As with so many trends, the use of tax-increment financing for redevelopment began in California. Since being created here in 1952, this vital aspect of redevelopment has spread to 48 other states. And yet if Gov. Jerry Brown's current budget proposal passes, it may very well die in the state where it was born. It is not going quietly. In the two weeks since Brown announced his intention to eliminate redevelopment in California as part of his proposal to cut the state's $24 billion deficit, what used to be a relatively obscure system intended to eradicate blight has been thrust into tumultuous debate. Redevelopment agencies are taking aggressive steps to protect their funds – though it's not clear whether these steps will withstand legal scrutiny. And the California Redevelopment Association has gone into "campaign mode" to try to block Brown's proposal. Mayors from the state's ten largest cities have met with Brown to plead their case, but so far Brown has not backed down. Meanwhile, a poll by the Public Policy Institute of California released Jan. 26 suggest that cities face an uphill battle: 66 percent of Californians favor the elimination of redevelopment.             At stake is $5 billion in redevelopment tax-increment funds currently controlled by redevelopment agencies, mostly associated with cities. The state's redevelopment agencies, led by the California Redevelopment Association, are insisting that the tax increment that they reap from redevelopment projects belongs to them. Their argument centers on the notion that redevelopment monies create significant positive externalities that other forms of state or local spending do not. These redevelopment advocates –say that up to 300,000 jobs and countless billions of dollars worth of development are in jeopardy.   Despite the stakes, many redevelopment officials say that the governor's announcement caught them by surprise. Just two months after winning a major victory with the passage of Proposition 22, they find themselves scrambling to shore up both funds and public support. "We're both shocked and disappointed that there was no forewarning and no discussion with any of the interested parties before the governor released his budget," said Long Beach Redevelopment Agency Executive Director Amy Bodek. The proposal would shut down all 400-plus city and county redevelopment agencies and thousands of redevelopment project areas. Officials from every city in California have lamented the threat to both specific projects and their local economies. (Counties do not use redevelopment as much as cities do.) Projects that are in jeopardy include such high-profile projects as a new football stadium in San Diego, a new Oakland A's ballpark in San Jose or Fremont, museums, transit oriented developments, and infrastructure projects throughout the state. Many agencies have gone so far as to approve new projects in the past two weeks in order to shield funds from a shutdown that would take place July 1 if the governor's proposal is enacted. The proposal makes it clear that the state will continue to honor existing obligations, via what the governor's proposal describes as "successor agencies." The board of the Los Angeles Community Redevelopment Agency approved $930 million in new investments for over 200 planned projects Jan. 14. That figure includes $35 million for the recently unveiled Broad Art Museum on Grand Avenue and $50 million for an adjacent Frank Gehry-designed mixed use complex. It also includes $20 million for the highly publicized "Clean Tech Corridor," plus countless smaller projects that are slated to receive CRA investments of as little as $50,000. The Los Angeles City Council still must approve the projects. The San Francisco Redevelopment Agency is considering similar moves to support mega-projects such as as Hunters Point and Treasure Island, both of which would include thousands of units of housing. The city council in Long Beach approved $1.2 billion in total obligations, including both ongoing and new projects. The San Jose Redevelopment Agency approved a more modest $58 million in new obligations – including funds for a new ballpark – while Fremont approved $140 million for the construction of its new BART station. The Culver City City Council even enacted a purchase agreement, worth $14 million, to transfer ownership of an existing municipal parking garage from the city to the redevelopment agency. The move would presumably get the garage on the agency's books and thus decrease the amount of funds that the state would be able to absorb and reallocate. In Glendale, the city council approved a host of projects—including a library, football fields, and pedestrian improvements—worth a total of $480 million in tax increment, according to Philip Lanzafame, Chief Assistant Director of Community Development. The redevelopment agency is also supporting a highly publicized expansion of the Americana at Brand mall. "We entered into cooperation agreements with the city to obligate those projects that were included in our five-year implementation plan," said Lanzafame. Long Beach's Bodek said that the threat of being shut down July 1 evinces a "misunderstanding" of how redevelopment projects work. She said that her agency reserves the right to continue entering into new contracts, especially on projects—such as a fire station currently under construction—that are already underway but may need amendments. "We cannot afford to jeopardize those projects," said Bodek. Though securing funds may seem like an underhanded move while the budget debate just gets started, Lanzafame said, "all the cities that are working on this strategy or similar strategies had been put in this position by Sacramento, because there had been very little conversation with local jurisdictions." Many officials had in fact expected the Legislature to pass legislation preventing this rush to secure funds, but thus far none has materialized. Senate Pro Tem Darrel Steinberg has indicated that he favors a compromise between the governor and redevelopment agencies and is not pushing any such legislation. In an initial report published the day after Brown released his budget proposal, the Legislative Analyst's Office warned that agencies would attempt to fast-track projects and therefore decrease the amount of tax increment that the state could recoup. The governor's budget estimates that once all other obligations are paid, the elimination of redevelopment will create a net gain of $1.7 billion for the state. Most of these monies will be returned to localities in the form of funding for schools and trial courts.  CRA spokesperson Krista Noonan said that CRA does not have accurate records of what agencies are doing statewide. She said that CRA is telling agencies they can approve projects "that are all set and ready to go, but if you have future projects we've told them to hold off on those." Indeed, that's far from the only thing that has eluded accurate record-keeping. Just about every aspect of the governor's proposal is at issue, ranging from the true value of the re-appropriated increment to the legality of the plan itself. Redevelopment officials argue that redevelopment is enshrined in the State Constitution and that Proposition 22 prevents the state from appropriating local redevelopment, and transportation, funds. The governor's office will likely argue, however, that redevelopment agencies exist only with the approval of the Legislature and governor and therefore can be eliminated. Beyond the legal arguments lies a deeper, and seemingly intractable debate over the effectiveness of redevelopment. Almost all involved – including CRA Executive Director John Shirey – acknowledge that the state's dire fiscal situation requires shared sacrifice. However, redevelopment officials contend that the value of redevelopment to localities far outweighs the property tax revenues that are diverted from the state's coffers. They say the proposal is therefore "penny-wise and pound-foolish." (Also, redevelopment agencies have already surrendered more than $2 billion to balance the state's budget.) But even this contention relies more on anecdotal evidence and casual studies than on a comprehensive, rigorous evaluation of redevelopment. State Controller John Chiang announced Jan. 25 that he would review 18 agencies statewide by mid-March (see InBrief). Redevelopment has suffered some scathing critiques, most notably from both the Los Angeles Times and the Senate Office of Oversight and Outcomes in September, which found that many agencies were failing to produce affordable housing and were instead stockpiling the 20 percent of their tax increment that is supposed to go to affordable housing. More broadly, agencies have been accused of cronyism, overly liberal definitions of blight, and lack of transparency. "Are there abuses in redevelopment agencies in terms of a more expanded view of blight? Certainly," said Renata Simril, managing director at real estate services firm Jones Lang LaSalle and formerly a developer with Forest City Enterprises. "That's not an issue of all redevelopment agencies are bad. It's more of an issue of an appropriate….regulation and approval method." Academically, the governor's proposal has stirred debate over whether redevelopment actually creates a net benefit statewide or whether its incentives and subsidies simply draw development into certain areas rather than others. Redevelopment has vexed scholars mainly because, they say, it is almost impossible to design a study that filters out other variables and hones in on a causal relationship between tax increment spending and the economic activity that is associated with redevelopment. It is, in short, impossible to evaluate what would have been developed in the absence of redevelopment. "It's hard to do an in-depth study on a policy like redevelopment," said Jed Kolko, research fellow at the Public Policy Institute of California. PPIC's only major study of redevelopment came out in 1998 and did not find significant benefits from redevelopment. Studies in other states have been similarly inconclusive. "The TIF area might grow or it might just be pulling growth from other areas," said Joan Youngman, senior fellow with the Lincoln Institute of Land Policy. "That's one of the concerns: If you're just moving development around instead of creating something new." Youngman also noted that much of the increase in TIF revenues are due to inflation, not proactive efforts to stoke development. As well, even if redevelopment does legitimately create local multipliers that justify the investment of tax increment money, critics of redevelopment still note that when dealing with the statewide budget, everything is relative. "I think you can say that (there are positive externalities) about almost everything, and certainly people do say that about other areas of the budget that are also slated for large reductions as well," said Jean Ross, executive director of the California Budget Project, a nonprofit watchdog organization. "We're looking at large cuts proposed to health programs that pull in, in some cases, 2-to-1 federal match. Those certainly have large multiplier effects." This lack of certainty has meant that the debates over the governor's proposal fall largely along the lines of self-interest. City councils across the state have passed resolutions opposing the proposal while others – especially firefighters and teachers unions – have praised it as an appropriate windfall. "For the state continuing to subsidize a program that has mostly local benefits, it seems like a program that would be appropriate for realignment or shifting it down to the local level," said Mark Whitaker, senior fiscal and policy analyst at the Legislative Analyst's Office. Counties are caught somewhere in the middle, according to Paul McIntosh, executive director of the California Association of Counties. Counties have frequently feuded with municipal redevelopment agencies over the fact that redevelopment can detract from county coffers. "There has been that natural rub and a great deal of skepticism on behalf of counties looking at cities that are using redevelopment….for projects that are, in the county's opinion, questionable redevelopment projects," said McIntosh. However, he also noted that 23 counties have their own redevelopment agencies, which the governor's proposal would eliminate alongside the city agencies.    But the proponents of redevelopment argue that a statewide perspective is beside the point: redevelopment, they say, was designed as a catalyst for local development, especially in places that need it most desperately. "There is an inherent gap between the cost of construction and the rent that you can derive in those markets," said Simril. "Greenfield development is easier than infill development. Infill development requires incentives," said Chris Redfearn, director of the Graduate Program in Real Estate at USC. "There's a sense that agglomeration is more beneficial for society—that we all benefit from having cities organized in a certain way." The nature of those benefits—or lack thereof—will likely be scrutinized in the coming weeks. Big-city mayors will be meeting with the governor to plead their case, and the Senate and Assembly budget committees will be holding hearings Feb. 3 and 7, respectively. Contacts & Resources: Amy Bodek, Long Beach Redevelopment Agency, (562) 570-6615 Jed Kolko, Public Policy Institute of California  http://www.ppic.org/ , (415) 291-4400 Philip Lanzafame, Chief Assistant Director of Community Development, City of Glendale, (818) 548-2005 Krista Noonan, Director of Communications, California Redevelopment Association  http://www.calredevelop.org/ , (916) 448-8760 Chris Redfearn, Director, USC Graduate Programs in Real Estate, (213) 821-1364 Jean Ross, Executive Director, California Budget Project  http://www.cbp.org/ , (916) 444-0500 Renata Simril, Manging Director, Jones Lang LaSalle, (310) 595-3660 Mark Whitaker, Senior Analyst, Legislative Analyst's Office, (916) 319-8335 Joan Youngman, Senior Fellow, Lincoln Institute of Land Policy  http://www.lincolninst.edu/ , (617) 661-3016

What would life be like in California without redevelopment? This is not a question that most cities, planning consultants, or urban developers in California have ever wanted to ask. But now Gov. Jerry Brown has forced the issue. Cleverly skirting the long-standing legal skirmishes over whether it's constitutional to take money away from redevelopment agencies, Brown has proposed simply abolishing the entire system, which can be accomplished via statute. The redevelopment establishment – accustomed to head-on assaults on its revenue but not its  reason d'etre  – never saw this one coming. "Shell-shocked" is far too kind a term to describe their current state. To be sure, killing redevelopment would create a major disruption for the people who work in the redevelopment establishment – redevelopment agency employees, lawyers, consultants, bond underwriters, and others who have devoted their life to the intricacies of the California redevelopment system. Some would lose their jobs or, at the very least, a lot of their income; some would keep doing what they're doing now; and some would adapt to the new world. For these folks – who, frankly, make up a significant portion of the audience for this publication – the prospect of a world without redevelopment is pretty scary. But what else would happen? The main thing that would happen is that California's tax-increment machine would come to a halt. Some projects would continue to move forward for those redevelopment agencies that still have a lot of bond revenue. But new activity would cease, and gradually cities would have to figure out how to attract real estate development – and build public infrastructure – in priority areas without using the funds available from tax-increment. On the one hand, it would create a more level playing field; on the other hand, it could place priority locations with expensive problems – brownfields, downtowns with small parcels – at a significant disadvantage compared to greenfield sites. Over the decades, redevelopment has been idealized as a highly effective tool to "save cities" and demonized as an evil plot by which big government and big developers squeeze the little guy. At different times in different cities, of course, it has been both. In recent years, however, redevelopment has increasingly been about one thing only: Cities capturing property tax increment dollars. Though complicated as a technical process, redevelopment in concept is pretty simple. It relies on finding one condition – blight, whatever that is – in order to obtain unusual powers of eminent domain and capture the lion's share of future increases in property tax revenues (otherwise known as tax increment). Eminent domain used to be a big deal – the only way to remove the hold-out brake-shop owner from blocking construction of your convention center – but the truth is it's rarely used these days. Fire-breathing redevelopment opponents have scared cities out of using it much. What cities are really after is the property tax increment. In a post-Proposition 13 world, it is the only way that a city can increase its share of the property tax pie. By unilaterally declaring an area "blighted" and creating a redevelopment project area, a city that typically receives about 15% of property tax revenue can capture – even today – about 65% of new revenues. (Older project areas still get close to 100% of this "tax increment".) In other words: Find blight and most of the future tax revenues in an area belong to you, not to the county and the school district. The state gets involved because, under court cases governing equalization of school funding, the state must replace all school funds lost to redevelopment. Is it any wonder that blight, as redevelopment wags like to say, is in the eye of the beholder? Is it any wonder that cities have pursued redevelopment as aggressively as possible in the three decades since Proposition 13 outlawed any increase in property tax rates? Is it any wonder that California uses tax-increment financing far, far more than any other state? And it is any wonder that the redevelopment establishment has had to play a defensive game in Sacramento – giving up tax-increment and flexibility inch by inch – since the last time Jerry Brown was governor? But other than redirecting property tax revenue from counties and school districts to a city's redevelopment fund, what is the endgame? The redevelopment establishment is fond of referring to redevelopment as California's largest economic development program – and they're right. As Brown's proposal has reminded everyone, redevelopment is a multibillion-dollar-a-year economic development program. But is it meant to generate a net increase in economic activity? Or is it meant to direct real estate development into specific, preferred locations – to combat poverty, for example? The redevelopment establishment uses both of these rationales depending on the situation, and in fact redevelopment is used for both these purposes – and many more besides. This has always been the big question about redevelopment in California. Tax-increment financing is an extremely flexible local funding tool. And part of the reason that it's so popular – and used in so many different ways, some legitimate and some not – is that it's just about the only tool cities have. This flexibility has always been the appeal of redevelopment to local officials. It's also what drives Sacramento finance nerds crazy about it. And therein lies the dilemma. On the one hand, redevelopment is the only game cities have to play – and those that play it well can show dramatic results. On the other hand, if you're the governor of California and you're going to put several billion dollars a year into economic development, would you pick this? A hodge-podge of subsidizes for both affordable and market-rate housing, big sales-tax generators such as retailers, some industrial development, hotels, and whatever else each city around the state thinks is important? The good thing about the current debate is that, after decades of attack-and-retreat skirmishing between Sacramento and the redevelopment establishment, Jerry Brown has finally called the question. For the first time in six decades, California has the opportunity to re-examine redevelopment's goals and purpose. After all, Brown is doing something more than just calling for the end of redevelopment. He has almost also promised "a new tool" for local governments to pursue economic development. But that moment could be squandered in the heat of the moment. The default solution would be more of the same: the redevelopment establishment again coughs up some more tax increment and gives up some flexibility, in exchange for continuing to exist. This is just an extension of what's been happening for years. On the other hand, Brown could try to use his leverage to force more fundamental changes that make redevelopment more useful and politically sustainable without doing away with it completely. For example, California could adopt a more targeted tax-increment program, aimed at specific situations such as transit-oriented development and brownfields. And such reform could do away with the blight finding, which has little more that a façade for decades. Yes, there would be a lot less flexibility for cities and redevelopment would be a smaller program under this kind of reform. But it would bring California in line with other states. Priority locations would still qualify for a break. And redevelopment abuse would be much less likely – making it a less juicy target for Sacramento year after year and, for that reason, a tool that cities know they'll have. That would be a real step toward a sustainable California – not just fiscally but politically as well.

An 11-judge panel of the Ninth U.S. Circuit Court of Appeals has thrown out the court's 2009 decision that invalidated the City of Goleta's mobile home rent control ordinance. This time, the court ruled the ordinance was not an unconstitutional taking of property because the mobile home park owners who brought the challenge acquired the property long after ordinance was in effect. In 2009, a three-judge panel for the Ninth Circuit made a controversial determination that a mobile home rent control ordinance constituted a regulatory taking ( Guggenheim v. City of Goleta , (9th Cir. 2009) 582 F.3d 996; see  CP&DR Legal Digest , October 15, 2009 ). The ruling appeared to threaten the viability of mobile home rent control schemes in more than 100 California cities and counties. The city sought and received an en banc hearing before a larger panel of judges. Because of the precedent-setting nature of the 2009 ruling, numerous interest groups – property rights organizations, the California Association of Realtors, affordable housing advocates, the League of California cities and others – filed amicus briefs. In an 8-3 decision, the en banc panel vacated the court's previous decision, holding that the mobile home park owners were not deprived of distinct investment-backed expectations. Therefore, the rent control ordinance did not constitute a taking of their property, the court ruled. When the plaintiffs, Daniel and Susan Guggenheim and Maureen Pierce, originally purchased Ranch Mobile Estates in 1997, five years prior to filing the lawsuit, the property was located in the unincorporated area of the county. The county code, originally adopted in 1979 and amended in 1987, imposed the identical rent control ordinance that was subsequently adopted by the city. This fact became crucial to the appellate court's en banc decision. The city adopted the rent control ordinance on the day in 2002 when Goleta incorporated. The measure imposed a cap on the amount mobile home park landowners could charge for rent and provided procedures for increasing the rental amount. The result of this law, according to the plaintiffs, was to transfer wealth from the landowner to the tenant because the artificially low rents made the individually owned coaches more valuable. Under the  Penn Central  test, a court must look at three primary factors when determining whether a regulatory taking has occurred: (1) the economic impact of the regulation on the claimant, (2) the character of the government's action, and (3) the extent to which the regulation has interfered with distinct investment-backed expectations. In this case, the court found that the third primary factor weighed greatly in favor of the city. The plaintiffs purchased property that was already burdened by the rent control ordinance, and plaintiffs had no expectation that the rent control ordinance would be lifted at some future date. Even when the city incorporated, the city never gave any indication of eliminating the ordinance, the court determined. "Since the ordinance was a matter of public record, the price they paid for the mobile home park doubtless reflected the burden of rent control they would have to suffer," Judge Andrew Kleinfeld wrote for the court. "They could have no ‘distinct investment-backed expectations' that they would obtain illegal amounts of rent." "The people who really have investment-backed expectations that might be upset by changes in the rent control system are tenants who bought their mobile homes after rent control went into effect," continued Kleinfeld, who was a dissenter in the original 2009 ruling. "Ending rent control would be a windfall to the Guggenheims, and a disaster for tenants who bought their mobile homes after rent control was imposed in the '70s and '80s." In a dissenting opinion far longer than the court's ruling, Judge Carlos Bea wrote that the majority had erroneously converted  Penn Central 's "three-factor balancing test into a ‘one-strike-you're-out' checklist." He also said the majority wrongly ignored the Supreme Court ruling in  Palazzolo v. Rhode Island , 533 U.S. 606 (2001) (see CP&DR Legal Digest, August 2001 ), in which the court permitted a property owner to challenge a pre-existing regulation. The majority held that  Palazzolo  "is of no help to the Guggenheims" because the cases differ. Although the city won this round, the battle may not be over. The court indicated that this lawsuit was only a facial challenge of the ordinance itself, and, if the city applied the ordinance in an unconstitutional manner, the property owners could bring an "as-applied" challenge at a later date. The Case: Guggenheim v. City of Goleta , No. 06-56306, 2010 DJDAR 19204. Filed December 22, 2010. The Lawyers: For Guggenheim: Robert S. Coldren, Hart, King & Coldren, (714) 432-8700. For the city: Andrew W. Schwartz, Shute, Mihaly & Weinberger, (415) 552-7272.

The Second District Court of Appeal has upheld a determination by the Department of Industrial Relations that required public improvements in a master planned community project to abide by prevailing wage laws. The court further ruled that Mello-Roos proceeds are "public funds," and that once a project is deemed a "public work" under the Prevailing Wage Law, all public portions of the project are subject to the law – including those public improvements that are privately financed. This case is significant because it turns the historical interpretation of "public work" under the Prevailing Wage Law on its head. Typically, the analysis to ascertain whether each public improvement is a public work is based on whether a portion of the required public improvement work received a direct allocation of public funds. Under this decision, developers will be required to pay prevailing wages for work on public facilities and infrastructure financed only partially by public funds. The Department of Industrial Relations (DIR) sets prevailing wage rates for different regions of the state based largely on union-level wages in the largest cities. Developers can often find contractors and subcontractors willing to work for less than the prevailing wage. The project at issue in this case – the Rosedale project in the City of Azusa – involves development of more than 1,200 homes, upwards of 50,000 square feet of commercial space, and various public infrastructure on the site of a former nursery. In an agreement with the city, developer Azusa Land Partners (ALP) agreed to conditions of approval requiring construction of certain public infrastructure and improvements, including a public school and adjoining park, sewer and water facilities, and street work, on behalf of the cities of Azusa and Glendora. The planning, design and construction of the facilities were to be funded through Mello-Roos bonds issued by a Community Facilities District (CFD). Under agreements between the city and the developer, ALP was obligated to perform the public improvements required by the city as conditions of project approval, even if the cost of the improvements exceeded the amount of the authorized bond funds, which was $120 million. Ultimately, the cost of the improvements totaled $147 million. The CFD issued only $71 million in bonds, leaving $76 million in public improvements to be borne by the developer. In 2007, DIR determined that ALP was required to comply with prevailing wage laws for all construction of public improvements required by the city's conditions of approval for the Rosedale project. After the agency rejected ALP's administrative appeal, the developer sued. ALP argued the project was not a public work under the Labor Code and, accordingly, it should be required to pay prevailing wages only for the public improvements actually financed with bond proceeds – not for privately funded infrastructure improvements for which no bond proceeds were received. A Los Angeles Superior Court judge ruled against ALP, and a three-judge panel of the Second District upheld the ruling on appeal. In defining the term "public work" under the Prevailing Wage Law (Labor Code §§ 1720-1861), the court held that the entire project constituted a "public work" because the project was funded  in part  through public funds. The court based much of its decision on 2001 legislation that expanded the universe of projects subject to the Prevailing Wage Law (see  CP&DR , September 2002 ). "The phrase ‘work done for' in §1720 subdivision (a)(2) includes all the infrastructure work performed for the CFD and required by the city as a condition of its approval of the project, not merely the work for which ALP received funding through the CFD," Justice Jeffrey Johnson wrote for the court. The court also held that under the plain meaning of § 1720, the Mello-Roos bond proceeds constituted public funds. The court focused on the phrase "paid for in whole or in part out of public funds" and reasoned that the city and CFD are public entities that directed Wells Fargo, the holder of the loan proceeds, to pay the developer for public works constructed. Finally, the court concluded that the obligation to pay prevailing wages applies to all required public works improvements, including those that are privately funded. The court ruled that "once the determination is made that the project is a ‘public work' under , the entire project is subject to the prevailing wage laws." The Court reasoned that the law does not contain a requirement that funds be directly allocated to specific works of public improvements or require dollar-for-dollar reimbursement for infrastructure improvements. The court found that "public work of improvement" means  all  public infrastructure and improvements required as conditions of approval. Assuming the court's holding stands, ALP will be required to pay prevailing wages on the $76 million in public improvements that it privately financed. The Case:  Azusa Land Partners v. Department of Industrial Relations , No. B218275, 2010 DJDAR 19029. Filed December 21, 2010. The Lawyers: For ALP: Patrick Perry and Nancy Fong, Allen, Matkins, Leck, Gamble, Mallory & Natsis, (213) 622-5555. For DIR, Vanessa Holton, Anthony Mischel and Christopher Jagard, Department of Industrial Relations, (415) 703-4240.

The parts of a Kern county mining project are decidedly not greater than – or a substitute for – the whole, as far as the California Environmental Quality Act is concerned. A county reviewing a mining reclamation plan is required to review the entire proposed mining project and not just the reclamation element, pursuant to the CEQA, the Fifth District Court of Appeal has ruled. The court ruled that Kern County should not have segmented the reclamation plan from the mining project that would trigger the need for reclamation in the first place. " hen the county focused on the reclamation plan alone, it committed the fallacy of division whereby a larger, whole project was improperly divided into component parts for piecemeal consideration. That was error," Justice Stephen Kane wrote for the unanimous three-judge appellate panel. The fact that the mining would occur on federal land and had been approved by a federal agency did not matter, the court determined. It ordered the county to prepare an environmental impact report for the entire project. In 2005, Carlton Global Resources submitted an application to Kern County to surface mine 250,000 cubic yards of calcite marble per year for 30 years from a 40-acre foothill property owned by the Bureau of Land Management (BLM). Carlton also sought approval for a reclamation plan to restore the land after the completion of the mining, as required by the state Surface Mining and Reclamation Act (SMARA). The BLM conducted environmental review of the project under the National Environmental Policy Act (NEPA), and the county conducted environmental review of only the reclamation plan under the California Environmental Quality Act (CEQA). After determining all impacts of the reclamation activities could be offset to a less than significant level, the county adopted a mitigated negative declaration and approved a conditional use permit for the reclamation plan. Neighboring property owners sued the county, arguing the county should have been the "lead agency" for the entire project – not only the reclamation plan – and that the failure to consider the whole mining project along with the reclamation plan violated CEQA. Kern County Superior Court Judge Kenneth Twisselman ruled for the county. The Fifth Appellate District agreed with the neighbors and reversed the trial court's decision. Kern County's zoning ordinance specifically indicated that surface mining operations required both a surface mining permit and a reclamation plan to be approved by the Planning Commission. The mining application clearly contemplated both a surface mining permit as well as a reclamation plan. Nonetheless, based on a Memorandum of Understanding (MOU) among the State of California, the U.S. Forest Service and the BLM, and the fact that the BLM approved the project after NEPA review, county planners and attorneys directed that the county's environmental review and approval contemplate only the reclamation plan. They reasoned that the BLM was the actual permitting agency for the mining operations. The appellate court disagreed with this approach, in part because the MOU did not preclude environmental review under CEQA. The Court of Appeal first held that the county was the lead agency under both SMARA and CEQA and, thus, was required to conduct environmental review of the entire project. The Court reasoned that a section in SMARA (Public Resources Code § 2770 (a)) and the county's own ordinance deemed the county to be the lead agency. Specifically, a federal agency cannot be a CEQA lead agency because it is not a state public agency. Given that it was clear the county was the lead agency for the mining project, Justice Kane wrote, "It was improper for the county to sever the mining operations from the scope of its review under SMARA." The court also addressed the scope of a project as defined by CEQA and emphasized that the term "project" refers to "the whole of an action" and "the activity which is being approved and which may be subject to several discretionary approvals by governmental agencies. The term ‘project' does not mean each separate governmental agency." The court distinguished the two mining cases cited by the county –  El Dorado County Taxpayers for Quality Growth v. County of El Dorado , (2004) 122 Cal.App.4th 1591 (see  CP&DR Legal Digest , December 2004), and  City of Ukiah v. County of Mendocino , (1987) 196 Cal.App.3d 47. Those cases involved existing, vested rights to mine and, thus, a review of only newly proposed reclamation plans by the local agencies was proper. Next, the court held that the MOU did not authorize the county to avoid environmental review of the mining project. The MOU merely acknowledged that cities and counties have a legal obligation to conduct environmental review of mining projects and reclamation plans under SMARA, and that federal agencies also need to consider environmental effects of mining projects, the court determined. The court noted that the MOU required the local and federal agencies to cooperate with one another on mining projects, and allowed local lead agencies under CEQA to adopt documents prepared under NEPA, assuming those documents met the requirements of SMARA and CEQA. However, the court found that the county "failed to avail itself of the cooperation provisions of the MOU," and that the county did not assist with the NEPA document or consider the NEPA document in any way, as was required by the MOU. In conclusion, the court set aside the county's approvals and ordered it to prepare an environmental impact report that addresses potentially significant effects on air quality, traffic, water resources and biology. The Case: Nelson v. County of Kern , No. F059293, 2010 DJDAR 17585. Filed November 19, 2010. The Lawyers: For Nelson: John L.B. Smith, Christopher L. Campbell and Amanda M. Neal, Baker, Manock & Jensen, (559) 432-5400. For the county: Theresa Goldner and Charles F. Collins, county counsel's office, (661) 868-3850. For Carlton Global Resources: Scott A. Morris, William T. Chisum and Hanspeter Walter, Kronick, Moskovitz, Tiedemann & Girard, (916) 321-4500.

The clamp on local governments in California grows only tighter and tighter. The number and detail of state mandates continues to increase. The ability to raise revenue continues to decrease. The amount of litigation never decreases. Redevelopment is in doubt. Keeping a city or county out of financial or legal trouble seems to get more difficult every year. Those were the implicit – and sometimes explicit – messages during the UCLA Extension Land Use Law and Planning Conference in Los Angeles last Friday. As always at the conference, expert practitioners and analysts reviewed last year's lawmaking, rulemaking and courtroom activity, and speculated about the year ahead. It was difficult to detect many rays of light for cities or counties. Naturally, everybody was abuzz about the future of redevelopment. San Gabriel City Manager Steve Preston described the situation as "turmoil" right now. Since Gov. Brown revealed a budget proposal that would eliminate local redevelopment authority , a number of redevelopment agencies have taken hasty action to obligate tax increment revenues in order to protect the money from the state. However, the administration, the Legislative Analyst's Office and others in Sacramento are looking skeptically at the quick activity, and it's likely that the state will define "obligate" very tightly, Preston warned. Regarding other revenues, we learned that under Proposition 26 , "a charge is a tax unless it's not," said Peter Detwiler, staff director of the state Senate Governance and Finance Committee. The Chamber of Commerce-backed the initiative requiring two-thirds voter approval for any revenue increase except those in seven exempt areas. Detwiler said development impact fees grounded on a solid nexus study or general plan are exempt, as are permit processing fees. However, conference co-chair Susan Hori, a partner at Manatt, Phelps & Phillips, was not so sure about the status of development impact fees because the Proposition 26 language is vague. The building industry is hinting that impact fees may not be exempt, and things like indirect source fees that some air pollution control districts have begun to exact could be targets for Proposition 26 challenges, she said. Hori said that cities and counties could get around Proposition 26 by signing development agreements, because developers willingly accept any fees or taxes that are part of such an agreement. But attorney William Abbott, of Abbott & Kindermann, pointed to a recent court case as a warning about development agreements. In Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes , the city was ordered to pay $32 million in damages and attorneys fees for violating a development agreement. The city was liable because a development agreement makes a city subject to contract law, limiting the city's discretion, he explained. Attorneys Michael Zischke, of Cox, Castle & Nicholson, and Susan Brandt-Hawley, who runs a small Sonoma County law office, made clear just how often cities and counties find themselves defending California Environmental Quality Act lawsuits. The attorneys, who typically represent opposite sides, covered no fewer than 25 CEQA decisions that the California Supreme Court or state appellate courts handed down during 2010, including 17 in which a city or county were directly involved. Local governments won some, lost some and even these two experienced attorneys often disagreed on what decisions meant. Still, it wasn't hard to draw a few conclusions: A city or county dealing with a controversial land use matter will get sued on CEQA grounds, and success in court depends on factors not entirely within the local government's control. Of course, an environmental impact report for a development project or growth plan needs to explain very clearly the sources of water to serve future homes and businesses. Hori recommended that all water assessments take note of extensive litigation over management of the Delta smelt, because that litigation has the potential to restrict the export of water from the Sacramento-San Joaquin River Delta. The litigation has been ongoing for years and is nowhere near a final resolution. Good luck with plans that rely on imported water – even water that the State Water Project has delivered in the past. On a different environmental front, David Smith, a vice president of development company DMB Associates, noted a quandary that will arise as regional planning agencies move forward on SB 375 implementation and the required sustainable communities strategies. The point of the law is to encourage denser development in advantageous locations. This development should provide regional benefits, but it will cause localized congestion – which raises both CEQA and local political issues for cities. And there was more. Senate Bill 812 from last year requires housing elements to analyze the needs of developmentally disabled people. It's a noble concept, but how, Detwiler asked, are city planners supposed to comply with this mandate? He offered no suggestions. The Williamson Act has served as the cornerstone for agricultural land preservation in California since the 1960s, but its future is "very uncertain," Detwiler observed. The state this fiscal year is providing $10 million to counties that lose money because of Williamson Act property tax breaks, but even that minimal amount is unlikely to survive the current budget debate. I continue flipping the pages of my notebook and the 450 pages of conference materials looking for an encouraging sign for local government. I'll let you know if I find one. – Paul Shigley

While redevelopment might once have been considered a key weapon in the War on Poverty, redevelopment officials now find themselves gearing up for a different kind of battle. They rallied the troops today, laying out a strategy for opposing the elimination of redevelopment in order to help close a $24 billion budget gap.  In a videoconference today the leadership and legal counsel of the California Redevelopment Association vowed that the organization would not compromise in its effort to turn back Gov. Jerry Brown's bid to eliminate redevelopment in the state. CRA Executive Director John Shirey repeatedly made a life-or-death analogy, saying "you can't compromise when there's a gun to your head." According to the governor's budget proposal, released last week, all 500-plus of the state's redevelopment agencies would be dissolved as of July and their tax increments freed for a variety of purposes. This threatened dissolution, according to Shirey, gives the redevelopment community no room for negotiation.  Shirey, along with attorney Brent Hawkins and CRA Legislative Associate Dave Jones, pointed to a number of aggressive legal and lobbying strategies that CRA and its member agencies plan to employ in the coming weeks. Shirey recommended that member agencies lobby elected officials, submit op-eds to their local papers, and rally allies such as builders, developers, and business associations. CRA's public relations offensive revolves around an oft-cited claim that redevelopment project areas represent over 300,000 private sector and construction jobs statewide. Shirey admitted, however, that "there's not really a pile of studies" to prove (or disprove) the effectiveness of redevelopment. He noted that redevelopment generates roughly $2 billion annually in revenue but stopped short of insisting that that amount represents a net gain caused by redevelopment activities.  On the legal front, CRA officials said that dissolution of redevelopment would violate as many as three provisions of the state and/or federal constitution: Proposition 22, Article 16, Sec. 16 of the California Constitution, and/or a violation of the contract clause of the state and federal constitutions. Jones called this situation a "conundrum" for the state. They vowed that if lobbying fails to persuade the Legislature to reject the governor's proposal, they would mount legal challenges.   Despite the governor's aggressive actions towards redevelopment, Shirey stopped short of vilifying him, admitting that the state is in dire financial straits and praising the governor for wanting to balance the budget "in an honest way." He did, however, emphasize that redevelopment "didn't get the state into this mess."  He also took swipes at the firefighters and teachers unions, both of which, he said, have been angling to free up the redevelopment tax increment for educational and public safety purposes. Jones noted that the conflict between redevelopment and education "is the crux of our problem" because it pits redevelopment against education, which is of course popular among voters. Shirey insisted that this is also a false conflict because redevelopment monies often go towards school construction and fire stations. During the videoconference, many of the questions from agency participants revolved around existing obligations and the possible transition that would occur if and when redevelopment is abolished. CRA officials emphasized that the Legislature has yet to pass any legislation freezing new obligations and that all existing contracts and legally binding agreements will be honored. Although he encouraged members not to think about dissolution, he said that he has yet to hear concrete plans for what form the "successor agencies" might take. Jones indicated that, rather than take the place of redevelopment agencies, they would likely "wind down and put redevelopment out of business."  CRA officials are intending to ramp up their lobbying efforts in anticipation of the meeting of the Assembly Budget Committee on State Administration, scheduled for Feb. 7.

Even though the recession has brought construction in the Central Valley nearly to a standstill, one of the world's largest suppliers of building materials appears bullish on the region. Cemex  Construction Materials, LP , has proposed  an aggregate mine on a 2,036-acre site in  Fresno County, inciting protest from both environmentalists and local Native American tribes. The site of the proposed  Jesse Morrow Mountain Mine and Reclamation Plan Project , 20 miles to the east of the city of Fresno and 15 miles west of Kings Canyon National Park, embodies many of the resource and land use planning challenges facing much of the state. The process leading up to the final EIR has divided the Choinumni Tribe, a local Indian tribe whose ancestral lands are anchored by Jesse Morrow Mountain ( Wahillish  to the Choinumni) . Local settlers massacred members of the Choinumni Tribe to the south of the mountain in 1852, and the final swath of land still owned by the 500-member tribe—the Choinumni Sacred Burial Grounds—lies on a two-acre plot to the north. Early in the planning process, Cemex reached an agreement with John Davis, leader of the Kings River Choinumni Farm Tribe, by swapping a 40-acre parcel on the north side of the mountain in exchange for cooperation with the mining project. Cemex considers the 40-acre parcel to be of greater cultural significance than the land on the southern end of the mountain, where Cemex would develop the project. Since that initial agreement was struck, a 150-member portion of the tribe—called the Traditional Choinumni Tribe—has opposed the project and the agreement. According to  Dave Singleton, program analyst for the state's Native American Heritage Commission , representatives from the Traditional Choinumni Tribe "didn't feel that the principles on behalf of Cemex respected their spiritual beliefs about the mountain—they feel strongly." Singleton added that Cemex has not improved efforts to consider all of the cultural consequences during the final EIR process in response to his agency's comments on the draft EIR. According to Singleton, Cemex also has not engaged with other tribes in the area. " Our concern is for all the culturally affiliated tribes that have an interest and have ancestral ties to that project and neighboring projects—it is a cultural landscape, not just Jesse Morrow Mountain," said Singleton.  He listed other cultural sites nearby, including the Wahtoke Village to the east of the mountain. In addition to the mountain's value to the Choinumni, the area is significant to the Western Mono tribe in the Sanger area and the Table Mountain Rancheria tribe in Friant. Further complicating the consensus-building process are disputes about the economic benefits and the environmental impacts of the project. Cemex claims that it will minimize the impacts of the project while providing critical supplies to the building industry in the region. The draft EIR, released for public comment in December 2009,  describes an aggregate mining, processing, and distribution facility on land designated for rangeland and irrigated agriculture. Cemex owns approximately 2,036 acres of undeveloped land at the site, of which approximately 824 acres will be developed for the project. The 824 acres includes 400 acres for mining and 40 acres for recycling, ready-mix, and asphalt facilities. The remaining 384 acres would act as a buffer between the mining and processing areas and surrounding land uses. Cemex maintains that the mine would be consistent with the land use designated for the area in the county General Plan. The Friends of Jesse Morrow Mountain—a local group that opposes the project to protect the cultural, historical, biological, water and visual significance of the mountain—contends that there will be significant and unavoidable impacts to aesthetics, air quality, cultural heritage, and vehicle traffic, as identified in the project's draft EIR. Cemex claims, however, that regardless of how much emissions the plant produces, it will ultimately reduce greenhouse gas emissions because of its proximity to producers of cement and other building materials. The draft EIR for the project included greenhouse gas analysis that was the first of its kind in Fresno County. According to Jennifer Borgen, spokesperson for Cemex , " Jesse Morrow Mountain's shorter distance to project sites immediately confers upon the county an ability to show reduced greenhouse gas emissions in compliance with new state laws ahead of dates extending to 2023, at no additional cost to city or county governments, " adding that the project will  save nearly 1,300,000 gallons of fuel annually compared to transporting aggregates from longer distances. The mitigation of greenhouse emissions resulting from the project relative to other options is hard to evaluate, especially in light of a dearth of strategic policies for resource planning at the state or regional level. The most recent geological survey taken by the state pre-dates the downturn in the building industry and recent technological advancements in the production and sourcing of building materials. The California Geological Survey (CGS) projects supply and demand for resources by region in the state. The most recent CGS study from 2007 found that Fresno County has a projected demand of 629 million tons of aggregate resources over the next 50 years, with 71 million tons permitted at the time of the study's release. Since the release of that study, two new aggregate resource facilities have been permitted in Fresno County, and the collapse of the real estate market has slowed housing starts. Many project opponents wonder if the data employed by the state are simply obsolete. The website for the Friends of Jesse Morrow Mountain includes independent analysis of the county's need for aggregate materials. The study, prepared by Richard Young, a retired NASA researcher residing in Dunlap, cites bad or obsolete projection methodology in the draft EIR and the CGS study. Mike Prandini, executive officer of the Fresno/Madera Chapter of the Building Industry Association, acknowledges that there is no current shortage of aggregates because of the ongoing building slump in the region. Nevertheless, the BIA supports the mine because builders expect that the return of the housing industry and the construction of the California High Speed Rail project will soon require large amounts of aggregates, especially concrete. "Builders are always concerned about aggregates," said Prandini. "Three of four years ago, there was real problem getting concrete. Prices hit $100 a yard—normally it is $50-60 a yard." Cemex and its predecessors have provided aggregates to the Fresno region since 1924 from the Rockfield Plant near Friant. With that mine reaching the end of its supply, Cemex intends the Jesse Morrow Mountain project to continue the company's production capacity in the region. Cemex decided on this site as the option with the least amount of environmental impact after also considering a 3,000-acre site closer to the Kings River. The Fresno County Planning Commission is expected to hear the final EIR for the project in March of 2011. With the controversial nature of the project in mind, the Planning Commission has announced that the public hearing period for the final EIR will last 30 days, instead of the legally required ten days. The county will conduct the CEQA review, with the possibility that the U.S. Army Corps of Engineers or the U.S. EPA intervene if the project does not satisfy the permitting criteria of industry regulations. Contacts & Resources Draft EIR (pdf): http://www.co.fresno.ca.us/departmentpage.aspx?id=4322 Friends of Jesse Morrow Mountain CGS Survey Briza Sholars, Planner III,?Fresno County Public Works and Planning Department:  (559) 262-4454 Jennifer H. Borgen, Director of Communications, External; Cemex, (713) 722-1799 Michael Prandini, Chief Executive, Building Industry Association – Fresno/Madera Chapter: (559) 600-4207 Dave Singleton, Program Analyst, Native American Heritage Commission , (916) 653-6251

When Proposition 84 passed in 2006, it reflected a booming economy. Providing $5.4 billion for clean water, parks, and open space the measure was seen as an important way to protect the state's natural resources at a time before many were worried about $28 billion deficits or maxing out the state's bonding capacity.  Prop. 84's primary focus is on waterways and water management. However, it also includes a relatively tiny set-aside for innovative planning that is proving to be a godsend to planning departments that are suffering unprecedented budget cuts (see CP&DR Insight Vol. 25, No. 5, March 2010 ).  Last month, the Strategic Growth Council approved the first round of Sustainable Communities Planning Grants. The council allocated roughly $23 million to 40 projects across the state. In many cases, this infusion of cash from Sacramento has given life to long-range planning activities and special projects that, despite the impetus of new statewide smart-growth incentives, otherwise would have been shelved indefinitely.  The economic crisis comes at an unfortunate time for cities and regional agencies, such as councils of government, that are gearing up to comply with SB 375, the 2008 law that promotes mitigation of greenhouse gases through smart-growth principles.  "(Applicants are) trying to do something that will help them not only meet their SB 375 targets but also really look at improving the quality of life in their communities," said Heather Fargo, executive policy officer at SGC.   Many of the municipal recipients are updating general plans or specific plans that seek to foster density and create greater harmony between density and transportation. Many of the MPO recipients will be creating region-wide blueprints and Sustainable Communities Strategies, per SB 375.  Stakeholders will continue to debate whether SB 375's regional targets are strong enough, too strong, or just right. However, localities are almost unanimous in expressing the complaint that SB 375 comes with almost no fiscal support from Sacramento. Many have lamented that SB 375 is an "unfunded mandate" that puts pressure on localities while offering scant assistance from the state.  "This is probably the first time that this kind of money, in this amount…has been available for planning efforts in a very long time," said Kim Murry, director of Long Range Planning for the City of San Luis Obispo. "It provides an alternative to funding this update that  the city probably couldn't have taken on by itself given current budget constraints."  The city received $880,000 to update its land use and circulation element. Prop. 84 funds are thus filling a crucial funding gap for many of the localities and agencies that received funding (three metropolitan planning organizations were given conditional awards). That leaves roughly 80% of approximately 188 applicants—totaling $94 million in requests—wanting for funds. SGC has not yet released a list of all applicants.  For many of the successful applicants, Prop. 84 funding has been approved for bread-and-butter projects that cities would normally fund in the normal course of business. These projects include area plans and general plan updates. In many cases, these updates have languished for lack of funding.  "General plans are often modified, sometimes updated, but there's no mandate stating when and how often they need to be, so it's very sporadic and all over the place," said Jena Price, Global Warming Coordinator at the Planning and Conservation League.  "Disadvantaged communities…would otherwise be left in the dust."  Tales of desperation abound among some of the recipients who struggle just to keep their doors open. Cities in the Central Valley such as Corcoran and Merced have suffered double-blows of the recession and the region's perennially poor air quality. Corcoran received a relatively large grant of $450,000 for its general plan update. (Disclosure: CP&DR Publisher Bill Fulton consults for the City of Corcoran.)  In funding general plan updates, the SGC hopes that cities will come up with plans that are not just revisions of current plans but, in fact,  revolutionary documents that serve as models for other cities.  "For a lot of people, even if they are just doing  bread-and-butter general plan updates, (they are responding to) the new world and the need to look at climate change, energy conservation, TOD," said Fargo. "Those aren't necessarily things that they've had in their general plan before." Some plans have been around since before climate change was even recognized as an environmental issue, much less a planning issue.  In Imperial County, tiny Calipatria—population 7,200, including 4,000 prison inmates—received $175,000 for an update of a general plan that has, because of the city's impoverishment, remained unchanged since 1992. Justina Gamboa-Arce, a contract city planner with the City of Calipatria, said that Calipatria's isolation and the county's own financial constraints meant that the city had no other option than to seek Prop. 84 funding.  "We pretty much knew if it didn't get funded through this program, there really isn't anything else out there," said Gamboa-Arce. "So if you don't get this, you're going to stay, in essence, another 20 years without a general plan update."   Twenty percent of the Sustainable Communities Planning Grants are earmarked for the benefit of economically disadvantaged communities, including Calipatria and Corcoran.  If the SGC had taken into account economically disadvantaged planning departments, then almost every project would have qualified for the earmark. Community Development Director Susan Atkins, of the City of Corcoran, described her city's level of disadvantage as "unbelievable."  Some recipients, however, are in less dire straits and are pursuing  projects that might be considered experiments or luxuries. The City of Morgan Hill received $380,000 to create a plan to install solar power generators along a freeway right-of-way.  Upscale Santa Monica, whose planning department is on stable financial footing, has received an embarrassment of riches, not only from SGC, but also from the federal Department of Housing and Urban Development. The city received $550,000 in Prop. 84 funds for a neighborhood plan at the Memorial Park Station, which will be a stop on the Expo Line Phase 11. It also received an unrelated $625,000 Sustainable Communities Challenge Grant—a joint project of the federal departments of Housing and Urban Development and Transportation—to plan a transit village at Bergamot Station, the next station on the Expo Line.  Santa Monica officials speculate that their applications succeeded because both projects tie into a recent general plan update that promotes sustainability and smart growth principles holistically throughout the city.  "I think that it was easier for both the federal and the state agencies to see that we're already thinking this way, about how to integrate transportation and land use…we have stated goals," said Santa Monica Senior Planner, Liz Bar-El.  SGC officials say that some cities' goals were not so clear. Of the 188 applications, they said that they were able to reject many simply because—regardless of financial need—the applications were sloppy or because proposed projects simply did not meet the standards set out by the grant guidelines. Twenty-five such applications were deemed ineligible for consideration.  Though some cities may have been disappointed, the recipients cover a diverse geographic and socioeconomic range.  "There's a huge need out there and it does appear that they did disburse the funds as evenly as possible," said Atkins of the SGC's approach to the Central Valley.  Fargo said that, desperate as some other cities may be, there is hope for them later this year. She said that SGC will be accepting another round of applications this summer and that projects that got shut out in 2010 have a good chance of succeeding in 2011.   "The good news is that we do have two more funding cycles," said Fargo. "We're hoping people will look at what has been funded….and look at what they might do and how they might improve their application."  SGC may alter the selection process somewhat for the next round. In particular, Fargo said that so many applications included economically disadvantaged communities that a separate set-aside may not be necessary. Economic disadvantage will remain a selection criterion. For those jurisdictions that were passed up this year, Fargo said that some need almost no changes to be frontrunners this year. And she said that SGC staff will be available to help localities on their applications.  For both recipients and future applicants alike, officials caution that departments cannot become dependent on state funding, especially given the drastic budget cuts that Gov. Jerry Brown has proposed. Recipients say, however, that they are aware of the grants' constraints and are treating them as one-time windfalls that are unlikely to recur. Most, in fact, are hiring temporary outside consultants rather than rehiring or taking on new full-time staff members.  Overall, however, Fargo said that she sees Prop. 84 grants as job-generators for planners. And she said that a lousy economy for builders might prove to be an ideal time for innovative planning.  "The timing is great: because we are in this recession, we're not seeing a lot of building," said Fargo. "But when the market comes back, you're ready to go and you're able to have a lot of up-front work done."   Contacts & Resources Sustainable Communities Planning Grants Funding Report Susan Atkins, Community Development Director, City of Corcoran, 559.992.2151 Liz Bar-El, Senior Planner, City of Santa Monica, 310.458.8341 Heather Fargo, Executive Policy Officer, Strategic Growth Council , 916.653.9205  Justina Gamboa-Arce, Planner, City of Calipatria, 760.348.4141 Kim Murry, City of San Luis Obispo, 805.781.7100 Jena Price, Global Warming Coordinator, Planning & Conservation League , 916.313.4508

When organizers of the UCLA Extension Land Use Law and Planning Conference sponsored sessions on ethics in previous years, yawns and frequent checking of cell phones was the overwhelming response. They expect a far more engaged audience this year for the session titled "Unringing the Bell: When Land Use Decision Making and Ethics Collide." The 25th annual Land Use Law and Planning Conference is scheduled for Friday, January 21, at the Millennium Biltmore Hotel in downtown Los Angeles. About 400 planners, attorneys, development professionals and government officials are expected to attend the day-long session that will also address recent and proposed legislation, SB 375, CEQA developments and other topics.  Land use has not been a major part of the ugly stories coming out of Bell – where elected and appointed officials enriched themselves with public funds – and Vernon – which has been run like a private fiefdom for decades. However, land use is at the center of upcoming trials for three former San Bernardino County officials related to a $102 million county settlement with an Upland developer and major campaign donor. And it's easy to see that the land use planning and entitlement processes are ripe for corruption because there is so much money at stake for private parties. "The concern is that these are bellwether cases, but they are not isolated," said San Gabriel City Manager Steven Preston, who will moderate the ethics panel. He and the other participants intend to ask audience members to submit anonymous questions about ethics issues they have encountered. The panel will also build a scenario for how someone might start slipping down a slippery ethical slope. Scheduled for the panel are Sonia Carvalho, a partner with the Best, Best & Krieger law firm and the city attorney for Claremont; City of Clovis Deputy City Planner David Fey; and David Snow, an attorney with Richards, Watson & Gershon. All three bring a different perspective to the issues, Preston noted. A different lawyer from Carvalho's firm served as city attorney in Bell and has been implicated in the scandal. Although Carvalho won't be addressing the Bell situation directly, Preston said she is a frequent speaker on ethics issues. Fey lived through Operation Rezone, a federal sting in Clovis and Fresno during the late 1990s that resulted in 16 convictions of public officials and developers. Fey can address the situation in a jurisdiction where large-scale growth is expected, Preston said. The city attorney in Beverly Hills and Rancho Palos Verdes, Snow is familiar with pending state legislation and well-versed in the American Planning Association code of ethics. "We've had ethics panels in the past, and they didn't draw much attention," said Preston. In 2006, Los Angeles County District Attorney Steve Cooley talked about the activities of his local government corruption unit. But Cooley is not the most compelling speaker, and the atmosphere was much less charged then. When the ethics discussion gets started at this year's conference, I bet everyone will put down the smart phone and listen. – Paul Shigley

The dissolution of redevelopment agencies may be the biggest bombshell that Gov. Jerry Brown dropped on the land use community. But it is not the only one. He is also targeting the Williamson Act, Enterprise Zones, and fire safety in order to help close the state's $28 billion deficit.  Enterprise Zones Like redevelopment project areas, Enterprise Zones are intended to stoke economic development in disadvantaged areas. However, rather than using tax increment financing and being orchestrated by a public agency, Enterprise Zones simply confer tax credits and other financial incentives on businesses that set up shop within the zones.  The proposed budget calls for the elimination of all Enterprise Zones and related benefits. Similar zones such as Targeted Tax Areas, Manufacturing Enhancement Areas, and Local Agency Military Base Recovery Areas would also be eliminated. Because these zones involve relatively straightforward tax credits, the savings estimate is relatively straightforward: $343 million in 2010-11 and $581 million in 2011-12.  The proposed budget includes the rationale that local economic development strategies should be managed locally. These strategies are, in fact, not of "statewide interest" "because the primary benefit of these zones is to shift economic activity from one geographic region within California to another geographic region within California," according to the budget draft. As with redevelopment agencies, the draft budget also includes some scathing criticism of Enterprise Zones:  The Legislative Analyst's Office "California's Enterprise Zone Programs" – 2005 found that EZs have little if any impact on the creation of new economic activity or employment. That activity would have occurred elsewhere, according to the analysis.  The Public Policy Institute of California found "Do California Enterprise Zones  Create Jobs?" – 2009 that there was "no statistically significant effect on either employment levels or employment growth rates" within enterprise zones as compared to neighboring areas.  The greatest benefits of Enterprise Zones may not accrue to the companies or localities but in fact to the consulting and accounting firms that facilitate the relocation of a business to an Enterprise Zone.  Enterprise Zones were established in 1984, with a maximum of 42 zones throughout the state at any one time. Zones are approved for 15-year terms. Gov. Arnold Schwarzenegger presided over on an Enterprise Zone bonanza, approving 36 in his two terms. New Enterprise Zones were approved in Anaheim, the Santa Clarita Valley, and the Los Angeles Harbor area just last month.  California Land Conservation (Williamson) Act A relatively minor item in the state budget, the Williamson Act for farmland protection cost the state $35 million in 2009-10.  Under the Williamson Act, owners of farmland can voluntarily agree to keep their land in agricultural production for as open space -- rather than convert it to other uses -- for a specified period in exchange for an artificially low tax assessment. The 1972 Open Space Subvention Act provides for the state to reimburse local governments for lost property tax revenue.  The governor proposes the permanent suspension of Wiliamson Act subventions. The budget invites localities to run the program as they see fit.  Wildlands Fire Protection The Department of Forestry and Fire Protection (Cal Fire) provides wildland fire protection services in over 31 million acres of state responsibility areas (SRAs). Although the number of acres in SRAs has been relatively constant since the 1950's, the composition of SRAs has greatly changed. Population and urban development in SRAs has grown significantly in recent decades, increasing fire risks and state costs. Under this proposal, responsibility for fire protection and medical emergency response in these populated wildland areas will be assumed by local government.The budget insists that jurisdictions making land use decisions which result in housing development encroaching in wildland areas also provide the necessary emergency response services associated with more highly populated land use patterns. In other words, local jurisdictions may not be able to approve development in unincorporated areas without also planning and paying for fire protection.  It is estimated that this proposal will result in the realignment of up to $250 million of Cal Fire's fire protection program to local governments.

As expected, the budget proposed today by Gov. Jerry Brown calls for the wholesale elimination of redevelopment agencies.  This dramatic move would free up roughly $5 billion in annual tax increments that redevelopment agencies control and would redirect those increments to fund a range of local services.  The proposal has set off what will likely be an ongoing debate over the value of redevelopment as it has been implemented in the 59 years since California voters approved a constitutional amendment allowing the use of tax increment financing to combat blight.  While the governor described the proposed budget as  "a tough budget for tough times," redevelopment officials have already launched their counter-offensive. John Shirey, executive director of the California Redevelopment Association, called the proposal "  smoke and mirrors that will bring little financial gain for the State, but will cause widespread and significant economic pain in communities throughout California."  The proposed budget's chapter on Tax Relief and Local Government includes a wide-ranging indictment of redevelopment. The budget offers the following reasons, among others, why redevelopment fails to live up to its promise:  Because redevelopment agencies keep the incremental monies that are generated within redevelopment, even tax increases that stem simply from inflation or property value increases--rather than direct agency intervention--end up in agency coffers. Meanwhile, the base tax that is distributed to other recipients remains the same and loses real value over time. The budget claims that over time, the increment kept by agencies can "dwarf" the base tax revenue that goes to local services like schools.  According to a 1988 study by the Public Policy Institute of California,  "fewer than one?quarter of the (redevelopment) projects came close to being responsible for the property taxes they received. These projects were also the ones with the most vacant land."  Redevelopment agencies have failed to develop affordable housing, which is supposed to consume 20 percent of agencies' income. Instead, many agencies have built up large balances.  In the aggregate, redevelopment agencies do not create a net increase in development. Development that occurs in redevelopment project areas would have occurred elsewhere in the state. The budget lists the following relative detriments of the diverting the tax increment:  Diversion of tax increment not only diverts a total of $5 billion from other taxing agencies but also creates a complicated system by which the state must "backfill" and compensate K-14 schools at a cost of approximately $1.8 billion annually. Local services such as law enforcement and emergency response rely largely on property taxes and local sales taxes. While the former is expected to stabilize, the latter is expected to take years before returning to pre-recession levels.  The budget proposes the following steps to disbanding redevelopment agencies and redistributing their tax increments:  By July, existing agencies would be disbanded and their debts would be gradually retired by local successor agencies.  Starting in 2012-13, the amount of tax increment remaining after paying pre-existing depbts and contractual obligation would be distributed to cities, counties, and K-14 schools in amounts proportionate to their share of the base countywide property tax. The net gain for these entites is estimated to be $3 billion annually.  Monies left in agencies' coffers that are earmarked for low- and moderate-income housing would be shifted to local housing authorities for the same purpose.  Fund future local economic development projects via a 55-percent voter approval for limited tax increases and bonding against local revenues for projects that are currently done by redevelopment agencies.  This announcement comes on the heels of what redevelopment officials considered a disastrous year. In May a judge upheld a 2009 law ordering the transfer of $2.01 billion in tax increment from agencies statewide to help fund schools. Agencies were then ordered to pay $1.7 billion of that payment, with the rest due this year.  "Without decisive action, the state's severe budget problems will persist, threatening economic recovery, job growth, public education and the quality of life in California," said Gov. Brown in a statement. "The adoption of this budget will position the state to lead the country as it slowly recovers from the Great Recession." Redevelopment officials contend, however, that the current system and the use of tax increments can stoke that recovery.  "The State and local governments have very few tools to stimulate the economy, but redevelopment is the exception," said the CRA's Shirey in a statement.  "Redevelopment is already a locally-governed service which generates hundreds of thousands of jobs." The governor's spending plan assumes that all statutory changes to implement budget actions will be adopted by the legislature in March, allowing the necessary ballot measures to be put before the people at a June special election.  Please visit CP&DR for continuing coverage of this proposal and reactions from around the sate.