County officials are questioning the state's housing allocation process, which often requires counties to plan for thousands of housing units even as they are also planning to protect agricultural land and open space. Does it make sense, they ask, for a county with limited infrastructure to plan for urban growth when incorporated cities are better positioned to handle new development? The issue has arisen recently in Napa, Sonoma, and Solano counties. All three are semi-rural counties on the edge of the Bay Area whose local governments were required to submit draft housing elements to the state on January 1. And, to varying extents in all three counties, growth is directed to incorporated cities — away from farmland and open space. In Napa, county officials are currently meeting with city officials to see if they can agree on shifting housing allocations. Said Napa County Supervisor Bill Dodd, "Consider the fact that we're an agricultural county, and the fact that the state always laments the loss of agricultural land, and the fact that HCD equates agricultural land and open space as land available for housing. There is a huge disconnect there." Alex Amoroso, senior planner for the Association of Bay Area Governments (ABAG), which allocates fair-share housing goals for the nine-county region, understands what Dodd is saying. During the Bay Area's next round of housing element updates, planners need to weigh agricultural and open space needs, he said. ABAG will have to begin the next round soon, as housing elements must be updated every five years under state law. "I think that the unincorporated planning issue is something that we need to address, just because more and more counties are moving toward slow growth," Amoroso said. Julie Bornstein, director of the state Department of Housing and Community Development (HCD), said the allocation of housing targets within a region is up to the local council of governments (COG), such as ABAG. State housing officials do not necessarily care how a COG divvies up the number of units for which the state says a regional must plan, she said. "From the state's standpoint, we would hope that additional housing units would be accommodated where there is some infrastructure," Bornstein said. "We want to discourage sprawl and encourage preservation of farmland." The state and regional housing allocation processes are among the topics of discussion for a housing element reform working group that is meeting in Sacramento (see , November 2001, in the Archives). The working group, headed by Assemblymembers Alan Lowenthal (D-Long Beach) and Patricia Wiggins (D-Santa Rosa), has been meeting since the close of the 2001 legislative year and includes representatives from across the spectrum — local government, developers, environmentalists and housing advocates. The participants have not yet reached many agreements, but some hope that a legislative package emerges from the working group later this year. The legislation would likely include increased enforcement of housing element compliance, and measures to make the housing element law work better for local governments, according to sources at the Capitol. The Napa County experience Officials in Napa County and their neighbors in Sonoma and Solano counties contend the housing element law does not work well from them. With guidance from Wiggins, Napa County established a committee of two county supervisors and two representatives from each of the five cities in the county. The committee has met only a few times since forming in late 2001. The idea is to think up ways for the cities to relieve the housing burden on unincorporated Napa County, and for the county to compensate the cities for taking additional housing. During the regional housing needs determination, ABAG assigned unincorporated Napa County 1,969 housing units, or 28% of the county's overall allocation. Yet the only county areas with much infrastructure are the small communities of Coombsville near Napa, and Angwin outside of St. Helena, and around the Napa County Airport between Napa and American Canyon. Furthermore, Napa County has a number of policies — some of which voters imposed — that protect farmland and the watershed from development. The most likely place for housing development in unincorporated Napa County is in the pastures near the airport, where the county has struggled since the 1980s to build an industrial park (see , September 2001, in the Archives). Supervisor Dodd, however, said planning houses near the airport "is the worst kind of planning." So one possible solution would be for the cities of Napa and American Canyon to annex industrial land near the airport in exchange for accepting more housing units. Napa Vice Mayor JoAnn Busenbark said the cities are not willing to "bail out" the county, but they are willing to address long-term land use planning. Napa, Yountville, St. Helena and Calistoga all rely heavily on the wine industry and related tourism. "It's got incredible potential because of the players around the table," Busenbark said of the new committee. "It's driven by this really intense desire to save our piece of the world." Amoroso said ABAG is watching the Napa County working group. The goal of the state housing element law is to divide the housing burden evenly across a region, but it is fine if local governments want to redistribute the housing numbers within their sub-region, he said. Solano County may attempt an approach similar to Napa County's Plenty of room for jobs Sonoma County officials have strongly criticized the ABAG regional housing needs determination. In fact, ABAG assigned unincorporated Sonoma County 6,800 housing units — about 30% of the county's entire allotment and more units than any other unincorporated county in the Bay Area. Yet the vast majority of development in Sonoma County is in the nine incorporated cities, all of which have growth boundaries. Sonoma County officials, like their counterparts in Napa, Solano and some other counties, argue that regional planners and state officials refuse to recognize growth-control policies aimed at protecting valuable farmland and open space. "I don't think we can make the numbers they want without busting our general plan," Sonoma County Supervisor Tim Smith told the Santa Rosa . But some people say counties are willing to fight only selected growth battles. "Some of those counties that are not set up well to deal with the housing issue are set up quite well to deal with the business end of things," Amoroso said. The ABAG housing determination was based primarily on projected growth in jobs and households within a jurisdiction, he noted. Businesses located in unincorporated Napa and Sonoma County, for example, continue to hire many thousands of farmworkers, winery workers and resort employees. Some environmental groups also question the counties' priorities. Unincorporated Sonoma County's regional housing allocation sounds daunting "if you think of large-lot, single-family houses," said Janet Stone, the livable communities program director for Greenbelt Alliance. The county, however, could meet its allocation of 1,300 very low-income units with about a dozen apartment complexes of roughly three acres apiece in unincorporated communities that already have some infrastructure, she said. "There is no reason why these areas couldn't accommodate compact housing development," Stone said. David Grabill, an attorney for Sonoma County Housing Advocacy Group, said hundreds of acres within the urban growth boundary for Santa Rosa are available for housing development. Some of the land is within the city's sphere of influence and some is outside. The real issue is a decade-old county policy that directs multi-family developments to cities. "The county is reluctant to allow apartment development in unincorporated areas, although they have to do it," said Grabill, whose suit over the county's previous housing element resulted in a court order that severely restricted subdivisions and rezonings. "They have the ABAG numbers, just like all the cities do. If the county doesn't provide its share, that just puts more pressure on the cities to provide lower-income housing development." After months of wrangling, county officials adopted a housing element that they say accommodates the mandated 6,800 units. In fact, said Deputy Planning Director Pete Parkinson, the county did not have to rezone any land because there are adequate sites available in existing unincorporated urban service areas. The county will consider residential projects close to those urban service areas if some development already exists, he said. The housing element approved by Sonoma County supervisors in late January allows affordable housing developments of up to 20 units-per-acre in commercial and industrial zones, contains provisions for inclusionary zoning, relaxes the regulation of second units, offers density bonuses of up to 100%, and calls for linkage fees on commercial development to fund housing programs. The provision of sewer service remains a significant problem, Parkinson said, because the largest unincorporated urbanized areas are served by the City of Santa Rosa, which is not willing to provide unlimited hookups. Small sanitation districts elsewhere have minimal capacity, he said. The cost and time required to build new wastewater treatment plants is potentially prohibitive, he added. Statewide implications The battle that Napa, Sonoma and Solano counties have fought is likely to reach far outside the Bay Area in coming years, when other regions complete the regional housing allocation process. Some rural counties welcome housing growth in unincorporated territory, while others — especially some counties in the Sierra Nevada foothills and along the coast — do not. "I think the state has a real challenge, and that's not lost on me," Napa County Supervisor Dodd said. "The point of this is not to be critical of the state … we're frustrated. We need to make sure that the agricultural nature of Napa County is as important to the state as it is to us." Dodd even suggested rethinking the regional approach to allocating fair-share housing units. The Solano county cities of Fairfield and Vallejo are located within a 20-minute drive of many Napa County job sites, he pointed out. "Isn't it more important to make sure you have homes available within a certain proximity to jobs, so that jurisdictional lines are not the issue?" Dodd asked rhetorically. Jurisdictional lines, however, present an issue that is unlikely to go away. Amoroso said that while ABAG might be willing to let a county and its cities reallocate housing units, no one is going to accept moving fair-share allocations across county lines. The issue that some people are avoiding is density, said ABAG's Amoroso. Protecting farmland and open space for the long-term requires building denser cities, he said. "What it all comes down to is, we're not building enough housing," Amoroso said. Contacts: Julie Bornstein, Department of Housing and Community Development, (916) 445-4775. Alex Amoroso, Association of Bay Area Governments, (510) 464-7955. JoAnn Busenbark, Napa vice mayor, (707) 258-7876. Bill Dodd, Napa County supervisor, (707) 259-8278. Janet Stone, Greenbelt Alliance, (415) 398-3730. David Grabill, Sonoma County Housing Advocacy Group, (707) 528-6839. Pete Parkinson, Sonoma County Permit and Resource Management Department, (707) 565-2563.

WASHINGTON _ Lake Tahoe area property owners seeking compensation for a moratorium on development first enacted two decades ago received a mixed reaction on January 7 from the two Supreme Court justices who hold the critical votes for their claims. Justices Sandra Day O'Connor and Anthony M. Kennedy peppered veteran Santa Monica property rights litigator Michael Berger with critical questions about the potential impact of forcing governments to pay landowners for any delay in acting on land use applications. But O'Connor and Kennedy later indicated sympathy for the plight of hundreds of landowners unable to develop their land since the adoption in 1981 of what was depicted as a temporary planning measure to help protect Lake Tahoe from environmental degradation. "It's been 22 years for some of them," O'Connor said. "Is there any end in sight?" The two centrist-leaning conservatives are expected to hold the balance of power in the latest, ideologically drawn property rights dispute at the high court. The court in the past decade has given property rights advocates a series of victories, sometimes on 5-4 votes pitting the court's conservatives � including O'Connor and Kennedy � against the four liberal justices. The new case pits a coalition that once had 700 Tahoe area landowners who adopted the environmentally attractive name Tahoe-Sierra Preservation Council against the two-state Tahoe Regional Planning Agency (TRPA), which Congress created in 1969. The agency has struggled since 1981 to devise and implement a plan to safeguard the crystal blue lake from what scientists say would be irreversible damage from sediment and runoff due to development. The landowners, now numbering about 400, have been in federal court since 1984 but have nothing to show for what Berger called the "Dickensian" litigation. The Ninth U.S. Circuit Court of Appeals has issued three rulings rejecting arguments that the initial moratorium on two plans adopted by TRPA in 1984 and 1987 amounted to an unconstitutional taking of the landowners' property without compensation (see CP&DR Legal Digest, July 2000). In appealing the Ninth Circuit's most recent decision of June 2000, Berger asked the high court to rule on all three of the agency's edicts. But the justices narrowed the case to the initial, 32-month moratorium. Berger opened the hour-long argument by insisting that the moratorium amounted to a "per se" taking because the landowners were denied "all economic use" of the land. But O'Connor and Kennedy both challenged Berger on the implications of requiring compensation for any government delays, however brief, on land use decisions. "What about your basic zoning law?" O'Connor asked. "Is that an immediate taking?" Kennedy made the dispute current by asking Berger whether New York City would face a takings claim if it imposed a one-year moratorium at the World Trade Center site while trying to come up with the best plan for development. When Berger answered yes, Kennedy was evidently disturbed. Later, when Berger appeared to backtrack from that position, Kennedy jumped in and asked whether he was changing his previous answer. Berger, however, appeared certain of support from two of the court's conservatives: Chief Justice William H. Rehnquist and Justice Antonin Scalia. "It doesn't seem fair to me to say these people should bear the burden of preserving the lake," Scalia said. "This was a general social problem for which the entire society should pay." Court watchers also assume that Justice Clarence Thomas will side with the landowners. Thomas, as usual, asked no questions during the argument. In an unusual twist, the two lawyers defending the regulatory agency before the high court were themselves both conservatives: John G. Roberts, a Washington attorney whom President Bush has nominated for the District of Columbia Circuit Court of Appeals, and Solicitor General Theodore Olson, supporting TRPA as a friend of the court. Both Roberts and Olson contended that recognizing the landowners' claim for the period of the moratorium could cripple orderly land use decision-making. "This was government acting the way we want it to act," Olson said of the moratorium. "Before we destroy the lake, let's stop and solve the problem that every landowner wants to solve." Instead of viewing the moratorium as a per se taking, Roberts and Olson argued, the ordinance should be evaluated under a three-part test set out in a 1978 Supreme Court decision, Penn Central Transp. Co. v. City of New York, 438 U.S. 104. Under that test, a takings claim is evaluated on the purpose of the government action, the economic effect on the landowner, and the effect on "reasonable investment-backed expectations." When a court applies the Penn Central test, the government agency usually wins. In questioning Roberts, O'Connor and Kennedy both voiced concern that landowners could be subjected to extended or repeated "temporary" moratoria. What about a 10-year moratorium, O'Connor asked. Roberts insisted that the duration of any restriction should merely be one factor in a Penn Central analysis, but he eventually conceded that at some point a "temporary" moratorium might go on for too long. Liberal justices John Paul Stevens, David H. Souter, Ruth Bader Ginsburg, and Stephen G. Breyer all appeared to support the agency's argument that the stiff Penn Central test should apply. However, Breyer did ask at one point whether the landowners should not have "some remedy at law." In his brief rebuttal, Berger returned to the landowners' plight. "These people are being asked to make a sacrifice on behalf of the greater public good," Berger said. "It's part of a public project to have this freeze on use, and the public ought to be paying for it, not the owners who are frozen out." Lawyers from opposing interest groups had differing predictions after the arguments. Richard Samp, legal director for the conservative Washington Legal Foundation, which filed a friend of the court brief for the landowners, forecast a pro-property rights ruling. He said Kennedy appeared to be a "solid" vote for their position and O'Connor "clearly wants to vote , but she dislikes per se rules." But Timothy Dowling, chief counsel of Community Rights Counsel, who authored a brief for state and local governments supporting TRPA, said he was "cautiously optimistic" about the case. He said "the swing justices" appeared to be drawn to O'Connor's position in an earlier case favoring a Penn Central approach in most takings cases. As for Kennedy, Dowling said that he was "harder to read," but that his World Trade Center hypothetical "recognized the broad implications of a ruling" in favor of the landowners. Both lawyers, however, predicted a narrow ruling. "It's going to be a narrow decision whatever they decide," Samp said. "That has been the practice of the court in these cases," Dowling said. "I'd welcome a narrow victory for the agency, something to break the record of defeats in recent cases." The Case: Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, No. 00-1167. The Lawyers: For Tahoe-Sierra Preservation Council: Michael M. Berger, (310) 449-1000. For Tahoe Regional Planning Agency: John G. Roberts Jr., (202) 637-5810. Kenneth Jost, a former editor of The Los Angeles Daily Journal, is a staff writer for Congressional Quarterly and author of The Supreme Court Yearbook (CQ Press).

Local growth controls are not as important in creating California's high housing costs and slow production as market forces and state fiscal policies, according to a new report by the Public Policy Institute of California (PPIC). Authors Paul Lewis and Max Neiman further found that local ballot measures are even less of a factor in the housing shortage than policies adopted by city councils. Lewis and Neiman surveyed almost 300 city planning officials across the state for the report that was released in late January, "Cities Under Pressure: Local Growth Controls and Residential Development Policy." Lewis and Neiman found that overt growth controls are rare. For example, only 14% of cities link new construction to concurrent capital improvements. And only 6% of cities cap annual building permits or restrict growth to already developed areas. Most growth-management policies that cities have adopted are understandable responses to conflicting pressures applied to city officials, according to the report. The authors reported that two widely accepted local policies do help limit housing: low-density zoning and restrictive building codes. On a broader scale, the system of funding local governments that emphasizes sales taxes and de-emphasizes property taxes is a disincentive for cities to approve new housing, according to the report. Inadequate infrastructure — especially roads — as well as rapid population growth and construction defect liability are also factors that constrain housing construction. Lewis and Neiman detected major regional differences. In the Bay Area, cities have more growth-control policies, and residential growth decisions are often controversial. Southern California and Central Valley cities have fewer growth-control policies and see far fewer disputes over new home construction. The report is available at the PPIC website, www.ppic.org Outgoing Assembly Speaker Robert Hertzberg (D-Los Angeles) has promised to introduce legislation this year based on the recommendations of the Speaker's Commission on Regionalism, but said he does not yet know which recommendations he will move. The commission, chaired by Nick Bollman of the California Center for Regional Leadership (CCRL), presented the recommendations to Hertzberg at CCRL's "Civic Entrepreneur Summit" in Berkeley in mid-January. Included in a large package of wide-ranging reforms were: *The creation of a permanent state entity to assist poor regions. *The creation of a Cabinet-level agency dedicated to work force investment (a proposal already in Gov. Gray Davis's budget this year). *A constitutional amendment to prevent the state from further raiding local governments' property tax revenues. *A system to encourage regional tax sharing by requiring local governments in each region to choose from a menu of tax distribution reforms. *The integrating of school and university construction with local planning. Hertzberg did indicate that fiscal reform lies at the heart of his regional agenda. "The only way to get to the core of this issue is to restructure the money," he said. The commission's report is available at http://www.regionalism.org/pdf/finalreport.pdf The City of Garden Grove in late January placed an emergency moratorium on new cyber cafes because of concerns over violent crime. The City Council approved a 45-day moratorium, which officials expect to extend, to give officials time to draft operating regulations for existing cyber cafes. Those measures could address hours of operation, age and number of employees, surveillance cameras, limits on school-age children, window tinting and security guards, said Community Development Director Matt Fertal. "What we'll bring back in 30 days will be somewhere between what the police department wants and what the businesses want," Fertal predicted. City planners also are trying to decide where cyber cafes fit into the current zoning ordinance. Prior to the moratorium, the city did not regulate the businesses at all. The city could classify cyber cafes as arcades, which are limited to a certain commercial zone and require a conditional use permit, Fertal said. Cyber cafes rent computer time for about $2 an hour and have become quite popular. Garden Grove has about 18 such businesses, some of which are open as late as 4 a.m. Police and some neighboring business owners complain that cyber cafes attract gang members late at night. Since November, there has been a stabbing death and a separate assault on two teenagers outside of Garden Grove cyber cafes. A few other cities in Orange County regulate cyber cafes, but business owners fear Garden Grove could set a tight new standard that other jurisdictions would emulate. A long-range development plan and environmental impact report for the proposed University of California, Merced, campus received approval from the UC Board of Regents in January. University officials hope to break ground on the 10th UC campus in May and begin conducting classes in fall of 2004 (see CP&DR Public Development, April 2001, available online at the "Archives" on http://www.cp-dr.com). However, some environmentalists are not satisfied with aspects of the long-range development plan, including the loss of vernal pool habitat and farmland. They suggested that a lawsuit is likely. Also at their January meeting in Los Angeles, the regents approved the purchase of 7,030 acres of land about 2.5 miles northeast of Merced from the Virginia Smith Trust. The university agreed to protect 5,030 acres as vernal pool habitat for the endangered fairy shrimp, and set aside 750 acres for natural resource research. The campus will be built on the remaining 1,250 acres. The regents also approved a 50/50 joint venture between UC and the Smith Trust to develop a new community on 1,240 acres just south of the planned campus. The U.S. Army Corps of Engineers relaxed its wetlands regulations in January. The agency eliminated the mandate that a developer replace wetlands on a one-for-one basis. Instead, the Corps of Engineers will only require that overall development within a Corps of Engineers district result in no loss of wetlands within the district. The Corps of Engineers also dropped a rule that limited the filling of seasonal streams to 300 lineal feet. Under the new regulation, builders may fill up to a half-acre (approximately 21,000 square feet) of any seasonal watercourse. The Corps of Engineers also relaxed some floodplain development rules. The Corps of Engineers did not change the requirement that any development affecting at least half an acre of wetlands receive an individual permit. The agency characterized the changes as "minor." Environmentalists were upset with the amendments, while builders offered mild praise. Regional water quality control boards in Southern California have continued to adopt new standards regarding stormwater runoff (see CP&DR Environment Watch, August 2001, March 2000). In December, the Los Angeles regional board — which governs Los Angeles and Ventura counties — approved amended regulations. In January, the Santa Ana regional board approved regulations for northern Orange County. The San Diego board is expected to adopt new stormwater rules for southern Orange County this month. The regulations are similar but not identical. All of them call for new development to have facilities that help slow down and treat stormwater, often through the use of small containment basins, grassy swales or mechanical filters. The idea is to reduce pollution and sediment levels in streams, rivers and coastal waters. In general, builders and inland cities criticized the regulations as unnecessary and expensive, while environmentalists and coastal cities applauded the regulations. Both sides agreed that the Santa Ana board's regulations were the weakest. The State Controllers' office has filed a lawsuit against the Town of Tiburon for failing to submit annual redevelopment agency reports. According to state officials, Tiburon did not file reports for the 1997-98 and 1998-99 fiscal years — and still had not as of January despite warnings from state officials. The lawsuit is believed to be the first filed against a city for failing to file the annual financial reports. The city could be fined up to $10,000 for each violation. Is "smart growth" a labor issue? Yes, according to the AFL-CIO, which has adopted an "urban sprawl and smart growth" resolution. The measure directs union leaders "to actively engage in the emerging public and political debates surrounding urban sprawl and smart growth, asserting labor's rightful role in the national debate about the future of America's cities for the benefit of all working families." Among those hurt by current trends, according to the AFL-CIO, are unionized grocery retailers that cannot compete with Wal-Mart, inner-city residents who have seen hospitals and public services close, downtown janitorial unions, and unionized public employees. San Bernardino County and the City of Redlands reached an agreement on the development of the infamous "Donut Hole" in January. The county Board of Supervisors and the City Council both approved an agreement that allows development to proceed on the 1,100-acre island of unincorporated territory inside Redlands. Under the agreement, the city will provide water and sewer services, through an intermediary county entity, to the property. The city and county will share sales tax revenue from the Donut Hole, with the county's share gradually shrinking to zero in 10 years. The agreement appears to end years of acrimony over control of the land involving the city, the county and Majestic Realty, which wants to build a shopping mall on the Donut Hole's citrus groves (see CP&DR Deals, June 2001; Local Watch, November 1998; Legal Digest, November 1997, available online at the "Archives" on http://www.cp-dr.com). The battle even reached the state Legislature, which passed a law in 2000 that removed the Donut Hole from the city's sphere of influence. Immediately after the city and county approved the agreement, some Redlands residents began talking about a ballot measure to block development on the site. Western Placer County could become home to metropolitan Sacramento's first large Indian casino. A U.S. Interior Department official announced in early January that the agency would accept 58 acres west of Lincoln in the Sunset Industrial Area into trust for the United Auburn Indian Community — despite opposition from U.S. Rep. John Doolittle (R-Rocklin) and some local government officials. With the federal government taking the property into trust, the Indians would be free to pursue their plans for a 200,000-squre-foot casino, restaurant and office complex — which is not subject to local government approval. Tribe representatives have talked with local officials for years about funding road improvements and emergency services to the area. Federal officials cited the tribe's outreach as one reason for approving the proposal. Only days after affirming a Clinton-era plan for managing 11.5 million acres of national forest land in the Sierra Nevada, the Bush administration begin backing away from the plan. In late December, U.S. Department of Agriculture Undersecretary for Natural Resources Mark Rey issued the final ruling in support of the Sierra Nevada Framework (see CP&DR In Brief, January 2002; Environment Watch, March 2001, available online in the "Archives" at http://www.cp-dr.com). But days later, Jack Blackwell, the newly appointed regional forester for California, announced an "action plan" to reconsider many controversial issues in the framework, which was eight years in the making. Blackwell's plan calls for reviewing limits on logging trees larger than 30 inches in diameter, standards for ski area and vacation home construction, and restrictions on grazing near streams. Environmentalists quickly condemned the proposed action plan, while loggers, ranchers and ski resorts welcomed the announcement. Los Angeles Mayor James Hahn in January pledged to create one of the biggest local housing programs in the county. Money for the proposed $100 million housing trust fund would come from federal grants, tobacco industry settlement payments, proceeds from the sale of city properties and property tax increment. According to housing experts, the city needs to build about 4,000 reasonably priced units each year to meet demand. Elk Grove became the third city in Sacramento County to provide financial support for the Rancho Cordova incorporation drive. In January, the Elk Grove City Council pledged $35,000 to help pay for an environmental impact report. Citrus Heights already gave $35,000 to the Rancho Cordova cityhood proponents, and Galt provided $5,000. Incorporation of Rancho Cordova, a few miles east of Sacramento along Highways 50 and 16, could reach the ballot in November.

A story on Page 1 of our January edition about the impact of new state redevelopment laws on the San Jose Redevelopment Agency contained several errors that may have mischaracterized the agency's $350 million bond issue. CP&DR suggested that the agency would likely not be permitted under state law to receive property tax increment in order to make debt payments past 2019. This was an error. Under the provisions of AB 1290 from 1993, redevelopment agencies may receive property tax increment for the purpose of repaying debt for up to 50 years after the creation of individual project areas, even if those areas later become part of a merged redevelopment project. The San Jose Redevelopment Agency created a merged area in 1981 from the project areas that existed then, and subsequently added several other newly created project areas to the merged project. According to the agency's Preliminary Official Statement for the bond issue, only two project areas in the merged project will see their ability to collect tax increment and repay debt terminated in 2019 – Park Center and San Antonio Plaza. The remainder will terminate at various dates between 2024 and 2044. For example, the Rincon North and South project area, which generates the most tax increment ($50 million in 2001-02), will terminate in 2032, the year that the new bond issue is scheduled to mature. According to the Preliminary Official Statement, the agency's tax-increment revenues will decline over time as these individual project areas reach their termination dates. However, according to the document, the agency will have approximately $1.40 in tax increment revenue for every $1 in annual debt service (including previous bond issues as well as the 2002 bond issues) each year until the bonds mature in 2032. The Preliminary Official Statement is available at www.emuni.com. CP&DR also erred by failing to report that the San Jose Redevelopment Agency bond issue received high ratings from all major bond ratings agencies, including Moody's (A2), Standard & Poor's (A), and Fitch (A). CP&DR also erred in reporting the date of the bond issue and the date of the bond's maturation. The date of the bond issue was January 15, not January 8 as we reported, and the date of the bond's maturation is 2032, not 2033 as we reported. Since our story appeared, the city's redevelopment agency has successfully sold the bonds. California Planning & Development Report takes great pride in providing its readers and subscribers with accurate information about events that we cover. We regret these errors, and we believe it is important to correct them.

California's housing shortage is usually represented by the number of single-family detached and multi-family housing units and their relative affordability. This characterization leaves out other important factors, such as the range of household sizes and types, lifestyle and location preferences. Another missing element is household wealth that accumulates through home ownership and the influence of the mortgage interest income tax deduction on home-buying decisions (including purchasing a second home). When one compares types of households to size and types of units, it appears that the market may not be providing the size and types of housing California's populace wants. The underlying assumption is that small households without children under age 18 would generally prefer smaller units in multi-family developments, while larger households would prefer single-family houses. That is a gross generalization; income, personal preferences, and housing units that are actually on the market at any one time are also factors when people choose their residences. But follow along for the sake of argument while I track households to housing units since 1990 at the state level. The table below shows that the number of households created between 1990 and 2000 was 90,000 more than the number of housing units. Those 90,000 households used up most of the vacant inventory generated by the late 1980's surge in apartment development. During the 1990s, the median number of rooms per unit and persons per household each increased slightly, seemingly showing that units and households were well matched. The types of units constructed also show little change, with a small increase in the percentage of units that are single-family dwellings offsetting a small decline in the number of units in structures with 10 or more units. But, consider the numerical increases in the two extremes of unit and household types. Families with children increased by 741,829, which roughly matches the increase of 777,617 single-family dwellings. The remaining 379,835 increase in one-person and all other households squeezed into the 254,050 new non-single-family dwellings, plus the vacant inventory. Nationally and in California, developers continue to build single-family dwellings, and those houses are getting larger, which is one reason that they cost so much. In 2000, 78% of all non-public housing starts in the nation were single-family dwellings. Nationwide between 1970 and 1999, new units with four or more bedrooms increased by 42%; median floor area increased by 46.5%; and the number of units with 2.5 or more bathrooms increased by 244%. And in the West, developers are building these larger houses on smaller lots. In 1997, the median single-family dwelling lot size in the Western states was 0.23 acres — one-third smaller than the national median of 0.35 acres. Given these data and the underlying assumptions, there appears to be a divergence between what developers are building — namely, large single-family houses – and what people need from the housing market. The majority of California households are without children (61% according to Census 2000), and they may prefer alternatives to large single-family structures if the market provided more choices. And this segment of the population is likely to grow as the baby-boomers age and their accumulated wealth and tax laws suggest a growing second-home market. Even the for-sale market could meet what appears to be a growing demand for housing alternatives. For example, a small four-unit condominium project developed on two small single-family lots could be of greater value than two typical single-family houses (with postage stamp yards). If each condo was worth $250,000, the total market value of $1 million would be $200,000 more than the value of two $400,000 single-family units. Instead of responding to what people need, we are heading down a path that pits ever-increasing costs of large single-family dwellings against the incomes of one- and two-person households. The small household may be the next market segment to decline now that the vacant inventory is depleted. Maybe it's time to invest in a roommate matching business. California1990Dist.2000Dist.Change Year-Round Housing Units11,182,88212,214,5491,031,667 9.2% 10 or more units 1,899,93417.0% 1,984,72916.2% 84,795 4.5% 2-9 units, mobile homes, RVs, etc. 2,351,99921.0% 2,521,25420.6% 169,255 7.2% SFD and 2-4 units 6,930,94962.0% 7,708,56663.1% 777,61711.2% Median number of rooms per unit 5.3 5.4 0.1 2.5% Households (occupied units) 10,381,20611,502,8701,121,66410.8% 1-person 2,429,86723.4% 2,708,30823.5% 278,44111.5% All Others 4,123,25839.7% 4,224,65236.7% 101,394 2.5% Families w/related children < age 18 3,828,08136.9% 4,569,91039.7% 741,82919.4% Median persons per household 2.8 2.9 0.1 3.9% Sources: 1990 and 2000 Censuses, Statistical Abstract of the United States: 2000.

The Third District Court of Appeal has allowed a California Environmental Quality Act suit to proceed even though the plaintiffs did not name every entity involved in the proposed project. The court held that the lawsuit over the environmental impact report for a water transfer in San Joaquin County named defendants that have an economic interest in the project "and can be expected to argue vigorously in favor of the adequacy of the EIR." The court overturned a trial court judge's decision to throw out the lawsuit for failing to name as defendants the agencies that would purchase the water. In April 1997, Oakdale Irrigation District, South San Joaquin Irrigation District and Stockton East Water District entered into an agreement with the City of Stockton, Lincoln Village Maintenance District, Colonial Heights Maintenance District and Central San Joaquin Water Conservation District. The agreement called for the two irrigation districts to sell between 8,000 and 30,000 acre-feet of water to the city and two maintenance districts via facilities owned by Stockton East. The amount would vary annually depending on inflow to New Melones Reservoir in the Sierra Nevada foothills. The irrigation districts served as the "lead agency" for CEQA purposes, and they adopted an EIR in July 1999. Four organizations — Deltakeeper, San Joaquin Audubon Society, California Sportfishing Protection Alliance and the Sierra Club — filed a lawsuit claiming that the EIR failed to address adequately the impacts of the water transfer project. The lawsuit named the two irrigation districts and Stockton East Water District as defendants. In December of that year, the defendants argued that the lawsuit did not name necessary and indispensable parties — the city, and the two maintenance districts that would receive the water. The defendants also said it was too late under CEQA for those entities to be sued, and, thus, the lawsuit should be dismissed. San Joaquin County Superior Court Judge Bobby McNatt agreed and dismissed the lawsuit. On appeal, the case turned on the interpretation of a "necessary party" and an "indispensable party" under Code of Civil Procedure § 389. A unanimous three-judge panel of the Third District ruled that the unnamed agencies were neither necessary nor indispensable, and the court reinstated the lawsuit. As for necessary parties, the issues were whether the defendants could receive full relief, whether any of the parties faced the possibility of inconsistent liabilities, and whether the unnamed parties would be able to protect their interests. The court held that the irrigation districts and Stockton East could receive full relief because resolution of the adequacy of the EIR would settle the question, and the statute of limitations barred further litigation. The court also held that no agency would face inconsistent liability because the April 1997 agreement allowed any of the agencies to back out if the EIR was held inadequate. The court spent most of its time addressing the final question of whether the irrigation districts and Stockton East could protect all the agencies' interests. The court said yes. "Plaintiffs timely named as defendants three parties to the agreement, all of whom have a strong interest in upholding the EIR so as to obtain the benefits of the agreement. A party's ability to protect its interest is not impaired or impeded as a practical matter where a joined party has the same interest in the litigation," Justice Coleman Blease wrote for the court. Furthermore, Blease noted, under a separate agreement among Stockton East, the city and the two maintenance districts, all of the agencies have a vote in how to defend lawsuits, and that vote is binding on all parties. "By this means the non-joined parties have the right to participate in and control the CEQA litigation through a collective decision which binds a named party to the action," Blease wrote. As for the question of indispensable parties, the court agreed with the defendants that in most cases all parties to a contract would be considered indispensable for litigation purposes, but not in every case, including this one, the court held. " he rights asserted in this litigation are independent of the contractual rights to water established in the agreement," Blease wrote. The court further held that the city and two maintenance districts were not indispensable because "they would have been limited at trial to the same legal arguments presented by the lead agencies and Stockton East, that the lead agency's certification of the EIR was supported by substantial evidence." Finally, the court ruled that upholding the trial court's decision would violate the spirit of CEQA. "Were we to find city, Lincoln Village and Colonial Heights to be indispensable parties, the adequacy of the EIR would escape scrutiny. Such a harsh result is unnecessary where other parties have a unity of interest in the CEQA litigation," Blease wrote. The Case: Deltakeeper v. Oakdale Irrigation District, No. C035745, 01 CDOS 10703, 2001 DJDAR 13323. Filed December 26, 2001. The Lawyers: For Deltakeeper: Rose Zoia, Brandt-Hawley & Zoia, (707) 938-3908. For OID: Tim O'Laughlin, O'Laughlin & Paris, (530) 899-9755. For Stockton East Water District: Jeanne Zolezzi, Herum, Crabtree, Dyer Zolezzi & Terpstra, (209) 472-7700.

Early this spring, University of California, Santa Cruz, officials intend to release a draft plan for new facilities that will greatly expand the school's marine biology research capabilities. Opposition to the project has come from nearby residents and some City of Santa Cruz officials. Opponents dislike the housing because of traffic and environmental impacts on the site. The rancor, however, appears to have diminished from the past, when several different private landowners tried to develop the site but crashed into Santa Cruz's slow-growth politics. Ironically, however, the city and community appear to have less control over the site now that the university has bought it from private landowners. University officials plan to build about 290,000 square feet of research space and support facilities, about 80 housing units, dormitory rooms for about 140 students, and 10 overnight beds for faculty members on portions of a 100-acre oceanfront site. The Long Marine Laboratory expansion will complement UCSC's existing marine laboratory, as well as research centers at the site run by the National Marine Fisheries Services and the state Department of Fish & Game. School officials see the facility as one bookend — with Monterey Bay Aquarium as the other — around the Monterey Bay National Marine Sanctuary. The university's latest move comes after a lengthy battle between city officials and Wells Fargo bank, which owned approximately 60 acres of the site known as Terrace Point. The spectacular parcel lies at the northwest edge of Santa Cruz, just off Highway 1. Wells Fargo acquired it in foreclosure during 1989, after the previous owner failed to receive approval for a development. In 1994, Wells Fargo proposed a specific plan that called for a marine research center and about 300 homes. As with previous proposals, this one received an outpouring of opposition from residents and City Hall. Wells Fargo withdrew the draft specific plan and hired a team of respected consultants to craft a new plan, according to Larry Mintier, of J. Laurence Mintier & Associates in Sacramento. The team included Mintier, UCSC Environmental Planning program founder James Pepper, architect Matthew Thompson, former Santa Cruz City Attorney Gerald Bowden, and local biologists and engineers. The city had annexed the land in the 1960s. During preparation of a general plan in the 1970s, development of the site was so controversial that officials left a "white hole" on the land use map, recalled Bowden, who was a member of the city Planning Commission and chairman of general plan committee at the time. Over the years, a number of people tried to develop the site, but they got nowhere, said Bowden. Eventually, the city adopted its own specific plan for the site. "It was practically a development proposal. It gave the number of units and the number of low- and moderate-income units, the mix of uses," Bowden said. The Wells Fargo consulting team relied on that specific plan when drafting its proposal. "The bank said, we don't care — just give us something the city will approve," Bowden said. Over the course of 3 1/2 years, the team prepared three new specific plans and two full environmental impact reports, Mintier said. The final plan called for about 175 housing units — including townhouses for scientists and short-term rentals for graduate students — a public-private marine research facility, a 30-room inn, a restaurant and a public park. Mintier said the proposal matched the city's general plan. But the proposal went nowhere. City planners said they could endorse only about 80 homes on the site, even though the general plan called for about 200, Mintier recalled. The Planning Commission recommended no housing at all. The consulting team saw that the city was never going to approve the project. "It was such a nightmare. We were all so discouraged," said Mintier, who has prepared more than 30 specific plans, master plans and general plans. "At the same time, all of us agreed it was the best project we'd ever worked on, and it was the best client we ever had." Bowden said the whole mess was a failure of the planning profession. During endless negotiations, the city's planners refused to abide by the general plan, and instead took a political approach, he charged. "At least the planners ought to have the guts and the integrity to say, ‘This is the general plan. We don't make up the rules as we go along here. Now, it's up to you — the elected official — to decide,'" Bowden said. Santa Cruz Councilman Keith Sugar, who took office at the tail end of the Wells Fargo development conflict, has no sympathy for Wells Fargo and its consultants. "As bad as the university's proposals are, the Wells Fargo proposals were far more intensive. I'm happy they're gone," the councilman said. A land use law instructor at Santa Clara University law school, Sugar said he uses the project in class as an example of bad planning. In 1999, Wells Fargo gave up and sold the site to the University of California, which is not subject to local land use regulations — an irony lost on few people. "The city lost every scrap of control it had," Bowden said. "It could have conditioned the crap out of Wells Fargo. Now, it won't even see an application." Sugar and some other city officials are not so sure. He believes the Coastal Act provides a basis for the city to get involved. "It is questionable whether or not the city has jurisdiction over university lands in the coastal zone," he said. "Their plans to develop this parcel are anything but a done deal." Charles Eadie, UCSC director of campus and community planning, said the Coastal Act requires UC to prepare a coastal long-range development plan, which is the equivalent of an LCP, and the city has no jurisdiction. Still, UC officials have tried to include city officials and neighbors in the planning process during the last year and a half, he said. "We had a lot of work to do to dispel the notion that we weren't just going to go ahead with the Wells Fargo plan," Eadie said, a former Santa Cruz city planner. "We think we've had a good, collaborative relationship with the city at the staff level and with the City Council representatives." Housing remains the stickiest issue. Residents of the oceanfront DeAnza Mobile Home Park next to Terrace Point continue to protest any plans to build new residences, and at least some members of the City Council reportedly remain dead set against housing on the site. But Eadie said planners are trying to be sensitive, and they have designated a 500-foot buffer around the housing site. But, he added, housing is essential. "It's terribly difficult to get in for six months to one or two years, and have them wade through the local housing market. That's pretty daunting," he said. Indeed, the rental vacancy rate in Santa Cruz typically hovers around 1%. And in January, the National Association of Home Builders declared Santa Cruz as the least affordable housing market in the country, with only 6.9% of locals able to afford the median-priced home. Besides the housing, UC plans to build a 250,000-square-foot marine research facility, about 21,000 square feet of support facilities such as an auditorium and workshop space, and about 20,000 square feet of equipment storage and maintenance facilities. Even with the housing and existing research facilities, the 76 buildable acres on the site will have only about 520,000 square feet of buildings. Much of the site will remain open space, although UC officials and Coastal Commissioner staff members disagree on wetlands delineation, which could affect building envelopes. Sugar said UC does not need the project because about a dozen similar research facilities already line Monterey Bay. Rather than continuing to expand, the school should focus on housing more of its current students, which would help ease the city's housing shortage, said Sugar, who fought Terrace Point development as a Sierra Club attorney before winning a City Council seat. "It's farcical to develop the least remaining coastal prairie terrace in the City of Santa Cruz. I think it should remain undeveloped," Sugar said. Characterized by grasslands and oak woodlands, coastal prairie terraces have exceptional habitat values, he said. University officials expect to release a draft plan in March, with an environmental impact report following soon thereafter. The project requires Coastal Commission approval. Cost estimates are not available, but Eadie said the research facilities alone could cost $75 million to $100 million. "It's going to take maybe 10 to 15 years to raise the money and build the individual components," he said. Contacts: Charles Eadie, UC Santa Cruz, (831) 460-3572. Keith Sugar, Santa Cruz city councilman, (831) 420-5020. Larry Mintier, J. Laurence Mintier & Associates, (916) 446-0522. Gerald Bowden, Dawson, Passafuime & Bowden, (831) 438-1221. UC project website: http://www2.ucsc.edu/ppc/planning/lml.html

California has plunged into recession. We are faced, as always, with a chronic backlog of infrastructure projects necessary to accommodate our growing population. We could certainly use some kind of economic stimulus. But the state faces a $12.4 billion budget deficit, according to the Legislative Analyst's Office. And by conventional measurements, the state's debt load is just about topped out. About 5% of the state's general fund – close to $5 billion a year – is being spent to service general obligation debt. Yet interest rates are lower than they have been in decades. So there is a lot of talk around California these days about taking advantage of the situation by refinancing existing debt or by getting voters to approve new bonds. State Treasurer Phil Angelides has even proposed to President Bush that the federal government guarantee state and local bonds, which would permit California's public pension funds to buy those bonds, thus priming the pump. The "infrastructure crisis" has become a cliché in California. From the '50s through the '70s, we built a huge amount of public infrastructure that did a good job of accommodating a state of perhaps 20 million to 25 million people. Now we're at 34 million people and counting – and the common perception is that we have not built much of anything during the last 25 years. So, the argument goes, it's probably time to dump $100 billion or so into the next generation of infrastructure. But it is not that simple. First of all, it is not clear that we have the capacity in California today to build all this stuff even if we wanted to. Caltrans has had a tough time actually getting projects designed and built – not for lack of money, but for lack of skilled personnel and absent a culture focused on getting things built. Second, it's not clear what we should build even if we could build it. The days of cheap land and wide-open construction are long gone, and there is little consensus on what pieces of infrastructure should be built and where they should go. Finally, there is the question of how we pay for this stuff. A great deal of the transportation funding still comes from the federal government and from special funds, such as the gas tax, earmarked for transportation. Beyond that, the infrastructure issue is largely a question of whether the state's voters are willing to approve bond measures. They have done so in record amounts during the last four years, but, given the recession and the budget deficit, it is not clear that they will keep it up. Public support for bonds is usually a function of the economy. During the boom of the late 1980s, Californians passed almost $20 billion in bonds. But during the big bust of the early '90s, state bonds were iffy propositions at the ballot box. From 1990 through 1994, voters turned down almost as much in bonds ($10.3 billion) as they approved ($10.9 billion). Bonds got especially hammered in the depths of the recession during 1994, when $6 billion worth were defeated and only a $900 million school bond passed. Since then, economic times have been better – and the Legislature has been smarter about what plays well with the voters. (Almost all bonds that appear on the ballot must win legislative approval first, and there is considerable horse-trading in Sacramento about which bonds reach the electorate.) From 1996 through 2000, voters approved about $20 billion in bonds and defeated only $220 million – this last being the "crime lab improvement" debacle in March 2000. To a large extent, the success rate has gone up because legislators have become more daring in throwing the "big-dollar bomb." Up until 1992, no single bond ever appeared on the ballot for as much as $1 billion. In recent years, however, we've seen a $9.2 billion school bond, a $2 billion seismic retrofit bond, and two $2 billion natural resources bonds. All of those multi-billion-dollar bonds passed. The single biggest reason for the uptick in bond successes, however, is the fact that voters love schools. Combined, K-12 education and higher ed account for more than half of the $40 billion in state bonds passed since 1982. And K-12 remains the most popular type of bond. Over the past 15 years, voters have approved $16 billion in K-12 bonds and rejected only the $1 billion on the ballot in 1994. During the next few years, however, the state's biggest infrastructure needs may lie in other areas – parks, housing, transportation, and the like. This is the kind of infrastructure that will shape the future of our state most profoundly, yet the electoral record for these issues is mixed. Despite the passage of Propositions 12 and 13 (land and water bonds totaling $4 billion) in March of 2000, park and natural resources bonds don't always do well. Before Propositions 12 and 13, California had seen only one major park bond issue pass since the mid-80s – $770 million back in 1988. Similarly, housing bonds and bonds aimed at rail construction have had mixed success. Housing bonds have a 50-50 track record (unless you count veterans' bonds, which always pass). State rail bonds, too, have lost as often as they've won. This record reflects the recession-era failures of rail bonds proposed by the Planning and Conservation League that reached the ballot by initiative rather than going through the Legislature. The legacy of those efforts is that, despite a lot of talk among "smart growthers" and the pavement crowd alike, we have not seen a transportation bond on the state ballot since 1994. Simply put, the bonds that could be leveraged to plan a different kind of California are politically riskier. They don't get on the ballot very often, and they frequently lose during a recession. Are we headed for another downturn in bond enthusiasm – especially for the riskier, planning-oriented bonds? A good "leading indicator" on that trend is probably Proposition 40, the $2.6 billion park bond on the March ballot. Proposition 40 has polled well, and it comes on the heels of the success of Propositions 12 and 13. But it is not clear whether a park bond can make it during a recession on the heels of a war. If Proposition 40 does pass, that may open the door for more planning-oriented bonds, such as the housing bond proposed by Senate Pro Tem John Burton in SB 1227. But a Proposition 40 defeat might end the enthusiasm for state bonds for a while. Or a loss might encourage a trend toward using schools as housing and as parks because school bonds could be the only ones voters are willing to support.

The U.S. Supreme Court has declined to review an endangered species decision in a California case handled by the U.S. Court of Appeals for the District of Columbia. The Supreme Court's decision, issued in mid-January, means that the appellate court opinion upholding the U.S. Fish & Wildlife Services listing of four species of fairy shrimp that live in California as either endangered or threatened will stand. The Building Industry Association of Northern California (BIA) filed the lawsuit in 1994. The builders argued that the listings should be overturned because the federal agency failed to make available to the public a study on which the listing decision was based. The BIA also claimed the decision was not based on the best available science and the agency misapplied its own policy on independent peer review. The BIA further argued that the listing violated the commerce clause because the fairy shrimp live in only one state and the federal government's regulation has nothing to do with interstate economics. (The Endangered Species Act is predicated on Congress's authority to regulate interstate commerce.) The trial court and the appellate court both ruled that the Fish & Wildlife Service followed proper procedures. The BIA did not press the commerce clause claim at the trial court level, and the appellate panel dismissed it in a footnote. Still, the commerce clause argument was central to the BIA's petition with the U.S. Supreme Court. Since 1995, the court has struck down a federal law against possessing a gun near a school and a law allowing a victim to sue a rapist in federal court. In those instances, the court ruled that the federal laws had nothing to do with interstate commerce. Property rights advocates hoped that the high court would apply the same reasoning to strike a major blow against the Endangered Species Act. However, the court declined without comment to hear the case. Fairy shrimp are small crustaceans that live in vernal pools — small indentations in the earth's surface that fill with water during the rainy season. Vernal pools are somewhat common in portions of the Central Valley and in San Diego County. Some scientists say that development and farming have wiped out most vernal pool complexes in the state, a factor that led to the endangered species listings. The case is Bldg. Indus. Ass'n of Superior California v. Norton, No. 01-620. At the court of appeal it was No. 00-5143.

The state Supreme Court will review an appellate court ruling that subdivision maps recorded prior to the first version of the Subdivision Map Act in 1893 do not create legal parcels. In January, all seven of the state's high court justices voted to review the decision in Gardner v. County of Sonoma (see CP&DR Legal Digest, November). The ruling on the validity of a lot map from 1865 was the clearest decision ever on the legal standing of antiquated subdivisions. The First District Court of Appeal found that the grandfather provision of the Subdivision Map Act did not apply to pre-1893 maps. "The Legislature intended the grandfather clause to apply to subdivisions approved under prior versions of the Act, i.e., to exempt from the current Act those subdivisions established in compliance with or exempt from laws then in effect," the court held. "The Legislature, with its strenuous emphasis on local control and approval of subdivisions, did not intend the grandfather clause to apply to the pre-1893 legal ‘State of Nature' when no subdivision statute was in existence." Planners and landowners have disagreed for years over the validity of "paper subdivisions." Planners argue that that recognizing the parcels now would be unfair and would hamper good development practices. An estimated 1 million paper lots exist in California. Some of those parcels are as small as 1,250 square feet. Many were created with no provisions for access and without consideration of topography. Still, landowners contend the lots were legitimately created under rules in effect at the time and government officials cannot ignore recorded maps. The state Supreme Court has not yet set a date for oral arguments. The case is Gardner v. County of Sonoma, No. S102249. It was originally published on October 11, 2001 at 01 C.D.O.S. 8793, and 2001 DJDAR 10909.

The City of Desert Hot Springs filed Chapter 9 bankruptcy papers in late December, making it the first California city in at least 25 years to seek bankruptcy protection. City officials said that the city has $8 million in debts it cannot pay, and that the bankruptcy plan was necessary to protect citizens. A major part of the debt is approximately $6 million owed to developers and their attorneys who won a Fair Housing Act suit against the city (see CP&DR Legal Digest, July 2001). Last year, the Ninth U.S. Circuit Court of Appeals ruled that the city illegally blocked the development of a low-income mobile home park, and the court upheld a jury's $3 million award to the developers, Silver Sage Partners, Ltd. Including interest and attorneys' fees, that amount has ballooned to about $6 million. The city never paid and Silver Sage was in the process of seizing city assets. Desert Hot Springs, a city of 17,000 about 10 miles north of Palm Springs, has struggled financially for years. City officials say the Ninth Circuit ruling put the city over the edge. But Silver Sage attorneys immediately accused the city of bad faith. "They're a deadbeat city," attorney William Davis told The Desert Sun. "It's another tactic, one in a long line." In the first test of a subsequent vote requirement for large projects in Newport Beach, voters soundly rejected a proposed 10-story, 250,000-square-foot office building at the Koll Center office park. During a special election in late November, 59.5% of voters said no to Measure G. One year earlier, Newport Beach voters approved the Greenlight Initiative, which requires the electorate to decide most projects that require general plan amendments, such as the proposed office building. The estimated 2,700 vehicle trips that the new office tower would have generated appeared to be a major factor, as the nearby intersection of Jamboree Road and MacArthur Boulevard is already very busy. A Sacramento County Superior Court judge has ordered a ban on all development on 600 acres in the City of Folsom because the city has failed to approve any low-income housing in recent years. Judge Lloyd Connelly essentially set aside the 600 acres as a reserve for affordable housing projects after ruling earlier that Folsom had violated state housing law because none of the 7,000 housing units approved by the city during the past 10 years were for low- or moderate-income people. Connelly acted in a lawsuit filed by Legal Services of Northern California. The nonprofit organization had signed an agreement with the city last year that called for the city to pursue 650 affordable units within four years. But the agreement quickly fell apart. Legal Services praised Connelly's November ruling. City officials said they would expedite preparation of a revised housing element so that they could minimize the length of time Connelly's order is in effect. The U.S. Army Corps of Engineers has rejected as incomplete an application from University of California, Merced, to fill seasonal wetlands on about 1,350 acres where the new school is planned. In early December, the Corps said it could not decide on the permit � required under Section 404 of the Clean Water Act � until UC provided a great deal more information. The federal agency requested an explanation of the need for a 910-acre campus and 340-acre development reserve, an analysis of indirect water impacts, a cultural resources survey of the site, information on the endangered San Joaquin kit fox, and other information. University officials downplayed the importance of the Corps' demands, but federal regulators suggested the situation could slow the approval process. The new UC campus and an adjoining community are planned for about 3,000 acres of farmland and a golf course a few miles east of Merced. Seasonal puddles known as vernal pools, which support endangered fairy shrimp, have been a major environmental obstacle to the project, and planners have already shifted the site of the proposed campus and new town away from the largest collection of vernal pools (see CP&DR, April 2001, June 1999). University officials insist they will have classrooms open by fall of 2004. A loophole that would have weakened environmental regulations for new power plants that run during times of peak demand was closed in December by the California Energy Commission. In October, the panel had voted 3-2 to allow "peaker" plants to operate for up to 30 years using a single-cycle generating process, even though the hastily-built plants were originally approved on the condition that they convert to a cleaner combined-cycle process by 2003. The commission also decided to allow large, permanent power plants to use an expedited permitting process if developers applied by December 19. But faced with sharp questions from some state lawmakers, including State Sen. Debra Bowen (D-Marina del Rey), chairwoman of the Senate Energy, Utilities and Communications Committee, and environmental groups led by the Planning and Conservation League, the commission unanimously reversed itself less than two months later. The Nature Conservancy has used a $35 million government grant to purchase a 9,200-acre island a few miles east of Rio Vista. Under a grant from the Cal-Fed Bay Delta project, the Nature Conservancy can continue to operate a for-profit farm on Staten Island. Nature Conservancy representatives said they intend to run a demonstration farm that shows how wildlife and a commercial agricultural operation can live in harmony. Cal-Fed officials said the project has multiple benefits for the delta. However, other environmentalists questioned the entire arrangement. There will be almost no public access to the land, and the Nature Conservancy can make a profit from farming property purchased with public money, they complained. Developers of a proposed 1,500-home subdivision in Tuolumne County have backed away from the project after opponents qualified a referendum for the March ballot (see CP&DR Local Watch, October 2001). At the request of Tuolumne Investors, the Board of Supervisors rescinded its approval of a general plan amendment, rezoning and a development agreement in December. Backers of the Mountain Springs project said they would design a new project for the 1,100-acre site near Sonora. U.S. Forest Service Chief Dale Bosworth has affirmed the Sierra Nevada Framework, a comprehensive plan for managing 11 national forests covering 11.5 million square miles of the mountain range. However, Bosworth did ask USFS foresters in California to consider ways to reduce the risk of fire, reevaluate the Framework based on the latest National Fire Plan, and find ways to synchronize the Framework with an earlier act of Congress calling for more of a multi-use approach to forests. The Sierra Nevada Framework now goes to Undersecretary for Natural Resources and Environment Mark Rey because Agriculture Secretary Ann Veneman recused herself. Under the lengthy management plan, loggers would be limited to cutting only small trees, and both loggers and ranchers would have to curtail activity in riparian areas (see CP&DR Environment Watch,March 2001). In general, environmentalists endorsed the plan, and natural resources companies condemned it. Mountain View mayor Mario Ambra has pleaded not guilty to charges that he abused his role by pressuring city officials to reject development proposals. Ambra has claimed that charges filed by Santa Clara County prosecutors are politically motivated and that he has done nothing wrong. The district attorney's office filed the charges in November after a civil grand jury completed a five-month investigation. Prosecutors say Ambra pressured planners to reject development applications for properties adjacent to land he owns on North Rengstorff Avenue. Prosecutors also allege the mayor urged code enforcement officers to step up efforts against another property owner. Ambra allegedly wanted to purchase and develop all of the properties himself. A new "Regional Transit Vision" prepared by the San Diego Association of Governments calls for integrating public transit into land use decision-making. Although the San Diego region has some successful transit programs, less than 5% of commuters rely on public transit, according to the SANDAG report. "The Regional Transit Vision integrates transit into many of our communities and neighborhoods," the document states. "It relies on local jurisdictions supporting transit-oriented developments that become the central activity areas around which housing, jobs, shopping and recreational opportunities are plentiful." The plan makes a number of financing and planning recommendations for transit agencies, cities, the county and SANDAG itself. The Regional Transit Vision is available in the publications section of the SANDAG website, www.sandag.org Correction: The Local Watch story in the December edition of CP&DR incorrectly characterized one statement from City of Industry Mayor David Perez. He said that the city's proposed reservoir in Tonner Canyon would not conflict with a wildlife corridor.

Here's a man-bites-dog story to top them all: The biggest redevelopment agency in the state may put itself out of business unless the state Legislature comes to the rescue. The San Jose Redevelopment Agency collects almost $175 million per year in property tax increment. That is by far the most of any redevelopment agency in California. It's 7% of the overall state redevelopment total. It's 50% more than the gigantic Los Angeles Community Redevelopment Agency. Like other big redevelopment agencies around the state, the San Jose agency has been in business for decades. It's long been known as one of the most aggressive redevelopment operations anywhere – working in industrial areas, the downtown, and the neighborhoods. It has funded one of the state's most innovative and respected affordable housing programs. A few years ago, San Jose maximized its flexibility in redevelopment by combining all of its project areas into one big project area, so that all the tax increment flows into one place. But now there's a problem. Beginning this year, old redevelopment agencies that want to keep collecting their property tax increment past the existing cutoff date must start anew in finding "blight" in their project areas. Under the terms of SB 211, a bill carried by Sen. Tom Torlakson, chair of the Senate Local Government Committee, and signed by Gov. Gray Davis, these agencies also have to use the tighter definition of blight contained in the 1993 law that reformed redevelopment. This requirement means that agencies must make a legal finding that most of the project area is afflicted by both physical and economic blight – not just one or the other, as used to be the case. In a remarkable public admission, Susan Shick, the executive director of the San Jose Redevelopment Agency, has acknowledged that her agency cannot make the new blight finding. Most of the tax increment scattered in the 13-square-mile "merged project area" comes from industrial areas that are now thriving. (Indeed, the industrial areas account for about 95% of the Redevelopment Agency's domain.) Without a change in state law to assist San Jose, the tax-increment spigot will be turned off in San Jose – which both Shick and Mayor Ron Gonzales have said will mean an end to the city's affordable housing programs, among other things. All this may not seem like such a big deal, given the fact that it will be a while before the tax increment dries up. Even if San Jose is unable to make the blight finding, the city will probably be able to funnel tax increment to the agency until 2019. But in the world of redevelopment, 2019 is right around the corner. The reason is that redevelopment is a debt-driven business. Deals are planned and executed based on cash derived from bond issues. The bonds are usually issued for 20 or 30 years and the revenue stream to pay them back usually comes from the property tax increment the redevelopment agency receives. Under the Torlakson bill, if the redevelopment agency could make the blight finding, San Jose could funnel tax-increment to the agency for an additional 10 years – to 2029. But the agency has publicly admitted it cannot make that finding. So for the moment, San Jose has to gamble that Wall Street investors will be willing to buy bonds for which there is no certain revenue stream in the "out" years. In fact, San Jose is scheduled to test the market on January 8, when the agency will issue $350 million in bonds scheduled to mature in 2033. Most of the bond proceeds will go for a large downtown library, a downtown parking garage, and the "Strong Neighborhoods" initiative, which is one of Gonzales's highest priorities. How can San Jose issue bonds that mature in 2033 when the redevelopment agency acknowledges that – under current law – it can't collect property tax increment after 2019? There are a lot of reasons. Among other things, the redevelopment agency does have other sources of revenue. But the main reason may be that San Jose is gunning for a special exemption from the Torlakson bill – perhaps not in 2002, but sometime over the next few years. As the deadlines in the redevelopment law loom closer, several of California's largest cities have gone to the Legislature seeking such exemptions. San Francisco obtained certain exemptions in a bill passed in 2000. Oakland and Sacramento went to the Legislature last year seeking similar exemptions – which was one of the reasons Torlakson pushed the idea of "triggers" in his across-the-board legislation. But SB 211 is not likely to be the end of the matter. The big cities will probably return to the Legislature in the future. In San Jose's case, the city appears to be trying to strengthen its case in front of the Legislature. San Jose has an undeniable record of achievement in redevelopment – focused on downtown revitalization, construction of public facilities, and well-funded affordable housing programs. Admitting that they cannot meet the blight trigger in the Torlakson bill — and issuing more debt at the same time — will put more pressure on legislators to give the city an exemption. Also, Gonzales and other leaders in San Jose have cleverly lined up the support of the Santa Clara County Board of Supervisors. Counties are typically the most vocal opponents of redevelopment, because much of the property tax increment funneled to the redevelopment agency is diverted from the county's general fund. Last spring, however, Gonzales made a redevelopment deal with Jim Beall, the chairman of the Santa Clara County Board of Supervisors. Under the agreement, San Jose agreed to build approximately $200 million in capital facilities for the county between 2001 and 2014 – including, possibly, a new county health center and facilities improvements in mostly poor, unincorporated county "islands" around San Jose. The city also agreed to devote 20% of its capital funds to the county from 2015 to 2063 – assuming the redevelopment agency is still around at that time. The deal turned the county from a potential enemy into a probable supporter of a legislative exemption for San Jose. One of the problems with redevelopment has always been that blight is in the eye of the beholder. For the first time ever, one of those beholders has blinked and admitted that blight doesn't exist. Such an admission may create an historic opportunity to re-examine the real purpose of redevelopment – and of the blight finding – in stimulating investment in California's existing urban areas. Maybe the Legislature should take advantage of that opportunity, rather than simply succumbing to intense pressure to create a loophole for one admittedly admirable city redevelopment effort.