few years back about another town center, The Grove at Farmers Market in Los Angeles (see , January 1999), the most important criterion is not whether artificial streets are garish or in questionable taste. The proper question, instead, is whether a particular set of buildings has the right "bones" to evolve from a private retail center into a for-real public street, just as Pinocchio eventually became a real boy. Even if the town centers are really monolithic malls in disguise, they look like rows of individual buildings, each with a distinct façade, and this artifice has an urban rhythm that can adapt itself to a larger context. For these reasons, I suggest we hold off judgment on the town centers, because some of them may serve as the seedlings from which entire pedestrian-oriented districts will grow, and, as such, may turn out to be defensible. With this criterion in mind — call it long-term urban viability for the lack of a better phrase — the comparison of Santana Row with Bay Street Emeryville becomes more focused. Bay Street — developed by Madison Marquette and designed by The Charles Group of Los Angeles, in association with David R. Hoffman — may be the more typical of the two town centers under discussion here. Bay Street is a single, elongated, inward-looking street that stretches down one long block. In another words, it is an inverted strip center. The front entrances are mostly on Bay Street, the official "walk street" of the project, while the center turns its back to Shellmound Street, a major thoroughfare. The retail portion is complete, while a residential portion, to be built atop the retail buildings, is currently under construction and will not be ready for occupancy until next year. A 300,000-square-foot IKEA outlet is on the south, while Powell Street Plaza, a smaller retail center, lies to the west across Shellmound. The stores within the Bay Street complex do not address Shellmound, and the Bay Street "urban village" offers the paradoxical image of turning its back on the largest local arterial, although architect Pigg has provided plentiful glass on the Shellmound side of the building so motorists see merchants and wares, not just blind walls. With the IKEA, Bay Street and Powell Street Plaza all in place and the enormous Chiron campus to the east, Shellmound looks like a major shopping street in the making, even if Bay Street has few, if any, storefronts on the corridor. The big barrier is the large scale of the retail projects, which may make it difficult to redevelop these big parcels on the store-by-store, fine-grained level that seems most desirable to add interest and variety to monolithic malls and big-box retailers. It would not be easy for an individual developer to come in and create, say, a restaurant with outdoor seating or a nightclub or a coffee shop or used bookstore, or other small "specialty" retail businesses that would give Bay Street some individual character. Worse, Bay Street is landlocked between Shellmound to the west and the Union Pacific tracks to the east, preventing developers from creating a district; Shellmound will always be a retail strip, dominated by cars pulling into garages, cars coming out of garages and still other cars zipping by quickly on the road — not the most pleasant experiences for people on foot. On the other hand, Bay Street has the potential to convert its blind backside into storefronts along Shellmound at some future time, creating a two-sided shopping street on this important corridor. Despite some challenging odds, this Pinocchio may yet become a real boy. Although the site plan of Santana Row probably preceded Bay Street in time, the San Jose project seems like an improvement over the Emeryville shopping street. Located within an existing, if under-used, intersection, Santana Row does not suffer from the obvious limitation of Bay Street of being a single street without the ability to expand. A "demalling" project built on the site of an earlier shopping center, Santana Row was developed by Federal Realty Investment Trust, and master planned by Street Works with architecture by Sandy & Babcock and Backen Arrigoni & Ross. Like Bay Street, Santana Row will be a sandwich of retail below and residential on upper floors. The advantage of the San Jose project is that it has taken root on an existing urban grid, and has the grace and ingenuity to address that grid in all four directions. This outward-looking design promises than Santana Row may age gracefully and merge with the surrounding urban fabric. On the other hand, there are some self-imposed limitations to Santana Row: The project pretends to be a continuation of a regular street grid while, in reality, drivers tend to find themselves dead-ending against parking structures or buildings. As in a Roach Motel, the target audience may find it easier to enter than to leave. Even with this problem, it is not impossible to imagine that some roads could be cut through the blind-siding streets, and that Santana Row could be reconfigured as a set of regular blocks. This is one urban marionette that has an excellent chance of becoming "a real boy."

The U.S. Court of Appeals for the District of Columbia has turned back a San Diego developer's broad attack on the Endangered Species Act as an unconstitutional exercise of federal power. Rancho Viejo LLC argued that the federal government had exceeded the authority granted to it by the constitution's Commerce Clause, and the developer pointed to two recent Supreme Court decisions striking down laws because they exceeded Congress's authority under the clause. A federal district court dismissed the suit, and the appellate panel in Washington D.C. affirmed that decision. "To survive Commerce Clause review, all the government must establish is that a ‘rational basis exists for concluding that a regulated activity sufficiently affects interstate commerce,'" Judge Merrick Garland wrote for the three-judge panel, citing , 514 U.S. 549 (1995). "And there can be no doubt that such a relationship exists for costly commercial developments like Rancho Viejo's." Rancho Viejo sought to build a 280-home project on 202 acres near the junction of Interstate 15 and Highway 76 in unincorporated San Diego County. The company proposed building houses on 52 acres upland of Keys Creek, which bordered the property. Rancho Viejo planned to use 77 acres, including portions of the streambed, as borrow areas for fill on the 52-acre housing site. To get the fill, Rancho Viejo had to get a Clean Water Act § 404 permit from the U.S. Corps of Engineers. The Corps determined that the project "may affect" arroyo toads, an endangered species present in the creek and adjacent to the project site, so the Corps sought a formal consultation with the U.S. Fish and Wildlife Service. In May 2000, Rancho Viejo dug a trench and built a fence parallel to the creek. The Fish and Wildlife Service quickly notified the developer that the fence resulted in the illegal "take" of an endangered species and would cause the future illegal take of toads. In August 2000, the Fish and Wildlife Service issued a biological opinion stating that Rancho Viejo's proposal to borrow material from the 77 acres was likely to jeopardize the toad's existence. The agency recommended that Rancho Viejo get its fill material from an off-site location. Rancho Viejo then sued, alleging that both the listing of the toad under the ESA and the application of the ESA to the project exceeded the federal government's authority under the Commerce Clause. The district court held that the case was the same as , 130 F.3d 1041 (D.C. Cir. 1997) (see , February 1998). In , the court rejected a Commerce Clause-based challenge to the application of the ESA to a hospital construction project in San Bernardino. The appellate panel agreed that was indistinguishable from the current controversy. In its appeal, Rancho Viejo cited two recent Supreme Court decisions as evidence that was no longer the controlling case. Those Supreme Court cases were , 529, U.S. 598 (2000) and , (" ") 531 U.S. 159 (2001) (see , February 2001). In , the high court threw out a section of the Violence Against Women Act because its adoption exceeded congressional authority under the Commerce Clause. Rancho Viejo argued that stood for the proposition that noneconomic activity, no matter its effect on interstate commerce, could not be regulated under the Commerce Clause. In , the Supreme Court limited the authority of the Corps of Engineers under the Clean Water Act. But the appellate court rejected the argument. " instructs that ‘the proper inquiry' is whether the challenge is to ‘a regulation of activity that substantially affects interstate commerce.'" Justice Garland wrote. "Similarly, declares that what is required is an evaluation of ‘the precise object or activity' that, in the aggregate, substantially affects interstate commerce. When, as directed, we turn our attention to the precise activity that is regulated in this case, there is no question but that it is economic in nature." Nothing in either case invalidated the holding in , the court ruled. Rancho Viejo countered that because the regulation had a noneconomic purpose — the protection of toads — it violated the Commerce Clause. But the court said no to that argument as well. "The Supreme Court has long held that Congress may act under the Commerce Clause to achieve noneconomic ends through the regulation of commercial activity," Garland wrote. Rancho Viejo's position would invalidate numerous laws regarding discrimination, health and welfare and other things, the court held. "Congress' primary object in passing product safety legislation, for example, was not to improve the productivity of industry but rather to protect the well-being of the public. Much the same can be said of federal environmental legislation. And plaintiff's position would make federal criminal law an area of particular vulnerability," Garland wrote. The court then dealt with Rancho Viejo's arguments that the ESA was overboard and that it represented an unlawful federal intrusion into local land use decisions. The overbreadth argument was essentially a facial challenge of the ESA, the court held, and such a challenge could stand up only if there were no set of circumstances in which the law would be valid. But Congress has the authority to regulate development projects, so the facial challenge failed, the court held. Finally, the court held that the ESA "represent a national response to a specific problem of ‘truly national' concern," as required by . "Moreover, while ‘states and localities posses broad regulatory and zoning authority over land within their jurisdictions, … it is well established … that Congress can regulate even private land use for environmental and wildlife conservation,'" Garland wrote, citing , 214 F3d 483 (4th Cir. 2000). "Tracing a 100-year history of congressional involvement in natural resource conservation, Chief Judge Wilkinson concluded gibbs> gibbs> that ‘it is clear from our laws and precedent that federal regulation of endangered wildlife does not trench impermissibly upon state powers.'" The Case: , No. 01-5373. Filed April 1, 2003. The Lawyers: For Ranch Viejo: John C. Eastman, (714) 628-2587. For Norton: Katherine Barton, Department of Justice, (202) 514-2000.

THE LOS ANGELES COUNTY Board of Supervisors has approved a revised environmental impact report for the proposed Newhall Ranch development in the hills just west of Santa Clarita. The revised EIR was required because a Kern County judge in 2000 found the original study lacking. Among other things, the judge found that the study did not adequately address where the project would get its water. The court will now review the revised environmental analysis. The revised EIR points to two primary sources of water: 7,038 acre-feet per year from landowner Newhall Ranch and Farming Company's agricultural supply, and 1,607 acre-feet annually transferred from a Kern County farmer. Those two sources are adequate to meet the needs of the project, according to a report by county Planning Director James Hartl. Additionally, Newhall secured an additional entitlement to 7,648 acre-feet per year from the oversubscribed State Water Project, purchased 55,000 acre-feet of groundwater banking storage capacity and determined that the local aquifer can be used for banking. The revised EIR and a settlement among Newhall, the Department of Fish and Game, and the Los Angeles County District Attorney spell out how to handle the San Fernando Valley spineflower. The endangered flower that was found on the site since the county originally approved the development in 1999, and Newhall was accused of hiding the species' presence. (see , March 2003). Under the settlement, Newhall will set aside 64 acres for a spineflower preserve and provide DFG with better access to the site and to biological reports. The Board of Supervisors also voted 4-1 to approved various general plan and specific plan amendments and a zoning change to allow the project to proceed. Supervisor Zev Yaroslavsky, who voted for the project in 1999, was the dissenter. "We are on a course that is demonstrably wrong," Yaroslavsky said during the board meeting. He called an analysis that found that less than 10% of Newhall Ranch residents would commute outside the Santa Clarita Valley for work "laughable." As approved, Newhall Ranch calls for 20,885 housing units on 11,963 acres. There would also be millions of square feet of commercial and industrial development to provide about 19,000 jobs. Roughly half the site would remain undeveloped. Environmentalists and, possibly, Ventura County, are expected to renew their legal challenges to the project. ******** TEJON RANCH COMPANY and the Trust for Public Land (TPL) jointly announced they are working on a deal in which the TPL would acquire up to 100,000 acres of the 270,000-acre Tejon Ranch north of Los Angeles. No price or timeline for signing a contract were announced. The land would provide habitat for rare species and oaks, and serve as a wildlife corridor that connects open space near the coast to the southern Sierra Nevada mountains. "To help us in planning the future of this historic ranch, we have created a long-term vision that calls for permanent conservation of about 100,000 acres of the most highly prized and environmentally sensitive lands in our nation," Tejon Ranch CEO Bob Stine said in a prepared statement. Tejon Ranch is developing a 20 million-square-foot industrial project in Kern County and is seeking Los Angeles County approved for a 23,000-home new town at Interstate 5 and Highway 138 (see , April 2003). Some environmentalists worried that the TPL purchase would only encourage development of the rest of the ranch. ******** A NEW U.S. INTERIOR DEPARTMENT proposal for solving water conflicts in western states during the next two decades concentrates on getting more out of existing resources. The report, "Water 2025: Preventing Crises and Conflict in the West," does not call for building additional reservoirs or relaxing environmental regulations — two notions that past Republican administrations have advocated. Instead, the report calls for additional research and development for things such as conservation and desalination. The report also calls for modernizing the water infrastructure to stretch existing supplies. "Crisis management is not an effective solution for addressing long-term systematic water supply problems," Interior Secretary Gail Norton said upon the release of the report in May. The report lists six principles: • Respect state, tribal and federal water rights, contracts and decrees of the U.S. Supreme Court. • Maintain and modernize existing water facilities so they continue to provide water and power. • Enhance water conservation and resource monitoring. • Use collaborative approaches and market-based transfers to minimize conflicts. • Improve water treatment technology, including desalination. • Derive additional benefits from existing water supply infrastructure. The report lists 10 hot spots where water conflict is most likely during coming years. Three of the hot spots are in California — the Colorado River, the Lake Tahoe region, and a region stretching from the San Francisco Bay delta to the northern San Joaquin Valley. The report is available at www.doi.gov/water2025. ******** RANCHERS AND PROPERTY RIGHTS ACTIVISTS in San Benito County have presented the Board of Supervisors with about 5,300 signatures on a referendum that seeks to overturn a recent board decision to adopt a slow-growth initiative. That initiative encompassed some existing growth-control policies and downzoned tens of thousands of acres of farmland and pasture. When presented with about 5,600 signatures on the initiative in April, supervisors chose to adopt it rather than put it on the ballot. The downzoning especially upset landowners, who responded with the referendum. As of early June, the board had not taken action on the referendum because of legal uncertainties regarding the measure's language. ******** A STUDY OF TRANSIT-ORIENTED DEVELOPMENTS by Caltrans reports that there are significant barriers to development near public transit stations, and recommends that the state modify policies and provide financial incentives to encourage this type of development. The study, "Statewide Transit-Oriented Development Study: Factors for Success in California," lists five major obstacles: Transit system design, local opposition, local zoning, high development risk and cost, and difficulties with financing. The report recommends that the state sell land it owns near major transit stations for transit-oriented development, encourage better coordination of land use and transportation planning, review state environmental requirements, provide funding to local government for transit-oriented development planning, allow greater flexibility in spending state transportation funds, and offer financial incentives. The report is available at www.dot.ca.gov/hg/MassTrans/tod.htm ******** A CONTROVERSIAL PROPOSAL to widen Highway 101 through the San Fernando Valley and eastern Ventura County has been suspended by Caltrans. The May decision came shortly after local representatives Sen. Sheila Kuehl (D-Santa Monica) and Assemblywoman Fran Pavley (D-Agoura Hills) announced their opposition. The freeway has become one of the most clogged in a heavily congested region, but public outcry against the proposal was overwhelming. Caltrans had estimated it would have to acquire about 700 homes and 250 business locations to accommodate the widening.

At last, a property rights ballot initiative is making the rounds in California. But the initiative begs the question: Is there still a property rights movement in this state? Maybe. It is unlikely that any sweeping pro-property rights action will come out of the Legislature or out of most California courts, least of all the left-leaning Ninth U.S. Circuit Court of Appeals. So, if California property rights advocates have much hope at all, they are likely to pin it on a ballot initiative. In mid-May, the attorney general and the secretary of state gave the green light to San Luis Obispo land-use lawyer William Walter to gather signatures to place "the California Property Rights Initiative," a constitutional amendment, on the ballot in November 2004. Placing any statewide initiative on the ballot is a daunting task requiring the collection of about 600,000 valid signatures. The effort usually requires paid signature-gatherers. Walter is an experienced land-use lawyer; he recently has represented several landowners in "magic subdivision" cases, which seek to validate the existence of parcels created prior to the passage of the first Subdivision Map Act in 1893 (see , August 2001 and , March 2000). But Walter is not a big name in the field along the lines of Ronald Zumbrun, Michael Berger, or the Pacific Legal Foundation. He indicates that the current wording of the initiative is a kind of trial balloon. He says he may revise and resubmit, but "no one will take you seriously" unless you have an actual proposal in circulation. Walter's initiative is fairly simple on its face. In all of his public communications, including an interview with , Walter contends that he is simply seeking to "level the playing field," rather than create more lawsuits. Having worked as a land-use lawyer for almost 30 years, he has concluded that California has by far the most oppressive property regulations — and the least sympathetic environment for property rights — of any state in the union. In a letter to the attorney general, Walter wrote: "The goal is not to foster litigation but to reform the conduct of California's government entities." He asserted that "legislative solutions have been conspicuously lacking to provide mechanisms to modify the behavior of government agencies" and concluded that "it is anticipated that through pro-active training (e.g. continuing education) of government entities about the standards of reasonable, fair, and proportionate conduct in the exercise of their duties, few such lawsuits would arise." Walter's initiative would not, however, change the constitution to require better continuing education. Rather, it would amend the definitions contained in Article 1, Section 19, of the California Constitution — the "declaration of rights" dealing with property rights — to more explicitly include onerous regulation as the basis of a claim that property has been damaged by, or taken for, public use. Definitions are not precise. Walter acknowledged that, at least at this point, his goal is to gauge political and financial support for an initiative. He may well revise the initiative and resubmit it later. If passed, the initiative may or may not create a flood of litigation. But it would certainly make the takings standard even murkier. During the past 25 years, property rights advocates have succeeded in swinging the legal pendulum back in their direction, but they have failed to secure a hard and fast standard for when a taking occurs and when it does not. In a recent commentary in the , pro-regulation advocates John Echeverria and Bill Higgins claimed that the takings test now has 13 factors that are so complicated and contradictory that they "do not supply a meaningful rule of law." Walter's initiative requires compensation in certain situations but is not specific. The bigger question politically is whether a property rights movement can ever gain much traction in California, no matter how well funded or zealous its "true believers" might be. In one sense, you would think so. There is still a cowboy mentality in many parts of the state, and the Libertarian Party is stronger here than in most other states. On the other hand, recent political and judicial trends suggest that the cowboys will be eating the regulators' dust for the foreseeable future. For years, legislation boosting property rights has regularly stalled in committee, and that roadblock is unlikely to fall soon with the Democrats firmly in control of Sacramento. Recent court rulings involving California property rights have not gone well for the landowners. Despite nearly two decades of litigation, property owners from Lake Tahoe — one of the most highly regulated parts of the country — have never won a solid legal victory. Most recently, in , the U.S. Supreme Court rejected yet another property rights claim from Lake Tahoe, this one involving a 1980s moratorium (see , March 2002). Also, prominent Sacramento developer Angelo Tsakapoulos suffered a narrow loss before the high court. A divided court upheld a lower court's ruling in , a case involving a large fine for Tsakapoulos for "deep ripping" a wetlands, apparently in violation of the federal Clean Water Act (see , January 2003). Perhaps most surprisingly, a local, pro-property rights ballot initiative in a seemingly sympathetic county went down to defeat last year. Voters in rural Nevada County defeated Measure D by 57% to 43% last November, even though Measure D's supporters outspent the opponents 10 to 1 in a county that has a long history of defending property rights. It could be argued that all of these pro-regulation victories have been narrow and could easily have gone the other way. Tsakapoulos lost his case before the Supreme Court on a 4-4 tie, with Justice Anthony Kennedy, a Sacramento native and friend of Tsakapoulos, absent. Even as Measure D was defeated in Nevada County, its supporters defeated its opponents in individual races for the county Board of Supervisors. And the California attorney general's office has narrowly escaped defeat in Lake Tahoe on any number of occasions. But the overall trend is that the pro-regulation forces almost always find a way to win in California, even if that victory is close. The only current exception to the rule is the Marine Forests Society case, currently pending before the California Supreme Court, in which property rights advocates have challenged the constitutionality of the appointments system for Coastal Commissioners. The big victory there is not just that a lower court found the system unconstitutional, but that the Supreme Court is examining whether to apply the ruling retroactively (see , May 2003). That move threatens to overturn the entire history of Coastal Commission rulings. But the Coastal Commission is always an anomaly in California land-use regulation — unusually aggressive and polarizing. In that sense, the commission is an easier target than most other regulatory agencies. On balance, California remains a highly regulated state that is politically hostile to property rights. That makes William Walter's initiative all the more important legally to property rights advocates, and all the more difficult as a political objective.

The California Coastal Commission does not have authority to consider environmental impacts to areas inside the coastal zone caused by development outside the coast zone, the First District Court of Appeal has ruled. The decision is the most definitive to date on the Commission's authority when a project straddles the coastal zone boundary. "Consideration of environmental impacts originating outside the coastal zone is the responsibility of the local agency with authority over their point of origin — here, the city. It is not the responsibility of the Commission," the appellate court ruled. The decision came in an environmentalists' lawsuit over the commission's approval of a 114-house subdivision on 44 acres in the Playa del Rey area of the City of Los Angeles. Catellus Residential Group initially proposed a 119-home development. The city adopted an environmental impact report for the project and approved the subdivision. The Sierra Club appealed that decision to the Coastal Commission. In August 1999, the Commission overturned the city's decision, citing concerns about excessive grading, landform alteration and the impact on coastal views. Catellus revised the project, cutting the number of houses to 114 and changing its plans for grading and slope stability measures. Catellus also agreed to purchase 15 nearby undeveloped lots and retire the development rights. The city prepared a supplemental EIR and, in January 2000, issued new permits. The Sierra Club again appealed, but this time the Commission voted 9-2 in August 2000 to uphold the city's approval. The revised project called for all houses to be built outside the coastal zone; however, a road serving most of the houses would run through the coastal zone. There would also be other grading and buried retaining walls in the coastal zone. The Sierra Club, the Spirit of the Sage Council, and Ballona Ecosystem Education Project sued the Commission, the city and Catellus, alleging a number of misdeeds. (A separate lawsuit filed by the Spirit of the Sage Council against the city is pending in the Second District Court of Appeal after the city won at the trial court.) The environmental groups sought an injunction to prevent Catellus from grading. The San Francisco Superior Court rejected the request, but the First District, in an unpublished ruling, approved the injunction. The case then returned to the trial court for a decision on the merits. In July 2002, San Francisco Superior Court Judge James Robertson ruled against the environmental groups on all grounds. The environmentalists appealed, and a unanimous three-judge panel of the First District upheld the lower court. The environmentalists' most important argument from a legal standpoint concerned the Commission's ability to review impacts originating outside the coastal zone. The environmental groups argued that the Commission failed to consider the impact that development of the houses outside the coastal zone would have on the nearby Ballona wetlands, an environmentally sensitive habitat area (ESHA) within the coastal zone. The project opponents argued that because development within the coastal zone (the road and grading) would support development outside the zone (the houses) — and because the development outside the coastal zone would impact an ESHA inside the zone — the Commission was obliged to consider those impacts and reject the development within the zone. Previous court rulings had not resolved this issue, but the First District concluded that the environmental groups were attempting to extend the jurisdiction of the Coastal Commission beyond that allowed in the Coastal Act. The court's decision hinged on its interpretation of two sections of the act — Public Resources Code §§ 30200 and 30604, subdivision (d). Section 30200 requires public agencies carrying out or supporting activities outside the coastal zone to consider the activities' direct impacts within the coastal zone. The environmental groups argued that this statute required the Commission to consider the inside-the-zone impacts from outside-the-zone development. But the court said the Sierra Club's interpretation did not jibe with § 30604, subdivision (d). In 1978, the Legislature amended that statute to address the Commission's authority when a project straddled the coastal zone boundary. "The legislative history … confirms that the Legislature intended to reject the notion that Commission jurisdiction over part of a project could be leveraged into jurisdiction over the entire project," Justice Linda Gemello wrote for the court. "If the Commission has no jurisdiction over the portion of a project outside the coastal zone, it follows that the Commission has no jurisdiction to evaluate that portion of the project to determine whether its effects are consistent with Coastal Act policies." The Sierra Club countered that the court's interpretation of § 30604, subdivision (d), amounted to an improper repeal of § 30200. But the court rejected that argument, ruling that § 30200 still controlled the responsibilities of other agencies, such as the city in this case. The court also shot down a slew of other arguments from the environmental groups. One of the more novel arguments concerned an ESHA that Catellus proposed to create. Under the Coastal Act, an ESHA is "any area in which plant or animal life or their habitats are either rare or especially valuable because of their special nature or role in an ecosystem and which could be easily disturbed or degraded by human activities and developments." Catellus proposed to revegetate the eroded and disturbed face of a bluff within the coastal zone, thereby creating an ESHA. Project opponents argued that ESHA protections would therefore apply, and the project would be inconsistent with the Coastal Act. "We conclude that both the language and intent of the Coastal Act dictate the opposite conclusion," Justice Gemello wrote. "ESHA protections do not apply unless an area is currently an ESHA. … If we were to adopt the Sierra Club's interpretation, we would create disincentives for any future developer to engage in habitat restoration as part of a development." The court also rejected opponents' argument that the Commission's procedure for adopting findings was improper. The Commission adopted findings five months after voting for the project because the findings that staff had prepared at the time of the vote were inconsistent with how the Commission actually voted. Opponents argued this was a "post-hoc rationalization," which the California Environmental Quality Act prohibited. The court found that the Commission adequately explained its reasoning at the meeting where the vote was conducted. "An agency must reason first, and reach its decision second. Written findings may come before or after, so long as they reflect the reasoning actually engaged in before the decision has been reached," Gemello wrote. In unpublished portions of the opinion, the court held that substantial evidence supported the Commission's decision that the project was consistent with the Coastal Act's policies for protecting views. And the court held that the Commission's decision not to consider feasible project alternatives complied with CEQA because the proposed project did not have any unmitigated impacts. The Case: , No. A100194, 03 C.D.O.S. 3143, 2003 DJDAR 3975. Filed April 11, 2003. The Lawyers: For Sierra Club: Frank Angel, (310) 314-6433. For the Coastal Commission: Hayley Peterson, deputy attorney general, (619) 645-2540. For Catellus: Robert Crockett, Latham & Watkins, (213) 485-1234.

A specific plan for a slice of northern Monterey County that has long been seen as a potential growth area could be released this summer. However, the second version of a Rancho San Juan specific plan is unlikely to settle long-running disputes over how the area between the City of Salinas and the unincorporated community of Prunedale should develop. At issue are not only how much of the roughly 2,500 acres should be developed and in what manner, but whether development should occur under control of the county, the City of Salinas or even a new city. Adding to the tension are the different desires of the numerous landowners in the area, and a Monterey County Superior Court decision ordering the county to complete the planning process. The court order is part of the project's lengthy history. During adoption of a general plan in the early 1980s, the county designated Rancho San Juan as an area for future development. In 1986, as part of the Greater Salinas Area Plan, the county designated Rancho San Juan as an "area of development concentration" and drew the first boundaries. A mixture of planning, politics and litigation consumed the next 12 years leading up to the release in 1998 of a specific plan and accompanying environmental impact report. Those documents generated a huge response from the public and agencies. "It was pretty clear what the community expected," said Celia Perez Martinez the county's current Rancho San Juan project manager. "They expected a community, not just houses. They expected no sprawl. They expected preservation of historic and cultural resources." But the plan did not meet those expectations, she said. The overwhelming response and the arrival of Sally Reed (late of Los Angeles County and the Department of Motor Vehicles) as county administrative officer led the Board of Supervisors to halt the specific planning process and begin an overhaul of the general plan in 1999. That move angered HYH Corporation, which owns or controls 671 acres in Rancho San Juan and which had helped fund the specific plan process. The company sued the county and won. The Superior Court said the county could not stop in the middle of the planning process, and the court ordered the county to complete the task. Planning resumed about two years ago but has remained mostly behind the scenes - to the frustration of property owners, city officials and environmentalists. Martinez said the county has conducted meetings with property owners, and she has made two presentations to the Salinas City Council. Plus, the Board of Supervisors has received two updates. But planners are working mostly with the first round of documents and the extensive comments, she said. The plan also will be based on the 12 "guiding objectives" that county supervisors established for the ongoing general plan update, she said. Those objectives include concepts such as compact development, balancing residential and commercial growth, and preserving farmland and rural areas. Two options presented thus far call for 4,000 housing units, roughly 2.5 million square feet of "employment center" development, a town center, and additional commercial, office and live-work development. Development would be held to city standards, Martinez added. The HYH lawsuit and the county's desire to satisfy that developer appear to be driving the county's approach, said both attorney Brian Finegan, who represents the owner of about 220 acres at the southern end of Rancho San Juan, and Gary Patton, executive director of LandWatch Monterey County. HYH has submitted an application, which the county is processing concurrently with the specific plan, for about 1,000 houses, a 40,000-square-foot shopping center and a golf course. The HYH property, though, is in the middle of the site, so developing that portion of Rancho San Juan first has been questioned by Salinas officials and others. The City of Salinas opposed the development proposed in the 1998 specific plan, and the city has not changed its position. The city has raised issues such as the provision of public services - especially water - traffic, loss of farmland and erosion of Salinas's urban edge. In a letter to the county earlier this year, the city indicated that the county's approach conflicted with the Boronda memorandum of understanding, a city-county pact that calls for city-centered growth. "The development of Rancho San Juan, essentially a ‘new town' with a potential population rivaling that of Gonzales, Soledad, Greenfield and King City, is in direct conflict with city center growth and many of the references to city center growth embodied in the Monterey County general plan," Salinas Planning Manager Robert Richelieu wrote. Rancho San Juan lies within 1,000 feet of the Salinas city limits, yet the city did not include Rancho San Juan in a general plan update completed during 2002. Salinas officials envision their city growing to the east and northeast, not directly north into Rancho San Juan, said Senior Planner Jenny Mahoney. "When you look at our land use map and you plug in Rancho San Juan, it looks like this weird appendage that doesn't fit with the rest of the city," Mahoney said. Still, some landowners want the city to annex their property. Finegan said his clients, the Ferrasci family, which owns a 220-acre strawberry farm that abuts the city limits, wants no part of the county process. "What I've consistently said to the county planners is, ‘Let my people go.' Let the Ferrasci family go make their deal with the city," Finegan said. "It's the logical place for the City of Salinas to expand. It's very developable property. It has minimal constraints." The county wants to keep Rancho San Juan for itself so that it can meet its state housing mandate, charged Finegan, who is skeptical of county talk of jobs-housing balance in the area. "There has never been any interest in the industrial part of that project," he said. Cathy West, executive director of the Monterey County Local Agency Formation Commission (LAFCO), said there currently is no answer to the ultimate question of who will govern Rancho San Juan. The LAFCO has begun studying what entities will provide services if Rancho San Juan development does proceed. There are two fire protection districts in the area, a park district has shown interest in providing services, and the Pajaro/Sunny Mesa Community Services District has proposed expanding its boundaries to consolidate water services to Rancho San Juan. "In any case, we're looking at some sort of temporary service arrangements out there," West said. The LAFCO studies could help answer the ultimate question, and they could affect both the city's and the county's approach to Rancho San Juan, West said. If an adequate commercial and industrial tax base were proposed at Rancho San Juan, LAFCO would look favorably on annexation, she said. If Rancho San Juan evolves as an urban yet unincorporated area, annexation would became more difficult because of the number of people involved, she said. And then there is the question of whether to develop Rancho San Juan at all. Patton, a former Monterey County supervisor and former general counsel for the Planning and Conservation League, said he has never supported growth in that area. Salinas has about 3,000 acres for growth, and the county has no business allowing large-scale development of unincorporated territory. The court order in the HYH lawsuit, Patton noted, only requires the county to complete the planning process; the court did not order the county to approve development. The area is home to the "Red Pony Barn" made famous by John Steinbeck. Historic preservation advocates want the barn protected. Farmland and open space advocates decry the potential loss of productive fields and scenic oak woodlands. And just about everyone is concerned about traffic on rural roads, narrow highways and the already busy streets of Salinas. If the county does approve large-scale development, many interest groups are likely to file a lawsuit or pursue a referendum. The City of Salinas has also hinted at legal action. An additional complication is the need to improve Highway 101, which splits Rancho San Juan. The highway currently is a four-lane road with cross traffic and driveways. Caltrans is constructing extensive safety improvements, but both Caltrans and the Transportation Agency for Monterey County view a proposed Prunedale bypass as the long-term answer to safety and capacity concerns. However, a bypass through the hills would cost hundreds of millions of dollars and require extensive property acquisition and, likely, environmental mitigation, said Colin Jones, a Caltrans spokesman. "The bypass is in the preliminary planning stages, but it's years if not decades away," Jones said. Because of this, Caltrans has asked Monterey County to plan Rancho San Juan both with and without the bypass. Contacts: Celia Perez Martinez, Monterey County Planning and Building Inspection Department, (831) 796-3087. Jenny Mahoney, City of Salinas Community Development Department, (831) 758-7206. Cathy West, Monterey County Local Agency Formation Commission, (831) 754-5838. Brian Finegan, landowner's attorney, (831) 757-3641. Gary Patton, LandWatch Monterey County, (831) 375-3752. County Planning and Building Inspection Department website: www.co.monterey.ca.us/pbi/