A Superior Court ruling invalidating the environmental impact report for El Dorado County's general plan is likely to reopen debate over the amount of growth allowed in the county and puts into question the future of several large developments. In a 142-page ruling, Sacramento Superior Court Judge Cecily Bond determined that the EIR violated the California Environmental Quality Act in 23 different ways. The judge found the county did not adequately address, among other things, impacts on water sources or traffic congestion. Furthermore, the EIR "failed to serve as an ‘environmental alarm bell' or a ‘document of accountability,' which the Supreme Court has stated are two of the essential functions of CEQA," Bond wrote. The ruling means the county will not approve discretionary projects during the near future, County Counsel Lou Green said. In a few months, the county hopes to receive a court order outlining how to deal with pending projects while completing the EIR work and adopting another general plan, he said. "In the meantime, there is no prohibition against issuing building permits because there is no finding of consistency (with the general plan) required for that," Green added. Revising the EIR to satisfy the ruling will take six to nine months, Planning Director Conrad Montgomery estimated. However, with two new members taking seats in January, the Board of Supervisors appears to have a slower-growth attitude, which could mean a much longer debate over development in general lies ahead. Attorney Stephan Volker — who represented a group of 18 homeowner groups, environmental organizations and government agencies — contended the county implemented a bait-and-switch scheme by not revising a 1993 EIR after making major changes to the proposed general plan in 1995. "The public was fundamentally misled into thinking this document (the general plan) would reduce environmental impacts and result in moderate or slow population growth," Volker said. "Now it's obvious the plan is void and the county will have to go back to the drawing board." County officials contended the 1996 general plan allowed less construction than the previous general plan, even though the new plan projected population growth from 150,000 to 370,000 by 2015. Judge Bond said the EIR should have considered the impacts of not revising the general plan and of a realistic slow-growth alternative. The judge, however, rejected challenges to policies in the general plan and denied a claim that the document violated "the public trust." Still, the decision requires El Dorado County to set aside the general plan, said Jim Moose, a Sacramento CEQA attorney for the county. "It's a very tough decision. It's a very strict interpretation of CEQA," Moose said. Volker vowed to continue fighting developments that would "prejudice future planning options." Large projects should go on hold until the county adopts an adequate general plan, he said. Planning Director Montgomery seemed to agree. "What we are looking at is a very wide-ranging moratorium on discretionary projects,'' he said. The judge's decision placed in limbo for an unknown period five large western county projects totaling about 5,200 homes, plus retail, office, and industrial development, according to Montgomery. Beginning in 1989, the county spent 6 1/2 years and $4 million revising its general plan. A consultant, Sedway Cooke Associates, finished a draft plan in 1992, but the Board of Supervisors then assigned county planners to work on the plan. The staff completed another draft plan in 1994, only to have a new, pro-growth board further alter the document before adopting it in 1996. The coalition represented by Volker then filed suit. Meanwhile, an initiative that growth-wary El Dorado voters approved last November has received a legal challenge. Measure Y was intended to force builders to pay for roads serving new subdivisions. The developers' lawsuit, filed January 29 in El Dorado Superior Court, takes issue with portions of Measure Y but does not contest the underlying theme that developers should pay for their traffic impacts, said attorney Michael Zischke, of San Francisco. Instead, builders contend the initiative fails to provide required exceptions for affordable housing projects, illegally removes road-spending from the Board of Supervisors' purview, and calls for a new election in 10 years with no authority to do so, Zischke said. Also, the measure conflicts with El Dorado County general plan policies regarding road funding and acceptable levels of service, Zischke said. Judge Bond did not throw out the general plan nor order the county to amend it, he noted. Green, the county counsel, intends to put the Measure Y lawsuit on the back burner because the initiative deals with standards for approving projects under the general plan — whose status now is uncertain. Contacts: Stephan Volker, attorney, Brecher & Volker, (510) 496-0600. Conrad Montgomery, El Dorado County planning director, (530) 621-5355. Lou Green, El Dorado County counsel, (530) 621-5770. Michael Zischke, attorney, Landels Ripley & Diamond, (415) 512-8700.

In a split decision, the California Supreme Court has once again expanded the scope of the anti-SLAPP law. This time, the court concluded that an allegation of racism in small-claims court and a complaint to the federal government does constitute the type of "issue of public significance" described in the law. In overturning a ruling by the First District Court of Appeal, the five-member Supreme Court majority rejected the argument that a nonprofit organization's tenant counseling activities were private in nature and neither promoted free speech nor informed the public about possible wrongdoing. The court also found that a defendant using the anti-SLAPP law need not make a separate showing that an issue of public significance was involved. In a separate opinion that concurred with part of the opinion, Justice Marvin Baxter -— joined by Justice Janice Brown — warned that the majority is "holding that EVERY lawsuit based on ANY actionable word uttered or written in connection with ANY legislative, executive, judicial, or other "official" proceeding in the state of California will henceforth, as a matter of law, be deemed a retaliatory SLAPP suit." The term "SLAPP" suit - the acronym stands for "strategic lawsuits against public participation" - is often used by citizen activists to refer to punitive lawsuits filed by developers and others to discourage citizen activism. (For background, see CP&DR, November 1990.) The law permits a special motion to strike a cause of action that is found by the court to be a SLAPP suit. Appellate courts have issued a dozen or so rulings on the SLAPP law, most of which have emerged from land-use disputes. However, the Briggs v. Eden case is the Supreme Court's first ruling on the issue. The Briggs case lingered on the Supreme Court's docket for several years, and the Legislature changed the law in 1997, partly in response to the Court of Appeal's ruling in the Briggs case. The majority relied heavily on the 1997 legislative changes in reaching its ruling. The Supreme Court's ruling clarifies an issue that has been the subject of disagreement even among different panels within the First District Court of Appeal. The case began when the Eden Council for Hope and Opportunity, a nonprofit organization in Hayward, began counseling several tenants who rent residential property from the plaintiffs in the case, Dan and Judy Briggs. In 1990, tenant Pamela Ford, an African-American, complained to ECHO that the Briggses were treating her differently than a white tenant. With ECHO's assistance, she filed a complaint with the federal Department of Housing and Community Development and filed a small-claims action in court. The Briggses were exonerated by HUD but Ford prevailed in the small claims court. Meanwhile, in an unrelated action, the Briggses sued ECHO and obtained a court order for the organization to produce its files. The Briggses alleged that ECHO employees had called them racists and specifically said Dan Briggs is "a redneck and doesn't like women." In 1991, Briggs called ECHO, seeking the names and addresses of ECHO board members so he could complain to them about the fact that ECHO had not produced the documents he had requested. Subsequently, Briggs had a telephone conversation with Caroline Peattie, ECHO's assistant executive director. According to the files, while talking with Briggs, Peattie wrote "KKK" on her message pad. In later meetings, ECHO staff members discussed whether Briggs was mentally unbalanced and made notes suggesting that the Briggses were on a "witchhunt." The Briggses later filed a lawsuit seeking damages for defamation and intentional and negligent infliction of emotional distress. In response, ECHO filed a motion to strike the complaint under the anti-SLAPP statute. The law requires that the anti-SLAPP law be applied only in cases where the statements in question are made in connection with issues "pending before or under consideration by executive and judicial bodies." Otherwise, the law can be applied only if the matter at hand involves an "issue of public significance." The Briggses argued that ECHO's alleged activities did not involve matters of "public significance," meaning they were not covered by the law. Alameda County Superior Court Judge Bonnie Lewman ruled in favor of ECHO's motion to strike the complaint and awarded ECHO attorney fees. The Briggses appealed both. The First District Court of Appeal, Division One, consolidated the two appeals and reversed Judge Lewman on both counts. The court held that ECHO had not made a prima facie argument that the lawsuit arose from an act by ECHO in furtherance of its constitutional petition or speech rights in connection with a public issue. Therefore, the appellate court concluded, it would not be covered by the anti-SLAPP law unless it dealt with an issue of public significance. "We remain committed to our earlier position that a lawsuit qualifies as a SLAPP suit only if it challenges a statement on a PUBLIC issue made in an official proceeding or a statement made in connection with a PUBLIC issue under review in an official proceeding." Division One's presiding justice, Gary Strankman, dissented from part of the ruling, concluding that the HUD and small-claims proceedings did not involve a public issue. He did, however, agree with the conclusion that a public issue showing is separately required. In 1997, after the California Supreme Court had agreed to hear the case, the Legislature amended the anti-SLAPP law and directed the courts to construe it as broadly as possible. In her opinion for the Supreme Court majority, Justice Kathryn Werdegar stated that the Supreme Court would have reversed the Court of Appeal ruling in any event but that the 1997 legislative amendments buttressed the argument to do so. The legislative amendments were but one of four arguments she used in reversing the appellate court. First, Justice Werdegar argued that the "plain language" of the anti-SLAPP statute argued in favor of ECHO's position that no separate finding of a "public issue" was required. All of ECHO's actions, she stated, were in connection with official proceedings. But, she added: "Even assuming, for the purposes of argument, that plaintiffs accurately have characterized ECHO's activities as constituting neither self-interested nor general political speech, we cannot conclude such activities thereby necessarily fall outside the protection of the anti-SLAPP statute." Indeed, she added, "the statute does not require that a defendant … demonstrate that its protected statements or writings were made ON ITS OWN BEHALF (rather than, for example, on behalf of its clients or the general public)." Werdegar also concluded that ECHO's arguments were valid under legal "principles of statutory construction," where different words or phrases are used in the same connection in different parts of the statute. In this case, she was referring to the various ways in which the statute deals with the question of "public interest" or "public issues." Under principles of statutory construction, she concluded, the law imposes no requirement to make a separate finding that the statements were made in connection with a public issue. Finally, Werdegar concluded that broad construction of the anti-SLAPP statute makes sense "from the standpoint of judicial efficiency." "In effectively deeming statements and writings made before and connected with issues being considered by any official proceeding to have public significance PER SE, the Legislature afforded trial courts a reasonable, bright line test applicable to a large class of potential section 425.16 motions." This last line of reasoning was a direct counter-argument to Justice Baxter's concurring and dissenting opinion, which argued that a broad construction would open the floodgates to anti-SLAPP motions to strike. In his lengthy separate opinion, Baxter agreed that ECHO had been acting in connection with a public issue. However, he disagreed with the majority's conclusion that a separate showing regarding a public issue was not necessary. Acknowledging that the anti-SLAPP law is a "powerful tool," he noted that it is not "generally available to the parties to any civil action." "The majority's holding in this case belies that carefully delineated legislative purpose and will authorize use of the extraordinary anti-SLAPP remedy in a great number of cases to which it was never intended to apply," he wrote. The Case: Briggs v. Eden Council for Hope and Opportunity, No. S062156, 99 Daily Journal D.A.R. 687, 99 C.D.O.S. 554 (filed January 21, 1999). The Lawyers: For Briggs: Kevin Anderson, Anderson & Blake, (408) 993-8493. For ECHO: Mark Goldowitz, Brancart & Brancart, (510) 835-0850.

In a split decision, the Fourth District Court of Appeal has ruled that the City of Riverside's requirement that poolrooms be closed from 2 a.m. to 6 a.m. is unconstitutional because it denies poolroom owners equal protection under the law. Noting that the ordinance dates back to 1909, Acting Presiding Justice Thomas Hollenhorst wrote for the majority: "Unfortunately, times are different today, and there are many establishments that cater to idleness and are open all night. The City cannot rationally claim that it is fighting crime merely by closing down poolrooms for four hours each morning." In dissent, Justice James Ward concluded that the city's decision to single out poolrooms is a legislative prerogative that the court should not overturn. "The majority's opinion essentially takes the City of Riverside to task for passing an ordinance without a rational basis," he wrote. "There was a rational basis for the City's decision and it is not for us to second guess the legislative body." The case emerged from Riverside's attempt to regulate poolrooms more strictly after several new ones opened in the city in the early 1990s. Having regulated poolrooms in some form since 1909, the city has required a special zoning permit for poolrooms since 1972. After two decades of little poolroom activity, however, four new poolrooms applied for permits in 1991. At the time, the permit process simply required a city investigation of the applicants and their backgrounds. Seeking more stringent regulations, the City Council imposed a moratorium on new poolroom permits and ordered the city attorney and the police department to draft a new poolroom ordinance. In 1992, the police department presented a draft ordinance to the Riverside City Council land use committee that called for closing poolrooms between 2 a.m. and 6 a.m. However, the police department did not conduct any analysis of crime at poolrooms during the nighttime or in comparison to any other public amusements that are open all night. After some changes by the city attorney, the new ordinance — with the hours restrictions — was adopted by the City Council. Poolrooms were expected to abide by it by March of 1993. Subsequently, the City Council amended the poolroom ordinance to state that public safety concerns required the restriction of hours. Jim Estavanovich, owner of Mr. Cue's Family Billiards, sued, claiming his constitutional rights had been violated. After a trial, a Riverside County Superior Court judge ruled in favor of Estavanovich. The city was enjoined from enforcing the hours, and Estavanovich was awarded inverse condemnation damages of $17,800. The city appealed, claiming that Estavanovich failed to establish that the ordinance is unconstitutional on its face. On appeal, Justice Hollenhorst placed great emphasis on the fact that the ordinance singled out poolrooms rather than all places of public amusement. "It is clear that the regulation of crime is a legitimate use of the police power," he wrote. "Further, since places of amusement and poolrooms are not suspect classes, a city can regulate either places of amusement or poolrooms for public safety reasons. On the other hand, it is an entirely different question whether a law that separates poolrooms from all other places of amusement, and all other places open late at night, creates a rational classification — and not an arbitrary distinction." Hollenhorst went on to criticize the city for singling out poolrooms. "A darts parlor or bowling alley would be allowed to remain open all night, but a poolroom would not. It is irrational to believe that the closing of the poolroom in a bowling alley at 2 a.m. will discourage criminal activity when the persons playing pool can remain in the bowling alley." Hollenhorst also concluded that "it is not even clear that there is any significant crime to regulate at poolrooms" because the few statistics the city police provided on this topic addressed only police calls to poolrooms and did not compare them to other public amusements. Among other things, the police statistics showed that almost all of the poolroom police calls between 2 a.m. and 6 a.m. originated from one pool hall and most of them dealt with activity at a nearby drug house. "In the absence of any reason to associate crime with poolrooms as opposed to other places of amusement," Hollenhorst concluded, "it is irrational for the City to single them out from other establishments and shut them down during certain hours. This classification scheme is arbitrary, discriminatory, and unconstitutional." In his dissent, Justice Ward argued that the city was entitled to a presumption of constitutionality and that Estavanovich had failed to establish that his equal protection rights had been violated. Ward was especially critical of the majority for "reading into" the text of the ordinance and seeking to overturn a legislative decision. "The question before this court is not whether we agree with the City's decision to close poolrooms between 2 a.m. and 6 a.m.," he wrote. "It is not our job to make that judgment call. This is a legislative prerogative. We merely have to find it debatable whether restricting the operating hours of pool halls will accomplish the stated goals of the legislative body. I find it debatable. The plaintiffs' burden is to convince us that it was irrational for the City to believe the regulation of hours of operation would achieve its goals. They have not convinced me." The Case: Estavanovich v. City of Riverside, No. E018016, 99 Daily Journal D.A.R. 845, 99 C.D.O.S. 713 (issued January 25, 1999). The Lawyers: For Estavanovich: Harry H. Histen, (909) 682-4121. For City of Riverside: Gregory P. Priamos, Supervising Deputy City Attorney, (909) 782-5567.

Elsewhere Near River City … West Sacramento hopes to become home to a minor league baseball team in little more than a year. The 12-year-old city is forming a Joint Powers Authority with Yolo and Sacramento counties to issue $40 million worth of taxable bonds to build a 10,000-seat baseball stadium near the Sacramento River. The new owner of the Oakland A's Triple-A franchise, now located in Vancouver, B.C., wants to play ball in West Sacramento in April 2000. Under the plan all three entities approved in February, Sacramento County will guarantee two-thirds of the annual $3.3 million bond payment with its motel bed tax revenues, explained Geoffrey Davey, Sacramento County chief financial officer. West Sacramento will pledge its general fund, and Yolo County will pledge its property tax increment from area development. Stadium revenues will pay off the 30-year notes. The team must average 3,500 fans for each of its 71 annual home games to generate enough money to retire the debt, according to a West Sacramento analysis. West Sacramento also intends to form a Mello-Roos District to issue $8.5 million worth of bonds for infrastructure near the stadium and spend another $1.5 million of city funds on similar needs. "Economically, it doesn't mean a whole lot," West Sacramento Mayor Christopher Cabaldon said of the baseball stadium. "There are some very localized impacts that we expect to see within a few blocks of the stadium. For us, it's a quality of life issue. It's a good, quality, family-oriented entertainment asset." Sacramento County Supervisor Roger Dickinson agreed the desire to add a regional entertainment attraction is driving the deal. However, the chance for three jurisdictions to work together is enticing because regional cooperation is needed to address tougher issues, such as flood control, air pollution, traffic congestion and economic development, he said. Significantly absent from the deal is the city of Sacramento. The city for more than 10 years has pursued a big-league baseball or football stadium next to Arco Arena, in the north end of town.

The state's new Attorney General, Bill Lockyer, ran for that office as a friend of the environment, and early indications are that he intends to have a high profile on environmental issues. Lockyer mentioned protection of natural resources in his inaugural speech, and, in one of his first official acts, announced greater involvement by his department in a lawsuit to ban personal watercraft, such as Jet Skis, from Lake Tahoe. Since then, the Democrat from Alameda County has requested more money to beef up environmental enforcement efforts. Environmentalists also hope he'll make enforcement of the California Environmental Quality Act a high priority. Early indicators show that he's planning to do so. The new attorney general met with environmental groups early in his administration, and in mid-February he addressed a lunch meeting for attorneys sponsored by the natural resources subsection of the State Bar of California. Lockyer's aides were quick to emphasize that the office will see a shift towards more environmental litigation. "He will be looking for bigger cases and more independent actions," than former Attorney General Dan Lungren, said Special Assistant Attorney General Patricia Wynne. "He's told deputies to come to him with cases to protect the environment." Some environmental groups have suggested that the new attorney general direct his office to reinstitute review of negative declarations and notices filed by local and state lead agencies, as was done under Attorney General John Van de Kamp, said Tara Mueller, an environmental attorney in Oakland. Under Van de Kamp, the AG's office often commented on the adequacy of local CEQA reviews, Mueller said. But the practice stopped when Lungren was in charge. "The office did essentially no CEQA enforcement under Lungren," said Cliff Rechtschaffen, an attorney and law professor who worked in the Environmental Section of the Attorney General's office under both Van de Kamp and Lungren. "It still got the complaints, but did nothing." The additional money sought for the department will provide a more stable funding source for the environmental prosecution unit, said Lockyer press secretary Hilary McLean. The requested $778,000 will fund six staff members, including 4 1/2 lawyers. In the past, attorneys were borrowed from other sections of the AG's office, but the new money will allow the department to fill vacant positions in the environmental law section. The environmental unit "will feel somewhat liberated, I hope," Lockyer said during his Sacramento speech to the bar members. Lockyer was asked during the same meeting with attorneys whether his office's revocation of an Attorney General's opinion issued under Lungren on reproductive rights might extend to other AG opinions, such as a 1995 opinion defining the scope of "take" under the California Endangered Species Act. Lockyer, after an initial discussion with his staff on the "take" opinion, reported that it was fairly reasoned, and he said opponents might want to go the Legislature for recourse instead of his office. Still, Lockyer said he welcomes comments on the opinion. The "take" opinion, number 94-605, involved whether habitat removal is prohibited under CESA, since the definition of "take" under California's Endangered Species Act is not as all encompassing as the definition under the Federal ESA. The attorney general told the bar group that he wants his office to play a bigger role in land use planning and water issues. He said that his office primarily does defense-type work, but both antitrust and the environment are two areas where the AG has the power to initiate actions. Lockyer's predecessor, Dan Lungren, emphasized crime-fighting during his eight- year term, but he did settle several large environmental lawsuits with such companies as Southern Pacific and Unocal. Lockyer in interviews and his inaugural address has said that he still intends to fight crime vigorously. In his inaugural speech, he said, "Whether children are injured by predators or injured by pollution of the water they drink or the air they breathe, we must and will choose justice." In the Lake Tahoe lawsuit, Lockyer filed papers one day after taking office, asking to intervene in a federal lawsuit brought by personal watercraft manufacturers. They challenged an ordinance banning Jet Skis and other small boats that is scheduled to take effect this spring. The ban is designed to prevent pollution from MTBE and other contaminants that the engines of small watercraft can spew into the water. Prior to Lockyer's taking office, the Attorney General's office had filed a friend of the court brief in support of the ban, but Lockyer said he wanted "more substantial involvement in the lawsuit." Contacts: Tara Mueller, Environmental Law Foundation, (510) 208-4555. Cliff Rechtschaffen, Golden Gate University School of Law, (415) 442-6674. Patricia Wynne, Special Assistant Attorney General, (916) 323-8271.

State and national politicians are jumping on the anti-sprawl bandwagon like never before, with no less than Vice President Al Gore launching a "livability initiative." Gore's proposal, which President Clinton mentioned during the State of the Union speech, promotes mass transit, open space conservation and development within existing cities. Pundits expect Gore may make the issue a cornerstone of his presidential campaign. Although new California Gov. Gray Davis has yet to discuss the subject in detail, California lawmakers are likely to deal with a number of anti-sprawl proposals this year. Advocates of "smart growth" believe now is the time to advance their agenda because of the change in the governor's office. "Just suddenly, it has taken off like I've never seen it," said Judy Corbett, executive director of the Local Government Commission. Her Sacramento-based organization of mayors, city council members and county supervisors has been writing about smart growth principles for eight years. Why are others paying attention now? "I think the effects of urban sprawl are increasingly visible. And the New Urbanism movement started making the mainstream press," Corbett theorized. The details of proposals from government agencies and interest groups vary, but the basics are similar — concentrate growth in existing communities, limit further development of open spaces and farmland, and create alternatives to the single-passenger automobile. "If nothing else, I think it's coming onto the radar screen of a lot of people," said Rachel Dinno, the Planning and Conservation League's natural resources director. "I think we are all talking about the same thing." The PCL devoted part of a recent report on saving California's environment to prevention of urban sprawl. Whether they think halting sprawl is smart or stupid, land use policy analysts took note when the subject qualified for the State of the Union address. The fact that Clinton — who has proven masterful at recognizing what people care about — mentioned the topic indicates the public perceives problems with common development patterns, said Gary Patton, chairman of the California Futures Network. In his State of the Union speech, Clinton said, "All communities face a preservation challenge as they grow and green space shrinks. Seven thousand acres of farmland and open space are lost every day. "In response, I propose two major initiatives: first, a $1 billion Livability Agenda to help communities save open space, ease traffic congestion, and grow in ways that enhance every citizen's quality of life; second, a $1 billion Lands Legacy initiative to preserve places of natural beauty all across America — from the most remote wilderness to the nearest city park," said Clinton, who credited Gore's leadership of the proposals. The livability initiative combines and expands existing programs to create a $10 billion package. About $6 billion would go for expanded mass transit, road upgrades and developing alternative regional routes. Other portions would assist state and local governments with funding parks, improving water supplies and developing abandoned industrial sites. Tax credits would leverage private investment in targeted areas. The Lands Legacy proposal contains nearly $600 million for grants and loans to state and local governments and nonprofit land trusts to purchase open space, protect farmland and assist endangered species. Another $440 million would buy land for national parks and other conservation purposes. Sam Staley, director of the Urban Futures Program with Reason Public Policy Institute, contended the Livability Agenda is based more on politics than real threats to open space. He decried the "federalizing" of what has long been a local decision-making process. Staley authored a report in late January, called The Sprawling of America: In Defense of the Dynamic City, that argues the smart growth movement is based on a poor understanding of the facts. For instance, only 5 % of the nation's land is developed, and the loss of farmland has declined during the 1990s compared with the 1960s, according to Staley's research. Although he shares the Democratic Party with Clinton and Gore, Governor Davis has remained publicly mute on smart growth. "Right now, he is not focussing on these things," said Patton of the California Futures Network. The CFN describes itself as "a statewide coalition dedicated to economically, socially and environmentally sustainable land use." The organization conducted a "Smart Growth Summit" recently that attracted 700 government officials, environmentalists and advocates for various causes. Several state leaders, including Lieutenant Governor Cruz Bustamante, Treasurer Phil Angeles and Resources Secretary Mary Nichols, addressed the gathering. But the governor was absent. "The Davis administration is hanging back," added the Local Government Commission's Corbett. Still, Corbett sees other allies in Angeles, a Sacramento developer who has embraced the New Urbanism, and Nichols, who has strong environmental credentials. Hoping to get the attention of California's first Democratic governor in 16 years, the Planning and Conservation League and 26 other environmental groups in February recommended the state take the lead in what are often seen as local issues. "We must act now to curb sprawl. State government can make the rules that govern land use planning, financing and development in California's communities," the PCL report states. PCL recommended the state provide incentives for more compact development within identified boundaries, strengthen local agencies' ability to redevelop brownfields, link water supplies and development, help towns revitalize older neighborhoods, and provide money for protecting agricultural land. Dinno conceded that city councils and boards of supervisors have traditionally handled many of these issues, but, she said, the state should demonstrate leadership. "All jurisdictions need to be involved in this issue. It's not just a local issue, and even if it was the locals would be looking for money from the state," she said. But Timothy Coyle, president of the California Building Industry Association, warned, "We've got to be careful that smart growth doesn't mean dumb ideas." For instance, urban growth boundaries — which are part of most smart growth strategies — can cause leapfrog development, Coyle said. He pointed to Silicon Valley, where rapid job growth combined with limitations on housing construction caused real estate prices to escalate, driving development to Tracy, Manteca and Modesto. Thus, many Silicon Valley workers must live more than an hour's drive away in the Central Valley. Any growth strategy must contain provisions for adequate housing. Only about half as many housing units get built statewide as are needed, Coyle added. Developers are willing to build infill projects, but state and local government should streamline the approval process, ensure streets are safe and schools are good, provide decent infrastructure, and exercise common sense when enforcing environmental regulations, Coyle said. When those issues are resolved, builders will strongly consider the higher-density, infill developments that smart growthers say they want, he said. Even then, builders must convince local decision-makers and prospective home buyers, he added. "When we ask for higher densities in many jurisdictions around the state, we meet ‘no' from the decision-making body, or they hear ‘no' from their constituents," Coyle said. He pointed to a proposal to increase density in a portion of central Fresno from 2 units an acre to 2.6 units an acre. After great public outcry, the city rejected the upzoning. PCL's Dinno said middle-class families who for decades fled cities for the suburbs are taking a new look at cities because of proximity to jobs and cultural amenities. Infill development done properly can compete in the marketplace with houses in new subdivisions, she contended. Patton said suburbia's attraction is waning. "I think when we look back on this 100 or 200 years from now," said Patton, "it will be like the Industrial Revolution. When people are spending four hours a day in the car getting to and from their job, when they are apart from their family and community for that amount of time, there is a huge social cost." People on all sides are closely watching a $16 billion transportation bond bill introduced in February by State Senate President Pro Tempore Phil Burton. The bonds would go before voters in $4 billion batches beginning in 2000. The all-important details of what the money would buy remain open for debate. Patton noted that development, labor and business organizations backed Burton's initial proposal. These groups often want the state to make money available with few strings attached, he noted. Both Patton, who also serves as executive director of LandWatch Monterey County, and Dinno said the state should reinvest in existing transportation systems before providing money for roads in undeveloped areas, perpetuating sprawling development. Contacts: Judy Corbett, executive director, Local Government Commission, (916) 448-1198. Gary Patton, chairman, California Futures Networks, (831) 375-3752. Rachel Dinno, natural resources director, Planning and Conservation League, (916) 444-8726. Sam Staley, director, Urban Futures Program, Reason Public Policy Institute, (310) 391-2245. Timothy Coyle, president, California Building Industry Association, (916) 443-7933.

The Del Mar City Council had enough evidence to deny a permit for a two-story home addition based on aesthetic grounds only, the Sixth District Court of Appeal has ruled. In so doing, the court reversed San Diego County Superior Court Judge Lisa Guy-Schall's decision to grant the homeowner a writ of mandate requiring the city to issue the permit. In overturning the trial judge, the appellate court found that Del Mar had not violated the landowner's civil rights under federal law. Significantly, on one issue the court relied entirely on the opinions of neighbors and city commissioners as "substantial evidence." The case involved a proposal by Breneric Associates and Stephen Scola to build a two-story addition to an existing single-family residence. Beginning in 1993, Breneric sought a permit from the city to build the addition. Under Del Mar rules, a design review permit is required prior to construction. The city's Design Review Board denied the permit, stating in particular that the use of glass panels on the roof deck was incompatible with the existing architecture of the building. The DRB also claimed that the siting of the addition would create a crowded condition incompatible with the surrounding neighborhood. Breneric appealed to the City Council, which remanded the case back to the DRB. The DRB again denied the permit, and Breneric again appealed to the City Council, which this time denied the permit as well. Breneric sued, claiming that the city violated the landowner's civil rights under 42 U.S.C. 1983, the federal Civil Rights Act. The lawsuit also sought a writ of administrative mandate to compel Del Mar to issue the design review permit. Judge Guy-Schall sustained Del Mar's demurrer to the Section 1983 action, effectively giving the city victory on that point. The judge also concluded there was insufficient evidence in the administrative record to support the denial of the permit under the city's ordinance and granted Breneric the writ of administrative mandate ordering the city to issue the permit. Del Mar cross-appealed, arguing that substantial evidence did indeed exist and the writ should be overturned. On appeal, the court affirmed Guy-Schall's first ruling and overturned her second, giving the city total victory in the case. Among other things, the court concluded that the heightened scrutiny required under the so-called Nollan/Dolan line of cases does not apply in this case. Breneric had not made this point but the Pacific Legal Foundation did so in an amicus curiae brief. The Nollan/Dolan line of cases requires a heightened level of judicial scrutiny in exaction cases. (For more discussion, see the report of the California Supreme Court's ruling in Santa Monica Beach Ltd. v. Superior Court, CP&DR Legal Digest, February 1999.) The appellate court concluded that Nollan/Dolan does not apply because the case did not involve an exaction of land or money from the landowner. On the substantial evidence question, the court addressed both the glass-panel question and the siting issue. On the siting issue, the court noted that the proposed addition left no sideyard setback on one side. "The testimony of neighborhoods and the opinions of the DRB members constitute substantial evidence." On the question of the glass panel, the court noted that Del Mar had found that the design did not coordinate with "color, materials, architectural form and detailing of the existing structure." One architect called the existing house "a unique example of a Victorian cottage" and concluded that a glass panel was inconsistent. On the Section 1983 complaint, the court found that Breneric had not made its case. Among other things, the court found that Breneric's lawsuit did not allege that Del Mar had deprived Breneric of a protected property interest; the DRB permit was a discretionary permit. The court also found no evidence that Del Mar had acted arbitrarily because the city had a sound policy basis for its decision. In addition, the court found that the facts of the case did not support the contention that the city denied Breneric equal protection or that its taking claim was ripe. The Case: Breneric Associates v. City of Del Mar, No. D024838, 99 Daily Journal D.A.R. 469, 99 C.D.O.S. 389 (issued December 15, 1998, published January 15, 1999). The Lawyers: For Breneric: Joseph S. Carmellino, (619) 622-8377. For City of Del Mar: Mark A. Potter, (619) 455-9737.

Downtown Riverside appears to be using the legal system as a revitalization tool - not by suing anybody, but by recruiting new courthouses. Last year, Riverside County agreed to finance construction of a $21 million federal courthouse in the same neighborhood as the county's Hall of Administration and County Courthouse. And in January, the Fourth District Court of Appeal moved from its longtime headquarters in downtown San Bernardino to a new courthouse adjacent to the federal site. The Court of Appeal move is considered a coup for Riverside, but it came as a blow to the already beleaguered downtown of San Bernardino. Division Two of the Fourth District has been located in downtown San Bernardino since it was created in 1966. But with a caseload that has doubled since 1987, the court has outgrown location in a former Safeco Title Insurance building there. The new building, which cost $7.2 million to build, is located at the corner of Lime and 12th in downtown Riverside. The new building's location was "driven by politics," Presiding Justice Manuel Ramirez told the San Bernardino Sun. The court receives approximately half of its workload from each county, with Inyo County accounting for a small portion of the caseload. The Riverside courthouse is the second new Court of Appeal courthouse constructed in a downtown location in recent years. Division Six of the Second District Court of Appeal - the only division located outside of Los Angeles - built a new courthouse in downtown Ventura after many years of renting office space there. The federal courthouse in Riverside will be located at the corner of Lemon and 12th. The county is building the courthouse with county-issued bond funds and leasing the property to the federal government for 15 years. The county had previously purchased the U.S. Bankruptcy Court building to accommodate its own expanding courtroom needs. Public Debt Issuance Stays Constant Public debt issuance in California remained constantly in 1998 at approximately $40 billion, according to new figures from the California Debt Investment and Advisory Commission. Local bond issues accounted for $28.7 billion, while state issues accounted for $11 billion - figures little changed from 1997. However, local agencies increased their debt in several areas, including housing, redevelopment, and hospitals. On the local front: o Local debt issuance for housing more than doubled in 1998, to approximately $2.1 billion. Most of the growth came from an increase in multifamily issues. In 1997, local agencies raised $600 million for multifamily housing on 91 bond issues; those figures grew in 1998 to $1.56 billion on 150 bond issues. Single-family debt rose from $475 million on 26 issues to $572 million on 29 issues. o On the commercial and industrial development front, local debt issuance remained constant at approximately 24 issues for $88 million. o Multiple-purpose redevelopment bonds rose by approximately 30%, from 77 issues for $1.28 billion in 1997 to 105 issues for $1.69 billion in 1998. o Local hospital and health-care bond issues rose from $1.29 billion (on 36 issues) in 1997 to $1.51 billion (on 42 issues) in 1998. o Local public works bond - the largest single category of local bonds - dropped slightly from $12.89 billion to $12.56 billion. o Local school facilities bonding dropped. For K-12 public schools, the figure dropped from $3.6 billion to $2.9 billion. College and university bonding remained more or less the same. Statewide bond issues were also about the same but had some overlap, including the following: o State public works bonding dropped from $2.6 billion to $1.4 million, largely because multiple-purpose public improvement projects dropped from $900 million in 1997 to almost zero in 1998. o As with local agencies, state agency bonding for housing projects increased substantially. But unlike local projects, the state funding went mostly for single-family housing. State housing bonds rose from $1.4 billion to $2.5 billion, with single-family bonds rising from $1.2 billion to $2.4 billion. Multifamily housing remained approximately the same at $147 million. o State education bonds, like their local counteparts, dropped somewhat. State school bonding dropped from $2.89 million to $2.27 billion. K-12 public school bonding dropped from $980 million to $820 million, while higher education bonding dropped from $1.88 billion to $1.13 billion. These trends are not likely to continue, however, given the passage of Proposition 1A, which authorized the issuance of some $9 billion in new state school bonds. More information on 1998 debt levels is available at the CDIAC web site, http://www.treasurer.ca.gov/cdadocs.htm.

No sooner had the fast-growing San Joaquin County city of Tracy settled a lawsuit and agreed to set up a joint powers authority on traffic issues than it was hit with a second lawsuit challenging its water supply and other facets of another huge development. In December, Tracy, Alameda County, the nearby city of Livermore, and the Sierra Club announced a settlement to a lawsuit brought over traffic issues raised by the city's approval of the 5,000-unit Tracy Hills project. Under the settlement, the JPA will be set up along with a developers fee of $1,500 per unit to pay for traffic improvements in Tracy and in nearby Alameda County. At the same time, the Tracy City Council approved another development, called South Schulte, which is expected to have about 6,000 homes. The developer of the project agreed to the same traffic mitigation fees. But the Sierra Club then filed suit on January 19 claiming that the city didn't have adequate water supplies or wastewater treatment for the new development. Eric Parfrey, a Sierra Club member and environmental planner who lives in Stockton, said the Sierra Club also had water concerns involving Tracy Hills, but settled the case because the traffic fee solution was so attractive. A separate case over the water supply for Tracy Hills is still pending. That lawsuit was brought by the County of Fresno because a water district there is supposed to supply the Tracy Hills water. A summary judgment motion on the Fresno County case was set for a late January hearing in Sacramento County Superior Court. "It's unclear how much staying power they're going to have," Parfrey said. "They wanted the Sierra Club not to settle on Tracy Hills." Parfrey said the water supply is important because the Tracy City Council has approved 20,000 new units of housing. Current plans are for the city to grow from a population of 48,000 to 160,000 in the next thirty years. Housing prices are low by Bay Area standards. Water supply "is really the Achilles heel for the ambitious growth of Tracy," he said. The U.S. Bureau of Reclamation warned the city in May 1998 that new developments could not be guaranteed a water source from the Delta during drought years. Tracy is about 70 miles from San Jose, and as Silicon Valley's housing and rental market has heated up, many workers there have moved to San Joaquin County. Commutes are as long as two or three hours each way. Most commuters drive on Interstate 580, which runs through neighboring Alameda County and the city of Livermore. Some are also beginning to commute via a new train service that began in late 1998. Alameda County, which has also seen significant growth of office parks in the Pleasanton area, has seen thousands of new vehicles on Interstate 580. Tracy officials argue that they're addressing a jobs-housing imbalance caused by the explosion of jobs in some Bay Area counties. Steven Meyers, Tracy's attorney in the Tracy Hills lawsuit, said that the JPA will study regional transit problems. At a later date, San Joaquin County may also join the JPA. Lakeside Tracy Associates, developers of Tracy Hills, will pay $174,000 for the study. Parfrey praised the JPA. "As a planner I loved it...a regional planning solution was what was called for," he said. The $1,500 per residence traffic fee is expected to generate $7.5 million. One-third of the money is slated for Alameda County projects, and the rest is slated for traffic projects in the Tracy area. Construction of the Tracy Hills project is slated to begin in a year. Meyers said the traffic fee could be placed on other developments when data is developed on their traffic impacts. But under state law, the settlement agreement couldn't arbitrarily set a fee for future developments, he said. If the other proposed units in Tracy adopt the traffic fee, another $22.5 million will be available for traffic improvements. The Tracy Hills settlement also contains a number of trip reduction elements. The developer of the project can seek a reduction in fees for providing such things as land for park and ride facilities, shuttles to transit lines, carpool/vanpool subsidies, and telecommuting programs. Under the settlement, the governmental parties are to "consider regional implications for major development projects" and "to recognize those regional environmental impacts that extend beyond jurisdictional boundaries." Parfrey noted that job growth in Santa Clara County, home of Silicon Valley, slowed last year. Tracy may be approving more units than the market needs, he said. The South Schulte lawsuit by the Sierra Club that the city's EIR failed to adequately analyze or mitigate a number of impacts including added traffic, storm drainage, impacts of leapfrog development, air quality, water supply and wastewater treatment and disposal. The developer of the South Schulte project includes Samir Kawar, who was part of a development group that tried unsuccessfully to develop the 5,200-unit Tassajara Valley project in Contra Costa County. In 1997, Kawar was identified by the San Francisco Chronicle as a Jordanian parliament member and former minister of water and transportation in that country. The application for Tassajara Valley was later withdrawn after widespread public opposition. The state's Fair Political Practices Commission fined Fakhry Kawar, an American citizen who manages his brother's properties, $22,000 for laundering $7,700 in campaign contributions to five Contra Costa supervisor candidates in 1992, according to the paper. Contacts: Steven Meyers, attorney for Tracy, Meyers, Nave, Riback, Silver & Wilson (510) 351-4300. Eric Parfrey, Sierra Club member, planner, (510) 420-8686 The case: The Sierra Club v. City of Tracy, case no. CV006772.

A Malibu property owner can't rely on the so-called "Calvo exclusion" - which exempts single-family homes from Coastal Commission jurisdiction - because the property owner had previously agreed to submit to the commission's control, the Second District Court of Appeal has ruled. "Appellant has taken inconsistent positions in this litigation, first waiving the right to further litigate the Calvo exclusion and agreeing to obey any Commission order regarding restoration of the property, and later asserting the Calvo exclusion and denying any obligation to obey Commission orders," the court wrote. It is the second Calvo exclusion case handed down by California appellate courts in recent months. In December, the Second District Court of Appeal re-affirmed a ruling to overturned a $2 million takings judgment against the Coastal Commission as the result of a jurisdictional dispute based on the Calvo exclusion. The case began in 1991, when the Coastal Commission sued property owner Amir Tahmassebi, charging that he had graded and filled his land and installed a culvert without seeking a permit from the commission, which has jurisdiction over coastal property. A year later, Tahmassebi and the Coastal Commission stipulated a judgment in which the Tahmassebi greed to obtain various permits, pay a fine of $15,000 and restore the property to its original state, if restoration was necessary, within 30 days of filing the restoration application. In November of 1994, more than two years after the stipulated judgment, the Coastal Commission ordered Tahmassebi to restore the property. In January of 1998, the Commission went to court to enforce the motion for enforcement of the judgment. The Commission alleged that Tahmassebi had not restored the property - as the Commission's order required - but instead had filed a restoration application that called not for restoration but rather called for the retention of the illegal development project in place. The Commission also charged that Tahmassebi had engaged in "false promises" and delays but had never complied. L.A. County Superior Court Judge Daniel A. Curry ruled in favor of the Coastal Commission, but Tahmassebi appealed. His main argument on appeal was that the Calvo exemption applied to his house. The Calvo exemption waives the requirement for a coastal development permit in the case of single-family homes which meet specified criteria dealing with location and water supply. Los Angeles County had, indeed, issued a Calvo exemption to Tahmassebi. But the Coastal Commission argued that the county had later ordered the property owner to seek a coastal permit. The Calvo exemption issue had been part of the case since the beginning - a fact that worked against Tahmassebi. The Second District ruled that Tahmassebi had waived his right to further litigate the Calvo exemption when he signed the stipulated judgment against him in 1992. Among other things, the Second District rejected Tahmassebi's claim that jurisdiction - that is, the Coastal Commission's jurisdiction over the property - cannot be conferred by the consent of the property owner. The Second District ruled that the Coastal Act gave Judge Curry clear subject matter jurisdiction over the issue, and furthermore argued that Tahmassebi's real beef was not with subject matter jurisdiction but with his allegation that the Coastal Commission exceeded that jurisdiction. The case was originally filed in October but was ordered published in January by the Supreme Court. The Case: California Coastal Commission v. Tahmassebi, No. B122210, 99 Daily Journal 484 (issued October 2, 1998, ordered published January 13, 1999). The Lawyers: For Tahmassebi: Thomas N. Banks, (310) 451-8831 For California Coastal Commission: Daniel A. Olivas, Deputy Attorney General, (213) 346-2688.

Ruling on wide-ranging issues in three separate cases filed by the same business, the Fourth District Court of Appeal has upheld a Newport Beach adult business ordinance as constitutional and concluded that the city did not violate the business's constitutional rights by denying some permits and revoking others. As the court stated in its decision, the case is about "appropriate ways in which to distinguish a theater from a restaurant - something with which the general public seems to have absolutely no difficulty, but which regularly defies the best efforts of courts and counsel." The cases were filed by the family of An Nguyen, which sought to convert a vacant restaurant into an adult entertainment establishment known as "The Mermaid". The restaurant was purchased with a pre-existing conditional use permit, but the city required the Nguyens to amend the permit to offer entertainment. In February of 1994, the City Council denied the amended permit application, concluding that the business was a theater in which food was an "ancillary service", rather than a restaurant. The city applied an unwritten "principal use" test to the situation, noting that 32% of the net public area would be used for entertainment, that the Nguyen's admitted that food would be "incidental to the entertainment," and that the Nguyens described their business as "adult theater " on their liquor license application. The Nguyens sued, and in response the city altered its zoning code to define a restaurant as a business whose primary purpose is selling food and beverages for on-site consumption. The ordinance placed a 20% limit on the net public area devoted to entertainment. At the same time, the city also adopted a requirement that an entertainment permit be required for any business that would provide both entertainment and food and beverages. The Nguyens subsequently applied for an entertainment permit, but the ordinance as it was then written included no time frame for acting on such applications and the Nguyens' application was neither approved nor denied. Subsequently - again in response to the Nguyens' plans - the city amended its entertainment permit ordinance and the Nguyens submitted a second application. The application was denied by both the city manager and the City Council - again because they concluded the Mermaid was a theater seeking permission to operate in a location zoned for a restaurant. After the second episode, the city also adopted an adult-oriented business ordinance requiring an adult entertainment permit and placing certain limitations on adult entertainment activities, including a "no-touching rule" and a prohibition on nude dancing (known as the "pasties-and-g-string ordinance". The Nguyens redesigned the Mermaid to comply with the city's definition of a restaurant and also successfully obtained entertainment and adult business permits as well. The Mermaid opened in February 1996. From the beginning, the Nguyens admit, the restaurant did not comply with the requirements of the ordinances. The city manager revoked the Mermaid's entertainment permit and refused to renew its adult business permit. The Mermaid appealed to the city council, which eventually affirmed the city manager's action. However, the Mermaid remained opened. In November of 1996, the city sued the Nguyens, the Mermaid, and its employees. The Nguyens filed several lawsuits against the city. They challenged the city's initial decision to deny their permit as a violation of their constitutional rights. They challenged the constitutionality of the pasties-and-g-string ordinance. And when the city sued the Nguyens to enforce its ordinances, the Nguyens cross-complained that their constitutional rights were violated when the later-issue permits were revoked. A series of trial court judges ruled in favor of the city in these various causes of action, and the Fourth District affirmed the trial court in all cases. Regarding the definition of a restaurant, the Nguyens claimed that the original ordinance gave the city too much discretion in making a determination. On that count, the appellate court agreed. By permitting the city to use an informal "primary use" test, the ordinance gave city officials "impermissible unbridled discretion" to deny a permit. However, the court concluded that the revised ordinance, with a 20% limit on entertainment space, "provides precisely the objective standard previously missing." The Nguyens also claimed that the entertainment permit represented a prior restraint on its First Amendment rights because the city manager has too much discretion. But, the court said, "there is nothing impermissible in authorizing the city manager to 'conduct an investigation' ... It would be preposterous to do otherwise." On the pasties-and-g-string ordinance, the appellate court concluded it was constitutional by relying heavily on the U.S. Supreme Court ruling in Barnes v. Glen Theater Inc., 501 U.S. 560, which concluded that protecting public decency is within the government's power. The appellate court also specifically rejected the Nguyens' argument that the pasties-and-g-string ordinance was pre-empted by various state statutes regulating sexual activity, saying that no state law specifically overrides local nude dancing prohibitions. The Nguyens also argued that the requirements of the adult business permit, which placed restrictions on touching and tipping among other things, was unconstitutional. But the appellate court disagreed. The court found three of the six requirements to be invalid - because they require managers and employees to exert control over patrons and performers - but nevertheless found the city to be within its discretion in revoking the permits. The Cases: Tily B. Inc. v. City of Newport Beach, Nos. G016950 and G019250, and City of Newport Beach v. An Nguyen, No. G022132, 99 C.D.O.S. 62 (issued December 30, 1998). The Lawyers: For An Nguyen: Ronald Talmo, (714) 738-1000 For City of Newport Beach: Jeff Goldfarb, Rutan & Tucker, (714) 641-5100.

One of the more interesting outcomes of the explosion of the Internet on our culture is the wave of anxiety it has produced at City Halls and in Sacramento. And it's not because the powerful new interactive media isn't already being used in hundreds of ways by state and local government to connect and its constituents - or otherwise benefiting our technology-strong economy. It is because the Web's success threatens to siphon off the lifeblood of the public agency revenue stream: sales tax. The threat is being taking very seriously. For openers, the National League of Cities vigorously opposed the Clinton-backed Internet Tax Freedom Act. Of course the League failed, and the ITFA was signed into law October 21, 1998 with heavy support from Internet Service Providers and e-retailers. President Clinton said that taxing the 'Net would be unfair, and would "weigh it down and stunt the development of the most promising new economic opportunity in decades." Among other provisions, the Act instates a three-year moratorium on state and local (but not federal) taxes on Internet access charges. And maybe more important for state and local government, the law cements into place the practice of prohibiting collection of sales tax by electronic vendors with no "outlets" in an out-of-state customer's home state. There certainly is ample evidence that e-commerce, with its potential to rearrange the taxing table, merits close scrutiny. After all, most of the wildly optimistic Internet use projections seem to be bearing out. And e-retailing is expanding as part of that trend. A January report by the Pew Research Center for People claims that 41% of Americans had gone on-line by the end of 1998. Compared with just 14% in 1995. An estimated 32% of Internet users bought something on-line in 1998, and these figures are before the Christmas-season surge. That's 34 million Americans - a fourfold increase from four years ago. So far, there is little hard evidence of any direct effect on municipal revenue streams. And according to the Chicago Tribune, internet sales still only account for 1% of retail sales. However, with the growth of e-commerce, it stands to reason that the more a state or municipality relies on sales tax for its revenues, the tighter a looming revenue pinch will feel. According to Forrester Research, Inc., e-retail will increase tenfold over the next five years. And currently, situs-based retail sales taxes make up nearly 30% of California's revenue stream. to Davis-based government revenue specialist Michael Coleman says that even though they make up only 9.6% of municipal revenues, sales tax has become the number one source of California cities' discretionary revenues. Even a modest drop in these proportions may yield dramatic effects. Mayor Harry Smith of Greenwood, Mississippi, reported to the National League of Cities that a 5% drop in sales tax revenues in his community would directly result in a loss of five police officers - 10% of his city's police force. Booksellers may be the first Main Street-styled retailers to take an e-commerce hit. Palo Alto-based Printers Inc. recently shuttered, reporting that they couldn't survive the 10% drop in year-to-year sales experienced over the 1998 Christmas season. The trend may grow as the overall population joins the on-line community in numbers mirroring Palo Alto's Silicon Valley home. But though e-commerce has become the latest problem for local government financiers, it's important to remember that the problem precedes Internet culture. The tax structure remains based on a taxing model designed for an insulated economic system: a geographically fixed economy where goods rather than services are produced, and where people live and work in the same community. The outmoded structure is politically hobbled by the very popularity of the Internet as a promising new medium and the corresponding unpopularity of taxes - despite the flagging public service levels faced by most communities. Traditional catalog sales have resulted in the same loss of local sales tax revenues. Observers from all perspectives agree that fundamental inequities in the tax structure push the whole question of e-retail taxation towards a discussion of overall tax reform. In California, the urgency of tax reform is underscored by dramatic in-state inequities amongst cities. Here, cities geographically blessed with favorable locations for regional malls, auto-malls and outlet centers have always been at a major revenue advantage to less favored locales - often only a few miles away. So are we facing yet another unforeseen consequence of the Internet? A comprehensive reform of state and local taxing structure that levels the playing field for all parties? Maybe. But not until Year 2004 will we be able to revisit the e-retail tax question. In that year, an ITFA-created Advisory Commission on Electronic Commerce will be required to propose new taxing recommendations. By then, harder data may be available. And policy makers just may figure out how to sell an equitable taxing program to a skeptical public. In the meantime, maybe city finance directors should invest municipal reserves into Amazon.com equities. Stephen Svete, AICP, is a principal in the Ventura-based consulting firm of Rincon Consultants Inc.