Describing the closing of a military base as successful might strike some people as a poor choice of words. Anybody acquainted with base closures knows they are traumatic events. The initial trauma, of course, is the loss of jobs and resulting economic depression that befall surrounding communities. The secondary trauma, which happens more slowly, is the series of barriers that communities encounter in their efforts to reinvent a base into an office park or airport. Redeveloping bases can be difficult because basic infrastructure — roads, sewers, electricity distribution — is often outdated or lacking. And the Pentagon can be a stumbling block until it agrees with local officials on a property appraisal. Without a conveyance agreement from the Pentagon, redevelopment plans cannot move forward. In the case of McClellan Air Force Base in Sacramento County, however, it is finally possible to talk about a successful base closure without a hint of irony. With final closure just over a year away, the conversion process is already well underway to change McClellan AFB into McClellan Park, a master-planned business park with an ultimate buildout of 17 million square feet of commercial space. Already, private businesses have leased about 1 million square feet of industrial space on the base, and several million more currently are under negotiation. One of the tenants, Arctic Slope, is an aircraft maintenance outfit that has obtained permission from the Pentagon to use military runways for commercial purposes. McClellan, in fact, is the birthplace of what is known locally as Hot Turnover — the military base that starts the conversion process long before the official closure date, creating a new job base before the military leaves. As such, McClellan probably represents the most progressive thinking in base reuse anywhere. The stakes are large at McClellan, where 10,000 people, both civilians and military personnel, worked in 1995, and where about 4,000 work now. As one of only five of aircraft maintenance depots in the country, McClellan is a highly developed industrial complex. Although military bases rarely translate easily into commercial real estate, McClellan is the exception. The base has 8 million square feet of space available for lease, almost evenly divided among office space, industrial, and research-and development and warehousing. "Sacramento is a great place to do a case study of base closure," said Rob Leonard, executive director of the county's base reuse department. Sacramento has experienced base closures in all three rounds of base closures under the Base Realignment and Closure Act of 1988. The final round, in 1993, represented the biggest blow when the county was threatened with the loss of McClellan, one of its largest employers. A major setback preceded the current planning effort of converting McClellan into a private business park. Under a program known as "privatization in place," McClellan would have preserved several thousand jobs on the base by auctioning off different "workloads" to private companies. The Pentagon, however, rejected the plan, and made McClellan compete with Hill Air Force Base in Utah for the privilege of performing maintenance work for the Air Force. In 1998, Hill won the competition. Losing the competition "put a high-intensity light on the re-use of McClellan," Leonard said. The upside was that the planning that had gone into the "privatization in place" competition could now be applied to a different closure scenario. Another potential impediment was the changeover of responsibility for utilities, from the base to the local utility provider. In the past, "there was a reluctance on the part of the local utility to provide service to a base because the utility needed to upgrade systems, and there would be no ratepayers" to support the upgrades, according to Tony Gallegos, western regional director for the Office of Economic Adjustment, the Defense Department agency that coordinates base closures. In the case of McClellan, however, the Air Force agreed to become a ratepayer of the local utility, Sacramento Metropolitan Utility District, enabling the utility to get a head start on upgrading electrical service. Meanwhile, county officials are negotiating with Northridge Water District and PG&E to provide water and gas to the base; county sewer and storm-drain agencies plan to provide services to the base before closure. Particularly innovative is the lease agreement that the Pentagon signed with the base in 1998. The structure of the lease is uniquely flexible, because it is additive: Whenever the developer finds a tenant for an available vacant building on the base, the developer can amend the lease with a "serial supplement," that adds the building to the county's leasehold. This type of lease has a number of advantages for both sides. The military maintains control of most of the base, and carries the cost of maintenance. The developer has the option of marketing many different buildings to potential tenants, without being obliged to pay for their maintenance. Known as McClellan Park LLC, the development team is made up of Larry Kelley, developer of the master-planned Stanford Ranch in Rocklin; Industrial Realty Group of Redondo Beach; and Morgan Stanley Real Estate Fund III. New tenants at the base are expected to minimize the impact of the military departure. When McClellan AFB closes next year, in fact, about 4,000 jobs will remain, or roughly the current level of employment with the military in place. In short, McClellan will be that unheard of event: A base closure without a net loss of jobs. The military worked closely with local officials in 1998 to formulate a mutually acceptable appraisal of $90 million, to be paid over 40 years. Local officials are hoping the military will waive that purchase price under the "No Cost Economic Development Conveyance" program that allows local authorities to assume ownership if they spend more than the purchase price on infrastructure or rebuilding. The developer has agreed to buy the land from the county for $90 million after title is transferred from the federal government, whether or not the county itself pays for the base. The creation of what will likely become the largest industrial center in Northern California is newsworthy enough. The real importance of McClellan, however, is the example it provides of keeping the lights on at the base after the military plays taps for the last time. The only sad part is that the Pentagon, the largest single purchaser of research in the country, did not figure this out 12 years ago, before the cycle of base closures dealt pain to hundreds of communities in California and elsewhere.

A county's mobilehome rent control ordinance applies for people who live in recreational vehicles for at least nine continuous months, the Sixth District Court of Appeal has ruled. The court said that Santa Cruz County's Mobilehome Rent Adjustment Ordinance applies to about 20 sites in a travel trailer and resort facility because residents of those sites have lived there continuously for nine months or more. The controversy began when Willows Resort owner Harold Griffith eliminated central garbage collection service and advised residents to obtain individual service. Willows Resort residents complained to the county. A hearing officer then ruled that Griffith, under the county's mobilehome rent adjustment ordinance, had to reduce rents by $11.60 per month (the cost of garbage collection) for about 20 sites where people had maintained residences for at least nine months. Griffith sued, arguing that the county ordinance is pre-empted by state laws prohibiting commercial rent and regulating mobilehome parks. Santa Cruz County Superior Court Judge Robert Yonts ruled against Griffith, who then appealed. A three-judge panel of the Sixth District upheld the trial court's decision. The court said that Griffith is subject to two state laws, the Mobilehome Parks Act (Health & Safety Code §18200) and the Recreational Vehicle Park Occupancy Law (Civ. Code §799.20). The Mobilehome Parks Act governs construction and operation of mobilehome and recreational vehicle parks. The recreational vehicle law addresses tenancies. Because the issue in this case is the right of tenants, the Mobilehome Parks Act, which Griffith argued preempts the county ordinance, does not apply, the court said. The recreational vehicle law gives "nine month" tenants rights similar to those of permanent mobilehome park tenants, the court ruled. The state prohibition of commercial rent control specifically exempts a mobilehome park, which Griffith runs for the 20 units in question, the court held. The Case: Harold Griffith v. County of Santa Cruz, No. H019474, 00 C.D.O.S. 2998, 2000 Daily Journal D.A.R. 4021, filed April 18, 2000. The Lawyers: For Griffith: Douglas Allen, (408) 298-6540. For the county: Pamela Fyfe, assistant county counsel, (831) 454-2040.

For the past decade, the Los Angeles Department of Water and Power has been preparing to tap a significant new supply of water to help meet demand in its growing service area. Yet, after investing $55 million in a pipeline and related facilities, the DWP put the project on hold in late April, just days before it was to begin operation. The reason was a loud, albeit belated, public outcry about the source of that new water: the Donald C. Tillman Water Reclamation Plant, which treats municipal sewage in the San Fernando Valley. The disruption of DWP's plans, even if the halt turns out to be temporary, illustrates the magnitude of the continuing public-relations challenge facing water managers as they try to tap a promising supply to meet the needs of California's booming population — namely, treated wastewater. As water gets more expensive and demand grows, wastewater recycling is expected to increase substantially. The State Department of Water Resources projects wastewater recycling will increase by about 60% to 577,000 acre-feet by 2020, and has identified the capacity for 1.4 million acre-feet a year if all potential projects identified in its 1995 survey of water providers were implemented. The DWP planned to pump treated effluent 10 miles to a spreading grounds in Sun Valley, where the liquid would percolate into the aquifer. That water, having undergone natural filtration during the long percolation process, would mix with natural groundwater and eventually would be pumped back out from wells more than a mile away, whereupon it would be chlorinated, mixed with water from other sources and piped to consumers. It would take about five years for the wastewater to complete its journey back into the municipal water system. The project would provide about 35,000 acre-feet a year — enough to supply 70,000 households in Los Angeles. Despite assurances by state and local health officials that the treated water would pose no health threat, local residents and their political representatives balked when they learned about the imminent startup in a series of local newspaper stories. New public hearings have been scheduled, even though the project was thoroughly aired during at least three phases of the planning and permitting process. Even the city's mayoral candidates have jumped on board, criticizing the lack of public involvement. "This is exactly the kind of issue that people have a right to make their own decisions about. It's their money, it's their water, it's their lives and they have to be consulted," Los Angeles City Councilman and mayoral candidate Joel Wachs told the Los Angeles Daily News. The resistance is not particularly surprising. The prospect of drinking former toilet water, no matter how much it has been purified by artificial and natural processes, generates what water managers refer to as the "yuck factor" — an almost insurmountable, visceral reaction that is not easily countered with testing data and epidemiological studies. However, there is nothing new or rare about the use of reclaimed wastewater in California. According to a September 1999 report by the State Water Resources Control Board's Office of Water Recycling, an estimated 364,595 acre-feet a year of municipal wastewater is currently being used. It is produced by 221 treatment plants, representing 45 of California's 58 counties, and is used at about 4,380 sites. By far the largest use is agricultural irrigation, which consumes 177,622 acre-feet a year. Landscape irrigation and impoundments rank second, at 67,776 acre-feet. Groundwater recharge, a category that includes the possibility of eventual residential use, is third at 38,489 acre-feet, followed by wildlife habitat, 27,174; industrial use, 18,418; recreational lakes and ponds, 17,854; and combating seawater intrusion, 10,141. Wastewater reclamation projects are particularly popular in semi-arid Southern California, which relies on imports for most of its municipal and industrial water supply. Imported water is expensive, and Los Angeles in particular has seen significant reductions in its supply. California, which uses of 5.2 million acre-feet of Colorado River water annually, will soon be cut back to its legal entitlement of 4.4 million acre-feet, with most of that extra 800,000 acre-feet to be subtracted from the Metropolitan Water District's supply. Recent court settlements have reduced the amount of Owens Valley and Mono Basin water available to Los Angeles by 10%. And deliveries from the State Water Project have been curtailed to prevent harm to endangered fish. Increasingly, reclaimed wastewater looks like a promising alternative to imported supplies. Already, 76 such projects are in operation in a six-county Southern California area: 19 in Los Angeles County, 16 in San Bernardino, 13 in San Diego, 12 in Riverside, 11 in Orange and five in Ventura. The rising cost of imported water has made reclaimed water economically competitive, despite the need for expensive treatment. The price of water supplied by the LADWP's East Valley Water Reclamation Plant will be about $500 an acre-foot; the MWD now charges $431 an acre-foot for drinking water. Still, the public needs convincing. As long as reclaimed wastewater irrigates golf courses, cemeteries, freeway medians, and pastures, or is pumped through industrial cooling systems, the public does not seem to care. What prompted the April backlash against the San Fernando Valley project was the likelihood that water sent down the sewer would eventually return via the kitchen faucet. Similar concerns helped torpedo a similar project last year in San Diego. A 1995 proposal to release treated wastewater upstream from a huge Miller Brewing Company plant in Irwindale prompted a similar outcry — along with a spate of jokes — which forced that project to be scaled back and redesigned. (Beer drinkers no longer need fear that the water they flush down their toilets will return to them in six-packs.) Nevertheless, residential customers throughout California already drink water that has passed through a municipal sewer plant, whether they know it or not. Some of that reuse is intended and is the result of carefully designed projects; the rest is what the Office of Water Recycling refers to euphemistically as "unplanned reuse." The latter consists of much of the State Water Project's supply, which is drawn from the Sacramento-San Joaquin Delta. Nearly every municipal wastewater plant in the Sacramento River watershed upstream of San Francisco Bay releases treated effluent into the river or its tributaries, and an indeterminate portion is pumped into the California Aqueduct. And water agencies throughout California pump groundwater that is a mixture of pristine sources and surface water that has percolated underground after washing over city streets, farm fields and other potential sources of contaminants. Still, there is something uniquely disturbing about the direct conceptual link between toilet and tap, as embodied by such projects as the LADWP's East Valley Reclamation Project. Water managers probably will never overcome the "yuck factor" entirely; if they hope to realize the promise of this largely untapped resource, they must either restrict its use to nonresidential customers or do a better job of enlisting the support of local politicians. Contacts: The WateReuse Association, (916) 442-2746. Lynn Johnson, chief of the Office of Water Recycling, (916) 227-4580. Los Angeles Department of Water and Power Public Affairs office, (213)-367-1361. Joel Wachs, Los Angeles city councilman, (213) 485-3391.

A Subdivision Map Act provision that gives local government a maximum of 120 days to acquire an interest in land upon which a subdivider is obligated to build improvements applies only in cases where the improvements are a condition of final map approval, the Fifth District Court of Appeal has ruled. A developer in the City of Clovis contended that such a narrow reading of Government Code §66462.5 would place an undue burden on the subdivider because a city could wait decades before acquiring off-site property, forcing the developer to bear a greater expense than originally contemplated. But the court held that if the off-site improvements are not a condition of final map approval, the local government and subdivider can set a time limit as part of a development agreement. In February 1990, Clovis and landowner William Tatham Jr. signed a subdivision agreement that called for Tatham to extend Temperance Avenue from the project to Shaw Avenue, a major thoroughfare. The city approved a final map for Tatham later that same month. In October of 1990, the city signed an agreement with N.T. Hill, who had acquired Tatham's interest in the project. The contract had roughly the same conditions. The city approved a second final map for the other portion of the subdivision that same month. Hill developed the two housing tracts but never extended the road. The city and Hill then sued each other for a variety of reasons based on the other side's alleged breach of contract, and they went through extensive legal contortions before arriving at the appellate court. The issue before the three-judge panel was narrow — the applicability of the 120-day requirement. Hill argued that the requirement applied to any condition relating to off-site improvements when neither party holds sufficient title to the land. Thus, because Clovis did not acquire the property for the road extension within 120 days, Hill contended he was not obliged to complete the work. Clovis countered that the 120-day limit applies only when a local body postpones or refuses approval of a final map because the off-site improvements have not been completed. Upholding Fresno County Superior Court Judge Gary Austin, the Fifth District said Clovis was right. The court relied heavily on the legislative intent behind AB 3452 from 1982, which created the Subdivision Map Act provision in question. "The concern which generated the enactment of §66462.5 is that a city or county could … completion of all improvements before approval of the final map, even when completion is made impossible as a result of the local body's own failure to obtain sufficient title," Justice Timothy Buckley wrote for the unanimous court. The law was intended to prevent a local government from holding up development by delaying off-site property acquisition necessary for project completion. Furthermore, the law specifically allows the local agency to require a subdivider to enter into a contract for completion of off-site improvements when the local agency acquires adequate interest in the land, Buckley noted. In this case, there were two such agreements, but they contained no specific term for Clovis to acquire the land. If Clovis' delays had interfered with Hill's ability to execute his part of the contract, Hill could have sued to enforce the contract's conditions, the court added. " y limiting §66462.5 to those instances in which approval of the final map is refused, this court does not impose an unjust burden on subdividers, nor does it create unreasonable consequences inconsistent with the legislative purpose," Buckley wrote. "Indeed, by refusing to expand §66462.5 as appellants advocate, the court will leave a carefully balanced legislative scheme intact." The Case: N.T. Hill v. City of Clovis, No. F032045, 00 C.D.O.S. 3321, 2000 Daily Journal 4563, filed April 28, 2000. The Lawyers: For Hill: Barbara McAuliffe, Motschiedler, Michaelides & Wishon, (559) 439-4000. For Clovis: Jerome Behrens, Lozano, Smith, Smith, Woliver & Behrens, (559) 431-5600.

A proposal from Cisco Systems to build a 6.6 million-square-foot campus for up to 20,000 workers in south San Jose has focused attention on the Silicon Valley's housing shortage. Cities and counties south of San Jose feel threatened by the continued industrial development in Silicon Valley because more and more technology employees are commuting from places like Hollister, Salinas and Santa Cruz. The City of San Jose, however, says it has long carried more than its fair share of the housing load and the city needs more jobs. And regional planners predict the Bay Area will create 400,000 jobs — but only 100,000 new homes — during the next 10 years. In the meantime, the housing market continues to tighten. The median single-family home price in Santa Clara County rose 38% in one year to $540,000 in March, according to California Association of Realtors. In a seven-county Bay Area region, the median hit $447,000 in March, a 28% jump. Although incomes are high for professionals, the National Association of Homebuilders now says that the five least affordable housing markets in the United States are in or adjacent to the Bay Area. The effects spiral outward from Silicon Valley to San Francisco, the far reaches of the Bay Area, the San Joaquin Valley and rural areas south of the Bay Area. The real estate prices — combined with traffic congestion created by people forced to commute long distances — are getting the attention of state lawmakers. Now it appears that Silicon Valley's skewed jobs-housing picture is driving much of the land-use policymaking occurring in the state Capitol. Coyote Valley calls Computer networking giant Cisco Systems has proposed a 6.6 million-square-foot campus on 688 acres in North Coyote Valley. The land is within the City of San Jose's urban growth boundary (called the Greenline) but has remained mostly agricultural. Cisco would construct the $1.3 billion project over five to ten years, and 20,000 people would work on the site at build-out. Cisco has applied for a rezoning to allow compact development — and retain nearly 300 acres of open space. A draft environmental impact report has been circulated and could go before the City Council this month, said Joseph Horwedel, San Jose deputy planning director. Cisco planners say they picked the site because the area has been designated for industrial growth since 1983, transit is available, the site would spur a "reverse commute," and new houses are planned nearby within San Jose. "We chose the North Coyote Valley for several reasons, one of which is that it was planned precisely for this type of project many years ago through a community and public process," said Cisco spokesman Steve Langdon. "And it is well-situated for public transit, with Caltrain on one side of the site and light rail planned on the other side." The reverse commute comes about because so many people now live in San Jose and head north every morning to the job-rich cities of northwest Santa Clara County, such as Sunnyvale, Mountain View and Palo Alto. Cisco would be the first major employer to locate south of most residential areas. But it is Cisco's location in south San Jose that has neighboring jurisdictions worried. The Cisco EIR estimates that only 20% of the workers will live south of the campus, and only 5% south of Santa Clara County. "We've already seen that that's not true," responded Salinas Mayor Anna Caballero. "Add 20,000 jobs 10 miles closer to us, and it's a natural commute. If you go north and housing prices are twice as high as if you go south, you're going to go south." Salinas has long provided housing for Monterey County farm laborers and the coastal tourism industry's service workers. But Monterey County's median income is about half that of Santa Clara County's, unemployment is double-digit, and many workers are underskilled. The result is that Salinas locals are getting priced out of the housing market, Caballero said. Salinas and other members of the Association of Monterey Bay Area Governments (AMBAG) contend the Cisco EIR is inadequate. The Cisco project qualifies as a "project of regional significance" under the California Environmental Quality Act, according to Kate McKenna, AMBAG special projects manager. However, the EIR says little about regional impacts. Planners to the south also note that although San Jose has set aside land for 30,000 additional homes in the Mid-Coyote Valley Urban Reserve and the nearby Almaden Urban Reserve, San Jose has no near-term plan to permit that housing development. San Jose officials, however, appear unsympathetic. They defend San Jose's long-range planning and suggest that outlying towns can choose how fast they grow. Moreover, they point to the city's $100-million-a-year housing program, which plays some role in the development of one-quarter of all new units in town, as evidence that the city cares deeply about sheltering its people. San Jose has 0.8 jobs per employed resident, San Jose planner Horwedel said, while cities in northwest Santa Clara County offer 1.5 to 2.5 jobs per employed resident. San Jose needs a bigger employment base to solve some long-standing budget problems, he said. The city will allow housing development in the urban reserves when several triggers are met: freeway improvement projects are underway, the city's budget is balanced for a projected five years, municipal service levels hit certain levels, and 5,000 jobs are created in North Coyote Valley. "Had we not put those triggers into the general plan, we would have long ago built that out with single-family residential, and that would not have solved anything," Horwedel said. The city continues to approve 3,500 to 5,000 new homes a year, two-thirds of which are in multi-family structures, he added. But Rob Mendiola, planning director for rural San Benito County, about an hour south of Silicon Valley, said San Jose is relying on 17-year-old general plan policies that are no longer valid. "What they are successful in doing if they implement that plan is pushing their problems off on other jurisdictions," Mendiola complained. "It seems fairly irresponsible to continue to build tens of thousands of jobs and not have a corresponding housing supply. It was irresponsible for the Mountain Views and Palo Altos to do that to San Jose years ago. They should certainly understand what they are pushing off on other jurisdictions." Technology workers have driven up housing prices in the Hollister area to the point that people who work in San Benito County must commute from small towns 50 miles away in the Central Valley. The county has responded to the growth pressures by making it difficult to increase building densities on land designated for agriculture. The Board of Supervisors also is considering a 2% annual growth cap. But there is little in the way of north-south negotiation. "It's very adversarial, which is unfortunate," added Salinas Mayor Caballero, who has sought assistance with transit and job training. "We have a totally different economy, and we're not even in the same county, so we have no pull." The new growth pressures in San Benito, Monterey and southern Santa Cruz counties are only the latest signs of the economic boom in Silicon Valley, where seven jobs have been created for every one housing unit constructed since 1995. Earlier indications can be found on Altamont Pass, which separates the Central Valley towns of Tracy, Manteca and Modesto from the Bay Area. Those three cities have grown to a combined population of nearly 300,000 while serving primarily as bedroom communities for Silicon Valley, up to 100 miles away. Not even San Francisco is immune. An estimated 500 Internet-related companies — with 40,000 employees — have set up shop in San Francisco. Those new companies, which are desperate for office space, combined with highly paid Silicon Valley technology workers who want to live in a hip atmosphere, are gentrifying some of San Francisco's grittiest neighborhoods. Business, lawmakers take notice Many of the Silicon Valley's big technology companies participate in various planning efforts, including the 175-member Silicon Valley Manufacturing Group and Joint Ventura Silicon Valley. According to SVMG President and CEO Carl Guardino, member CEOs say the biggest obstacle to continued economic growth is "homes that are affordable to working families. Almost completely tied with them is a working transportation system." To help meet those needs, SVMG spearheaded a $20 million housing trust fund (Cisco is a contributor) to assist first-time homebuyers, develop and rehabilitate affordable rentals, and shelter homeless people. On the political front, SVMG has a grass-roots Housing Action Coalition that uses "smart growth" criteria to lobby for residential developments, and a leadership council that inventories land and meets with city leaders to champion housing. The group has also led successful campaigns to raise the Santa Clara County sales tax to fund highway and transit projects. Guardino concedes that the large number of high-paying jobs has skewed the housing market. But he argued that California's government financing system — which caps property taxes at artificially low levels, gives the majority of property tax revenues to schools, and forces cities and counties to rely heavily on sales taxes — is as much to blame as anything. "We penalize cities that provide housing," Guardino observes. "Even HP is a revenue-neutral proposition for local government, even though those are tremendously high-paying jobs." More than ever before, elected officials at the local and state level appear to recognize the impacts of what is popularly called the "fiscalization of land use." The Capitol is full of bills that address land use practices, and proposals to reform local government financing are everywhere. Notably, representatives from the Bay Area's fringes are leading much of the discussion. Assemblyman Fred Keeley (D-Santa Cruz) said that what happens in Silicon Valley drives the policy debate because Silicon Valley is seen as the prime component of the state's economy, and because the technology entrepreneurs are largely apolitical. "People," said Keeley, "chase both values — a high paying job in the new economy, and an affordable house." But the political, social, economic and environmental consequences of people living two hours from the office are enormous, he said. In the Legislature, the nine bills backed by the broad-based, bipartisan Jobs-Housing Coalition appear to be a direct result of the Silicon Valley imbalance. (See CP&DR, April 2000.) The bills provide regulatory changes and financial incentives for local government to approve more housing near job centers. Other bills have been introduced that encourage transit-oriented development and require that regional housing plans contain one residence per 1.5 jobs. And Assembly Democrats have proposed a $1 billion housing package to help first-time homeowners and provide affordable rentals. However, most observers expect no systemic changes to the land-use planning process unless Gov. Davis makes the issue a priority, which he has not thus far. Local elected officials talk about transportation and they have convened regional transit meetings in recent months. They and Silicon Valley business leaders appear to have influenced Davis's recently released transportation plan, which favors the Silicon Valley over any other region of the state. But few local elected officials are willing to broach the topic of housing. Mostly they argue about regional projections for housing demand and say new houses should be built elsewhere. What's the answer? One solution would be for technology companies to spread outward to places like Salinas and Modesto. But companies show little interest in leaving Silicon Valley because that is where the talent pool and start-up companies are concentrated. Gary Patton, executive director of LandWatch Monterey County, which bills itself as a land-use watchdog, said housing subsidies and creative approaches by expanding companies are necessary. "The answer is, obviously, requiring a city to specifically tie approval of new jobs to construction of adequately priced housing in the jurisdiction that gets the new jobs," Patton said. University of California, Berkeley, City and Regional Planning Professor John Landis, who has studied the region extensively, offered an even simpler answer: Build many more housing units. "There's only one way to get out of this, and that's to build our way out of it," Landis said. "No amount of ‘good planning' or transit-oriented development is going to solve the problem. We just need more housing production, and that's a hard thing to say if you are an elected leader." Cities in northwest Santa Clara County are mostly built-out. Jurisdictions that have land available have little political will to allow large-scale housing development, Landis said. If Silicon Valley is going to house the workers, it probably means addressing the amount of land reserved as open space, Landis added. Contacts: Joseph Horwedel, San Jose planning department, (408) 277-4576. Anna Caballero, Salinas mayor, (831) 758-7201. Rob Mendiola, San Benito County Planning Department, (831) 637-5313. Kate McKenna, Association of Monterey Bay Area Governments, (831) 883-3750. Fred Keeley, Santa Cruz assemblyman, (916) 319-2027. Steve Langdon, Cisco Systems, (408) 525-1499. Carl Guardino, Silicon Valley Manufacturing Group, (408) 501-7864. John Landis, UC Berkeley, (510) 642-5918.

Should planning departments in California force developers to steer clear of fire-prone areas? Or should building departments force developers to fireproof their neighborhoods instead? Frankly, I'm a little tired of posing this question, because it comes up every time there's a big set of fires. But when you're looking at a couple of thousand houses lost and more than a billion dollars in property damage, it's a question you have to ask. The last time this question came along was four years ago – almost to the day – in the wake of the last enormous conflagration, in which more than 20 people died and 3,600 homes were destroyed. The answer at that time pretty clearly was in favor of fireproofing neighborhoods rather than avoiding fire-prone areas. Since then, there has been little evidence that policy is changing. But the California Department of Forestry & Fire Protection (CDF) has been thinking about it. And maybe it's worth a fresh look, if local governments are willing to think about it. As usual, perverse financial incentives built into the state system make city officials less likely to think about it. "Avoidance" is one of those good planning ideas. You simply draw a line around fire-prone areas and don't allow construction inside the line. Kind of like earthquake planning. Or classic McHargian environmental planning. But in an era when California is running out of places to put people and property rights advocates have the upper hand, avoidance is not always viewed as a viable option. To be fair, there's also some evidence that better fire mitigation at the neighborhood level is working. The turning point in the avoidance v. mitigation debate came during the last devastating fires four years ago, when the Stevenson Ranch subdivision near Santa Clarita in unincorporated Los Angeles County survived a nearby fire without much trouble. A front-page story in The New York Times documented how a wide variety of mitigation practices required by Los Angeles County building inspectors created a mostly fireproof subdivision. Most of the post-mortems focused on building codes, not planning. The emphasis was on mitigation, not avoidance. The City of San Diego, which bore much of the damage during the 2003 fires, finally outlawed wood roofs. This time around, attention again quickly turned to mitigation rather than avoidance. Even as the fires were still burning, the Los Angeles Times returned to Stevenson Ranch to confirm that it still had not burned down thanks to the effective creation of defensible space . As for the use of land use planning for avoidance, most everybody was fatalistic. Referring to the San Bernardino Mountains – again in flames this time around – San Bernardino County Supervisor Patti Aguiar told the Riverside Press-Enterprise in 2004: "A moratorium probably made sense a long time ago, if you didn't want anybody up there. But now, everybody's already up there. It's pretty darn late ." CDF, however, hasn't stopped thinking about avoidance as opposed to mitigation, and with good reason. As the state fire agency, CDF has primary responsibility for fighting wildfires — especially in rural areas, but also in semi-urban areas on the perimeter of the Southern California metropolis. CDF fights wildfires not by putting them out immediately, but by containing them and allowing them to burn out. Among other things, this appears to be a more environmentally sustainable approach, given what the experts call California's "fire-driven ecology." But when structures are present, CDF must by law focus on the structures, not on the wildlife. This often requires redeploying firefighters and other resources from containing a far-reaching wildfire to protecting a small geographical area with structures in it. In the past few months, both the state fire chief and the Legislative Analyst's Office (LAO) have tried to highlight the problems that subdivisions in fire-prone areas are creating. In a report issued last March , the LAO noted that CDF's budget had increased 83% during the last decade, from $475 million to $869 million. This fiscal year's budget for CDF tops $1 billion. The LAO attributed much of the increased cost to additional development in the wildland-urban interface, which state fire officials like to call the "WUI." In recent years, the LAO noted, the State Responsibility Area – the geographical area to which CDF must by law provide wildland fire protection – has remained stagnant at about 31 million acres. But just from 2000 to 2005, the number of houses in the State Responsibility Area increased by more than 10% – from around 780,000 to around 860,000 units. Then, at the beginning of the fire season in June, CDF Director Ruben Grijalva devoted his weekly message to an unusually detailed and insightful analysis of the wildland-urban firefighting problem. Grijalva zeroed in particularly on the development question, noting the trend of equity refugees moving away from urban areas and into wildland areas. He placed particular emphasis on the issue of watershed preservation in wildland areas, saying that low-density forest subdivisions can harm watersheds that all urban Californians depend on. In general, local jurisdictions – especially counties – have not paid much attention to these concerns. That's not surprising. As with so many other land use policy issues in California, it is at least partly a question of who bears the cost – the local governments or the state. Buried deep within the rules as to what constitutes a State Responsibility Area is a density rule. In unincorporated areas with timberlands, rangelands, or watersheds, counties bear financial responsibility for firefighting if subdivisions contain more than 3 units per acre. If a subdivision contains less than 3 units per acre, then the state has financial responsibility to pay for the firefighting. In other words, if counties are inclined to permit subdivisions in fire-prone areas to begin with – and most rural counties in California are so inclined – then they have a financial incentive to lower the density so fighting wildfires is CDF's problem. The LAO report from last spring suggested that the minimum density should be changed to remove this perverse incentive. If there's one bright spot in all this, it's Riverside County. Thanks partly to new state fire hazard maps, Riverside is taking fire risk seriously, and considering the possibility of creating a fire hazard zone similar to the 100-year floodplain that would not permit development . So not everybody has given up. And that is a good thing. Because surely if there is one thing that land use planning is well-suited for, it is mapping out hazards and helping to avoid them.

The state Supreme Court has modified its most recent California Environmental Quality Act ruling, but it rejected the losing side's request for a re-hearing. In Muzzy Ranch Co. v. Solano County Airport Land Use Commission , the court ruled than adoption of an airport land use compatibility plan qualified for a "common sense" exemption from CEQA review (see CP&DR Legal Digest, July 2007 , May 2007 ). In one portion of the opinion, the court applied the "substantial evidence test" to the issue of the exemption, even though the CEQA Guidelines and prior case law indicate that the "fair argument" standard applies to non-statutory exemptions. Under this standard, a project does not qualify for a non-statutory exemption if an argument can be made that the project might have a significant effect on the environment. In its modification, the court did not specifically name the fair argument test, but the court did remove all references to the substantial evidence test for non-statutory exemptions. The modification was filed September 12, 2007, and may be found at 2007 DJDAR 14225. A divided state Supreme Court has decided not to hear a closely watched case involving CEQA and housing elements. In an unpublished opinion issued in June, the First District Court of Appeal ruled that San Francisco should have conducted an environmental impact report for a housing element update adopted in 2004. The city argued that no environmental review was necessary because the 2004 update was not substantially different from the previous housing element adopted in 1990. But the First District accepted the argument from neighborhood groups concerned about overcrowding, traffic and impacts on business that the update required study. The state Supreme Court took extra time to consider San Francisco's request for review, but only Justices Joyce Kennard and Carlos Moreno voted to hear the case — two short of the four needed to grant review. Thus, the First District ruling stands in San Franciscans for Livable Neighborhoods v. City and County of San Francisco , No. A112987.

Local zoning trumps a valid easement, the Second District Court of Appeal has ruled. In a case from Los Angeles, the court determined that one property owner's easement on his neighbor's property was valid but unenforceable because it violated the zoning. The situation is this. John Blankenship owns a half-acre lot in Sunland, a quasi-rural area off the 210 Freeway in northwest Los Angeles. He also owns an easement, acquired by a previous landowner in 1994, on three-quarters of an acre of adjacent property. The easement permits the keeping and enjoyment of horses. The new owner of the neighboring property, Henri Baccouche, filed a lawsuit seeking to extinguish the easement on the corner of his 4-acre parcel. Both lots are zoned "residential estate." Baccouche argued that, under the city's zoning ordinance, the keeping of horses is permitted only in conjunction with a residential use. Because his property is vacant, Baccouche argued, the equine easement was invalid. Los Angeles County Superior Court Judge Elizabeth Grimes ruled for Blankenship. She found the easement valid and determined that, because Blankenship's property contains his house, the easement did not violate the city's zoning ordinance. Baccouche appealed, and a unanimous three-judge panel of the Second District, Division Four, overturned the lower court in part. The Second District agreed with the lower court that the easement is valid. However, the appellate court determined that enforcement of the easement was not permitted. Both sides and the court relied heavily on Teachers Ins. & Annuity Assn. v. Furlotti , (1999) 70 Cal.App.4th 1487. Also from Los Angeles, that case involved a commercial building's easement to use an alley shared with an apartment building. The boundary between the commercial zone and the residential zone ran down the middle of the alley, and the owner of the apartment building sought to prohibit commercial use of the residential portion of the alley, which would essentially make the alley impassible for trucks. Ruling for the apartment building owner, the court cited Municipal Code § 12.21.C.5(h): "No accessory building or use shall be located on a property in a more restrictive zone than that required for the main building or main use to which it is accessory." Thus, the use of the residential portion of the alley for commercial deliveries, loading and trash collection was not permissible. "Private agreements as to the use of property are immaterial to the validity of a particular zoning ordinance," the Teachers court concluded. In the case at hand, both properties have residential estate zoning, but that zoning does not permit the keeping of horses except as part of a residential use. "To the extent the easement purports to grant Blankenship the right to keep horses on the undeveloped Baccouche lot, it is unenforceable because it would allow a use not permitted by the zoning, as in Teachers ," the court ruled. The house on Blankenship's property does not overcome the restriction. "Section 12.03 expressly requires that the accessory use be on the same lot as the residence," the court ruled. The Case: Baccouche v. Blankenship , No. B192291, 07 C.D.O.S. 11006, 2007DJDAR 14188. Filed September 11, 2007. The Lawyers: For Baccouche: David Romley, (818) 951-9469. For Blankenship: Edward Russell, (949) 622-4333.

A settlement agreement between the City of Los Angeles and an Orthodox Jewish congregation that permits operation of a synagogue in a residential district has been invalidated by the Ninth U.S. Circuit Court of Appeals. The court ruled that the settlement agreement was essentially a conditional use permit that was granted without giving affected people — namely, the neighbors — notice and an opportunity to be heard. The lack of process violated the Los Angeles Municipal Code, which a settlement agreement may not do, the court concluded. Congregation Etz Chaim's synagogue has been litigated in federal and state court for a decade. In the mid-1990s, the congregation applied for a conditional use permit to use a house on Highland Avenue in Los Angeles's Hancock Park neighborhood for worship and services. After the city denied the application, the congregation filed a federal court lawsuit alleging a violation of civil rights, and filed a separate suit in state court. The Los Angeles County Superior Court and the Second District Court of Appeal upheld the city's denial. The congregation then returned to federal court. Citing the state court rulings, a District Court judge tossed out all of the congregation's claims except those concerning the Religious Land Use and Institutionalized Persons Act (RLUIPA), which Congress had only recently passed. In September 2001, the city and the congregation settled the lawsuit. The settlement agreement authorized the congregation to use the Highland Avenue property for worship, subject to a number of restrictions. This time, the neighbors sued, arguing that the settlement agreement violated their due process rights and local zoning ordinances. A District Court judge ruled for the congregation and the city. When neighbors appealed, the Ninth Circuit sent the case back to District Court for reconsideration in light of a state appellate court ruling in Trancas Property Owners Ass'n v. City of Malibu , 138 Ca.App.4th 172 (2005). In Trancas , the court invalidated a city's settlement agreement with a developer that approved the developer's tract maps (see CP&DR Legal Digest , November 2005). The court ruled that the city had contracted away its police power, which it may not do. The court also ruled that the agreement's exemption from density limitations amounted to a variance, which may not be granted without the city following prescribed administrative proceedings and adopting findings. The District Court found that the Congregation Etz Chaim case was different from Trancas and again ruled against the neighbors, who then went back to the Ninth Circuit. This time, the appellate court said the cases were indistinguishable. "The congregation sought, and the settlement agreement granted, permission to operate a synagogue on the Highland property. In an R1 zone, congregational worship is considered a ‘conditional use' under § 12.24, and requires a permit," Judge Barry Silverman wrote for the court. "Before allowing such a use, the city was required to comply with the ordinance's procedural formalities. Because the city did not satisfy those formalities when it entered into the settlement agreement, the agreement is invalid and unenforceable under state law." The district court found the cases were different because Trancas involved tract maps that apply to property, while the settlement agreement here was between the city and the congregation. Still, the Ninth Circuit said Los Angeles had improperly bargained away its police power "so long as the congregation is in existence." The Ninth Circuit rejected the argument that the city charter permits the city to circumvent zoning procedures to settle litigation. " Trancas clearly holds that such exemptions are illegal," Silverman wrote. The District Court also had upheld the settlement agreement because the city's rejection of the congregation's plan might have violated RLUIPA. That was not good enough for the Ninth Circuit. A federal court can uphold a settlement agreement authorizing a state or municipality to disregard its own laws only if the court finds "there has been or will be an actual violation of federal laws." But in the settlement agreement, the city specifically disclaimed any admission of liability under RLUIPA. The decision puts the congregation's record in the Ninth Circuit at 1-1. Three years ago, the court ruled that the city could not revoke a building permit that was based on the settlement agreement, even though the congregation did not process its building plans as required by the settlement ( Congregation Etz Chaim v. City of Los Angeles , 371 F.3d 1122 (2004) (see CP&DR Legal Digest , July 2004). The Case: The League of Residential Neighborhood Advocates v. City of Los Angeles , No. 06-56211, 07 C.D.O.S. 9816. Filed August 21, 2007. The Lawyers: For the league: Leslie Werlin, McGuire Woods, (310) 315-8200. For the city: Tayo Popoola, city attorney's office, (213) 978-8068. For Congregation Etz Chaim: Susan Azad, Latham & Watkins, (213) 485-1234.

A state law that permits landlords to go out of the rental business does not trump the California Environmental Quality Act, the Second District Court of Appeal has ruled. The court said that a Los Angeles County property owner cannot use the Ellis Act to avoid mitigation measures imposed on a plan to demolish apartment buildings and replace them with condominiums and new apartments. The ruling came in the long-running battle to preserve the Lincoln Place apartments in Los Angeles's Venice district (see CP&DR Places , February 2007) and appears to be a significant victory for the few remaining Lincoln Place tenants, as well as hundreds of tenants who were evicted or relocated in less-than-voluntary fashion. The court suggested that the property owner, Apartment Investment and Management Company (AIMCO), was playing a game to avoid the obligations that the city imposed while approving AIMCO's project at Lincoln Place. Those obligations are contained in the city's conditions of approval for AIMCO's vesting tentative tract (VTT) map. "We reject any argument that because AIMCO complied with the RSO's Ellis Act provisions and relocation benefits, it may go out of the rental business without reference to conditions 5b and 13 of the VTT. AIMCO specifically agreed to additional conditions in the VTT to mitigate the demolition of a very large apartment complex that has been part of the community for many years, the removal of more than 700 rent-controlled units from the marketplace, and the displacement of those tenants, in order to get permission to redevelop the land. It may not now act as if those events never occurred," Justice Laurie Zelon wrote for the court. The Lincoln Place project has an extremely long administrative, political and legal history. Lincoln Place was designed by noted architect Ralph Vaughn and built during the late 1940s and early 1950s. The 52 minimalist buildings spread across 38 acres contained 795 apartments and were connected by extensive walkways and landscaping. In 1991, Denver-based AIMCO and a local developer (who is no longer involved) proposed demolishing the buildings and replacing them with 654 market-rate condominiums, 52 moderate-income townhouses and 144 low-income apartments. The city refused to approve the project and ultimately a court found that the city's regulations were a violation of the Ellis Act ( Los Angeles Lincoln Place Investors, Ltd. v. City of Los Angeles , (1997) 54 Cal.App.4th 53 ( Lincoln Place I ); see CP&DR Legal Digest , May 1997). Partly because of Lincoln Place I , the Legislature amended the Ellis Act — a 1980s statute that ensures property owners may remove a property from the rental market — to make clear that local governments do have authority to regulate the demolition of rental properties. In 2002, the city certified an environmental impact report and approved a vesting tentative tract map. Soon thereafter, the city approved demolition permits. Tenants and historic preservation advocates sued, and a court in 2005 ruled that the city had violated CEQA by not enforcing mitigation measures before approving the demolition ( Lincoln Place Tenants Assn. v. City of Los Angeles , 130 Cal.App.4th 1491 ( Lincoln Place II ); see CP&DR Legal Digest , September 2005). Although Lincoln Place II stalled the demolition of Lincoln Place apartments, AIMCO was already well into an aggressive tenant removal program. Starting in 2004, the majority of the remaining 350 households renting apartments in Lincoln Place signed "voluntary relocation agreements." However, others refused to go, and AIMCO began serving tenants with eviction and "Ellis" notices in early 2005. In July of that year, AIMCO took nearly 100 tenants to court to force their removal. In December of 2005, AIMCO attempted to lockout the remaining tenants of 52 apartments, an incident that led to an ugly and well-publicized confrontation between tenants and sheriff's deputies. By the time the tenants association filed the present suit in June 2006, only 13 apartments remained occupied, although former tenants continue to be keenly involved in the controversy. The tenants association argued that AIMCO had not complied with two mitigation measures and a relocation plan approved as part of the subdivision map. The mitigations and relocation plan were intended to ensure that current tenants could relocate to a comparable or better unit within the new project, receive maximum relocation assistance under the city's rent stabilization ordinance, or accept one of the new affordable units with moving costs paid. Los Angeles County Superior Court Judge David Yaffe ruled against the tenants, but a three-judge panel of the Second Division, Division Seven, overturned the lower court. AIMCO argued that the mitigation measures conflicted with its Ellis Act rights and that the conditions did not apply because AIMCO never recorded the vesting tentative tract map. The court dismissed those contentions without addressing whether AIMCO — which owns more apartments than any other entity in the country — is truly going out of the rental business at Lincoln Place. The court found that the mitigation measures are within the Ellis Act's exceptions for local land use controls, that AIMCO agreed to the mitigations during the administrative process, and that AIMCO could not pretend evictions were not part of the overall project. "Throughout the approval process, tenants were told they could choose to remain on site; this promise is memorialized in conditions 5b and 13. Eviction is inconsistent with these provisions," Justice Zelon wrote. "Furthermore, prior to commencing the evictions, AIMCO did not advise the city or the tenants that it intended to abandon the project; on the contrary, as its arguments concede, the evictions are a prelude to proceeding with the project." " he mitigation conditions and other conditions in the VTT constitute enforceable covenants under CEQA, to be fulfilled before the final map may be recorded," Zelon wrote. "AIMCO cannot attempt to defeat the conditions it imposed upon itself in order to obtain approval of the VTT by ignoring such conditions or attempting to render them meaningless by moving ahead with the project in spite of them. Such conduct amounts to ‘piecemealing,' a practice CEQA forbids." In early October, the Los Angeles City Council voted not to appeal the ruling to the state Supreme Court. AIMCO could still file an appeal. In the meantime, the California Building Industry Association has asked the state high court to depublish the decision so that it may not be cited as precedent. The Case: Lincoln Place Tenants Association v. City of Los Angeles , No. B193235, 07 C.D.O.S. 11365, 2007 DJDAR 14722. Filed September 19, 2007. Modified October 10, 2007 at 2007 DJDAR 15586. The Lawyers: For the tenants association: John Murdock, (310) 450-1859. For the city: Gerald Sato, city attorney's office, (213) For AIMCO: Mark Schaeffer, Nemecek & Cole, (818) 788-9500.

A San Diego merchant who has become one of the state's leading fighters against eminent domain has not only lost his appeal of a trial court decision upholding the taking of his shop, but he has also lost a $9 million award of compensation and attorneys' fees. The Fourth District Court of Appeal ruled that Ahmad Mesdaq could no longer challenge the taking itself because he had withdrawn money that the San Diego Redevelopment Agency deposited into an account to compensate him. The unanimous three-judge appellate panel also determined that San Diego County Superior Court Judge John Meyer made numerous mistakes during the valuation phases of the litigation. The Fourth District sent the case back to the lower court for a new trial on how much the redevelopment agency owes Mesdaq. In mid-October, Mesdaq asked the state Supreme Court to review the case. In the meantime, a settlement that Mesdaq reached earlier this year with the developer who has since acquired the site of his former cigar shop appears to be in doubt. The story is one that, not surprisingly, has served as the basis for a documentary film. In 1983, Mesdaq received political asylum in the United States after the Soviets destroyed his home in Afghanistan. He attended college in San Diego and later owned several restaurants in the city's rebounding Gaslamp Quarter. In 2001, he acquired a building at Fifth Avenue and J Street for $1.3 million, and then went about overhauling the structure. In 2003, he opened Gran Havana, a cigar lounge and coffee shop that soon counted Gov. Arnold Schwarzenegger as one of its customers. But the city's downtown redevelopment arm (Centre City Development Corp.) and developer GRH, LLC, had other ideas for the prime location close to the San Diego Padres new baseball stadium and the convention center. GRH acquired 35,000 square feet of land but still needed Mesdaq's 5,000-square-foot parcel to make room for a proposed 12-story, high-end hotel. GRH made offers to Mesdaq, but he declined them. So, in April 2004, the San Diego Redevelopment Agency filed a complaint in eminent domain to acquire Mesdaq's property. The agency sought a "quick take," so it also deposited $3.1 million as probable compensation and asked for immediate possession. Mesdaq held on for a while but ultimately closed Gran Havana in 2005, and the redevelopment agency took possession of the property. Three separate trials were conducted: a bench trial to determine whether the taking was for a public use, a second bench trial regarding Mesdaq's request for pre-condemnation damages, and a jury trial to determine just compensation. Judge Meyer ruled that the taking was legitimate, but that a cleanup order the redevelopment agency had issued was unreasonable and the jury could consider granting damages for it. Later, a jury awarded Mesdaq $7.8 million — $4.2 million as fair market value for the property, $3.4 million for lost goodwill, $96,000 for lost furniture and equipment, and $78,000 for pre-condemnation damages. Meyer also awarded Mesdaq $1.2 million in attorneys' fees and costs. Both sides appealed. Mesdaq challenged the trial court ruling that the agency had the legal authority to take his property, while the agency challenged the awards. The Fourth District did not reach the merits of Mesdaq's appeal. The court noted that in August 2005, seven months after the court ruled the redevelopment agency could take the property, Mesdaq's lender, First National Bank, filed an application to withdraw nearly $1.2 million from the $3.1 million the agency had put on deposit. Mesdaq did not object and First National removed the funds to pay off the merchant's outstanding mortgage plus interest. The withdrawal of funds ended Mesdaq's ability to challenge the taking under Code of Civil Procedure § 1255.260, according to the Fourth District. The court cited the state Supreme Court's recent decision in Mt. San Jacinto Community College Dist. v. Superior Court , (2007) 40 Cal.4th 648, 666: "‘An owner cannot have it both ways. It is reasonable to require the owner to choose one or the other: either to deny the condemner's right to take the property and litigate, or to take the deposit.'" Mesdaq argued that he could continue to challenge the taking because he did not receive the funds, the bank did. But the court found no legal distinction. "The money withdrawn was used to satisfy Mesdaq's indebtedness ," Justice Joan Irion wrote for the court. "Further, the payment of Mesdaq's indebtedness with the deposit funds was accomplished with Mesdaq's explicit consent." On the redevelopment agency's appeal, the Fourth District reversed the lower court on the setting of the date of valuation, the determination of lost goodwill, legal fees and pre-condemnation damages. Again, the court leaned heavily on Mt. San Jacinto , which upheld the constitutionality of the state's "quick-take" procedure (see CP&DR Legal Digest , Aril 2007). In a standard eminent domain proceeding, the property may be valued either at the time the proceeding commences or at the start of the trial. But in a quick-take, "the land is to be valued as of the date of the deposit of estimated value which permits an order for early possession," Irion explained, citing Code of Civil Procedure § 1263.110. Judge Meyer implicitly found the $3.1 million deposit was adequate, but immediately prior to trial determined that the date of the trial would be the date of valuation. He reasoned that just compensation required the jury to consider the Gaslamp Quarter's rising property values. That was an error, the Fourth District ruled. Irion again cited Mt. San Jacinto : "‘In a quick-take proceeding, the constitutional requirement that an owner receive "just compensation" does not support a court's decision to disregard the statutory mandate because, under the constitution itself, "just compensation" is made available to the owner at the time of the deposit.'" Because Meyer insisted on the wrong date of valuation, the jury's award of $4.2 million must be set aside, the court ruled. To determine compensation for lost goodwill, Meyer permitted the jury to consider testimony from Mesdaq's expert regarding potential revenues from a restaurant on the site. However, Mesdaq did not have a restaurant or a liquor license. " he goodwill statute does not contemplate compensation for hypothetical or potential as opposed to actual goodwill lost," the court ruled in throwing out the jury's award of $3.4 million. Because the decision on attorneys' fees was based on awards that the court overturned, the trial judge ruling's on fees also was set aside. As to pre-condemnation damages, Meyer had ruled the agency's issuance of a "Polanco notice," two months before it filed the eminent domain action was unreasonable and Mesdaq was eligible for damages. A Polanco notice informs a property owner in a redevelopment project area that the agency suspects the property is emitting hazardous substances, and the notice gives the owner 60 days to respond with a remedial action plan. The trial court determined the agency issued this notice as a negotiating tactic to lower the value of the property and, therefore, Mesdaq was eligible for pre-condemnation damages. But the Fourth District said that a property owner is eligible for pre-condemnation damages only if the government's unreasonable action actually reduces the property value. "Here," Irion wrote, "there is no evidence that the agency's unsuccessful use of the notice as a negotiation tool diminished the fair market value of Mesdaq's property." What happens next with Mesdaq — and the site — is unclear. Although the redevelopment agency cleared the site two years ago and sold it to GRH, it remains a parking lot. The developer's original deadline to commence construction on the planned 334-room hotel was the first of this year. GRH reportedly offered, and Mesdaq accepted, $7.8 million to end all litigation earlier this year. However, the redevelopment agency has not approved the settlement, which may be further threatened by Mesdaq's appeal to the state Supreme Court. Mesdaq has continued to fight against the use of eminent domain for economic development purposes. He has appeared at numerous legislative hearings and is likely to be a player in the 2008 campaigns regarding eminent domain reform. The Case: Redevelopment Agency of the City of San Diego v. Mesdaq , No. D047927, 07 C.D.O.S. 10582. Filed August 31, 2007. The Lawyers: For San Diego: Bruce Beach, Best, Best & Krieger, (619) 525-1300. For Mesdaq: Vincent Bartolotta Jr., Thorsnes, Bartolotta & McGuire, (619) 236-9363.

The Ninth U.S. Circuit Court of Appeals has dismissed a mobile home park owner's attempt to invalidate San Luis Obispo County's mobile home rent control ordinance. The court ruled that Manufactured Home Communities' facial challenge of the ordinance was filed too late, the company's arguments over how the county applied the ordinance were not ready for judicial review, and the company's due process and equal protection claims were without merit. The court also declined to review the county's administrative process for considering the property owners' rent increase, because a state court has upheld the process. Manufactured Home Communities (MHC) has fought mobile home rent control ordinances in a number of cities. Now known as Equity Lifestyle Properties, the Chicago-based company owns more than 300 mobile home parks and recreational vehicle resorts in 30 states. It acquired Sea Oaks Manufactured Home Community in Los Osos in 1997 — 13 years after county voters approved a mobile home rent control initiative. The initiative capped annual rent increases at 60% of CPI and established the county Mobilehome Rent Review Board. In March 2002, MHC notified tenants in 9 of the 126 spaces that their rents would increase by an average of 185%. MHC said that the tenants had signed a standard-form 12-month rental agreement, and any lease or contract other than month-to-month was exempt from the rent control ordinance. The rent review board conducted three hearings and ultimately concluded that the agreements were month-to-month contracts no different than previous contracts that prior and current park managers had considered subject to the ordinance. On appeal, the Board of Supervisors upheld the rent review board's decision. In January 2003, MHC sued the county in federal court, arguing that its property had been taken without compensation and that the county had violated its constitutional rights to due process and equal protection. In a two-sentence order, District Court Judge Terry Hatter dismissed all of MHC's claims. MHC filed a similar suit in state court, and a San Luis Obispo County Superior Court judge also ruled against the company. An appeal of that decision is pending. The Ninth Circuit opinion written by Judge Diarmuid O'Scannlain methodically makes its way through MHC's claims. The property owner's takings claims took two forms: a facial challenge of the ordinance itself, and an "as applied" challenge. The court declined to consider the facial challenge because it was filed after the statute of limitations ended. MHC, which acquired Sea Oaks 13 years after the rent control ordinance was approved, argued Palazzolo v. Rhode Island , 533 U.S. 606 (see CP&DR Legal Digest , August 2001), eliminated the statute of limitations for facial challenges. The unanimous three-judge Ninth Circuit panel disagreed. "We read Palazzolo to require equitable tolling to protect subsequent landowners who do not receive notice of a regulatory taking or who lack standing to object to such taking prior to expiration of the limitations period," O'Scannlain wrote. "For such subsequent landowners, the limitations period must begin at the time of their acquisition of property, not at the time the original taking occurred. Thus, under Palazzolo , MHC had one year to file its facial takings claim after it acquired the property in 1997. Because MHC filed its claim in 2003, it exceeded the statute of limitations by five years." On the as-applied challenge, the court determined MHC's claim was not ripe for judicial review. To pursue such a claim, a landowner must attempt to obtain compensation through the state's procedure. In California, a landlord may seek a " Kavanau adjustment," under which future rents increase to compensate for previous confiscatory rents (see CP&DR Legal Digest , February 2004). MHC never sought a Kavanau adjustment. "Unless a complainant has sought relief through a Kavanau adjustment, he cannot file a federal complaint objecting to an uncompensated taking by the state," O'Scannlain wrote. The court dismissed MHC's arguments about why the Kavanau process would be futile and could not provide adequate compensation. MHC argued that its due process rights were violated because the county's application of the rent control ordinance violated substantive due process. MHC contended the ordinance transferred the value of MHC's property to a select group of tenants, and this transfer of value is not a legitimate state purpose. This argument was a nonstarter with the Ninth Circuit. "The Supreme Court and this court have upheld rent control laws as rationally related to a legitimate public purpose ," O'Scannlain wrote. MHC also got nowhere with its argument that the rent control ordinance unlawfully discriminated against mobile home park owners, thereby violating their right to equal protection. The court ruled the county could legitimately single out mobile home park owners because of the shortage of spaces and the impracticality of moving a mobile home. As for the county's administrative process, the court declined to consider the matter because the Superior Court had already issued a decision. The Case: Equity Lifestyle Properties, Inc. v. County of San Luis Obispo , No. 05-55406, 07 C.D.O.S. 11119. Filed September 17, 2007. The Lawyers; For Equity Lifestyle Properties (MHC): David J. Bradford, Jenner & Block, (312) 923-2975. For the county: Henry Heater, Endeman, Lincoln, Turek & Heater, (619) 544-0123.