A Butte county landowner who claimed that flood control measures undertaken and approved by Butte County amounted to inverse condemnation had all of his arguments rejected by the Third District Court of Appeal. The court ruled that the strict liability standard that applies in most inverse condemnation cases does not apply in the flood control context. Instead, the court determined a rule of reasonableness applied to the claims, and the landowner did not prove that the county acted unreasonably. Developer William Hauselt purchased a 94-acre almond orchard along Highway 99 about one mile north of the Chico city limits in 1988 with the intent of developing a housing subdivision. Ten years later, Hauselt sued Butte County, arguing that actions of the county had caused flooding of his property and that the county had prevented him developing his land. He sought compensation for inverse condemnation. Hauselt argued that the county had converted Keefer Slough, which forms the northern boundary of his property, into a major drainage facility. He pointed out that the county allowed drainage systems for the nearby Carriage Estates and Wildflower Estates subdivisions to pipe runoff into Keefer Slough. He said the county permitted the developers of those subdivision in 1992 to raise the slough's north bank above the level of the south bank, which lies on his property. He said a bridge the county built over Keefer Slough in the early 1990s increased flows because the old bridge acted as a plug. He cited the 1995 North Chico specific plan, which identified Keefer Slough as the area's primary drainage channel even though it had inadequate flood capacity. And he said the county altered the flow of storm-damaged Rock Creek in a way that increased Keefer Slough flood flows. He further argued the county had improperly prevented him from developing his land, although apparently the county rejected only one subdivision proposal. Butte County Superior Court Judge Steven Howell ruled the county's activities were not unreasonable conduct that would result in inverse condemnation liability. Howell also found that Keefer Slough is a private watercourse and that the statute of limitations had expired for the contentions regarding the neighboring subdivisions' drainage systems. The judge did award Hauselt $1,034 for a temporary taking because the county placed material on his property to prevent flooding on a nearby street. On appeal, Hauselt argued the trial court judge failed to decide the "central issue" of whether the county had implemented a 1979 master storm drainage plan that converted Keefer Slough and his property into a public drainage hub. The Third District said Judge Howell had in fact decided the issue and specifically stated in his ruling that the county did not adopt the plan or construct the facilities in the plan. The trial court determined the county had instead implemented a drainage system employing on-site detention ponds, such as those in the Carriage Estates and Wildflower Estates subdivisions, to slow drainage into Keefer Slough. Hauselt further argued that the rule of strict liability applied because the matter involved flood damage resulting from a public flood control project. The Third District disagreed with this reading of the law and instead cited the state Supreme Court's ruling in Locklin v. City of Lafayette , (1994) 7 Cal.4th 327, 366: " ith respect to flood control projects, the public agency is liable only if its conduct posed an unreasonable risk of harm to the plaintiff, and that unreasonable conduct is a substantial cause of the damage to the plaintiff's property. The rule of strict liability generally followed in inverse condemnation is not applicable in this context." Hauselt contended there was no evidence for the trial court's rulings that the county was not responsible for Keefer Slough's maintenance, that the county played no role in raising Keefer Slough's north bank, and that the county's projects did not increase water flow or volume in Keefer Slough or on Hauselt's property. The appellate court would have none of this. "First, even assuming for the sake of argument that these findings are unsupported and that the county did engage in these actions, for plaintiff to prevail under the applicable law here – the reasonableness rule – he must still show that the county acted unreasonably and that he took reasonable measures to protect his own property," the court ruled. "Plaintiff has not argued that the county acted unreasonably." Moreover, the court said, Hauselt forfeited his arguments because he failed to cite evidence unfavorable to him. The court pointed to evidence that the slough is privately owned, that a private berm existed on the north bank before either neighboring subdivision was built, and that the county had not permitted an increase in the height of that berm. The court also upheld the statute of limitations ruling regarding drainage from Carriage Estates and Wildflower Estates. Hauselt contended that because the damage was ongoing, the five-year statute of limitations did not apply. The court disagreed and said the five-year deadline for a possessory action involving real property applied. The drainage ditch in question was shown on a 1976 subdivision map, the county accepted the subdivisions' drainage improvements in 1989 and 1991, and Hauselt testified he discovered the ditch and pipes in 1992. All of those dates were more than five years before Hauselt filed his inverse condemnation suit in March 1998. The Case: Hauselt v. County of Butte , No. 054927, 09 C.D.O.S. 3705. Filed March 23, 2009. The Lawyers: For Hauselt: Gary Livaich, Desmond, Nolan, Livaich & Cunningham, (916) 443-2051. For the county: Stephen Horan, Porter Scott, (916) 929-1481.

The City of Patterson's in-lieu affordable housing fee has been invalidated by the Fifth District Court of Appeal, which rejected the city's methodology for setting the fee. Homebuilders celebrated the decision as a victory in their long fight to constrain development fees, while affordable housing advocates and municipal attorneys described the ruling as limited. Like about one-third of cities and counties in California, Patterson imposes inclusionary zoning that requires market-rate homebuilders to provide a certain percentage of units to low- or moderate-income households. And, like many jurisdictions, Patterson permits builders to pay an in-lieu fee rather than build the actual units. Patterson based its in-lieu fee on the 642 affordable units the city was allocated in the 2002 Regional Housing Needs Assessment (RHNA) for Stanislaus County. Development of those 642 units would require a subsidy of $73.5 million, according to a city consultant. The city divided that figure across the 3,507 "unentitled units" in town as of January 2005 to reach an impact fee of $20,956 per unit. The court, however, could find "no reasonable relationship" between the extent of the city's affordable housing need and the development of either the unentitled lots or the particular subdivisions at issue in the litigation. "It is the first case that says affordable housing type of fees can be measured by the same kind of generally prevailing reasonable relationship standard that applies to fees in general," said attorney David Lanferman, who represented the Building Industry Association (BIA) of Central California in the lawsuit. "You need to have at least some evidence that the fees are related to the burden created by the development's impact." California courts have not applied the Nollan/Dolan heightened scrutiny standard of review to legislatively adopted fees, Lanferman said. The Fifth District did not apply heightened scrutiny but, because the subdivision in question was the subject of a development agreement that permitted a "reasonably justified" fee increase, the court used the standard from the state Supreme Court's decision in San Remo Hotel v. City and County of San Francisco , (2002) 27 Cal.4th 643 (see CP&DR Legal Digest , April 2002 ). In San Remo , the court insisted on a "reasonable relationship" between fees and impact. Thus, The Fifth District ruled, citing San Remo, there must be "a reasonable relationship between the amount of the fee, as increased, and ‘the deleterious public impact of the development.'" That holding, said Lanferman, is significant because it is the first application of the San Remo standard, and it means that cities and counties must show a connection between construction of market-rate housing and the need for affordable units. However, Mike Rawson, an affordable housing advocate and attorney with the Public Interest Law Project, said builders may be reading too much into the decision. "It's a little to early to tell the legal implications. It's a very narrow holding," Rawson said. The court merely ruled the fee justification study was not related to how the city applied the fee to the subdivision, he said. Rather than viewing the fee as replacing the 10% of affordable units the project did not provide, the city relied on its RHNA number to determine the fee. "I think this is a peculiar case," he said. Sacramento attorney William Abbott, co-author of Exactions and Impact Fees in California , said Patterson got off track when it used its RHNA number, which had no relationship to the project at hand. "That analysis is not a nexus analysis, it's a state housing policy," he said. "This is not how most agencies generate housing fees." Abbott said the court's application of San Remo was not a big deal. Rather, the case illustrates that when a city puts everything into a contract such as a development agreement, the city loses its deferential standing in court, he observed. The project at issue here is two subdivisions containing 214 single-family residential lots within the larger Patterson Gardens development. In January 2003, the city approved a development agreement with Morrison Homes for the two subdivisions. The agreement provided the developer with four options for meeting the city's inclusionary housing mandate. Morrison could build affordable units, develop senior housing, obtain affordable unit credits from other developers or pay an in-lieu fee when building permits were issued. At the time the development agreement was approved, the city's in-lieu fee was $734 per market-rate unit, but the agreement noted the city was preparing a new fee schedule and Morrison would be bound to the revised fees. Since 1995, the city had assumed the in-lieu fee revenue would leverage additional federal grants and loans to provide adequate funding. The new fee schedule marked a policy change. It placed the entire burden of meeting the city's RHNA affordable housing allocation on market-rate builders. The RHNA allocated to Patterson 235 units of very low-income housing, 182 units of low-income housing and 225 moderate-income units, which together would require a subsidy of $73.5 million. In March 2006, the city adopted the new fee of nearly $21,000 per market-rate unit. Morrison Homes and the local BIA sued, but San Joaquin County Superior Court Judge David Vander Wall upheld the housing fee as reasonable. On appeal, the builders argued the fee increase violated the development agreement because the fee was not "reasonably justified." The city argued that phrase in the agreement meant typical legal requirements had been waived. But the court found existing law would still apply to the fee increase. Patterson's fee, the court determined, was not substantially different from the fee in San Remo, which San Francisco imposed on hotel owners who converted residential living units into tourist hotel rooms. Hence, Patterson needed to prove a reasonable relationship between the fee and the project's impact. The city apparently made little attempt to demonstrate a nexus existed, instead contending the fee justification study "clearly shows the need for affordable housing generated by the new construction." That argument appeared to miss the point. "The record in this matter reveals no reasonable relationship between the extent of the city's affordable housing need and the development of either (1) the 214 residential lots that constitute the two subdivision owned by developer or (2) the 3,507 unentitled lots identified in the fee justification study," Justice Betty Dawson wrote for the court. "No connection is shown, by the fee justification study or by anything else in the record, between this 642-unit figure and the need for affordable housing associated with new market-rate development." The court initially filed its decision in late January. After the BIA asked the court to publish the decision, the court significantly reworked the most important part of the opinion and then approved the publication, meaning the opinion may be cited as legal precedent. The court modified the opinion one more time after the initial publication. In the meantime, Patterson has changed its fee structure again. The city now requires builders either to provide 15% of units as affordable or to pay an amount that will fully fund the units' development. The Case: Building Industry Association of Central California v. City of Patterson , No. F054785, 09 C.D.O.S. 2617, 2009 DJDAR 3027. Filed January 30, 2009. Modified and ordered published March 2, 2009. Modified and rehearing denied March 20, 2009, at 2009 DJDAR 4327. The Lawyers: For the BIA: David Lanferman, Sheppard, Mullin, Richter & Hampton, (415) 434-9100. For the city: George Logan, city attorney, (209) 357-1431.

Suddenly, for the first time in 30 years, Washington is the center of the government money world. This is turning things upside down for the planning and development establishment, as local officials, developers, transportation leaders and others flood the nation's capital in search of dough. But what will all the dough do? And how will it shape the growth landscape of California over the next few years? Local government revenue in California is dropping and is likely to fall further over the next year or two. The state government, having finally passed a budget designed to dodge a $40 billion deficit, is now facing a brand new deficit of at least $8 billion. Sacramento's fiscal plight shifts the focus to Washington, from which money appears likely to flow out quickly to the hinterlands for the foreseeable future. There is, of course, the stimulus package – about $800 billion, which includes an odd bag of tax cuts, social safety net provisions, backfilling of state and local budget cuts, and a few pots of money that might actually stimulate the economy and create jobs that did not exist previously. In theory, the stimulus money could make a big difference, not just in keeping local governments in California afloat, but also in shaping the future of the built environment because of all the capital projects that could be funded. But the interplay between the stimulus and the state budget creates some conflicting priorities, because the federal money is often designated for capital expenses, while the state cutbacks will likely affect operating expenses. For example, the stimulus contains almost $7 billion for transit capital projects. This means local transit operators in California can go to the feds for money to buy new buses. At the same time, however, the state budget package eliminated all "State Transit Assistance" money, which is used for both capital and operating expenses, and of course the "Transportation Development Act" revenue – sales tax on gasoline which gets sent to the locals primarily for transit – is going down. That means local transit service will probably be cut everywhere in the state. So local agencies may be able to buy new buses with federal money and … park them. (Now that ought to make it easier to meet those AB 32 greenhouse gas emission reduction goals!) At the same time, there are a few areas where locals may actually get some additional money to move things forward in a significant way. These include the augmentations to the community development block grants and also the energy conservation block grants. The energy grants in particular could provide locals with a whole new source of money to pursue smart growth efforts in the short term. Locals can use these funds for a variety of things, including building codes, transportation demand management, and even zoning ordinances that promote smart growth. Most of the money will flow directly to the locals, but some will be given out on a competitive basis by the California Energy Commission. The stimulus package contains a variety of other pots of money as well that might help in planning and development. For example, every jurisdiction will get additional community development block grant money, which, of course, must be targeted to low-income neighborhoods. And there is a variety of pots of money designed to help the homeless, because there will probably be more homeless people. The big pot of money, however, is reserved for highway infrastructure – almost $30 billion, which will go to the states, though metropolitan planning organizations will have some authority to allocate funds. The Obama administration is making it very clear that the money has to be spent within 120 days. At the same time, some lobbying groups – for example, Smart Growth America and its spin-off organization, Transportation For America – are gearing up for a state-level effort in California to put some kind of smart growth "screen" on how the money is spent. Given the time factor – and the idea that the projects being funded are the ones that happen to be "shovel-ready" – it is hard to imagine Smart Growth America's approach actually working. For example, it is pretty clear that one of the reasons Gov. Schwarzenegger pushed for environmental review exemptions for certain highway projects (see CP&DR Insight , March 2009 ) was to clear the way for stimulus money. Few of those projects – which include widening stretches of Highway 50 and Highway 99 – would likely pass smart growth muster It is much more plausible to see the inside-the-Beltway smart growth crowd winning some successes on the coming transportation and climate change bills, which are much more policy-driven. The reauthorization of the federal transportation bill – a once-every-six-years event – has even more significance this year because the gas tax no longer generates as much revenue as it used to and nobody quite knows where else to turn to get more. Nobody on Capitol Hill wants to propose an increase, though Schwarzenegger did propose it on the Sunday news programs during late March. Then there is the federal climate change bill. Because it could provide an enormous source of additional money for something , every lobbyist inside the Beltway is jockeying for a piece of it. That is because that in limiting carbon emissions, the federal government will probably auction off at least some of the emissions "allowances," raising as much as a trillion dollars over the next couple of decades for environmental protection. Finally, there's the possibility of Stimulus Round 2, which most everybody in Washington expects will be pumped out, needed or not, later this year or possibly next year. Add it all up, and what you have is a return to the 1960s and '70s – the pre-Reagan years – when everybody expected the federal government to pay for everything and local politics was, in large part, the art of lobbying Washington for dough. Federal money in particular is likely to play an enormous role in funding capital projects over the next five years at least – perhaps the next 10. For now, all this money seems likely to simply reinforce existing growth patterns, though in the long run things may change.

A sharply divided U.S. Supreme Court has issued a ruling limiting environmental organizations' ability to challenge U.S. Forest Service regulations. The five-judge majority ruled that five environmental groups lacked legal ability – or "standing" – to challenge Forest Service regulations exempting salvage-timber sales of 250 acres or less from statutory environmental review provisions because the organizations could not show they suffered concrete harm from the exemptions. In a dissent by Justice Stephen Breyer, the four-judge minority characterized the ruling as "counterintuitive." Five environmental organizations, including the Sierra Club and Earth Island Institute, filed a lawsuit in late 2003, after the Forest Service exempted a 238-acre timber sale in California's Sequoia National Forest from the typical public notice, review and appeal procedures contained in federal statutes. The Bush administration had enacted Forest Service regulations exempting salvage-timber sales of 250 acres or less and fire-rehabilitation projects of less than 4,200 acres from normal reviews. The Burnt Ridge project involved salvage logging in a portion of the national forest that had burned in 2002. The organizations and the Forest Service settled the dispute over Burnt Ridge when the Forest Service halted the timber sale and promised to permit public comment if the project returned. Still, the organizations wanted to press their claims regarding six other Forest Service regulatory exemptions that did not apply to Burnt Ridge. A District Court judge permitted the lawsuit to proceed, and in 2005 invalidated five of the exemptions and issued a nationwide injunction against their application. The Ninth U.S. Circuit Court of Appeals later ruled that the exemptions not at issue in Burnt Ridge were not "ripe" for judicial review ( Earth Island Inst. v. Ruthenbeck , 490 F.3d 687 (2007)). Still, the Ninth Circuit upheld the lower court's ruling on two exemptions regarding prior notice and comment, and appeals procedures that were applicable to Burnt Ridge. The issue for the Supreme Court, then, was whether the organizations had standing to challenge any of the Forest Service's exemptions. Writing for the majority, Justice Antonin Scalia said that the organizations could demonstrate standing only if the challenged regulations would have a particular, concrete effect on the groups. Once the groups settled the Burnt Ridge dispute, though, the groups could not make that showing, according to Scalia, who was joined by the usual group of Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Anthony Kennedy. "We know of no precedent for the proposition that when a plaintiff has sued to challenge the lawfulness of certain action or threatened action but has settled that suit, he retains standing to challenge the basis for the action (here, the regulation in the abstract), apart from any concrete application that threatens imminent harm to his interests," Scalia wrote. Scalia said that affidavits from group members – which explained the members' interests in national forests and how they would be harmed if the exemptions remained in place – that were filed after the Burnt Ridge settlement were submitted too late to establish standing. Scalia thought little of the affidavits anyway, writing, "Accepting an intention to visit the national forests as adequate to confer standing to challenge any government action affecting any portion of those forests would be tantamount to eliminating the requirement of concrete, particularized injury in fact." In a dissent joined by Justices John Paul Stevens, David Souter and Ruth Bader Ginsburg, Breyer said the majority was setting the bar unreasonably high for plaintiffs. He noted that the Forest Service had admitted it planned to exempt thousands of salvage-timber sales in the near future. "The court," wrote Breyer, "holds that the Sierra Club and its members (along with other environmental organizations) do not suffer any ‘concrete injury' when the Forest Service sells timber for logging on ‘many thousands' of small (250-acre or less) woodland parcels without following legally required procedures – procedures which, if followed, could lead the Service to cancel or to modify the sales. Nothing in the record or the law justifies this counterintuitive conclusion." According to Breyer, there was no basis for the court to ignore group members' affidavits, which, he wrote, "adequately show a ‘realistic threat' of injury to plaintiffs brought about by reoccurrence of the challenged conduct – conduct that the Forest Service thinks lawful and admits will reoccur." The ruling pleased private logging companies and the American Forest and Paper Association, but it was unclear what the Obama administration thought. It was the Bush administration that sought review of the Ninth Circuit's decision, and the case was argued last October. Environmentalists, who had received amicus support from California Attorney General Jerry Brown, said that future lawsuits would have to contain more detail about specific harm resulting from challenged regulations. The Case: Summers v. Earth Island Institute , No. 07-463, 09 C.D.O.S. 2568. Filed March 3, 2009. The Lawyers: For Summers: Edwin Kneedler, Department of Justice, (202) 514-2203. For Earth Island Institute: Matt Kenna, Western Environmental Law Center, (970) 385-6941.

Voters in Lodi rejected redevelopment, while those in Alamo said no to incorporation of a new city during municipal balloting on March 3. In Los Angeles, voters narrowly rejected two charter amendments, one for a solar energy program, the other for fiscal incentives for business development. Only in Glendora did the electorate provide a positive response to proposed change. A measure rezoning the site of a former automobile dealership for other retail uses passed easily. Redevelopment has been a controversial topic in the San Joaquin County city of Lodi for years. In 2002, the City Council dropped a plan to establish a redevelopment project area after opponents gathered enough signatures to force a referendum. But the idea never completely died, and the City Council last year approved a 2,100-acre project area covering much of the older, east side of town. Again, opponents forced a referendum election, but this time the question actually went on the ballot as Measure W. Opponents argued that redevelopment would saddle Lodi with debt, permit the redevelopment agency to use eminent domain on behalf of special interests and take money away from schools and the county. "This Lodi ordinance binds our city for the next forty years," stated one flyer against redevelopment. "No to Waste – Lodi doesn't need another layer of government." Proponents contended redevelopment would provide the best tools to revitalize a poor part of town, and they noted the City Council had prohibited use of eminent domain. Still, opponents carried the day, as 54.1% of voters overturned the council's redevelopment plan. "Lodi has a small but very vocal group of people who really distrust government. We have more than our share of referendums," said Mayor Larry Hansen, Lodi's mayor and retired police chief. A city of 63,000 people, Lodi is one of the few San Joaquin Valley cities where growth control measures and big-box limitations frequently make it onto the ballot. The Measure W defeat, said Hansen, "was really frustrating to me because those who understood it are just baffled why the community wouldn't help itself." He blamed the loss on the negative campaign against redevelopment and the timing of the election for a period when nothing else was on the ballot and the economy is bad. Still, the problems persist, he said. "What's your plan?" Hansen demanded. "You still have 100-year-old sewer pipes. You still have neighborhoods that are run down. People still need affordable housing. The sad thing is, we have no money to address these issues." However, Lodi Councilwoman Joanne Mounce, a redevelopment opponent, said the city has raised nearly $30 million through utility surcharges – enough to fund necessary infrastructure maintenance and upgrades. She denied the city's east side is blighted. "I've always felt the plan was a smokescreen for economic development, not for all of these other things," said Mounce, who decried incentives for developers and businesses. "I just think there needs to be reform of redevelopment on the state level." In Contra Costa County, voters overwhelmingly denied Alamo's bid to become the state's 481st city. Opponents agued that the Contra Costa Local Agency Formation Commission's comprehensive fiscal analysis overstated revenues and underestimated expenses, especially for law enforcement. The opponents – who included Cecily Talbert Barclay, co-author of Curtin's California Land Use and Planning Law – presented their own study that said the new city could face an almost immediate deficit that would prompt either service cuts or higher taxes. The proposed city of about 16,700 people and 10 square miles would have been based on a contract model more commonly seen in Southern California. The city would have had only about 10 employees, with private firms and other public agencies providing most services. However, the new city would have gained control of the politically sensitive topics of planning, roads and parks. The incorporation drive stemmed in part from the Board of Supervisors' decision a few years ago to convert a local land use advisory council from elected to board-appointed. The incorporation drive failed, as Measure A received only 35.6% support. In Los Angeles, voters defeated a charter amendment that would have required the Department of Water & Power (DWP) to install and operate 400 megawatts of solar energy facilities on city properties by 2014. Measure B provided a major component of Mayor Antonio Villaraigosa's renewable energy proposal, and Villaraigosa easily won re-election over token opposition during the March municipal election. But Measure B opponents said the solar program was ill-conceived, would have relied on DWP's union employees when it should have been open to competitive bidding, and would have raised electricity rates. Although Measure B lost 50.5% to 49.5%, Villaraigosa vowed to press forward with additional solar installations. Measure E, the economic development charter amendment, fared even worse, as 52.3% of voters said no. The proposal would have given the city clear authority to provide economic incentives to retain or attract businesses. The city already provides numerous incentives to developers and businesses, but the charter is unclear on the city's authority. Currently, incentives require City Council approval. Measure E would have clarified the charter and permitted city staff to offer incentives. Skeptics cited a city controller's report that found the city does a poor job of ensuring subsidized developers provide promised public benefits. Voters in the San Gabriel Valley city of Glendora endorsed the rezoning of the site of a former Hyundai dealership located in the Glendora Marketplace shopping area. Previously, the site was reserved for automotive-related uses. The Measure C zoning approved by 70.0% of voters permits up to 100,000 square feet of general and specialized retail, including restaurants and department stores.

A former San Joaquin County political operative who was convicted of corruption in 2005 has had five of 17 guilty counts thrown out by the Ninth U.S. Circuit Court of Appeals. The appellate panel overturned counts of attempted extortion against Monte McFall but upheld conviction on 12 counts of extortion, mail fraud and witness tampering. A former Water Reclamation District 17 board member and Stockton-based lobbyist, McFall was charged with illegally trying to block Calpine from competing with his client, Sunlaw Energy, for the right to build a power plant at the Port of Stockton. He was also charged with, among other things, shaking down a company called Golden State Developers for $50,000 to $100,000. Federal prosecutors indicted McFall, then-San Joaquin County Sheriff Baxter Dunn, former county Supervisor Lynn Bedford, and Allen Sawyer, who was chief deputy director of the Governor's Office of Criminal Justice Planning, in September 2004. Dunn, Bedford and Sawyer all pleaded guilty to mail fraud or making false statements. McFall went to trial and was convicted in March 2005, as was a former aide to Bedford. McFall was sentenced to 10 years in prison and a $50,000 fine (see CP&DR In Brief , April 2005 , February 2005 ). The Ninth Circuit, however, found that McFall was not guilty of attempting to extort Calpine. According to the court, McFall, Dunn and Sawyer formed a company that had a contract with Sunlaw that would pay them handsomely if Sunlaw won the right to build at the port. They pressured Calpine to withdraw from port competition; when Calpine refused, McFall and his partners drew up a resolution raising environmental, health and safety concerns about a Calpine project in neighboring Alameda County. Bedford sponsored the resolution, which the San Joaquin County Board of Supervisors passed 4-1. McFall's participation in that activity, the Ninth Circuit ruled, did not amount to a conspiracy to commit extortion. Because of an improper jury instruction, the Ninth Circuit overturned McFall's conviction on attempting to extort money from Golden State Developers in exchange for delivering Bedford's vote. Part of McFall's case could be retried, or he could have his sentence reduced. He remains in prison in Arkansas. The Ninth Circuit ruling in United State v. McFall , No. 07-10034, 09 C.D.O.S. 2860, was filed March 9.

The future of Bay Area Rapid Transit (BART) service in the South Bay became less clear in March. The Santa Clara Valley Transportation Authority (VTA) learned in March that a planned extension of BART from Fremont into downtown San Jose and on to Santa Clara will be delayed by an unknown number of years because of lower-than-expected sales tax revenues. A VTA consultant reported that after inflation is considered, sales tax revenues will remain flat through 2036. Revenues from the Measure A 2000 sales tax override for numerous transportation projects will generate only about $7 billion, rather than the expected $11 billion. Estimated to cost $6 billion, the 16-mile BART extension had been scheduled for completion by 2018. Faced with the poor revenue forecast, Valley Transportation Authority officials now say they may build the extension in segments, with the final piece to downtown San Jose and Santa Clara not being completed before 2025. The news of the sales tax revenues arrived only five months after Santa Clara County voters approved an additional one-eighth-cent sales tax for the BART project. In the meantime, two former BART board members and a transit advocacy organization have sued the Metropolitan Transportation Commission and the Alameda County Transportation Improvement Agency for allocating $313 million to help fund a 5.4-mile BART extension through Fremont to the city's Warm Springs District. The group Transportation Solutions Defense and Education Fund and former BART Directors Sherman Lewis and Roy Nakadegawa argue that a 2000 Alameda County sales tax measure bars use of that revenue source for the Fremont project until full funding for BART to Santa Clara is assured. The Alameda County agency has allocated $224 million in sales tax revenue to the project. The plaintiffs also say MTC cannot shift $91 million in bridge toll increase money from a proposed Dumbarton Bridge train project to the BART extension. The plaintiffs have asked a judge to block construction of the line to Warm Springs, which is scheduled to begin this summer. The Santa Clara County BART extension would take off from the Warm Springs station.

Since our previous blog on the possibility that auto malls – like regional malls – will soon become retail dinosaurs, the California press has glommed onto the idea big time. This is partly, of course, because auto sales are in the news in other ways. A few cities, for example, are offering auto sales tax rebates as part of their "local stimulus package," while other jurisdictions have provided loans to car dealerships . First came Brandon Lowrey in the Los Angeles Daily News , who used Palmdale's auto sales tax rebate as the hook for a story about how much auto sales tax is declining. He quoted a Los Angeles city official as guessing that auto-related sales tax revenue dropped 21%, or $2.1 million, during the fourth quarter. Then, Brooks Edwards in the Victor Valley News took the story one step further, reporting on San Bernardino's plans to offer a sales tax holiday for about 10 days, starting this Wednesday (March 25) and slopping over two weekends, to April 5. Of course, neither reporter explained how eliminating sales tax on automobiles will help increase city sales tax revenues. And this morning, Big Dan weighed in on the topic. Sacramento Bee political columnist Dan Walters took note of the general decline in auto sales and appeared to come down on the side of broadening the sales tax to include services as well as goods. Stay tuned. The auto-mall-as-dinosaur story isn't going away anytime soon. – Bill Fulton

A state appellate court has upheld a Santa Clara Valley Water District rate increase as exempt from the California Environmental Quality Act, rejecting multiple arguments from a retail water company that the increase was subject to environmental review. Created by state law, the Santa Clara Valley Water District provides wholesale water to various retail water suppliers. The district also manages the groundwater basin by recharging the aquifer and by providing treated surface water so that other entities limit their groundwater pumping. The district has authority to levy a fee on water extracted from the groundwater basin. In March 2006, the water district submitted its annual report for the upcoming fiscal year to the Board of Supervisors. The report contained the staff's recommendations and analysis concerning groundwater-charge rate increases for the 2006-07 fiscal year. The staff recommended for a "low case" scenario for potential rate increases of about 3% to 7%, and against a "high case" scenario that would fund additional operations and capital investments. Staff also recommended increasing surcharges on treated water, partly to reduce treated water sales because the groundwater basin was full at the time. Great Oaks Water Company submitted a formal written objection to the rate increases, arguing they were being used to affect groundwater levels and were therefore subject to environmental review. Great Oaks is a private utility that serves 100,000 residential, commercial and industrial customers with water extracted from the company's wells in Santa Clara County. The water company is subject to the district's groundwater charges. After several meetings, the district's Board of Directors accepted the staff's recommendations and approved the rate increases in June 2006. The board made findings that the charges were exempt from CEQA review because the charges were for meeting operating expenses, purchasing supplies, meeting financial reserve needs and completing capital projects necessary to maintain services within existing service areas. The district essentially cited the CEQA exemptions for rate setting found in Public Resource Code § 21080, subdivision (b)(8). Great Oaks sued, arguing that the district's CEQA findings were inadequate and not supported by substantial evidence, and that the rate increases were adopted for purposes requiring CEQA review. A Santa Clara County Superior Court judge rejected the contentions, as did a unanimous three-judge panel of the Sixth District Court of Appeal. Great Oaks argued the findings were inadequate because the district did not cite specific facts in the record to support the exemption. The court disagreed and pointed to the standard the state Supreme Court established in Environmental Protection & Information Center v. California Dept. of Forestry & Fire Protection , (2008) 44 Cal.4th 459. In that case, the court ruled that it was acceptable for an agency's findings to refer generally to the administrative record, even though specific references would be the better practice. What matters, the court ruled, was "the analytic route the administrative agency traveled from evidence to action." The Santa Clara district passed this test, the Sixth District ruled. The water district identified statutory purposes for which it claimed the exemption, and referred to portions of the annual report and other information from the hearing process to support those purposes. "In other words," Justice Wendy Duffy wrote for the court, "based on the totality of the resolution's findings, we can readily ascertain the analytic route that the district traveled from evidence to action." Great Oaks argued substantial evidence did not support the findings, and it pointed to evidence the district used rates to manipulate groundwater supplies and expand the district's services. The court rejected the contention, concluding the "annual report alone contains substantial evidence supporting the district's findings that the groundwater-charge rate increases were for statutorily exempt purposes." "Even if the record shows that the district was effectuating groundwater management policy through its groundwater rates," Duffy continued, "as long as its stated purpose for the use of the funds raised via the rate increases fell within the scope of the statutory exemption, the district's action remained exempt." Great Oaks pointed to evidence the district had used past capital expenditures to expand services, but the court said past practices did not matter here because Great Oaks failed "to provide linkage between these past expenditures or projects and the funds to be received in the future from the proposed groundwater rate increases." The Case: Great Oaks Water Co. v. Santa Clara Valley Water Dist. , No. H032067, 09 C.D.O.S. 1179, 2009 DJDAR 1363. Filed January 28, 2009. The Lawyers: For Great Oaks: Jeffrey Lawson, Silicon Valley Law Group, (408) 573-5700. For the district: Thomas Berliner, Duane Morris, (415) 371-2200.

Post-war suburbia has its defenders and its detractors. Recently, I encountered a truly staunch supporter of suburbia and a well-spoken critic. One of them sees black where the other sees white. It was a good reminder of how difficult planning is in California. Helen Allen, a city councilmember in Concord, is an unapologetic defender of the suburbs. I spoke to Allen several weeks back while preparing a story on reuse plans for the closed Concord Naval Weapons Station. The council approved an urban blueprint centered on a BART station. Although she voted for the plan simply to move along the process, Allen hates the plan. People choose to live in places like Concord because they are attracted to quiet neighborhoods of single-family homes with nice yards, Allen said. The plan for the Navy property emphasizes transit-oriented development, high densities and mixed uses. How, she asked, can such a design be considered "smart" when it departs so radically from the rest of town, which people like very much? A well-known firebrand in the East Bay, Allen is in her fifth term on the Concord City Council. Previously, she served on the Clayton City Council and Planning Commission. She's been a player in Contra Costa County land use planning for 35 years, a period during which Contra Costa County's bedroom suburbs have boomed. That's because people find those suburbs desirable, Allen said. The high-density, transit-oriented plan for the Navy property? "Nobody wants to say the king is naked," Allen told me. "I'm trying to be realistic." A little more recently, I spoke with Graham Brownstein, executive director of the Environmental Council of Sacramento, for an upcoming story in Planning magazine on fast-growing cites. One of the cities I examined is Elk Grove. In many respects, Elk Grove is the epitome of modern-day suburbia: massive single-family subdivisions, several commercial power centers, and broad boulevards connecting to highways that carry commuters to jobs in nearby Sacramento. From Brownstein's perspective, Elk Grove also epitomizes everything that's wrong with suburbia. There are no real alternatives to the automobile, there are few employment centers, and the low-density development has paved over hundreds of acres of prime farmland and valuable habitat. "It's not a question of growing or not growing, but rather, how do we grow and are we growing in ways that harness our investment in the best way possible?" Brownstein said. "Even if there weren't economic benefits, you could make an argument that it makes more sense to build communities for people rather than for cars." Brownstein pointed to midtown Sacramento as a better model. Midtown's grid and street design make walking and bicycling feasible, there is a nice mix of structures and uses, traffic is congested but does move, and large employers are located in the neighborhood and close by. He also cited central Folsom, which has a walkable grid, mixed uses and a light rail transit station.   So which vision is correct? Allen's suburbia, which characterizes California since World War II ended? Or Brownstein's urbanism, which predominated prior to the war? Passage of Senate Bill 375 suggests Brownstein's vision may win. I would suggest, however, that we're still in the very early innings. - Paul Shigley

The City of Stockton had no right to take private property on which it later built a minor league baseball stadium, the Third District Court of Appeal has ruled. "This is a case of ‘condemn first, decide what to do with the property later,'" Justice Kathleen Butz wrote for the unanimous three-judge appellate panel. "We shall conclude that the project description in the resolutions of necessity was so vague, uncertain and sweeping in scope that it failed to specify the ‘public use' for which city sought acquisition of the property. This crucial defect precluded an intelligent inquiry into whether city had a legal right to condemn the property and fatally flawed the condemnation process." The court did not order the return of the property – complete with ballpark and parking lot – to the previous owner. Instead, it permitted the city to commence the eminent domain process anew. The court did order the city to pay the property owner's legal costs, estimated at nearly $1 million. The five-story Marina Towers office building was constructed during the mid-1970s as part of a waterfront redevelopment effort that never took off. By the time an entity called Marina Towers LLC (Marina) purchased the property and an adjacent unimproved parcel in 2000, the office building was vacant. The owners proposed renovating the building and opened negotiations with San Joaquin County officials about a potential lease. Meanwhile, city staff members were working on a plan that identified the Marina properties and others along the north shore of the Stockton Deep Water Channel for development of the Stockton Event Center, which would feature an indoor arena, a baseball stadium, a hotel and apartments. The city notified Marina in May 2003 that it was considering acquiring the property via eminent domain. Two months later, the City Council approved a preliminary site plan for the Stockton Event Center that called for an apartment complex on the site of the vacant office building. In September 2003, the council conducted a hearing to consider a resolution of necessity – an essential step before the filing of an eminent domain legal action. At the hearing, Marina's representative complained the city had not defined the project for which it needed the property and questioned how condemnation could benefit the public when it appeared the city was simply transferring the property from one developer to another. Nevertheless, the City Council unanimously approved resolutions of necessity for both parcels, stating that the city already owned 20 acres on the north shore it was preparing for development, that the site was a "catalyst site" for redevelopment and that assembling the north shore parcels would permit development of larger and economically feasible uses. Six days later, the city filed its eminent domain action. Marina fought the lawsuit vigorously. While the litigation was pending, the city adopted an environmental impact report for the Stockton Event Center project, adopted a new resolution of necessity stating it needed one of Marina's parcels for parking, and then adopted a supplemental resolution designating the other parcel for a ballpark. By the time a trial began in 2005 on the city's right to take the properties, the city had already constructed the ballpark and parking lot (see CP&DR Local Watch , December 2006 ). Marina argued the city's acquisition did not serve a public purpose, the resolutions were invalid because they did not identify a public use, the city violated the California Environmental Quality Act by failing to complete a new EIR before condemning the property, and the city unlawfully condemned property in a redevelopment project area without complying with the Community Redevelopment Law. The property owner got nowhere with a San Joaquin County Superior Court judge, who rejected all of Marina's claims. A jury later awarded Marina $1.97 million as compensation for the taking. Marina found a much more receptive audience at the Third District Court of Appeal. In its decision, the court reviewed the details of eminent domain law and the Community Redevelopment Law. Although the property lies in a redevelopment project area, the City of Stockton – not the Stockton Redevelopment Agency – acquired the property. Thus, because the property was not being taken to eliminate blight as permitted under redevelopment law, the city had to find (1) the project was in the public interest and necessity, (2) the project was compatible with the greatest public good and least private injury, and (3) the property acquisition was necessary for the project. But the court determined that because there was "no intelligible description" of the project, Stockton could not make the required findings. "If the governing body does not have before it a definable project for which the property is sought to be taken, any discussion of the pros and cons of the condemnation would be an empty gesture and the necessity findings rendered at the conclusion of the hearing would be devoid of real meaning," Justice Butz wrote. Instead, the city provided a list of every potential legal reason for taking the property. But, the court held, "A statement that the property is being taken for any or all of the authorized purposes listed in the Government Code or Code of Civil Procedure amounts to a failure to disclose the purpose of the taking." The fact that the city later changed the resolutions of necessity and actually built public facilities does not matter, the court ruled, because, "a governing body's post-resolution conduct is not relevant" to the validity of the resolutions. Thus, the court ruled, the trial court should have dismissed the city's eminent domain action. Marina argued that if the city's condemnation was not valid, Marina should get the property back. But the court declined to give Marina a publicly funded stadium and parking lot. Instead, it offered the city "the opportunity to adopt new resolutions of necessity for the Marina property containing an adequate description of the proposed projects." Exactly how the process might work, however, is uncertain because the new resolutions arguably would be after-the-fact rationalizations and hearings to "consider" the resolutions mere formalities. Ever since Redevelopment Agency v. Norm's Slauson , (1985) 173 Cal.App.4th 1121 – in which the court blocked an eminent domain action because the agency had already contracted with a developer to build housing on the property being condemned – courts have frowned on resolutions of necessity that amount to foregone conclusions. The Case: City of Stockton v. Marina Towers LLC , No. C054495, 09 C.D.O.S. 1848, 2009 DJDAR 2187. Filed February 13, 2009. The Lawyers: For the city: Thomas Keeling, Freeman, D'Auito, Pierce, Gurev, Keeling & Wolf, (209) 474-1818. For Marina Towers: Norman Matteoni, Matteoni, O'Laughlin & Hechtman, (408) 293-4300.

With its well-paying high-tech jobs, close commuting proximity to Sacramento, a scenic location on the American River, ample supplies of new housing and a quaint downtown, Folsom has many assets. Because of those advantages, the city on the eastern edge of Sacramento County has attracted hordes of newcomers in recent years. As a result, schools are overcrowded and the city is rapidly running out of land. The city is culminating a 10-year effort to expand itself to attract more industrial and commercial growth, while contending with low-income housing advocates who say there is not enough affordable housing. In recent months, the City Council pondered whether to adopt an emergency ordinance to freeze development applications. Folsom has about 50,000 residents, not including the roughly 7,500 inmates at Folsom State Prison. The city has grown at an annual rate of 5% to 10%, according to Planning Director David Storer, and expects to have as many as 70,000 residents by the year 2013. With all available land expected to be built out by early in the next decade, the city is looking south of Highway 50 to accommodate future growth. In May, the Sacramento County Local Agency Formation Commission is expected to approve Folsom's application to extend its sphere of influence to include nearly 3,600 acres of hills and woodlands south of the city's current borders, according to John O'Farrell, executive officer of LAFCO. The land is outside the county's current urban growth boundary. In order to gain LAFCO approval for the application — which is the first step towards annexing the land into the city — Folsom officials have agreed to 16 conditions for such things as improvements to Highway 50, protection of native trees, clean up of contaminated land and groundwater, and keeping 30% of the acreage as open space. O'Farrell called the conditions the "most far reaching conditions this LAFCO has ever imposed." "We agree with all the conditions," said Storer, adding that it is developers who will have the obligation to comply with the conditions. Storer said the current City Council has not said what kind of development it wants to allow in the new area. An earlier City Council told LAFCO it wanted commercial and industrial development, and open space. The process stands in contrast to another recent battle in eastern Sacramento County. Last year, developer C.C. Myers placed Measure O on the ballot to bust the county's urban services limit and build the 3,000-home Deer Creek Hills subdivision eight miles south of Highway 50. That measure was opposed by several members of the Folsom City Council and was defeated by a large margin (see CP&DR, December 2000). Not everyone in Folsom agrees with the southern expansion. A group opposed to the application, called Alliance of Folsom Residents, submitted a petition signed by 600 residents to LAFCO in December, according to the Sacramento Bee. A lack of public school classrooms and a shortage of affordable homes are partial causes of the backlash. Legal Services of Northern California threatened to sue the city earlier this year, according to Storer. The legal aid group charged that the city has violated state law by failing to ensure an adequate supply of affordable housing in its 1992 general plan. Legal Services also testified in opposition to the proposed sphere of influence application, according to Storer. A Legal Services representative did not return calls from CP&DR. Although the City Council had taken no action on a proposed emergency ordinance to freeze development applications by mid-March, it appears that the Legal Services' pressure and resulting negotiations have had an impact. The City Council has authorized preparation of a new housing element to be completed a year ahead of schedule. Recent housing development has not been of the "affordable" variety. The city has been issuing more than 1,000 single-family housing annually. And after issuing no building permits for apartments between 1992 and 1997, the city approved 1,026 high-end apartments in 1999. Growth is exploding throughout the region at the base of the foothills, Storer noted. Neighboring communities — including unincorporated El Dorado County, and Roseville and Lincoln in Placer County — have boomed in recent years. One reason for the growth is the expansion of high-tech companies such as Intel, which is a major employer in Folsom. The city has also seen tremendous growth of its retail sector in recent years, adding a power center and expanding an outlet center. In addition, the historic Old Town district's quaint antique stores and restaurants also draw tourists. An extension of the county's light rail system to Folsom in 2003 is also expected to draw more visitors and commuters. All the growth has placed a strain on the city's schools, which are part of the 16,000-student Folsom-Cordova Unified School District. The district covers both the city of Folsom and the neighboring unincorporated community of Rancho Cordova, which has not seen the same rapid growth as Folsom. The enrollment at schools within Folsom has jumped from 4,928 in 1992 to 7,500 students this year, and is expected to rise to 13,700 in 2014, according to Debbie Bettencourt, deputy superintendent of the district. Classroom space in Folsom is at a premium at elementary schools near new housing developments. Large signs in front of some of the newest elementary schools warn parents that the schools are oversubscribed and their children may not be able to attend those schools if they buy homes nearby, according to John Frith, a six-year Folsom resident who's children have attended local schools. Instead, children are bussed to schools outside their neighborhood. However, a new elementary school is scheduled to open in August, said Bettencourt. A new high school opened two years ago at a cost of $68 million, but it is already at capacity, and a second high school is planned, she added. In the past, district-wide bond measures have failed. Several years ago, the two communities began conducting separate bond elections, which were to raise school construction funds for Folsom and to modernize schools in Rancho Cordova. The last time Folsom passed a school bond was in 1992, Bettencourt said. Last May, Measure M, a $38.4 million school bond measure failed when it fell 74 votes short of the required two-thirds majority. The passage of Proposition 39 last November, which allows school bonds to pass with 55% of the vote, will not help Folsom because the proposition does not cover elections for school facility improvement districts such as the one used in Folsom. Bettencourt said the district is hoping to get corrective legislation passed by state lawmakers this year to allow Folsom-Cordova bonds to win elections with 55% of the vote. The district is tentatively planning a bond measure for this November, but it would be unaffected by any corrective legislation, according to Bettencourt. The district did away with year-round schooling because the community opposed the schedule; however, the district may have to return to it, she indicated. Contacts: John O'Farrell, Sacramento LAFCO executive officer, (916) 874-6474. David Storer, Folsom planning, inspections and permitting director, (916) 355-7200. Debbie Bettencourt, Folsom-Cordova Unified School District (916) 355-1100.