The requirement that two Antioch property owners dedicate land for a new highway bypass when they develop their property is constitutional, the First District Court of Appeal has ruled. The ruling overturned a trial court judge who found that the dedication requirement violated the Dolan "rough proportionality" test because the two property owners were treated differently than property owners whose land was not along the bypass alignment. The trial court also determined the dedication requirement violated the equal protection clause because the two property owners were not treated the same. "In our view, the court misconstrued Dolan and judged the legality of the dedication requirement using a benchmark — equality of burden among all property owners benefiting from the bypass project — that is not required by Dolan , and not otherwise mandated by state or federal law," Justice Sandra Margulies wrote for the unanimous three-judge panel of the First District, Division One. The decision came not in a case directly challenging an exaction or regulation, but in an eminent domain valuation case. Composed of Contra Costa County and the cities of Antioch and Brentwood, the State Route 4 Bypass Authority is an 18-year-old joint powers authority whose mission is to build a new freeway in Eastern Contra Costa County. The authority long ago adopted a policy requiring its member agencies, when granting development approvals to property owners along the chosen freeway alignment, to require dedication of a 110-foot-wide right-of-way. More recently, the authority began eminent domain proceedings to acquire a 250-foot-wide strip across lands owned separately by Toshiko Morimoto and Ronald Nunn. The authority sought a total of 16.9 acres from Morimoto, and 3.3 acres from Nunn. The authority contended that the value of the 110-foot-wide strips that would have to be dedicated in the future should be based on existing agricultural uses. Thus, 4.7 acres of the Morimoto property would be valued as farmland, while the remaining property would be valued based on its highest and best use as commercial and residential development. Similarly, 1.5 acres of the Nunn property would be valued as agricultural land, with the rest valued based on its potential for commercial and residential development. This approach is permitted under City of Porterville v. Young , (1987) 195 Cal. App.3d 1260, according to bypass authority. The landowners did not agree with this approach, and, ultimately, neither did Contra Costa County Superior Court Judge Joyce Cram, who ruled that the dedication requirement ran afoul of Dolan and the equal protection clause. In Dolan v. City of Tigard , (1994) 512 U.S. 374, the U.S. Supreme Court built on its landmark Nollan decision. In Nollan , the Supreme Court ruled that there must be an "essential nexus" between an exaction and a project's impact. In Dolan , the court ruled that there must also be a "rough proportionality" between the exaction and the project's impact. The First District ruled that Judge Cram misread Dolan because she concluded that Dolan prohibited the authority from placing a greater financial burden on property owners' based on the location of their property. The appellate court ruled that Dolan does not require consideration of other property owners. " he takings clause, as construed in Dolan and other cases, only protects a property owner from being assessed for more than the full spillover costs of developing his or her property; it does not compel public agencies to pick the most equitable possible method of distributing such costs," Justice Margulies wrote. "The trial court's formulation of the Dolan test would also lead to a multitude of practical problems," Margulies continued. "Trying to establish that a developer challenging a dedication condition is not being asked to shoulder a greater financial burden than any other similarly situated developer would not be easy, and would likely become a fruitful source of litigation." Moreover, there was no evidence that Morimoto and Nunn were being disparately burdened, the court concluded, noting that impact fee and road dedication policies would apply to any developer in the area, and that property owners along the future freeway would gain additional economic benefits. "Although the trial court and take the position that it would be fairer and more rational to do away with the dedication requirement and raise fee levels for all developers, the equal protection clause is not a rule of thumb for determining the relative fairness and wisdom of public policy choices," the court ruled. "It is a safeguard against wholly irrational policies that do not advance a legitimate state interest or that single out an unpopular group for discriminatory treatment." The trial court had also ruled that the dedication requirement violated the equal protection clause because the Nunn property was expected to generate up to three times as much traffic as the Morimoto property, yet the authority sought one-third as much land from Nunn. However, the First District again said evidence was lacking "to draw any conclusions about the relative burdens placed on property owners to mitigate area-wide transportation problems." The First District sent the case back to the trial court for further proceedings based on the authority's use of the Porterville approach to valuation. The Case: State Route 4 Bypass Authority v. Superior Court , No. A116834, 07 C.D.O.S. 9398, 2007 DJDAR 12099. Filed August 8, 2007. The Lawyers: For the authority: John Makin, Greenan, Peffer, Sallander & Lally, (925) 866-1000. For the property owners: Matthew Gray, Bingham McCutchen, (925) 937-8000.

A billboard company may not bring a California Environmental Quality Act lawsuit over the City of West Hollywood's amended sign ordinance, the Second District Court of Appeal has ruled. The Second District upheld a trial court judge, who had determined that Regency Outdoor Advertising was attempting to use CEQA to pursue its commercial interests against competitors. In 1998, West Hollywood amended its zoning ordinance to permit tall wall signs — illuminated outdoor advertising of at least 5,000 square feet — along Sunset Boulevard to break up the visual monotony of blank walls. The signs were to be allowed where windows were less than 15% of the image area. Two years later, the city permitted Regency to place a tall wall sign on a building at 9229 Sunset Boulevard. In 2001, however, the city amended its ordinance again. This time the ordinance permitted tall wall signs only if windows covered less than 15% of the wall, not merely the image area. The amendment compelled Regency to remove its sign because windows covered about 25% of the wall. In 2004, the city proposed reverting to the earlier language regarding "image area," which apparently would permit a new sign on the building at 9229 Sunset. But by that time, Elevation Media and Sunset Sierra Properties had gained the right to place the sign on the building. Regency said the restored language needed review under CEQA. Instead, the city invoked CEQA's "common sense" exemption and adopted the amendment without environmental review, prompting Regency's lawsuit. Los Angeles County Superior Court Judge David Jaffee tossed out the case based on the precedent set in Waste Management of Alameda County v. County of Alameda , (2000) 79 Cal.App.4th 1223. The Waste Management case was filed by the operator of a landfill (Waste Management) whose proposed acceptance of a particular type of waste was subjected to environmental review by a regional water quality control board. When a competing landfill located only four miles away but within a different water board's jurisdiction was allowed to accept similar waste without undergoing environmental review, Waste Management sued. But the court dismissed the case, concluding the company could not use CEQA simply to advance its commercial and competitive interests (see CP&DR Legal Digest , May 2000). On appeal, Regency argued that Waste Management did not apply. Regency contended it was suing over an ordinance of general application while Waste Management involved a single permit. Regency cited Dunn-Edwards Corp. v. South Coast Air Quality Management Dist ., (1993) 19 Cal.App.4th 519, for support. But the Second District said Dunn-Edwards focused on regulator's response to claims about environmental effects of regulations, and not on standing (a party's ability to bring a lawsuit). "A case is not authority for a proposition it does not address," Justice Laurence Rubin wrote. Regency argued that while the landfills involved in Waste Management were in two different water boards' jurisdictions, Regency has its main office and billboards in West Hollywood. Therefore, the company has an interest over and above the general public's. The court agreed the ordinance affects Regency more than it does the general public. "But the amendment does not have environmental effects on Regency that are greater than the effects it has on other businesses and property owners in the city," Rubin wrote. Regency argued that instead of relying on Waste Management , the court should look to Burrtec Waste Industries, Inc., v. City of Colton , (2002) 97 Cal.App.4th 1133. In Burrtec , the court allowed a company to pursue a CEQA lawsuit concerning a competitor's permit application because it involved the city's failure to follow public notice requirements. The fact that Burrtec Waste Industries could gain an economic advantage did not disqualify the company's suit (see CP&DR Legal Digest , July 2002). The Second District was unconvinced: "Regency does not allege it lacked notice of the city's proceedings to amend the ordinance. Instead, Regency simply disagrees with the outcome of those proceedings in which it participated." Regency further argued that it had "citizen standing" under CEQA and, for support, cited four other lawsuits it has pending regarding competing billboard companies' compliance with CEQA. That argument played badly at the trial court, where Jaffee concluded it was further evidence of Regency's use of CEQA for economic purposes. "To dispel the aura of self-interest masquerading as environmentalism, some evidence is likely to exist of a party's engagement in environmental issues where it had nothing to gain financially," Justice Rubin wrote. "The trial court found Regency's gaggle of lawsuits was not such evidence." The Case: Regency Outdoor Advertising, Inc. v. City of West Hollywood , No. B18611, 07 C.D.O.S. 8870, 2007 DJDAR 11348. Filed July 25, 2007. The Lawyers: For Regency: Michael Tidus, Jackson, Demarco, Tidus & Peckenpaugh, (949) 752-8585. For the city: Michael Jenkins, Jenkins & Hogin, (310) 643-8448. For Elevation Media and Sunset Sierra Properties: Gary Mobley, (949) 955-1010.

A new environmental impact report is not required for a drastically modified high-rise project proposed in downtown Los Angeles, because there is substantial evidence that a 2005 addendum to a 1989 EIR was sufficient, the Second District Court of Appeal has ruled. In its decision, the court makes two things perfectly clear: The "fair argument" test does not apply when the question concerns the need for a supplemental EIR, and the Third District Court of Appeal got a similar case wrong. The decision came in a lawsuit over a long-planned project on 6.3 acres of parking lots next to the Harbor Freeway, near Staples Center. In 1990, nine years before Staples Center opened, the city approved a 2.7-million-square-foot development of three 30-story towers, a 36-story tower and a 7-story structure. Primarily office space, the project also was to have a hotel, some retail facilities and possibly a cultural center. The EIR, certified in 1989, concluded the project would result in unavoidable, significant impacts to traffic, air quality, water, sewer capacity, solid waste, and police and fire services. Project approval was followed by litigation, a weak office market, numerous tweaks to the project — but no actual construction. Finally, in 2004, the developer proposed changing the project primarily to residential. In late 2005, after IDS Equities acquired the project, the city approved the 3.2-million-square-foot L.A. Metropolis project of four towers ranging from 350 to 620 feet in height. The towers would contain up to 836 residential units, a hotel of 480 rooms, 1 million square feet of office space and a small amount of ground-floor retail in all the buildings. The city also certified a 390-page addendum to the original 1989 EIR and a 2000 addendum. The 2005 addendum found that most of the earlier unavoidable impacts would be solved by the switch to a primarily residential project. Only air quality and construction noise were identified as significant unavoidable impacts. In January 2006, Mani Brothers Real Estate Group, an office real estate investment company, filed suit arguing that the EIR addendum was inadequate for the revised project and that a supplemental EIR was required. Los Angeles County Superior Court Judge David Yaffe ruled that the 2005 environmental document was adequate except for its analysis of impacts to police services. He ordered the city to prepare an "SEIR that deals with the necessity for increased police services required by the new, predominately residential project." Both sides appealed, and a unanimous three-judge panel of the Second District Court of Appeal, Division Two, upheld the lower court. Mani Brothers relied heavily on Save Our Neighborhood v. Lishman , (2006) Cal.App.4th, 1288. In that case, the Third District Court of Appeal rejected the City of Placerville's use of an addendum to a negative declaration for a revised project. The court said the approach was not legal because the revised project was really a "new project" that was unrelated to earlier versions, except for the fact that they were proposed for the same site (see CP&DR Legal Digest , September 2006). By law, the court ruled, the new project required a fresh environmental review. In the case at hand, the Second District called the analysis in Save Our Neighborhood "flawed" and not appropriately deferential to the governing body. What matters, the Second District said, is not the project details, but the environmental impacts. "Labeling a project a ‘new' project, as distinguished from a ‘modified' project, and finding such a label determinative, as the court did in Save Our Neighborhood, imposes a new analytical factor beyond the framework of CEQA," Presiding Justice Roger Boren wrote for the court. "Particularly here where there is a previously certified EIR, changes in the size, ownership, nature, character, etc. of a project are of no consequence in and of themselves. Such factors are meaningful only to the extent they affect the environmental impacts of a project." What matters, according to the court, is that there was substantial evidence supporting the city's decision to use an addendum. The lower-threshold "fair argument" test does not apply. In an instance such as this one, where the question concerns subsequent environmental review, the court views the record "‘in a light most favorable to the city's decision in order to determine whether substantial evidence supports the decision not to require additional review,'" Boland wrote, citing Friends of Davis v. City of Davis , (2000) 83 Cal.App.4th 1004 (see CP&DR Legal Digest , October 2000) While most of the addendum passed the substantial evidence test, the analysis of impacts on police services failed. The mitigation measures in the 2005 addendum — private security guards, electronic surveillance equipment, card-key entry systems — were no different than mitigations identified in 1989, when the impact on police services was deemed unavoidable and significant, the court noted. " he 2005 addendum fails to explain how the mitigation measures, found unable to mitigate the original project's impacts in the 1989 EIR, are now magically able to mitigate the impacts of the larger and mostly residential modified project," Boren wrote. An SEIR to evaluate the impacts on police services is required, the court concluded. The Case: Mani Brothers Real Estate Group v. City of Los Angeles , No. B194309, 07 C.D.O.S. 9317, 2007 DJDAR 11908. Filed August 2, 2007. The Lawyers: For Mani Brothers: Thomas Winfield, Brown, Winfield & Canzoneri, (213) 687-2100. For the city: Siegmund Shyu, city attorney's office, (213) 978-8191. For IDS Equities: Amy Nefouse, DLA Piper, (619) 699-2693.

In a decision deferential to city officials, an appellate court has upheld the City of Vacaville's approval of an 860-acre project as compatible with the general plan. The decision also provides the first published ruling on the recently amended state density bonus law, which the court applies very broadly. The First District Court of Appeal rejected slow-growth advocates' argument that the subdivision map was inconsistent with Vacaville's general plan, and that the city and developer abused the density bonus law to squeeze more units into the project. The court's ruling on the density bonus issue has spurred a great deal of discussion. The court ruled that the city could provide a density bonus greater than prescribed in state law, and that the bonus need not be based on any particular local policy. Plus, the court ruled, a developer must designate only 35 units for senior citizens to be eligible for a density bonus of at least 20% for the entire project, no matter how large the project. "This is an enormous gift to the development community," said Stuart Flashman, the attorney for project opponents. "Some of the holdings about the density bonus law are really surprising," added Barbara Kautz, a municipal law attorney with Goldfarb & Lipman who was not involved in the case. The court goes out of its way to say that the provision of 35 non-income-restricted units for seniors is all that is needed for the 20% density bonus, she said. The court even uses the hypothetical example of a 2,000-unit project that would be eligible for 400 extra units if the developer provides a mere 35 age-restricted units. (The density bonus law permits bonuses for senior citizen housing developments, which are defined in the Civil Code as projects of 35 units or more.) It is doubtful the court's interpretation is what housing advocates have in mind, Kautz said. On the issue of general plan compatibility, the court cites the Governor's Office of Planning and Research General Plan Guidelines and the landmark general plan case Corona-Norco Unified School District v. City of Corona , (1993) 17 Cal.App.4th 985. "An action, program, or project is consistent with the general plan if, considering all its aspects, it will further the objectives and policies of the general plan and not obstruct their attainment," the court ruled. "State law does not require perfect conformity between a proposed project and the applicable general plan; ‘rather, to be "consistent," the subdivision map must be "compatible with the objectives, policies, general land uses, and programs specified in" the applicable plan,'" the court held, citing Sequoyah Hills Homeowners Assn. v. City of Oakland , (1993) 23 Cal.App.4th 704, 717. Flashman contended the decision is actually a blow to general plan integrity. "Unfortunately, there is a line of cases where courts of appeal are more and more deferential to the city. This one is about as far as you can go," Flashman contended. "The city can say it means whatever the city says it means. It's another piece of bad news for the average citizen." Vacaville Deputy City Attorney Melinda Stewart rejected that characterization. "I wouldn't say it gives us unfettered authority. The city still has to act within the goals of the general plan," she said. All general plans are written differently, and Vacaville's plan allows for a great deal of flexibility on some matters, which is what the court recognized, Stewart said. After adopting an updated general plan in 1990, Vacaville followed up with the Lower Lagoon Valley Policy Plan for a lightly developed area between the city and nearby Fairfield. The policy plan called for development of a regional business park and upper-end housing of up to 730 units, as well as a golf course, regional park and open space. Nothing much happened until the city in June 2004 approved a specific plan and general plan amendment for Triad Communities of Seattle to permit 1,325 housing units, up to 1 million square feet of commercial and office space, and 50,000 square feet of retail space. The project was not popular. Greenbelt Alliance sued over the project's environmental review, and other opponents gathered enough signatures to force a referendum election on the specific plan and general plan amendment. Triad then revised its plan and settled with Greenbelt Alliance. The new project called for 1,024 housing units, 700,000 square feet of office space, and 50,000 square feet of retail development. Although the project would exceed the policy plan's limitation on housing by about 300 units, the city found the project compatible because it would decrease potential office development and eliminate the possibility of big-box retail. The City Council approved the project and an addendum to the original environmental impact report in February 2005. The group Friends of Lagoon Valley then sued over general plan consistency and application of the density bonus law. Solano County Superior Court Judge Donald Fretz ruled for the city and ordered Friends to pay Triad $12,000 to offset the cost of preparing the administrative record. On appeal, the First District upheld the ruling in its entirety. Friends argued that the project was incompatible because it would increase traffic congestion beyond general plan thresholds, reduce the size of the policy plan's envisioned business park, and provide more housing than the plan allowed. The court, however, ruled that Friends was reading the general plan's traffic congestion policies too strictly. The policies provide exceptions for projects such as this one, the court found. Plus the city required payment of impact fees for specific mitigation measures, and the City and Caltrans are working on a cooperative study of clogged freeway ramps, the court determined. As for office development, the court conceded that the project's 700,000 square feet of office space is far less than the policy plan's 4 million square feet for offices and a hospital. But, Presiding Justice William McGuiness wrote, "This difference in square footage, while significant, does not in itself violate the city's plans." Regarding the additional housing units, the court ruled that Friends' "argument construes the policies expressed in the plans too rigidly and ignores the flexibility city officials have in implementing them." Citing Napa Citizens for Honest Government v. Napa County Bd. of Supervisors , (2001) 91 Cal.App.4th 342, 378, McGuiness wrote, "The question is not whether the square footage of the proposed development matches the square footage envisioned for various uses in planning documents, ‘but whether the project is compatible with, and does not frustrate, the general plan's goals and policies.'" "Substantial evidence supports the city's conclusion that the residential development proposed in the project is compatible with general plan goals and policies," the court ruled. On the density bonus law (Government Code § 65915), the court provided the first published interpretation of 2004 legislative amendments that established a sliding scale for mandatory density bonuses of 20% to 35% depending on the amount and type of housing a developer provides (see CP&DR , September 2004 ). Lagoon Valley project opponents argued that the 40.5% bonus Vacaville granted to Triad was beyond the statutorily allowed 35%, especially because the city has no ordinance permitting a greater bonus. The court disagreed. " t is clear that 35% represents the maximum amount of bonus a city is required to provide , not the minimum amount a developer can ever obtain," Boren wrote. In addition, he wrote, "Nothing in the density bonus law suggests that a municipality must enact an ordinance any time it wishes to provide more of a density bonus than is required by state law." This part of the decision is particularly troubling to some planners because it means a city or county essentially may use ad-hoc density bonuses to supersede zoning. But Stewart, the city's attorney, said the ruling simply lets cities decide on projects case-by-case. "It does give the city the authority and some flexibility in application of the density bonus statute," she said. Vacaville granted the 40.5% bonus to what would have been a 730-unit project because Triad agreed to provide 100 age-restricted townhouses, 75 units of moderate-income housing, and amenities including parks and a fire station. Opponents argued the senior housing density bonus applies only to the age-restricted portion of the development. Again the court disagreed. "Nothing in § 65915 states or suggests that the density bonus for senior citizen housing could not be applied to the development project as a whole," Boren wrote. "We recognize that, under our interpretation," Boren continued, "the senior housing provision of § 65915 has the potential to create a windfall for developers in some circumstances." Attorney Flashman said an appeal to the state Supreme Court is possible. Leaders of the California Chapter of the American Planning Association are talking about asking state lawmakers to clarify their intent on the density bonus provisions. Meanwhile, the project cannot proceed yet because — under Triad's settlement with Greenbelt Alliance — the developer must circulate an initiative to delineate an urban planning area. If the City Council declines to adopt the initiative, or if voters reject it, then Triad would be on the hook for huge open space mitigation fees before it could build. The Case: Friends of Lagoon Valley v. City of Vacaville , No. A113236, 07 C.D.O.S. 10460, 2007 DJDAR 13253. Filed August 28, 2007. The Lawyers: For Friends: Stuart Flashman, (510) 652-5373. For the city: Melinda C.H. Stuart, city attorney's office, (707) 449-5105. For Triad Communities: Clark Morrison, Cox, Castle & Nicholson, (415) 392-4200.

What a difference a year can make. During the final days of the 2006 legislative session, a package of bills intended to force better coordination between flood control and land use planning in the Central Valley and Bay Delta region died amid a deluge of acrimony. This year, however, state lawmakers approved six bills similar to measures that failed last year. What changed? Certainly the wording and policies of the bills were at least a little different this year. But maybe more important was the careful, behind-the-scenes work of legislative staff members, lobbyists and a few lawmakers. The result is a collection of bills that, for the most part, has the support of local government, planners, developers, environmentalists and flood control experts. "It's a huge deal," said Sande George, lobbyist for the California Chapter of the American Planning Association. The flood bills appear to be the most important land use measures approved by the Legislature, which concluded its regular session in mid-September. (The governor has since called for a special session on health care and water.) Unlike recent years, lawmakers approved few significant housing bills in 2007, although they did approve one controversial bill that could at the very least make housing element compliance more difficult for some cities. A bill that focused on regional planning and greenhouse gas reduction (SB 375) stalled in the final weeks and is likely to return in 2008. After the Hurricane Katrina disaster in 2005, many people urged California lawmakers to take action in 2006. They did place $4.1 billion in bonds on the ballot to upgrade flood control systems, but they left land use policy unchanged. Part of the problem last year was that numerous lawmakers tried to take the lead and they did not coordinate their efforts adequately. In the final days of the 2006 session, Sen. Mike Machado (D-Linden), possibly the Legislature's more important player on flood matters, blew up everything. After the 2006 session ended, Machado met with numerous interested parties and continued to negotiate even after he introduced his cornerstone bill, SB 5, at the beginning of the new session. By increasing the level of flood protection required for urban and "urbanizing" areas, the bill could limit areas for new construction — something builders have not been able to accept. Machado kept talking, however, and was apparently aided by Sen. Darrell Steinberg (D-Sacramento) in negotiations with the California Building Industry Association (CBIA). In the end, the CBIA endorsed SB 5, primarily because its stricter flood control standards do not take effect until 2015 and there is no moratorium in the meantime. In addition, planners and local government officials conceded that they could no longer ignore the fact that levees on which much development relies are known to be inadequate. The Machado bill contains a number of provisions. Among them are these: • The Department of Water Resources (DWR) and the Central Valley Flood Protection Board (nee State Reclamation Board) must provide cities and counties with preliminary flood plain maps and the state agencies must adopt a Central Valley flood protection plan by 2012. • Every city and county in the Central Valley must incorporate the new flood protection plan's data, policies and implementation measures into general plans within two years, and amend zoning ordinances as necessary during the following year. • Local government may not approve new development in areas that do not have 200-year flood protection unless adequate progress is being made to achieve that level of protection. All areas of new development must have 200-year protection by 2025. • Cities and counties are authorized to prepare local flood protection plans that include strategies for increasing flood safety, funding strategies, flood control maintenance, and emergency response. Local governments accepted the legislation because it requires the state to provide the sort of information that local planners and engineers have lacked in the past. Builders accepted SB 5 because it provides a level of flexibility in how local governments achieve the mandatory level of flood protection. Machado's bill is part of a package of other bills that work together. Assembly Bill 5 (Wolk) overhauls the Reclamation Board and requires DWR to undertake numerous efforts to improve and distribute data. SB 17 (Florez) renames the Reclamation Board as the Flood Protection Board and expands the panel to nine members. AB 156 (Laird) provides for better mapping of area protected by levees and improved coordination for maintenance of the levees. AB 162 (Wolk) requires cities and counties statewide to integrate flood safety into general plans. The Schwarzenegger administration did not participate actively in any of the Legislature's flood policymaking. Not part of the package but definitely related is AB 70 (Jones), which makes local governments partially liable when property is damaged during floods. The liability provisions apply to newly developed areas protected by state levees. The intent of the bill is to make local governments more accountable for approving development in areas with questionable flood protection. An Assembly committee bill analysis frames the situation this way: "The question, in short, is simple: When a devastating flood hits the Central Valley, who should be responsible for the ensuing property damage: the state-level actors who failed to provide adequate levees, the local actors who increase the state's liability by locating new developments behind suspect levees, or both to the extent culpable? This bill answers that both should pay a fair and equitable portion." Unlike other flood bills, AB 70 has a great deal of opposition, especially from local government. In the area of housing, the most controversial bill from a planning standpoint is AB 414 by Assemblyman Dave Jones (D-Sacramento). The bill allows cities and counties to count only 50% of the housing units possible in commercial zones for the purpose of meeting fair-share affordable housing numbers. The intent of the bill is to prevent local governments from counting for purposes of the regional housing needs assessment (RHNA) all of the housing units that could potentially be built in commercial zones where housing is allowed. Planners and local government advocates said the bill is contrary to infill development policies and will encourage greenfield sprawl. "It's just bad planning. It only applies to affordable housing, so it sends those units out to the hinterlands," said Bill Higgins, a lobbyist for the League of California Cities. "The bill doesn't strike the right balance between encouraging housing and protecting the environment. It's a housing-only bill." But Brian Augusta, a lobbyist with the California Housing Law Project, said Higgins and planners are making way too much of a "very narrowly crafted" bill that does little more than codify the Department of Housing and Community Development's current practices for reviewing housing elements. The problem, said Augusta, is that some cities use dual zoning — mixed-use zoning or commercially zoned areas where housing is permitted — to meet all of their affordable housing obligation. However, the zoning itself contemplates that much of the land will be used for non-housing purposes, Augusta said. If cities want to ensure residential infill, they can zone for residential development or adopt mixed-use zones that require a residential component, Augusta said. "The notion that we are somehow driving development out to the greenfields is overreaching," said Augusta. "It's a specious argument. I think they've run out of good arguments." Another housing bill that received approval this year is SB 2 (Cedillo). It requires cities and counties to identify a location for at least one emergency housing shelter, and to identify zones where shelters are allowed with or without permits. In addition, the bill exempts permitting of emergency shelters from the California Environmental Quality Act. The bill also prohibits cities from imposing additional restrictions on supportive or transitional housing. In its final version, SB 2 reflected extensive negotiations among housing advocates, planners and cities, and all sides appeared satisfied. However, the Department of Finance remained opposed, calling by-right approval of emergency shelters infeasible. Schwarzenegger vetoed a similar bill last year and a veto appears possible again this time. What could have been the most important land use bill in many years, Steinberg's SB 375, came to a halt during the last two weeks of the session when the author agreed to make it a "two-year" bill, as requested by numerous interests. The bill sought to tie together regional growth scenarios with transportation planning and funding, with the intent of reducing greenhouse gas emissions. The bill passed the Senate and appeared headed toward the Assembly floor when Steinberg pulled the plug for the year. Exactly why he did so was unclear, but it appeared that arguments that the bill could become a "no-growth" tool held some sway. Bills approved by the Legislature during 2007. Flood Control • AB 5 (Wolk). Assigns new duties to the Reclamation Board and the Department of Water Resources. • AB 70 (Jones). Makes local governments partially liable for damage caused by Central Valley flooding in newly developed areas. • AB 156 (Laird). Provides for better mapping of areas protected by state levees and improved coordination among the state and local districts for levee maintenance. • AB 162 (Wolk). Requires all cities and counties to integrate flood safety into their general plans. • SB 5 (Machado). Requires the state to prepare a Central Valley flood protection plan and requires local general plans and zoning to comply with the plan by 2015. Requires a 200-year level of flood protection for areas of more than 10,000 people. • SB 17 (Florez). Renames the Reclamation Board the Flood Protection Board and expands its membership to nine. Housing • AB 414 (Jones). Restricts cities and counties' reliance on commercial zones for meeting regional fair-share affordable housing obligations. • AB 641 (Torrico). Prohibits cities and counties from requiring payment of development fees prior to the certificate of occupancy stage, so long at least 49% of the units in a project are very low- or low-income units. • AB 763 (Saldaña). Increases notice that must be provided to residents prior to a conversion of rental property to condominiums. • AB 1019 (Blakeslee). Establishes a process for reallocating a portion of a county's fair-share housing numbers when a city annexes unincorporated territory. Signed by governor . • AB 1058 (Laird). Requires the Department of Housing and Community Development and the Building Standards Commission to adopt standards for "green building." • AB 1259 (Caballero). Extends by one year until June 30, 2009, the housing element update deadline for jurisdictions in the Monterey Bay Area Governments region. • AB 1542 (Evans). Amends the Subdivision Map Act to impose new requirements on the conversion of mobile home parks to resident-owned subdivisions. • SB 2 (Cedillo). Requires cities and counties to identify specific sites for homeless shelters and prohibits special restrictions on transitional and supportive housing projects. 2006 housing bond allocations • AB 1053 (Nuñez). A last-minute bill that makes Anschutz Entertainment Group eligible for $50 million for public improvements in the L.A. Live project in downtown Los Angeles (see CP&DR Places , April 2006). • AB 1091 (Bass) Alters criteria for awarding $300 million for transit-oriented developments. The projects now must be located within a walkable half-mile route of a transit station, rather than within one mile. • AB 1460 (Saldaña). Requires HCD to give preference in the multi-family housing program to infill projects and those using sustainable building practices. • SB 77 (Ducheny). Allocates $95 million for the transit-oriented development program. • SB 586 (Dutton). Allocates $100 million for "innovative housing," including $5 million for a construction liability insurance reform program. Redevelopment • AB 987 (Jones). Requires redevelopment agencies to record affordability covenants specifying the date on which the affordability restriction expires. • SB 437 (Negrete McLeod). Requires redevelopment agencies to specify their project areas' time limits in annual reports and five-year implementation plans. Signed by governor . • SB 698 (Torlakson). Cleans up 2006 legislation regarding eminent domain procedures, with the intent of providing greater protections for property owners. Other • AB 373 (Wolk). Overhauls the Mello-Roos Community Facilities District law and the school facilities improvement district law. • AB 1260 (Caballero). Clarifies Proposition 218's notice and protest procedures for property-related fees. • AB 1322 (Duvall). Requires Caltrans, when acquiring property by or under threat of eminent domain, to provide the property owner with copies of all appraisals. • SB 103 (Cedillo). Requires local agencies to prepare a report, conduct hearings and post information on their websites regarding any economic development subsidy worth at least $100,000. • SB 162 (Negrete McLeod). Requires local agency formation commissions to consider environmental justice when they decide on boundary changes. • SB 343 (Negrete McLeod). Increases requirements for the distribution of background materials prior to public meetings and mandates that information be posted on local government websites.

Just as a well-aimed bowling ball can be expected to knock down all ten pins and boost a bowler to a top score, many planners believe that a well-written zoning ordinance can steer the housing market toward socially beneficial ends. There is a difference between a bowling lane, however, and a downtown area. A bowling lane is a simple configuration, and a downtown area is an unfathomably complex network of financial, political and human factors. A bowling ball traveling down a lane has a predictable result. The result of trying to influence the real estate market with incentives is far less certain. Take for example the issue of density bonuses. The city councils of both San Diego (in March) and Los Angeles (in August) have both adopted new, improved, more-for-your-money density bonuses. In both cases, the cities have hewed closely to a model ordinance prepared by the state Housing and Community Development Department (HCD). In both cities, the new laws are intended to stimulate the production of affordable housing by offering developers the chance to make a bigger profit on the market-rate side than otherwise, if those developers are willing to tuck a couple or three units of low-cost housing into the mix. The bonus rewards the developer for taking on extra risk of a larger project. Both cities require developers to set aside at least 10% of their units as low-cost housing. In San Diego, developers can receive a bonus for setting aside only 5% of their projects for very-low income families. For that set-aside, the developer can now expand his project by 20%. By adding even more space for low-cost housing, developers can expand their projects by 35%, thus building a project 135% of the size permitted by the base zoning. The zoning ordinances of both cities, however, share a significant feature: Both laws allow a developer to enlarge a residential building without limiting the number of units that can be built in the project . This is very important: Most zoning codes for housing typically cap the number of units on a particular piece of land, while zoning on commercial property is usually limited by size (the formula is the familiar floor-area-ratio, or FAR, meaning the ratio of square-footage under roof to the square-footage of the site). Although the difference may appear trivial to non-housing weenies, this is a major change in policy. Clearly, the goal is to encourage developers to squeeze as many units, ideally low-cost ones, onto the site as possible. In Los Angeles, housing officials spoke openly of their desire for developers to build many very small units, some as tiny as 200 square feet, or roughly the size of the living room of my modest house in the San Fernando Valley. Los Angeles and San Diego are two very different places. Why did the two cities, then, adopt two very similar ordinances? Both cities are experiencing a surge of high-end condo construction and conversion in their downtown areas. San Diego needs many new units of low-cost housing to keep pace with the production of new, market-rate units, and Los Angeles needs even more. In fact, San Diego has been producing a steady number of affordable units since 2001, when the boom in downtown housing first gained traction. Currently, downtown San Diego has about 9,100 units, of which about 17% were affordable in 2006; the city hopes to boost that ratio to 20% by the end of this year. In downtown Los Angeles, the percentage of affordable units is 40%, much higher than in San Diego, largely because the city's redevelopment agency built nearly 9,000 units of low-income housing during the decades prior to downtown condomania. Currently, however, the development of market-rate and luxury units far outstrips affordable housing construction. Since 1999, when an adaptive-reuse trend ignited downtown LA's housing market, only about 1,200 affordable units have come to market, while nearly 6,000 market-rate units have reached completion. Some observers are troubled by the emphasis on very small units. Such units make sense for only single adults, such as the many immigrant men who work in L.A. and send money home. The danger is overcrowding if relatives or live-in lovers become permanent guests. The very worst scenario is that entire families move into the mini-apartments, and efficiency apartments spiral into overcrowded slums. Insofar as policing of housing (as opposed to planning regulations) is extremely lax in Los Angeles, the worst case is not unthinkable. Prejudice can also rear its ugly head. The density bonus can become a turn-off to middle-class renters and condo buyers. One developer that has included several low-cost condominiums in one of its downtown Los Angeles buildings, Forest City Enterprises, told reporters in 2005 that it had lost several sales due to the anxiety regarding the inclusion of the low-cost units. Apparently some condo buyers equate low-cost housing with crowding and criminality, rather than a chance to live among teachers, journalists, students, licensed practical nurses and their ilk who cannot afford market-rate homes. For all this hand-wringing and blinking of tearful eyes about increased density, the irony is that the density bonuses may not be powerful enough to produce many units. The cost of construction is rising, which is one reason why multi-family developers can only make their projects pencil at comparatively high prices and high rents. Plus, bonuses may not appear attractive when the market is strong and developers can lease or sell entire buildings at market-rate prices. Add the credit crunch to that, and affordable units may take a while in arriving. We will see in coming months if the new zoning ordinances succeed in spurring the construction of new units for low- and moderate-income renters and home buyers. It all seems very uncertain to me. Meanwhile, I'm going back to the bowling alley, where all you need is a steady aim, all the results are predictable, and the only incentive is a pitcher of beer.

The second and final phase of the Playa Vista development in Los Angeles is on hold again after a state appellate court in mid-September rejected the environmental impact report. "We conclude that the EIR was deficient in its analysis of land use impacts, mitigation of impacts on historical archaeological resources, and wastewater impacts," the Second District Court of Appeal ruled in an unpublished opinion. One of the most controversial and closely watched developments in California, Playa Vista is planned to have about 5,800 housing units and 3.5 million square feet of office and retail space. Most of the residential component in phase one is complete. Nearly half of the residential units and 250,000 square feet of office and retail space are planned in phase two. Although environmentalists were elated at the ruling, Playa Vista developers vowed the press forward. The case is City of Santa Monica v. City of Los Angeles , No. B189630. Ruling in the first round of litigation over University of California's long-range development plan for the Santa Cruz campus, Santa Cruz County Superior Court Judge Paul Burdick strongly urged the warring parties to mediate their dispute. Burdick ruled for the City of Santa Cruz in its lawsuit over the environmental impact report for the long-range plan, finding that the university failed to adequately address water, traffic and housing. But Burdick made clear that neither side is winning and that the city and university should work on a settlement before they continue spending time and money fighting each other in court. Santa Cruz and UC have been at odds for years over campus expansion. The conflict reached new heights last year, when the city sued over the long-range plan and then voters approved two ballot measures aimed at blocking university building plans (see CP&DR Public Development , December 2006). San Luis Obispo landowner Ernie Dalidio has sued two organizations that ran and funded ballot measure campaigns against his proposed development along Highway 101 at the south end of town. Dalidio sued the San Luis Obispo Downtown Association and a group called Responsible County Development, alleging the groups were involved in racketeering, conspiracy, money laundering, unfair business practices, anti-trust and campaign funding irregularities. In November 2006, San Luis Obispo County voters approved Dalidio's ballot measure for a shopping center, hotel, office complex and 60 houses on 130 acres. County voters' approval in 2006 followed city voters' rejection of the project during a 2005 referendum election (see CP&DR , December 2006 , June 2005 .) The groups sued by Dalidio were involved in both the 2005 and 2006 campaigns. Other organizations have since sued over the approved Measure J, which they contend goes farther than legally allowed for a citizen initiative. A state auditor's report gave the Department of Housing and Community Development (HCD) and California Housing Finance Agency good marks for administering housing bonds approved by state voters in 2002 and 2006. Both agencies have awarded funds in a timely manner and generally complied with bond funding requirements, the auditor determined. However, the auditor reported that HCD's "monitoring of entities to whom it awarded funds (awardees) has been inconsistent." The auditor reported that in three of 18 instances tested, HCD permitted awardees to receive funding advances greater than permitted by HCD's standard agreements. The auditor also found that HCD's ongoing oversight is lacking in the Emergency Housing and Assistance and CalHome programs, as the department "does not currently have processes for conducting site visits of sponsors or otherwise verifying program compliance during the period following final payment of funds by the state." The department said it would take steps to implement the auditor's recommended procedures within six months. In a separate report , State Auditor Elaine Howle recommended that the state either adequately fund a grade separation program or drop it and invite local agencies to seek other monies for separating railroad crossings from roads. Administered by Caltrans, the grade separation program provides funding to local agencies to eliminate at-grade crossings, which can be hazardous and induce congestion. At-grade crossings are increasingly a problem in urban Southern California because of trains hauling ever-more imports flowing through the ports of Los Angeles and Long Beach. Yet the annual budget allocation for the program has remained stuck at $15 million since 1974, even though the cost of the average project has increased tenfold since then from $2.5 million to $26 million, the auditor reported. Although more than 50 eligible projects have been on a priority list in recent years, local agencies often end up not pursuing the projects because they cannot raise the additional funds necessary to finish the job. The 2006 state transportation bond, however, included $250 million for grade separation projects. Howle recommended that, once the bond funds are expended, the Legislature either increase the annual program budget and individual project allocation limits, or close down the program and let "local agencies compete with a broader range of projects for funding available to them through other programs such as the state transportation improvement program." Both of the recent auditor's reports are available at www.bsa.ca.gov The City of Glendale has approved two 16-story residential towers for downtown. Intracorp plans to develop the 200-unit project at Wilson Avenue and Orange Street. The towers are the first major residential project approved since the city adopted a new downtown plan in 2006.

Only weeks after one round of relatively noncontroversial updates to the California Environmental Quality Act Guidelines officially took effect, the Governor's Office of Planning and Research has been charged with a far more ambitious task: amending the Guidelines to account for global warming. The agency is apparently putting together a schedule and process, and the first meetings with interested parties could occur before the end of the year. The process of revising CEQA Guidelines is typically laborious and contentious. This time, the process may be overtly political, as well. Officials at the Office of Planning and Research (OPR) said they are not authorized to discuss this round of Guidelines revisions and directed CP&DR inquires to Gov. Schwarzenegger's press office. A spokesman for the governor said the process is still being worked out. He was unable to answer questions about timing, who would be involved and issues that would be addressed. For two months this summer, Republican lawmakers blocked adoption of the state budget in part because of concerns about whether and how global warming should be considered an issue for CEQA purposes. Manufacturing, development, petroleum and other interests urged lawmakers to keep global warming issues out of environmental reviews for land use plans, transportation plans, development projects and anything else that could be a "project" under CEQA. Their concerns stemmed from recent litigation over the lack of global warming considerations in environmental impact reports, including a suit (since settled) that Attorney General Jerry Brown filed over San Bernardino County's updated general plan (see CP&DR , July 2007; In Brief , September 2007). As part of the budget settlement, the Legislature approved SB 97 (Dutton), which exempts transportation and flood control projects funded by the 2006 state bonds from global warming considerations. However, the bill concedes to environmentalists on the primary point: global warming is a CEQA issue. The bill directs OPR to prepare "guidelines for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions." The bill gives OPR a July 1, 2009, deadline, and mandates that the Resources Agency adopt the Guidelines by January 1, 2010. The legislation further requires OPR to update the Guidelines periodically based on state Air Resources Board (ARB) information and criteria. Russell Lowery, chief of staff for SB 97's author, Sen. Bob Dutton (R-Rancho Cucamonga) said the Guideline amendments are necessary because of today's overwhelming uncertainty about the issue. "The sooner the Guidelines are out and ready, the sooner judges will have something on which to base a decision," Lowery said. " can deal with regulations. What they can't deal with is uncertainty in litigation." The exact language of SB 97 — specifically the phrase "guidelines for the mitigation of greenhouse gas emissions" — does raise an issue, because CEQA and the Guidelines have never previously prescribed mitigation. Besides dealing with potential mitigation measures, the new Guidelines will likely need to address standards of significance, and a project's baseline for evaluation. The state's greenhouse gas reduction law (last year's AB 32) speaks to reducing emissions to the 1990 level by 2020. Thus, it is conceivable that 1990 should serve as the baseline for environmental reviews, said Terry Rivasplata, a former state CEQA clearinghouse director now with Jones & Stokes. "Every project contributes just a little bit to this global problem," Rivasplata said. "It's awfully hard to argue that a project won't have an impact." But does that mean, he asked rhetorically, that an EIR will be required for every minor subdivision or small office building? The California Chapter – American Planning Association (CCAPA) suggests the answer should be no. A white paper prepared by the CCAPA's Climate Change Task Force contains this recommendation: "The Legislature should require CEQA climate change analysis only for large projects and exempt small and infill projects from this requirement. For instance, limiting the requirement for climate change analysis to projects of statewide, regional or area-wide significance should be used as a starting point for the definition. General plans, general plan updates, regional transportation plans, and specific plans should also be included in the definition of projects requiring climate change analysis." The CCAPA further recommends exempting LEED-certified "sustainable" developments, and projects that are consistent with a local or regional plan that includes climate change strategies. Environmental organizations, however, may be reluctant to accept CCAPA's "streamlined" approach. They are more likely to agree on the CCAPA's call to recognize that the impacts of climate change on a project — such as increased flood risk and reduced water supply — also should be considered during environmental review. Like California, other states are only beginning to wrestle with greenhouse gas emissions as a land use issue. In September, New Mexico Gov. Bill Richardson's Community Development Council adopted regulations for awarding Community Development Block Grant planning funds. The regulations require that plans analyze greenhouse gas emissions from the housing, transportation, commercial and industrial sectors, and include policies for reducing the emissions. In Massachusetts, the state has started conducting climate change analyses for state building projects. Of course, the new CEQA Guidelines will not be in place for more than two years. In the meantime, OPR has been advising people preparing environmental documents to use whatever quantification tools are available, acknowledge that there are no standards of significance, and simply make a good faith effort to address climate change. Rivasplata had a different view of the interim period: "You get chased around by the attorney general and you get sued by other interests." Adopted Guidelines Meanwhile, Guideline amendments based on recent statutory changes went into effect in late July. The amendments reflect things that lead agencies should already have been doing, according to practitioners. Among the statutory charges were new definitions for exempting certain infill projects, farmworker housing and affordable housing from environmental review. There has been confusion over exactly how far those exemptions reach, explained Terry Roberts, director of the state CEQA clearinghouse. The new Guidelines also take into account 2001 legislation regarding water supply studies for large subdivisions, and the mandate for the preparation of urban water management plans. The fact that those laws have been in place for years but were not reflected in the Guidelines created some confusion, Rivasplata said. Contacts: Terry Rivasplata, Jones & Stokes, (916) 737-3000. Russell Lowery, Office of Sen. Bob Dutton, (916) 651-4031. CCAPA climate change white paper: www.calapa.org Updated CEQA Guidelines: http://ceres.ca.gov/ceqa/

Morris Newman's June Deals column, "Disney Spins Negative Fantasia About Housing," is off the mark, citing misinformation and wrongly taking Disney to task on Anaheim housing issues. As the former director of the California Department of Housing and Community Development, and now as President and CEO of the Orange County Business Council (OCBC), I appreciate the opportunity to correct the record. California communities are required by law to create long-range general plans with extensive public input, hearings, expert advice and ultimately a vote of elected council members, so that residents and businesses know where future homes, businesses and parks should go. The general plan is a blueprint folks can rely upon for their own individual and business planning, reflecting future demographics that are a city's destiny. General plans should stand for something, particularly in a time when population growth and job growth are predictable with reasonable certainty. In 1994, the City of Anaheim approved its general plan and, as part of it, created the Anaheim resort area — only 5% of the city's land area — turning a blighted area into a world-class resort destination. Relying on that plan, millions of federal, state, local and private dollars were invested in 2.2 square miles, an area that contributes nearly 50% of the city's annual revenue. Further, implementation of that plan resulted in the Anaheim resort area becoming the fastest growing market in the country for hotel occupancy. Transient occupancy taxes, paid by resort visitors, have more than doubled, from $33 million in 1994 to $80 million in 2006. As to housing, Anaheim's planning and implementation of its general plan appear to be just as successful, as indicated in OCBC's recently released Workforce Housing Scorecard 2007 Inaugural Edition. After a year's research and academic peer review, we concluded Anaheim is a county leader in workforce housing production — including low- and very low-income housing. Anaheim's housing matches its jobs generation and will likely continue to do so. If only other Orange County cities could be as forward-thinking! The report can be found at www.ocbc.org . Orange County has lost almost 15% of its 25 to 34 year olds in the last five years. They cite the inability to find a home to start their families as a top issue. They're not just moving inland, but out of state to Las Vegas, Phoenix and Austin. Daily commuters into Orange County are expected to grow to 600,000 by 2025. We risk becoming a county of aging boomers with ever-increasing traffic congestion for the young who will be forced to travel to "service" us, and we face a county brain drain of well-educated talent to fill high-paying jobs. OCBC contends that to solve this, each city's general plan must be implemented consistent with its approval. Good planning has to mean something. On August 21, the Anaheim City Council responded to the collection of thousands of signatures by Anaheim residents demanding a public vote be taken to overturn the council's previous position allowing non-resort uses in the lucrative resort area. OCBC contends that "a deal is a deal;" that the 3-2 City Council wrongly ignored its general plan and agreements with the business community; and Anaheim voters should overturn the decision when they head to the polls June 3, 2008. Anaheim should stay the course because it's working. Keep the resort area as planned, and continue to put housing where the long-range plan says it should go. - Lucy Dunn, Orange County Business Council

The smart growth crowd has weighed in on global warming, suggesting that more compact development patterns could reduce greenhouse gas emissions by 7-10%. Why? Because there's significant evidence that compact development patterns reduce vehicle miles traveled; and without the introduction of cleaner-burning fuels, the only way to reduce greenhouse gas emissions from vehicles is to reduce driving. But this is not likely to happen without more tough regulation that links emissions with land use. At least that's the argument contained in a new report called "Growing Cooler: The Evidence on Urban Development and Climate Change." And it's a sobering argument as California seeks to implement AB 32. The report has received a lot of publicity because it was issued by the Urban Land Institute. But it was really a collaborative effort between ULI, the National Center for Smart Growth at the University of Maryland, Smart Growth America, and the Center for Clean Air Policy. The authors included such familiar smart growth names as Reid Ewing, Don Chen, and David Goldberg. The report doesn't present any new research results. Rather, it re-packages a lot of existing research on smart growth and compact development in the context of climate change. Nevertheless, a lot of it is interesting. The report drives home the point that the greenhouse-gas emissions issue is really not very different from any other air pollution. The report concludes that any reduction in carbon dioxide emissions is likely to be offset by an increase in driving – pretty much the same thing that has happened, at least in California, with carbon monoxide emissions over the last 40 years. And the report's main policy recommendation is to create a greenhouse-gas emissions conformity provision for regional transportation plans. This would be the same conformity requirement that currently exists for other air pollutants. So there you go: This is just another air pollution problem. And California faces the same tough choices on greenhouse gas emissions as we have faced for decades on other emissions. Except in this case, the goal isn't to curb the increase in emissions. The goal is to reduce emissions – by a lot. Which means any solution is going to force radical change in the way we live.

It's undeniable: California is in the worst housing bust since the early 1990s. Sales have dropped by a third compared with last year. Prices are stable for now, but nobody knows what will happen once all those bank repos hit the market. And it's pretty clear that developers all over the state are sitting on their entitlements. Nobody's building anything unless they absolutely have to. Which means all those condo and mixed-use projects that planners are crowing about will not get built anytime soon. But does that mean they won't get built at all? No. In the long run, the shift toward a more urban California – especially in the coastal areas – will continue. Land won't get a whole lot cheaper, and construction materials will probably still go up in price. But the urban transition may not happen as fast as we thought, and it might look a little different than we expected. This is the fourth real estate bust over the last 35 years in California. The other three have all followed a pattern – the bust is long, and then it is followed by a boom of slightly shorter duration characterized by huge price increases. Last time, prices bottomed out during 1991 or 1992, then stayed flat until 1997 or '98, then tripled between '98 and '06. (Evened out over the 15-year period, this actually represents about 8% annual appreciation.) But there are some differences. The last bust occurred mostly as a result of Southern California's aerospace-led recession. Lots of people were losing their jobs in factories and on military bases, or were shifting over to jobs that didn't pay as well – or they were just plain nervous about getting laid off. It's fair to say that the early '90s bust was an honest-to-God recession. This time, the bust can probably be viewed much more as a "correction" – an inevitable downturn in an overheated real estate market fueled at least in part by easy credit. Sales are slow partly because those 100%-plus, low-initial-interest-rate mortgages just are not around anymore. (The 65% fixed-rate mortgage is doing just fine.) This will not have much effect on prices – unless those subprime mortgage holders default on their loans or have to sell at a bargain-basement price, which is already happening in some market segments. So it is reasonable to assume that prices will drop some. The question is how much. Five percent? 10? 20? No one really knows. A lot depends on the extent to which both the feds and the Fed decide to step in and bail out the subprime mortgage lenders with refinancing opportunities and lower interest rates. The bottom line question in planning and development goes more or less like this: Will housing continue to be the driving force in the real estate development business, as it has been over the last decade? And, if not, can other sectors of the real estate industry attract enough capital to keep the development business going? You can't build too slowly during a recession; and you can't build too fast during a boom. Developers downsize during a bust. But they also keep pushing for entitlements, so they can come out of the bust ready to build. What will they try to entitle during this bust? California's push toward urbanism during the last decade – and, more to the point, smart growth and new urbanism – is attributable mostly to housing prices. All kinds of high-density, urban-style projects pencil out for developers when condos go for $400,000 instead of $150,000. Demand has been strong enough, especially in the built-out coastal counties, that condo developers willingly delivered retail and lots of other mixed-use components to cities in exchange for permission to lay the golden egg of housing. The condo egg isn't so golden anymore – but wherever prices land, they are still likely to be far higher than they were back at the end of the '90s. That would suggest we shall see more high-density projects entitled in the future. But it's also an article of faith that in bad times, developers stick to the knitting. So maybe we'll see residential developers sticking with residential projects and not venturing so readily into mixed-use projects – even when planners push them in that direction. But the developer is only half of the entitlement equation. The other half is the investor. And whereas developers stick to what they know – residential developers like to do residential projects – investors are fickle. They'll put their capital wherever they think they'll get a return. They're also lemmings, following the latest fad. This can affect the planning and development business in two ways. First, it's possible that the overall amount of capital flowing into real estate development will decrease considerably. Investors tend to regard real estate and stocks as "countercyclical" – that is, when one goes down, you should invest in the other because it's going to go up. This trend is often a self-fulfilling prophecy, as prices in either sector rise simply because more investment money is being shoveled toward those investments. It's no surprise that real estate went up during the late '80s when the stock market went down. The reverse happened in the early '90s; and the trend reversed again around 2000. Right now both real estate and stocks look fragile, but it may well be that capital flows from real estate into stocks over the next year or two. The other possibility is that capital will flow to other types of real estate. It's been easy to forget this during the recent housing boom, but the truth of the matter is that investment in different real estate sectors is cyclical and faddish as well. Remember the early 1980s boom in warehouses? The late '80s boom in office buildings? The mid '90s boom in entertainment retail? All these were capital-driven booms, as investors threw money at a real estate sector that was hot at the time. And with money being thrown at housing over the last decade, we've got a pent-up demand in some of these other sectors, especially office and industrial. It is entirely possible that in the near future, mixed-use condo projects will be remembered as so-o-o-o 2005 – compared with those shiny new office condos built in 2010.

Director of Community DevelopmentCity of El Cajon, CA Ideally located in Southern California's San Diego County, the City of El Cajon (pop. 97,000) is seeking a visionary Community Development Director. Just minutes from downtown San Diego and area beaches, El Cajon is a valley community encompassing 14 square miles surrounded by mountains. The Community Development Department is supported by 18.5 FTEs and an annual operating budget of $1,698,358. The Department is organized across two divisions: Planning (Current and Advanced), and Building and Fire Safety. El Cajon's next Community Development Director will be a proactive big picture leader who is well-versed in contemporary planning principles and practices, as well as economic development and revitalization. The Director will also be knowledgeable regarding building codes. The candidate selected will have the opportunity to influence the specific plan currently being amended which applies to the City's downtown area. At least five years management experience in a similar setting and a Bachelor's degree are required. The closing date for this recruitment is Friday, October 12, 2007 (updated). The salary range is $112,965 to $137,634 plus 5% differential for a Master's degree related to the job, and is supplemented by an attractive benefits package. Detailed brochure and submission instructions are available online at www.tbcrecruiting.com . Teri Black-Brann tel 310.377.2612 Teri Black & Company www.tbcrecruiting.com