Doctor, I need to tell you why I am lying on the couch today. In my line of work, as you know, I report on public-private deals for California's most distinguished land-use newsletter. And, for the most part, I perform my job without major psychic distress or disturbance (except for occasional bouts of rage when I learn that redevelopment agencies have declared open fields of wildflowers to be "blighted" in order to build power centers.) But something has happened recently. I heard that the City of Oakland took the very unusual step of accepting stock warrants from a technology company in partial payment for a piece of land. The topic seemed so good, so right for a chest-thumping Deals column. But for days I have been unable to write. Each time I think about Oakland's deal, I think about ... about ... (I am almost too embarrassed to say it) ... Olivia Newton-John doing the sexy dance in that skin-tight, black leather outfit at the end of "Grease." Hold on, doctor. It's not what you think. The symbolism runs deep. Oakland's deal, like Olivia's outfit, is provocative: The city has sold 14.5 acres near the Oakland Airport to Zhone Technologies Inc., a telecommunications start-up, to build a 300,000-square-foot plant on the site. For this site, Zhone (pronounced "zone") paid $6 million, plus 100,000 warrants. (A warrant gives the holder the right to buy shares in a stock company at some future time.) Zhone, which was founded less than a year ago, expects to go public sometime in the near future, but the date has not been fixed. Although a number of real estate developers and landlords have been willing to accept stock in lieu of rent, Oakland is the first city to accept equity in a company as payment in a real estate transaction, according to Frank Fanelli, the city's real estate manager, who negotiated the Zhone deal. Doctor, somehow I feel I am being manipulated. I feel like the City of Oakland is trying to get a rise out of me. The calculated reaction, of course, is for everyone to roll their eyes and say sober and respectable things like, "the Public Interest is too important to play dice with," or "Cities should not put taxpayers at risk by gambling on the overheated stock market." Why, the very idea of accepting stock warrants for publicly owned land sounds as reckless — as insane — as investing our Social Security savings in the stock market. (I'm not making a political statement, doc. I know that you put your Roth IRA into a high-tech mutual fund, and that you now have more money than Ed McMahon.) Oakland's Fanelli told me that he is proud of this transaction. "We have a lot of horsepower and creativity here to think outside the box," he said in an interview. "It was quite novel for a public agency to try and act like a private entrepreneur." He even invited other companies to make similar offers to Oakland: "The city is open for business. Bring us a deal we can't refuse." Now, a close examination suggests that this deal is actually very tame and very safe — especially compared with a typical Marks-Roos bond deal, which is based entirely on speculation. The Oakland property is part of a 22-acre parcel that the city bought from the Port of Oakland for about $9 million, or roughly $9.39 per square foot. According to my Texas Instruments calculator, Zhone paid about $9.50 per square foot for its parcel, so the city already has recovered its costs. Offering the land at cost is perfectly acceptable, of course, if the goal was to attract an employer who would provide 1,300 high-paying jobs, as Zhone plans. As for the warrants, they are gravy. If the city makes money, that is great. If the warrants turn out to be worthless, however, City Hall workers will not be forced to sell their office furniture at a lawn sale. And unlike the parade of dot-coms that are currently crashing in front of our eyes, Zhone may just hit pay dirt. The company was founded by the top executives of Ascend, which was purchased last year by Lucent Technologies for about $24 billion. Not yet a year old, the new company has already attracted $500 million in seed money from high powered investment outfits such as Kohlberg Kravis Roberts & Co., Texas Pacific Group and New Enterprise Associates. At this point in my reporting, doc, it hit me: Oakland is showing off! It wants to exclaim to the world how au courant and techno-hip it is. And why does Oakland need to show off? Well, doc, I'm a little bit of an amateur shrink myself, and I have a theory. The city has an inferiority complex. Oakland is one of the last Bay Area cities to reap the benefits of the computer and Internet revolutions. Oakland has become tired of being viewed as the Camden of Northern California, a city of industry, urban grit and crime. Oakland wanted to do something to get itself noticed — something other than electing a wacky ex-governor as mayor or spending tens of millions of dollars on a bad football team. The whole thing reminds me of Olivia in Grease. Remember the picture, doc? In the beginning, she is a plain girl in a plain dress. She is not cool or flashy. She makes a number of ill-fated attempts (here symbolizing Jerry Brown's election and the Raiders' deal) to draw the attention of John Travolta. But she appears hopelessly unable to make Travolta (symbolizing the high-tech and dot-com sector) pay attention to her. Then, in the movie's finale, she appears in that smashing outfit (again, symbolizing the Zhone lease). She is hotter, more flamboyant, than any other girl. John Travolta at last pays attention to her, and soon the pair is dancing energetically. Success and happiness abound. Now, doctor, I am fixated. I know I should be writing about Oakland's strong assets in transportation, its affordable real estate, its bay frontage and the city's investment in downtown. But whenever I think of that flashy warrant deal, I find myself unable to write. I just can't get the picture of that dancing woman out of my mind. Can you help me, doc? Can you? Doctor F (after a pause): "Explain one thing, if you would, please. These warrants ... are they still available?"

The Fourth District Court of Appeal has turned away a Proposition 218-based challenge to the City of San Diego's tax on rental residences. The court held that the tax is an excise tax that is not subject to the provisions of Proposition 218, the "Right to Vote on Taxes Act" of 1996. San Diego began assessing a "rental unit business tax" on apartments and hotels in 1942. The tax evolved over the years, and in 1992 was extended to cover all residential properties available for rent, including single-family homes. The city's last substantial amendment of the tax, codified at San Diego Municipal Code §31.0305, was in 1993, when the city raised the rates. The city assesses owners $50 plus $5 per unit for one to 10 units, $57 plus $9 per unit for 11 to 100 units, and $150 plus $8 per unit for more than 100 units. The city deposits the revenues into the general fund for general governmental purposes. Two property owners, Edward Teyssier and Robert McCarty, challenged the rental tax, claiming that the city had to put the assessment to a vote. But the property owners lost at separate trial courts, and, a unanimous three-judge panel of the Fourth District, in combined proceedings, upheld both rulings. Teyssier and McCarty pointed to the provision of Proposition 218 that "no tax, assessment, fee or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership." They argued that this language meant Proposition 218 applied to any assessment related to property ownership. But the Fourth District, Division One, panel refused to give Proposition 218 the broad reading that the property owners wanted. The court accepted the city's contention that the annual assessment is levied upon the use of property, not the ownership of property. "The plain meaning of ‘incident' as relevant here is ‘something that occurs … in connection with something else' or ‘something appertaining or attaching to something else,'" Acting Presiding Justice Don Work wrote, citing The Random House Dictionary. "By its plain language, applies to fees levied strictly as an incident of property ownership, without any additional condition present." Work continued, "Were Proposition 218 intended to include excise taxes imposed for the exercise of a privilege of ownership or a particular use of property, its drafters could have said so, clearly and expressly. They did not." As an excise tax, San Diego's assessment qualifies as a "general tax" under Proposition 218 (Articles XIII C and XIII D of the California Constitution), the court held. As a general tax, it would be subject to Proposition 218's voting requirement only if it were imposed, extended or increased after January 1, 1995, the court said. San Diego last increased the tax in 1993. The San Diego property owners presented an argument similar to one that was successful last year in a challenge to the City of Los Angeles's apartment inspection fee. (Apartment Association of Los Angeles v. City of Los Angeles, 74 Cal.App.4th 681; see CP&DR Legal Digest, October 1999.) In that case, the appellate court held that Proposition 218 did not distinguish between property owners in general and property owners who rent or lease their property. The state Supreme Court now has the case under review. But in a footnote to the San Diego case, the Fourth District said San Diego's ordinance is "significantly different" from Los Angeles' fee. In Los Angeles, the assessment was levied regardless of whether the unit was occupied, and the revenues were earmarked for anti-slum enforcement, the court said. In San Diego, the assessment is "a residential rental component of the business tax," is unrelated to inspections and pays for general governmental purposes. The Cases: Edward M. Teyssier v. City of San Diego, No. D033171 and City of San Diego v. Robert McCarty, No. D033622, 00 C.D.O.S. 4833, 2000 Daily Journal 6409, filed June 15, 2000. The Lawyers: For Teyssier and McCarty: Norman Blumenthal, Blumenthal, Ostroff & Markham, (619) 239-1111. For San Diego: Anita Noone, assistant city attorney, (619) 533-5800.

Santa Cruz County's granting of six variances for a new house on the beach has been upheld by the Sixth District Court of Appeal. The unanimous three-judge panel ruled that the county could consider federal and county regulations as "special circumstances" in approving variance requests. The controversy was centered on some of Santa Cruz County's most desirable real estate, namely, Beach Drive, next to Rio Del Mar Beach, in Aptos. In 1996, Jim and Judi Craik purchased a house at 415 Beach Drive, and Norma Odenweller and Robert Fleck bought the adjacent lot at 413, which contained a garage and parking area. Odenweller and Fleck then submitted plans to build a house and sought numerous variances. The county Planning Commission approved six variances allowing three stories instead of two; a 32-foot-high structure instead of 28 feet; a 16-foot front yard setback and 8-foot second story deck setback instead of 20 feet for both; 53% lot coverage instead of 50%; a second story deck; and more than 50% of the front yard to be used for parking. The county provided findings for all the variances and noted conditions such as the narrow 35-foot lot and FEMA hazard zone regulations that prohibit living space in the lower 23 feet of the structure. Moreover, most of Beach Drive was developed before the county adopted a general plan and zoning regulations, and few of the existing 61 houses meet current regulations. For example, 19 of the existing houses have three stories, and the majority has front yard setbacks of 10 feet or less. The Craiks sued, arguing that the county was making ad hoc, parcel-by-parcel decisions in violation of state planning and zoning laws. They contended that the county could grant a variance only if there were physical disparities between the subject property and other lots in the zoning district. They also argued that the variance conflicted with the county general plan and that the county's findings were inadequate. But Santa Cruz County Superior Court Judge Richard McAdams and the appellate panel rejected all three arguments. "First, there is no authority to support that a ‘physical' disparity is a precondition for a variance," Acting Presiding Justice Eugene Premo wrote for the Sixth District. "Government Code §65906 requires variances to be granted ‘because of special circumstances applicable to the property.' The Santa Cruz County Code adopts the same concept (‘special circumstances'). And the leading case in this area interprets the concept as emphasizing only undefined ‘disparities between properties.' Topanga Assn. for a Scenic Community v. County of Los Angeles (1974) 11 Cal.3d 506. Thus, defendant was not barred from considering the FEMA and related county regulations as special circumstances." Even though the regulations apply to everyone, the practical impact of the rules can be considered disparate, the court held. As for the general plan conflict, the court ruled that the general plan limitations were a matter of interpretation and the court would defer to the county. Finally, Premo wrote that the county's findings "need not be stated with judicial formality. … We have no trouble following defendant's analysis. The property in question is small and the backyard is unusable. Hence the need for a forward-setting building site and decks. The proposed structure cannot be occupied in the first 23 vertical feet. Hence the need for 4 additional feet and an extra story." The Case: Jim Craik v. County of Santa Cruz, No. H020690, 00 C.D.O.S. 4980, 2000 Daily Journal D.A.R. 6627, filed May 3, 2000, ordered published June 1, 2000. The Lawyers: For Craik: Douglas E. Marshall, (831) 425-7900. For the county: Rahn Garcia, assistant county counsel, (831) 454-2040.

A day before his agency issued sweeping regulations to protect threatened salmon and steelhead in California, Oregon, Idaho and Washington, Will Stelle was matter-of-fact about the likely reaction: litigation. As northwest regional administrator for the National Marine Fisheries Service, he's been in the hot seat for years as the region has struggled to reverse the devastation visited upon native fish species by dams, farming, urban development, road construction, logging, water diversions, and commercial and recreational fishing — virtually everything people do in or near the water. Working from an office in the dour National Oceanic and Atmospheric Administration complex on the shore of Seattle's Lake Washington, Stelle has been in the center of a pitched political and legal battle among local government officials, business owners and environmental groups over the intertwined fates of fish and local economies. Lawsuits are inevitable, he said. In fact, they might be the only way the conflict between fish protection and economic pursuits will ever be resolved. In late June, NMFS issued its final rule for preservation of 14 runs of salmon and steelhead, including three in California. The document was still warm from the photocopier when the Washington Environmental Foundation and four other groups filed a notice of intent to sue the agency to overturn the rules as inadequate to protect fish. Simultaneously, the rules were denounced as excessive by the National Home Builders Association and the Pacific Legal Foundation, a property-rights advocacy group, which had already filed suit on behalf of bait shops, motels, landowners and fishermen in southwest Oregon. The suit challenged NMFS's authority to list coho salmon there as threatened under the Endangered Species Act (ESA). Attorney Russ Brooks said the group may broaden the suit to challenge the new rules. Reaction in California was more muted because many watersheds affected by the new regulations are already under restrictions imposed by previous ESA listings. Nevertheless, the NMFS rules released on June 20 have potentially far-reaching effects on local land-use practices across a broad swath of California. The regulations also represent an intriguing new approach to federal regulation. It is, in fact, the approach local communities have been demanding for years. But now that they have gotten their wish, local officials are almost completely unprepared to respond. Technically, the document issued by NMFS is known as a "final 4(d) rule," after a section in the Endangered Species Act. When the relevant federal agency (the U.S. Fish & Wildlife Service for inland species and a few marine species, and NMFS for most marine creatures and anadromous fish) declares a species endangered, a blanket prohibition on "take" of that species automatically is imposed. When a species is listed as threatened, however, protection is not conferred until the agency devises a rule under section 4 (d) of the ESA describing regulations that are "necessary and advisable to provide for the conservation of the species." In the past, NMFS has simply issued 4(d) rules that prohibit the take (any action that harms individuals or their habitats) of threatened species. The rules issued June 20 break with this tradition, providing exemptions for actions that are carried out under approved state, local or tribal conservation programs. With this deceptively simple change, NMFS opened the door for local communities to decide how they will respond to the ESA listing, giving them a chance to continue some activities that harm fish as long as these occur in the context of a broader approach that improves the species' chance of survival — habitat restoration, land conservation, rigorous water-quality controls, removal of fish-blocking dams and culverts. This locally determined approach — in contrast to the top-down, one-size-fits-all mandate typically issued from Washington — has long been the regulatory grail sought by community leaders in regions hosting endangered species. Locals' presumption has been that they know the terrain best and must live with the consequences of the listing; therefore, local community leaders are in a better position to craft protections that respect both the ecological needs of imperiled creatures and the economic needs of their community. Now they will have a chance to prove this presumption valid. The new rules apply to 14 "evolutionarily significant units" of salmon and steelhead. An ESU is a biologically distinctive group of salmon or steelhead that is uniquely adapted to a particular area or environment. The California ESUs involved are the Central Coast steelhead, the South-Central Coast steelhead, and the Central Valley steelhead. Their habitat encompasses the coastal watersheds from just south of San Luis Obispo north to the Russian River, and the Central Valley from just south of Modesto to Redding — a total of 26,858 square miles comprising all or part of 31 counties. The final 4(d) rules single out several state or local regulatory or conservation plans as being acceptable to NMFS; any activities that occur under their auspices are exempt from the ESA's "take" provisions. To provide comparable exemption, the rules invite other agencies to seek NMFS approval of their own plans for land-use regulation, fisheries management, hatchery operations, forestry practices, and water diversions. However, none of the programs NMFS singled out for embrace is in California. The most likely candidate is the California Coastal Salmon and Watersheds Program, an embryonic initiative modeled after similar statewide plans in Oregon and Washington. In addition, two multi-county initiatives have been established to coordinate salmon and steelhead recovery along the North Coast. Other than that, little has been done at a state, regional or local level to prepare for the final rule. This means state, county and city agencies in California will have to seek federal approval to learn if their existing regulations provide adequate protection for steelhead Greg Bryant, recovery coordinator for NMFS in California, said his agency has been trying for two years, with little success, to get the state to cooperate in developing a 4(d) response package. In 1990-2000, California allocated $13 million to salmon restoration — a relative pittance compared with its neighbors. For example, Washington's Salmon Recovery Funding Board has at least $75.5 million available in the 1999-2001 cycle for such work. Most of the money invested in programs of potential benefit to California steelhead have come through the CalFed program, a state-federal initiative to improve ecological conditions, water quality and supply reliability in the Sacramento-San Joaquin river delta. Those programs, however, address only Central Valley watersheds, not the coast. The NMFS steelhead rules, which are controlled by a court order, take effect 60 days after their July 10 publication in the Federal Register, giving California until September 8 to respond. The salmon rules would take effect in January 2001. That is not much time to respond. Without a comprehensive plan like the ones being developed in Washington and Oregon, California will end up mediating the inevitable conflicts between fish and people one lawsuit at a time. Contacts: Greg Bryant, National Marine Fisheries Service: 707-825-5162. Russ Brooks, Pacific Legal Foundation: (425) 576-0484. Michael Rossotto, Washington Environmental Council: (206) 622-8103.

An appellate court has ruled against a citizens group that had protested Placer County's handling of an application for a 22-unit lodge at Lake Tahoe. The Third District Court of Appeal ruled that the citizens group had no standing to bring a lawsuit based on alleged violations of the California Environmental Quality Act because the group did not seek county Board of Supervisors' review of the negative declaration approved by the Planning Commission. The unanimous three-judge panel rejected the argument that raising CEQA issues during the Planning Commission hearing was adequate to preserve judicial standing. The court also held that the CEQA issue was never properly before the Board of Supervisors even though a staff report to board — which considered an appeal of parking requirements for the lodge — referred to the negative declaration and supervisors adopted the negative declaration. In late 1997, the owners of Vista Shores Resort on Highway 28 along the northwest shore of Lake Tahoe applied for a conditional use permit to redevelop their property. The owners sought permission to replace an eight-unit motel with a two-story, 22-unit lodge of mostly two- and three-bedroom units. In June 1998, the Placer County Planning Commission approved a negative declaration and conditional use permit for the project. Neighboring property owners Larry and Sharon Kramer immediately filed an appeal with the Board of Supervisors, claiming that the 26 proposed parking spaces were inadequate. The Board of Supervisors considered the appeal in August. The planning department's staff report said the appeal was "of the Planning Commission's action to approve a Negative Declaration and Conditional Use Permit. …The reason for the appeal was cited as insufficient parking on the site." During the appeal hearing, no one questioned the negative declaration. Supervisors decided to require 10 additional parking spaces but voted unanimously to deny the appeal, adopt the negative declaration and find that the project complied with a "parking demand table" approved by the county and the Tahoe Regional Planning Agency. The Kramers and others then filed a lawsuit claiming that the county should have completed an EIR and that the project violated both the parking demand table and the North Tahoe Community Plan. Placer County Superior Court Judge James Garbolino found that the project opponents failed to exhaust their administrative remedy by not appealing the negative declaration to the Board of Supervisors. He also found that the project complied with parking requirements, and he issued summary judgement for the county. On appeal, the project opponents argued that a section of CEQA (Public Resources Code §21177) does not require that every issue be raised at every hearing, or even at the final hearing, before a lawsuit is filed. They also said CEQA was in fact an issue before the Board of Supervisors. The Third District disagreed. " laintiffs appeal placed only the conditional use permit before the Board of Supervisors and only with regards to parking," Justice George Nicholson wrote. "The appeal form provided a specific notation by which plaintiffs could have appealed the Planning Commission's approval of the negative declaration, but plaintiffs did not specify they were appealing the Planning Commission's decision on that point. Such a failure to raise an issue in an administrative appeal after raising the issue in the first public or administrative hearing constitutes a failure to exhaust administrative remedies and prevents the issue from being raised in a subsequent judicial action." The trial court should not review an issue that was not raised before the administrative body with final decision-making authority, the court held. The appellate court also said the title of the staff report was irrelevant and that county code required the board to adopt "all findings necessary to implement its approval of the project," including the negative declaration. In an unpublished portion of the opinion, the court held that "substantial evidence supports the County's finding that the project complied with the Parking Demand Table." The Case: Tahoe Vista Concerned Citizens v. County of Placer, No. C032876, 00 C.D.O.S. 4736, 2000 Daily Journal D.A.R., 6273, filed June 13, 2000. The Lawyers: For Concerned Citizens: Rose Zoia, Brandt-Hawley & Zoia, (707) 938-3908. For the county: Scott Finley, Placer County Counsel's office, (530) 889-4044.

The Fourth District Court of Appeal has overturned an award of nearly $300,000 in attorneys fees to groups that lost a case based on the California Environmental Quality Act. The Fourth District ruled that even though the groups felt obliged to pursue the lawsuit, which followed an earlier successful suit, they were not entitled to fees in the second lawsuit. The case stems from Riverside County's approval of the giant Eagle Mountain landfill at a former iron-ore mine only 1.5 miles from Joshua Tree National Park. Environmentalists led by the National Parks and Conservation Association sued the county over the EIR during the mid-90s. A trial court and the Fourth District both ruled that the EIR for the proposed 2,200-acre garbage dump was inadequate. National Parks & Conservation Assn. v. County of Riverside, (1996) 42 CalApp.4th; see CP&DR Legal Digest, April 1996. After losing the appellate court ruling, Riverside County prepared a new EIR — and environmentalists sued for a second time. San Diego County Superior Court Judge Judith McConnell again found the EIR deficient, but the Fourth District overturned that ruling and said the document was acceptable. National Parks & Conservation Assn. v. County of Riverside (1999), 71 Cal.App.4th, 1341 (National Parks II); see CP&DR Legal District, June 1999. The California Integrated Waste Management Board has since issued permits to Kaiser Ventures, which is trying to sell the project. However, neighboring landowners have sued the Department of the Interior in federal district court over steps the Bureau of Land Management took to accommodate the landfill. The latest issue in state court concerned attorneys' fees. Although the Fourth District, Division One, upheld the county's EIR last year, it postponed the issue of legal costs. Judge McConnell had ordered the county to pay $294,000 of environmentalists' attorneys' fees, an order that the green groups tried valiantly, but unsuccessfully, to defend on appeal. Code of Civil Procedure §1021.5 allows a court to award attorneys' fees to a successful party when its private enforcement of laws upholds an important public right, and a significant benefit was conferred. Most of CEQA case law is built on such cases. The National Parks and Conservation Association argued that §1021.5 gave trial courts broad discretion to award fees. The association also contended that the appellate panel should look at the litigation as a whole, rather than at success or failure of one particular stage. And the group argued that it had a continuing obligation to review the second EIR and "raise reasonable grounds for objection." The unanimous three-judge appellate panel rejected all three arguments. First, the court noted, the trial court never handled the case after it was overturned on appeal. "The obvious failure of this argument is that the trial court was never given the opportunity to exercise is discretion to determine whether the Association was a prevailing party after we reversed the court's order in its entirety," Justice Judith Haller wrote. Because the association lost the case, the award of attorneys fees must be reversed, he court ruled. As for looking at the litigation as a whole, the court said such an approach was inapplicable because the association recovered fees for prevailing in the lawsuit over the first EIR. Challenging the second EIR was "a substantively discreet action." Finally, Haller wrote, "There is no statutory authority or case law requiring an opponent in environmental litigation to bring a challenge to a revised EIR filed on a return. While the Association had a right to commence proceedings challenging the adequacy of the Return, it was not ‘required' or compelled to do so." In one small victory for the landfill opponents, the court found that the Association might be eligible for $13,902 in fees "reflecting work performed during the administrative process leading to the certification of the Return EIR." It is arguable that this work ensured the second EIR addressed the deficiencies found in the first study, the court ruled. It remanded this issue back to Judge McConnell. The Case: National Parks and Conservation Association v. County of Riverside, No. D032228, 00 C.D.O.S. 4426, 2000 Daily Journal D.A.R. 5927, filed June 5, 2000. The Lawyers: For the association: Jeffrey Dintzer, Gibson, Dunn & Crutcher, (213) 229-7000. For the county: Steven Weston, Weston Benshoof Rochefort, Rubalcava & MacCuish, (213) 623-2322.

A proposed $500 million cargo airport southeast of San Diego could bolster the area's manufacturing sector, but opposition to the airport is growing. With passage of the North American Free Trade Agreement and the economic expansion of the late 1990s, the San Diego-Tijuana metropolitan area has become a major manufacturing hub. Factories on either side of the border turn out clothes, televisions, appliances, parts and other items. However, distributing the products to markets, or to final assembly plants, is increasing becoming a headache. And the limited distribution system now available could hamper further economic growth, some analysts say. San Diego's Lindbergh Field is a highly constrained airport, with a short runway, strict noise requirements and poor ground access. And expansion of facilities at Lindbergh will probably be dedicated to passenger service. Because of Lindbergh's limited capacity, 90% of products that require shipping by air — that's about 500,000 tons a year — are sent out of airports more than 100 miles north in Los Angeles and Ontario. Business interests and the City of San Diego would like to see new facilities for cargo shipping, so the city has proposed converting a general aviation airport on Otay Mesa — only two miles north of the U.S-Mexico border — into a major cargo airport. The city acquired Brown Field from the military nearly 40 years ago, and it owns 886 acres in the area. The city would need an additional 235 acres to the east of Brown Field to accommodate the cargo airport. "Eventually, we are going to need every square inch of Lindbergh for passenger service, so this provides an outlet for cargo handlers there already," said Mike Westlake, a city planner for San Diego. But, as with any airport proposal, opponents are lining up against the city's plans for Brown Field. The cities of Imperial Beach, Chula Vista and Coronado have all gone on record against the cargo airport, which would be called San Diego Air Commerce Center. San Diego County has questioned the project, and, in June, Rep. Bob Filner (D-San Diego) announced his opposition because the airport would "detract from the quality of life" for South Bay residents. Although he has no vote in the matter, Filner's stance was a blow to airport backers because he represents the area in Congress and he had earlier spoken highly of the airport's economic benefits. San Diego city officials and a consortium of developers have talked about a cargo airport at Brown Field since at least 1998, and developers report that they have already poured $6 million into planning. However, when the project reached the city's Planning Commission in May, the commission voted 3-1 to reject the environmental impact report and deny the project. But with three of the seven commissioners recusing themselves because of conflicts of interest, the project actually goes to the City Council without a Planning Commission recommendation, Westlake said. The City Council is scheduled to consider the proposal on August 14. In the meantime, representatives of the city, the county and developers have been meeting to see if a compromise can be reached. Although the county will not take an official position before the Board of Supervisors considers the issues late this month, the county is worried that the cargo airport would hamper the county's own economic development plans for the area, said Joan Vokac, the county's chief of advance planning. "Our concern is that we are attempting to development an industrial park on the east end of the airport," Vokac said. "We're targeting the area for a high-tech park." A busy, noisy airport might not be compatible with technology campuses, she said. The county would like assurances from the Federal Aviation Administration that developer's plans to have airplanes take off toward the west — and away from the county's proposed business park — are realistic, Vokac said. The county has a specific plan for 3,300 lightly developed acres on Otay Mesa near the airport. Because the property lies within the Border Development Zone, the city can reinvest the tax increment to encourage development, Vokac explained. Erik Bruvold, director of government relations for the San Diego Regional Economic Development Corporation, said there is no reason the county and city could not mesh their plans. "We think there are synergies between what they are planning to do and the airport," Bruvold said. The EDC endorses the cargo airport as a way to support industrial growth on both sides of the border. Quick access to a facility would support expansion of "just-in-time" manufacturing that has blossomed in Baja California, Bruvold said. Plus, the cargo airport itself would provide good jobs, he added. "The kinds of jobs that are going to be created at an air cargo center are good, middle-class jobs. They typically are in the logistics area, are often unionized and pay a good wage," Bruvold said. According to developers, the cargo airport when fully built out in 2017 could provide up to 11,000 jobs and generate $750 million in annual gross receipts. If those figures are accurate, Brown Field would be a very busy place — a prospect that angers residents for miles around the site. Imperial Beach Mayor Diane Rose recently sent out a letter urging residents of the city, which lies under the proposed flight path, to fight the project. The airport, combined with existing Navy helicopter activity at Ream Field, means "Imperial beach is facing aircraft noise pollution 24 hours a day 7 days a week," Rose wrote. Area residents have already filled public hearings on the project. And purchasers of some new homes west of Brown Field have filed lawsuits against the developer, alleging they were deceived. A recent demonstration with a Boeing 747 appears to have only steeled opponents, who complained about the noise. But Westlake, the San Diego city planner, said the environmental impact report determined the airport would not be incompatible with other land uses and that large jets would not impact surrounded property owners. At the start of operations, the cargo airport would have only about 48 flights a day, he said. Contacts: Mike Westlake, San Diego city planner, (619) 446-5220. Joan Vokac, San Diego County chief of advance planning, (858) 694-3765. Erik Bruvold, San Diego Regional Economic Development Corporation director of government relations, (619) 234-8484.

With the approval last March of a statewide initiative and the signing of a pact between the governor's office and 63 Indian tribes, development of Indian casinos is taking off. Proposals for major new casinos are introduced seemingly every week, and tribes that operate many of the existing 39 casinos have expansion plans. The casino boom is passing by local government officials, who have no say over what happens on lands held in trust for Indian tribes. "If it's reservation land, they pretty much do what they want to do," summed up Tom Parilo, development services director for Butte County, which has two casinos. That can be a difficult to swallow because these casinos can dramatically increase traffic, conflict with existing land uses and spur other growth in rural areas under the county's jurisdiction. And, the casinos pay no sales or transient occupancy tax. Lake County Community Development Director Dan Obermeyer said he is sympathetic to Indians' economic development needs and their distrust of the government. But, he added, "I think there needs to be some forum. There are impacts that need to be addressed, and there needs to be some way to mitigate them." Phillip Isenberg, a former state lawmaker and now a lobbyist for the Alliance of California Tribes, said some tribes have worked out agreements with local governments. However, he said, "The tribes are not going to give control of tribal lands to counties or the state." The current system In 1987, the U.S. Supreme Court made clear that Indian tribes had the authority to conduct gambling on reservations free of state or county regulation. (California v. Cabazon Band of Mission Indians, 480 U.S. 202.) In response to that decision and the growth at the time of Indian bingo halls, Congress approved the Indian Gaming and Regulatory Act of 1988. It established the terms and conditions of casino development on Indian reservations, which are also known as trust lands. The act created the National Indian Gaming Commission, whose primary mission is to ensure that games are managed fairly and that tribes are the main beneficiaries. The act does not address land use implications. Last March, nearly two-thirds of California voters approved Proposition 1A, the second time in two years that the electorate backed Indian casinos. (A second initiative was required because the State Supreme Court threw out Proposition 5 from 1998.) Approval of Proposition 1A validated a compact between Gov. Davis and the tribes that allows for Nevada-style gambling in the form of slot machines, video poker and house-banked card games. The compact has provisions that, among other things, limit the number of slot machines, outline what types of gaming is allowed, and require revenue-sharing with the state. The compact's environmental requirements are minimal. For significant new casino construction, a tribe must prepare a report of potential off-reservation impacts and make a good-faith effort to mitigate those impacts. A tribe is to distribute the report to state and local governments and the public, and the public can comment. But the state's only recourse is to challenge the adequacy of the review process, and only after attempting to negotiate a new process, according to consulting firm Waltona Manion & Associates. There is supposed to be a pot of money for mitigating new casinos' impacts, but the status of the fund is unclear, added DeAnn Baker, a California State Association of Counties lobbyist. Indians have pursued casino development as a way to fund housing, health programs, sewer and water improvements, and education, said Clifford Trafzer, a professor of Native American studies at University of California, Riverside. Thus far, transportation routes have influenced casino development, as tribes with freeway frontage have cashed in the most. It is ironic, Trafzer added, that the "worthless" land designated for Indians many years ago is now so valuable. The Indians' newfound wealth has also gained them great influence in Sacramento, as tribes have lavished millions of dollars of campaign contributions on state lawmakers and Gov. Davis. Lawmakers have generally taken a hands-off approach to Indian casinos. Davis, meanwhile, included $30 million in his transportation package for a new freeway interchange serving Casino Morongo in the Riverside County community of Cabazon. Big money gets involved Although tribes were building casinos prior to the March election, the tribes' new ability to have Nevada-style gambling has energized casino development. Within weeks of the election, major gambling companies from Nevada, Louisiana and Atlantic City came onto the scene with proposals for large resorts featuring giant gambling halls, hundreds of hotel rooms and strips of retail shops. Among the major proposals: o A full-scale, $180 million resort in Valley Center, in San Diego County, by the San Pasqual Band of Mission Indians. o A $100 million resort in Jamul, just east of San Diego, by the Jamul Indians. The proposal requires the federal government to expand a 6-acre reservation to include 100 adjacent acres the tribe recently purchased. Kean-Arogvitz Resorts of Houston, which operates two Indian casinos in Louisiana, and Lakes Gaming Inc. of Minnesota, which developed Indian casinos in that state, are providing funding. o Expansion of an existing casino in Lakeside run by the Barona Band of Mission Indians. The plan calls for a 300,000-square-foot casino, 120-room hotel, golf course, restaurants and even a two-story carousel. o A $100 million casino and hotel in northern San Diego County by the Rincon San Luiseno Band of Mission Indians. Harrah's Entertainment of Las Vegas is behind the project. o A $90 million casino, also in northern San Diego County, by the Pala Band of Mission Indians. Anchor Gaming of Nevada is involved. o A $60 million expansion of an existing casino near Coachella by the Twentynine Palms Band of Mission Indians. Trump Hotels & Casino Resorts, Inc., is behind the project. o An $80 million casino on 40 acres along I-10 in Rancho Mirage by the Agua Caliente Band of Cahuilla Indians. The tribe also plans to expand its existing casino in downtown Palm Springs. o A casino along I-10 near Coachella by the Torres-Martinez Indians. Rep. Mary Bono (R-Palm Springs) is carrying a bill that would compensate the Torres-Martinez Indians for the flooding of their land, which became the Salton Sea, and allow them to buy land that includes 640 acres along the freeway. Tribes with existing casinos in the area oppose the bill. o A five-story hotel and casino on Highway 41 in Madera County, about 25 miles south of Yosemite National Park, by the Picayune Rancheria tribe of Chukchansi Indians. The project also includes several large restaurants and a 150-seat nightclub. o A 125,000-square-foot entertainment complex in Tuolumne County by the Tuolumne Band of Me-Wuks. o A casino of at least 100,000 square-feet plus a hotel in Shingle Springs, in western El Dorado County, by the Shingle Springs Band of Miwok Indians. A successful lawsuit to block access via private roads has halted the project. o A $100 million casino in an industrial park in Rocklin, in Placer County, by the United Auburn Indian Community of Miwok and Maidu Indians (see CP&DR Deals, December 1999). Station Casinos of Nevada is behind the proposal, which requires the Bureau of Indian Affairs to place the land in trust. o Conversion of an existing San Pablo card room into a full-scale casino by the Lytton Band of Pomo Indians, who want to buy the facility. In May, Gov. Davis rejected a compact with the Lytton Band, blocking the proposal for now. o A 175,000-square-foot casino and restaurant complex in Alexander Valley, near Healdsburg, proposed by the Dry Creek band of Pomo Indians. Mark Advent, who built the New York-New York hotel and casino in Las Vegas, is involved. The sewer and water stick While local government has no control over development on trust lands, it does have a say when a landowner wants to annex into a special district. Local officials in several jurisdictions have used the Local Agency Formation Commission project to gain at least a little leverage over casino development. The Butte County LAFCO is considering an application from Gold Country Casino just outside Oroville to annex into separate sewer and water districts. The Tyme Maidu Tribe says the annexation of 34 acres is to accommodate residential development, a park and a large parking lot. Butte County LAFCO Executive Officer Paula Leasure said she is treating the application as if expansion of the tribe's existing casino were involved. Why would a parking lot need sewer and water, she asked. "We're going to be looking at it for maximum impacts," she said. "Traffic has turned out to be one of the biggest impacts we've had . I know traffic accidents are up significantly." The LAFCO cannot request changes in land use or project design, but it could ask for a large one-time impact fee, said Leasure, who noted the casino is surrounded by residences. Obermeyer, of Lake County, said officials there have used the LAFCO process to get concessions from Indian casino operators. Lake County has had as many as four Indian casinos operating at one time, and some tribes are more open to negotiating that others, he said. Currently, Lake County is processing a Williamson Act cancellation contract for the Big Valley band of Pomo Indians to accommodate expansion of a casino near Lakeport. While Obermeyer does not believe the land ever should have been placed under the Williamson Act, he sees traffic and wetlands concerns with a bigger casino — but no legal ability to address them. The existing facility is in a floodplain and a narrow two-lane road provides the only access. El Dorado County planners have wrestled for several years with implications of a casino development along Highway 50, a few miles west of Placerville. The Shingle Springs Band of Miwok Indians erected a large tent for gambling, but patrons could reach the facility only by way of private roads. Residents of the area, a gated, large-lot subdivision, successfully sued to block the tribe's use of the road for casino access. Since then, the tribe has purchased property in an attempt to gain new access to their landlocked parcel, said county Planning Director Conrad Montgomery. But the earlier confrontation has steeled casino opponents, and the Board of Supervisors approved a resolution in early June opposing the casino. "The problem is it's entirely a low-density residential neighborhood," Montgomery said. "The ideal situation would be to try and find a completely different site." New representatives of the tribe have shown a willingness to negotiate, including offers to fund law enforcement and pay something like a bed tax to the county, Montgomery added. County officials believe a casino is inevitable, so they might as well make the best of it, he said. Other counties, however, have not concerned themselves. "It's never been an issue one way or the other for the county," said David Wert, spokesman for San Bernardino County, which is home to two casinos. Cooperation could grow Isenberg, the Indians' lobbyist, said Indians often have had no contact, or only hostile contact, with local government. "Traditionally, Indian tribes in California and most of the rest of America have had relations only with the federal government," he said. "Local governments just kind of view them as a pain in the neck, particularly now that they have trust land on which they can do anything that a separate government entity could do." But tribes are willing to be good neighbors and some of them are working out agreements with local government to fund emergency services and infrastructure improvements, Isenberg said. "If you try to guess where the next 50 years will be, it is with these agreements," he said. Baker, the CSAC lobbyist, said counties and tribes have a mixed record of cooperation so far. "It really just depends on the individual tribes," she said. Leasure, of the Butte County LAFCO, suggested counties might want to plan commercial development of their own near casinos to build the tax base. "One way the counties could get a handle on the casinos would be to go out and plan the area around the casinos," she said. "It would involve some extensive planning and general plan amendments up front. From a theoretical standpoint, I think it could work." Contacts: Dan Obermeyer, Lake County Community Development Department, (707) 263-2221. Paula Leasure, Butte County LAFCO, (530) 538-7151. Conrad Montgomery, El Dorado County Planning Department, (530) 621-5355. DeAnn Baker, California State Association of Counties, (916) 327-7500, ext. 509. Clifford Trafzer, University of California, Riverside, (909) 787-4577, ext. 1828. Phillip Isenberg, Alliance of California Tribes, (916) 447-7933. National Indian Gaming Commission website: www.nigc.gov Victor Rocha's Indian and Gaming News website: www.pechanga.net

A recently adopted specific plan for nearly four square miles in southern Sacramento County represents the first time county officials have instituted a major farmland mitigation program. The East Franklin Specific Plan calls for developers of 2,475 acres to contribute $950 per acre to an account that will purchase agricultural easements or property in a nearby farming area. Whether farm owners will cooperate, however, is uncertain. The mitigation fee is intended to protect about 26,000 acres of farmland south of the fast growing community of Elk Grove, said Sacramento County Supervisor Don Notolli, who represents the area. "Agriculture is important in the history of this community, and it will continue to be in the future," said Notolli. Sacramento County's general plan calls for development of prime farmland to be mitigated with the purchase of rights to prime agricultural land elsewhere in the county. However, the county had not implemented the policy for a major development since adopting the general plan in 1993. Whether or not the $950-an-acre fee will provide enough money is unknown. But Notolli — who earlier pressed for a higher mitigation fee but eventually voted for the $950 rate — pointed out that the fee will apply to the entire specific plan area, even though only 1,400 acres qualify as prime farmland. "In looking at the calculation, where you have 2,400 acres paying the fees and the loss of 1,400 acres, it's a pretty good number to start with," Notolli said. The Environmental Council of Sacramento, a 30-year-old coalition of environmental groups and individuals, endorsed the East Franklin Specific Plan for several reasons, said ECOS leader Earl Withycombe. First, the East Franklin plan carries out the general plan policy of mitigating the development of farmland. Second, and even more importantly, the specific plan requires the county to purchase agricultural easements in the immediate area of the development. That focus is important because East Franklin is right up against the county's urban services boundary, and pressure could easily build to expand the boundary, Withycombe said. Thus, the specific plan provided a creative approach to preserving the integrity of the urban growth boundary. No one expected extensive development on the urban services boundary only seven years after it was adopted, said Withycombe, who noted a major retail development called Lent Ranch has also been proposed right on the boundary. "It made a lot of sense to us that we were better off forestalling development on lands just across the urban services boundary … until the next overhaul of the general plan, when the issues could be revisited," Withycombe said. Supervisor Notolli said the board decided it could not reasonably offset loss of south county farmland by acquiring agricultural easements in the rural northern part of the county, as some people had proposed. Instead, they focused on an area within three miles of the East Franklin Specific Plan area. Looks good on paper The Sacramento Bee has reported that farm owners near East Franklin have indicated little interest in selling agricultural easements. Instead of preserving farming, they want to preserve their right to sell land to developers. The farmers point out — correctly — that the county has not enforced the farmland mitigation policy for other major developments. Denny Lewis, executive manager of the Sacramento County Farm Bureau, endorsed the mitigation fee but said no one can predict its effectiveness. "There's such little experience dealing with agricultural mitigation fees. I have no idea whether the agricultural community will accept this. I suspect they will," Lewis said. "Either we're going to grow houses, or we're going to grow food. And this is a start." The Nature Conservancy has been purchasing agricultural easements along the Cosumnes River watershed, south of Elk Grove, for years. That program has been quite successful, Lewis said. Wine grapes are the number one crop in southern Sacramento County, according to Lewis. Other components of the area's farm industry are dairy, cattle, hay, alfalfa and barley. Sacramento County had $278 million in agricultural production in 1998 (the last year for which figures are available), ranking it 22nd among California's 58 counties, according to the California Farm Bureau Federation. State officials estimate that the five-county Sacramento region (Sacramento, Yolo, Sutter, Placer and El Dorado counties) lost 2,800 acres of prime farmland to development from 1996 to 1998. That figure worries open space and farming advocates, but builders say it is a tiny amount that totals only about two-thousandths of 1% of the region's total farmland. Density policy doesn't survive While the East Franklin plan does implement the general plan's farmland mitigation policy, it required general plan amendments to remove four transit-oriented zones from the East Franklin area. Instead, those areas will have single family homes along with some typical apartment buildings and retail stores. County planners say there just is not enough acceptance of high-density, mixed-use planning concepts. (See sidebar.) Indeed, Elk Grove residents lobbied for fewer housing units in East Franklin. As a result, county supervisors approved a plan that calls for far more large-parcel, single-family development than originally envisioned. Although county supervisors approved the East Franklin Specific Plan in late May, what exactly will become of the plan is unclear because the area lies within Elk Grove, which became an incorporated city on July 1. Growth was the number one issue during the incorporation election, with many people contending the county has been too accommodating to developers. Elk Grove Mayor Jim Cooper said it would be unfair for the city to insist on changes to proposals that have already gone through the county process, such as the East Franklin Specific Plan. Supervisor Notolli added, "I don't think our work is going to be discarded." Still, said Cooper, the bedroom community of about 55,000 needs a better balance of growth so that not everyone has to commute to jobs in Sacramento. The new mayor noted that during the last few years, 40% of residential building permits in unincorporated Sacramento County have been issued in Elk Grove. Interestingly, the new East Franklin Specific Plan designates 2,398 acres — nearly the entire specific plan area —for single-family residential development. The plan earmarks only 47 acres for office and commercial, plus 30 acres for medium-density residential. Under the plan, 10,400 housing units could be built. When the Elk Grove City Council convenes for the first time, it will have no fewer than 46 pending development projects to consider, Cooper added. Contacts: Don Notolli, Sacramento County supervisor, (916) 874-5465. Jim Cooper, Elk Grove mayor, (916) 686-2222. Earl Withycombe, Environmental Council of Sacramento, (916) 444-6666. Denny Lewis, Sacramento County Farm Bureau executive manager, (916) 685-6958.

Each day, a parade of trucks heads north out of the Southern California metropolis, grinding over the Tehachapis and descending into Kern County, one of the state's premier agricultural regions. The convoy is nearly a mirror image of the truck traffic heading the other way laden with commodities grown in the fertile Central Valley. There is an important difference, however. Whereas the southbound trucks, bearing oranges, tomatoes, almonds, carrots, cotton and other valued products, are welcomed, the northbound trucks haul a less popular cargo: sewage sludge, the semisolid leftovers of municipal wastewater treatment. This aesthetically unsavory product is a perennial headache for sanitation districts. Yet to farmers trying to coax crops from marginal farmland, sludge is a nutrient-rich resource. And now it is at the heart of a legal and political battle that pits science against popular perception, and the state's rural heartbeat against urban muscle. Technically, "sludge" is organic solids separated from untreated wastewater. The stuff trucked to Kern County from cities throughout Southern California is known more accurately, if less descriptively, as "biosolids" — human and industrial waste that has been filtered from treated wastewater, pumped into tanks and allowed to cook in its own biologically generated heat until bacteria and other pathogens have been neutralized. For decades, sewage plants dumped their sludge in the ocean, buried it in landfills or incinerated it. But regulatory barriers to ocean disposal and burning have made those options unattractive. And high tipping fees at crowded urban landfills have made burying it costly. Searching for a new solution, municipal sanitation districts have in recent years seized on a paradoxically old technique: land application. Essentially, properly treated biosolids are a fertilizer and organic soil amendment, and plowing such waste into cropland to boost fertility has an ancient history. An Environmental Protection Agency guide describes the value of sludge in glowing terms: "Biosolids are, in effect, a slow-release nitrogen fertilizer with low concentrations of other plant nutrients. In addition to significant amounts of nitrogen, biosolids also contain phosphorus, potassium, and essential micronutrients, such as zinc and iron, which are of great benefit in the West, where many soils are deficient in micronutrients. Since biosolids are also rich in organic matter, they can improve soil quality by improving water-holding capacity, soil structure and air and water transport. Proper use of biosolids can ultimately decrease soil erosion." Southern California sanitation districts had little trouble finding receptive farmers in Kern County, which has much land that is fertile but also much that is not. Both varieties are urged into cultivation by inexpensive water. A billion pounds of sludge a year, more than 50 truckloads a day, makes its way to Kern County, where it is spread on land used for such nonfood crops as cotton, sorghum and alfalfa. Thanks to its proximity to Southern California's urban centers, and the convenient access provided by Interstate 5, Kern County has quietly become California's top repository of sludge. Not everyone in Kern County is happy about that. Local environmentalists and health activists, for example, warn that sludge might contain high levels of toxic metals derived from industrial processes, as well as viruses, parasites and other pathogenic organisms that survive processing. The limited research that has been done, however, suggests there is little public health risk. Heavy-metal concentrations in municipal wastewater have been greatly reduced since the 1970s under tough federal and state discharge regulations. A 1996 report by the National Research Council noted, "There have been no reported outbreaks of infectious diseases associated with a population's exposure — either directly or through food consumption pathways — to adequately treated and properly distributed reclaimed water or sludge applied to agricultural land." But an audit of EPA's biosolids management and enforcement, which the U.S. Inspector General's Office released March 20, found that federal regulations governing the land application are adequate. But the Inspector General also concluded that EPA does not collect enough information or conduct enough field inspections to determine whether farmers comply with the law. If the actual public health threat is ambiguous, public attitude is not. "We don't want to be L.A.'s toilet," one Kern County farmer told a newspaper reporter earlier this year. Sensitive about the public image of Kern County agricultural products — particularly high-value specialty crops competing in a cutthroat market — a coalition of growers persuaded the Kern County Board of Supervisors last October to pass an ordinance making it illegal to apply conventional sludge to farmland. The ban would be phased in over three years, after which time only "exceptional quality" biosolids — sludge that has been mixed with other organic matter and composted — could be plowed into the soil. Municipal agencies relying on Kern County farmland as a destination for sludge responded in November with a lawsuit contending that the county violated the California Environmental Quality Act by failing to review the environmental impact of its sludge ban. The Southern California agencies also claimed they are exempt from local ordinances. The Superior Court trial, moved to presumably neutral Tulare County, is now in the discovery phase. The dispute even migrated to the Legislature, where Sen. Richard Polanco (D-Los Angeles) introduced SB 1956, which would prohibit local governments from adopting biosolids regulations more restrictive than the federal government's. Assemblyman Roy Ashburn (R-Bakersfield) countered with legislation (AB 2495) specifically requiring local agencies to abide by the building and zoning ordinances of other local jurisdictions. Polanco has put his bill on hold, but Ashburn's remains alive, having received unanimous approval in the Assembly. Although Kern's contested ordinance officially declared the county's willingness to accept "exceptional quality" sludge, the sincerity of that commitment is in doubt. In May, the Yakima Co. abandoned plans to build a composting facility able to handle 600,000 wet tons (biosolids are 75 percent water) of sludge a year from eight Southern California waste agencies. The company blamed fierce community opposition, which led to permitting delays. To municipal waste managers, the failure of Yakima's plans suggests that public perception — not legitimate concerns about health risks or groundwater purity — is responsible for Kern County's ban. And they see that attitude as shortsighted. "We think it's a more reasonable, sensible option" than burying it in a landfill, said Mike Sullivan, Sanitation Districts of Los Angeles County biosolids recycling coordinator. His agency sends 1,500 to 2,000 wet tons of sludge a week to Kern County, reimbursing farmers for the cost of hauling it, spreading it and handling the paperwork — a sum that averages around $25 a ton. The cheapest alternative would be to truck the sludge to a landfill the agency owns, but that would shorten the landfill's three-year life expectancy. And it would mean forgoing the utility of a nutrient-rich organic fertilizer, as well as ignoring the broader question of what to do with so much waste. And if the sanitation agencies lose their legal attempt to overturn Kern County's ban? There's always Arizona. "They welcome the stuff there," Sullivan said. Contacts: Kern County counsel's office: 661-868-3800. Sanitation Districts of Los Angeles County: (562) 699-7411 EPA Biosolids website: www.epa.gov/unix0008/community_resources/muni/water/wbiosolid.html

The Metropolitan Water District won a round of a lawsuit over the price it charges for conveying private transfers of water. A three-judge panel of the Second District Court of Appeal, Division Five, ruled that Metropolitan can include its capital investment and other system-wide costs when figuring the fee it charges for handling water transfers. The appellate court overturned the decision of San Francisco Superior Court Judge Laurence Kay, who had ruled Metropolitan improperly included costs unrelated to the actual water transfer. The appellate panel sent the case back to Kay for further proceedings. The ruling is potentially a blow against the private water market that many public officials, farmers, speculators and developers hope to nurture. In 1986, the Legislature adopted "water wheeling" statutes (Water Code §§1810-1814) that prohibit public water agencies from withholding use of their canals and pipelines when unused capacity is available and fair compensation is paid. The idea is to encourage transfers of water from land with excess water rights, such as certain farms, to growing urban areas. In January 1997, Metropolitan established a wheeling rate of $141 per acre foot for its member agencies, regardless of the water's source, how far the water would travel or the facilities used. Representatives of all 27 member agencies — except the San Diego County Water Authority — voted for the rate. The San Diego agency is counting on buying water on the open market to help meet future needs. To get court validation for its wheeling rate, Metropolitan filed a lawsuit against seven parties, including the San Diego County Water Authority, Imperial Irrigation District, private water developer Cadiz Inc., and a few Native American tribes. But Judge Kay ruled that Metropolitan could not set a fixed wheeling rate in advance of a particular transaction and without regard to the specific proposal. He also held that Metropolitan could not include system-wide costs, such as expenses for constructing reservoirs and administrative buildings. On appeal, San Diego County Water Authority and other defendants argued that wheeling rates should be determined on a "point-to-point" basis that accounts only for the facilities used. But Metropolitan contended that because a private water transfer could displace a sale to a member agency, Metropolitan's other agencies would get stuck with a higher proportionate share of system-wide costs, thus subsidizing the water transfer. In a detailed opinion, the court found "neither the plain language of the wheeling statutes nor the legislative history supports a conclusion as a matter of law that system-wide costs cannot under any circumstances be included in a wheeling rate calculation. … The Legislature did not utilize language which is consistent with defendants' theory that only ‘point-to-point' costs my be recovered." "In short," wrote Presiding Justice Paul Turner, "the Legislature did not intend that the impact of the wheeling statutes should be to cause a water conveyance system owner to lose money or to subsidize wheeling transfers." The panel sent the case back to the lower court to determine whether Metropolitan's wheeling rate meets the definitions of "fair compensation" and reasonableness within §1813. However, the case could become moot depending on the outcome of pending legislation. Senate Bill 1973 (Perata) would give the Public Utilities Commission authority to determine what factors can be included in wheeling rates. The Case: Metropolitan Water District of Southern California v. Imperial Irrigation District, No. B119968, 00 C.D.O.S. 4206, 2000 Daily Journal D.A.R. 5615, filed May 30, 2000. The Lawyers: For Metropolitan: N. Gregory Taylor, MWD, (213) 217-6115. For Imperial: David Osias, Allen, Matkins, Leck, Gamble & Mallory, (619) 233-1155. For San Diego County Water Authority: Daniel Hentschke, SDCWA, (619) 682-4113.

Homeowners associations in the retirement community of Leisure World acted legally when they spent half a million dollars of homeowners assessments on an initiative campaign to halt a proposed airport, the Fourth District Court of Appeal has ruled. The court cleared the political activity of the Golden Rain Foundation of Laguna Hills and three of its member homeowner associations. The groups provided $542,000 for Orange County's Measure S, a 1996 ballot initiative aimed at blocking development of an airport at El Toro Marine Corps base, which is near Leisure World. (Measure S failed. But, in March, Orange County voters approved Measure F, which requires a two-thirds vote of the public for the proposed airport to go forward. Various homeowners associations also contributed to the pro-Measure F campaign.) The lawsuit was filed by members of the homeowners associations, although the Orange County Register reported that developer George Argyros, the proposed airport's prime private supporter, was behind the suit. The suit claimed that the associations did not have the power to make the political contributions, and that the donations were illegal and violated members' constitutional rights of free speech and association. Orange County C. Robert Jameson ruled for the homeowners associations, and a unanimous three-judge appellate panel upheld the ruling. In the published portion of its opinion, the court held that the associations are corporations that can use the "special litigation committee" defense. In this case, after the lawsuit was filed, each association created its own special litigation committee. Each committee was composed of members of the board of directors who had not become members until after the lawsuit was filed. The committees retained lawyers and conducted thorough reviews before concluding that the lawsuit was not in the best interest of each association. Thus, the actions of the homeowners associations boards of directors were protected by "the business judgement rule," the court held. The special litigation committee defense is intended "to further the fundamental principle that those best suited to make decisions for a corporation — including the decision to file suit on its behalf — are its directors, not its stockholders or the courts," Justice Betty Ann Richli wrote. In the unpublished portions of the opinion, the court ruled that the associations had the authority to make the contributions necessary to preserve Leisure World residents' lifestyle. The court noted, "A carefully designed professional survey revealed that 91.3% of Leisure World residents opposed the airport conversion." And the court held that the contributions did not violate anyone's constitutional rights. The Case: Warren T. Finley v. Superior Court, No. E024743, 00 C.D.O.S. 4077, 2000 Daily Journal D.A.R. 5439, filed Mary 23, 2000. The Lawyers: For Finley: Daniel Livingston and Alan Ross, Payne & Fears, (949) 851-1100. For the homeowners associations: William R. Hart and Robert Mulvihill, Hart, King & Coldren, (714) 432-8700.