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The owner of a San Pedro hotel who intends to sell out to a nonprofit group has standing to file a Fair Housing Act lawsuit against the City of Los Angeles for allegedly interfering with the sale, the Ninth U.S. Circuit Court of Appeals has ruled. In addition, the Ninth Circuit ruled that City Councilman Rudy Svornich - while immune from liability for his legislative actions - is not immune from a lawsuit alleging he retaliated against the hotel owners by allegedly initiating code enforcement inspections. The case began in 1994, when the Fentis family, owner of the California Hotel in San Pedro, agreed to sell to a nonprofit developer known as A Community Of Friends, or ACOF, which planned to convert the hotel to housing for mentally disabled people. The sale was contingent on ACOF obtaining federal financing and tax credit allocations. The $1.3 million federal loan had to be approved by the City of Los Angeles. In 1995, several local groups, including the San Pedro Chamber of Commerce, publicly expressed their opposition to the project. Later that year, the L.A. City Council Housing and Community Redevelopment Committee voted not to recommend that the federal funds be applied to the California Hotel project. Svornich, the city council member who represents San Pedro, was chair of the redevelopment committee. Subsequently, John Fentis was quoted in a local newspaper claiming that the city had acted illegally and his family would sue. Several weeks later, members of L.A.'s "Slumlord Task Force" inspected the California Hotel and found code violations requiring $40,000 in repairs. Subsequently, the Fentises filed suit, alleging a violation of their civil rights under 42 U.S.C. 1983, as well as state and federal fair housing laws. They asked that the city and Svornich be enjoined from interfering with the funding of a home for the mentally ill. After the complaint was filed, the city re-inspected the California Hotel. Inspectors concluded that the Fentises had not made substantial progress on previously cited problems and also found new violations as well. The city charged the Fentises with criminal slum offenses. Following all this activity, the redevelopment committee recommended approval of the California Hotel loan and the City Council concurred. ACOF received tax-credit authorization and the sale of the property was completed. However, the Fentises elected to move forward with their claims. U.S. District Court Judge Harry Hupp dismissed most of the claims, saying, among other things, that the Fentises had no standing to complain about the city's interference. Hupp also ruled that Svornich as an individual was immune from action he took in a legislative capacity. However, Hupp allowed the Fentises to amend their complaint in order to properly state a retaliation claim against the city and against Svornich. Once the claim was amended, however, Svornich moved for - and received - summary judgment on the retaliation claim. Hupp also dismissed the retaliation claim against the city itself and, after a lengthy delay, granted summary judgment to the city on all other claims. But a three-judge panel of the Ninth Circuit overturned some of Judge Hupp's rulings. Most significantly, the panel concluded that the Fentises do have standing to file a lawsuit under the federal Fair Housing Act. Judge Hupp had concluded that the relationship between the Fentises and the people who would actually be victimized - the mentally disabled persons who would move into the hotel after it was sold and renovated - was too tenuous. "To establish standing under the Act, all the Fentises need to show is that the City interfered with the housing rights of the mentally ill and that, as a result, the Fentises suffered an actual injury." The city had argued that it could not be held liable for a discretionary action - i.e., choosing not to approve the loan to ACOF. But the Ninth Circuit disagreed. "The allegation here is not that the City violated the Act by failing to approve the ACOF loan, but that it improperly interfered with the loan ACOF needed to purchase the Fentis' property." The Ninth Circuit upheld Judge Hupp's conclusion that Svornich is immune from liability based on his legislative actions but overturned Hupp's ruling that he is also immune from the retaliation claim. " e believe that there are genuine issues of material fact which preclude summary judgment," the court wrote. "The timing of the investigations, the short amount of time given to the Fentises to make repairs, the participation of the Building and Safety Commissioner, the criminal prosecution, and the evidence suggesting that a city official may have been demoted for interceding on behalf of the Fentises cannot, on the current state of the record, be accepted as routine or condemned as evidence of invidious purpose." The court remanded the retaliation claim against both the city and against Svornich personally to the trial court for a trial on its merits. The court affirmed Hupp's dismissal of the Civil Rights Act claims, saying the Fentises alleged no claim against themselves and - at least so far as the Civil Rights Act is concerned - have no standing to sue on behalf of the mentally disabled. The Case; San Pedro Hotel Co. v. City of Los Angeles, No. 97-55053, 98 Daily Journal D.A.R. 11480 (issued November 6, 1998). The Lawyers: For San Pedro Hotel Co.: William J. Davis, Davis & Co., (949) 222-9034. For City of Los Angeles: Jesse J. Gonzalez, Deputy City Attorney, (213) 485-1059.

The U.S. Forest Service could be forced to make changes in its land-use planning for four forests it manages in Southern California as a result of a lawsuit that charges the service hasn't properly considered preserving the 40 federally endangered and threatened species of plants and animals that live there. Until the Forest Service takes those species into account, the suit is asking a federal court to stop such activities as livestock grazing, mining, off-road vehicle use, road building, land exchanges, land purchases, special projects, and other uses in the Los Padres, Angeles, San Bernardino and Cleveland National Forests. Those forests span California's coast and interior regions from Monterey to San Diego. The suit, filed in U.S. District Court for the Northern District of California, charged that the Forest Service, a division of the U.S. Department of Agriculture, has failed to consult with the U.S. Fish and Wildlife Service, which is a division of the U.S. Department of Interior. The suit charges the Forest Service should be consulting with the Fish and Wildlife Service over Land and Resource Management Plans (LRMP) for the four forests and their impacts on federally-listed threatened and endangered species there. The suit was filed by the Arizona-based Southwest Center for Biological Diversity. The group's attorney, Jay Tutchton, said it has entered settlement negotiations with the U.S. Forest Service and that the Forest Service has begun consultations with the Fish and Wildlife Service since the lawsuit was filed. A LRMP is a 10- to 15-year strategy for managing each forest in an environmentally sound way. Many if not most of the 40 species in the lawsuit were listed after the LRMPS were adopted in the 1980s. Tutchton said that if the Forest Service took care of endangered species within its forests, some species who live on private property might not be endangered or threatened species. The costs imposed on a private developer to do an HCP for such species can be hundreds of thousands of dollars, he noted, while in contrast, the government makes only $1.30 a month to allow cows to graze in national forests and denude riparian habitats. Tutchton said that cows are allowed to graze in both the Los Padres and Cleveland National Forests. Another example of the Forest Services' failure to take endangered and threatened species into account, he said, was placing a campground "squarely in an Arroyo Toad breeding ground in Los Padres National Forest." A U.S. Justice Department attorney declined to comment on the specifics of the case. The suit seeks an order forcing the Forest Service to consult with the FWS, and to prevent the Forest Service from continuing with such activities until it complies with the Endangered Species Act. While the Forest Service has begun such consultations, Tuchton called it "limited progress." Tuchton said similar suits had earlier been filed against national forests in the Pacific Northwest, Arizona and New Mexico to bring the Forest Service into compliance there. He said he was unaware whether other national forests in Northern California were in compliance. The case is Southwest Center for Biological Diversity v. G. Lynn Sprague, et al., Case No. 98-2434SC. Contacts: James J. Tutchton, Earthlaw, (303) 871-6034. Jean Williams, U.S. Forest Service, (202) 305-0228.

Gray Davis's election appears to mean a new era in Sacramento. But whether it portends a shift in state policy relating to planning and development remains to be seen. Davis is a Democrat who has always enjoyed environmentalist support, but he is also a cautious politician unlikely to initiate sweeping policy reforms. Caution notwithstanding, Davis must deal with a strengthened Democratic majority in the Legislature that may seek a more aggressive approach on environmental, land use, and local government issues. Democrats control the office of governor and lieutenant governor and both houses of the Legislature for the first time since 1974. Furthermore, the Democratic majority in both houses grew considerably on election day. Democrats now hold 48 of 80 Assembly seats and 25 of 40 seats in the Senate. Among other things, these electoral victories strengthen the position of leading environmentalists in the Senate such as Byron Sher, chair of the Senate Committee on Environmental Quality, and Tom Hayden, chair of the Senate Committee on Natural Resources and Wildlife. Also holding a strong hand is Sen. Jim Costa, chair of the Senate Agriculture and Water Resources Committee. Though more conservative than Sher and Hayden, Costa has been one of the most effective legislators in Sacramento in the last few years. In addition, the forced departure of many legislators because of term limits has brought a new flock of lawmakers directly from local government. Close to one-sixth of the legislature now consists of new members who previously served on a city council or a county board of supervisors. And Davis takes office just after the passage of Proposition 1A, the $9 billion school bond package, and Proposition 11, which permits more sales-tax-revenue sharing among neighboring jurisdictions. Prop 1A also imposes major reform on the state's school fee system, limiting local government's ability to demand higher school fees from developers. It received 62% of the vote. Proposition 11, the municipal tax-sharing constitutional amendment, received 53% of the vote. This proposition, championed by Republican Assemblyman George Runner, a former mayor of Lancaster, permits two municipalities to share sales-tax revenue with a super-majority of the two city councils, repealing the requirement for voter approval from both cities. This measure - long advocated by reformers - could be a small but important step in reducing competition for retailers and sales taxes among adjacent municipalities. At press time, however, Davis still had not made any appointments to his new administration, so there was little clue at to what direction he might take on any planning and development issues. The only major moves he made in the weeks after his election had to do with education. He selected Barry Munitz, head of the Getty Trust in Los Angeles and former chancellor of the California State University system, to lead his transition team. (Some environmentalists pointed out that Munitz formerly worked for financier Charles Hurwitz, controversial owner of the Pacific Lumber Co., who has been locked in a lengthy dispute with the state over logging in Northern California.) He also appointed a task force to examine education reforms. Local Government So far, the only relevant policy Davis seems motivated to address is a restoration of property taxes to cities and counties - potentially reversing, at least in part, the decision of Gov. Pete Wilson in 1992 and '93 to shift approximately 25% of the property tax in the state away from local governments to school districts. However, even that proposal could be rife with political problems, given his backing by teachers unions and his decision to make schools a high priority. Under Proposition 13, the state government has the authority to allocate property-tax revenue among various government agencies. However, the state is also required to equalize school funding from its own general fund. During the early '90s, Wilson chose to shift property-tax revenue from cities and counties to school districts in order to lessen the financial burden on the state. Local governments have been clamoring for property-tax restoration ever since they lost the property tax. Despite growing support in the Legislature, however, Wilson never signed a bill altering the property-tax formula. In October, however, both Davis and his Republican opponent, Dan Lungren, appeared at the League of California Cities convention. According to eyewitness reports, Lungren did not address the property tax issue - but Davis committed himself to action on it. "He came to the League annual conference and spoke and met with our board," said League of California Cities lobbyist Dwight Stenbakken. "He said, it's time to return your property tax. I'll sign a bill to return a reasonable amount over a reasonable time." Both the League and the California State Association of Counties are expected to make property-tax restoration a top priority in next year's legislative session. As Davis contemplates his next step, he may be confronted with a more activist legislative body on local government issues. Since term limits began removing longtime legislators, more new lawmakers have come directly out of local government. In the process, these legislators - such as Assembly Members Tom Torlakson, a Republican from Contra Costa County, and Mike Sweeney, a Democrat from Hayward - have made local government issues a higher priority. With close to 20 new legislators arriving straight from local government, this caucus may have more influence than ever. Land Use and Environmental Planning Despite repeated attempts by growth management advocates to interject growth and land use into the gubernatorial debate, Davis said virtually nothing about this issue during the campaign. (This stands in stark contrast to the last campaign for an open gubernatorial seat, when Dianne Feinstein and Pete Wilson - both former mayors - aggressively debated land-use planning as an issue.) As the first Democratic governor in 16 years, however, Davis will be under considerable pressure to reaffirm environmental protections and deal with related land-use planning issues. "We're hoping he will bite the bullet and move to some sort of comprehensive growth management plan for the state," said Samuel Schuchat, executive director of the California League of Conservation Voters. "When we interviewed him he was clearly aware that the fundamental environmental problem facing the state was the huge surge in population, and there's no planning in place for that." Though growth management was not an issue during the campaign, Schuchat is rumored to be one of Davis's transition insiders on environmental issues, along with Darryl Young, a longtime Hayden aide who worked on his campaign. Davis may have considerable opportunity to shape land-use and environmental policy quickly because of upcoming vacancies on state boards and commissions. In addition to his political appointments - such as Resources Secretary and director of the Governor's Office of Planning and Research - Davis will be able to appoint four members to the Coastal Commission. (For the first time in 16 years, all 12 Coastal Commission members will be selected by Democrats; the other eight are chosen by Assembly and Senate leaders.) One unusual opportunity exists at the Integrated Waste Management Board, where one Wilson holdover was never confirmed and a second was elected to the Legislature. Two additional slots on the six-member board will be up a year from now.

In Riverside County, the county supervisors have never been big fans of federal endangered species regulations. So it should be no surprise that the board recently granted individual home builders a exemption basically excusing them from complying with those regulations. But the supervisors were forced to rescind those regulations once a judge ruled against them.. The issue arose in the southwestern part of the county, home to the Quino checkerspot butterfly, which last year was listed as an endangered species. Because of that designation, the animals and their habitats cannot be destroyed. The board was apparently upset because the listing occurred after development approvals had been given. "There was a dispute over what the county's role was in disclosing impacts for the Quino checkerspot," said Dan Silver, executive director of the Endangered Habitats League. The California Environmental Quality Act requires impacts to endangered species to be disclosed, he said. In June, the supervisors tried to get around the endangered species act by exempting builders of homes under 10,000 square feet from complying with the regulations. But that move was struck down by Superior Court Judge Gloria Trask. In September, the supervisors unanimously rescinded the entire policy. Now, said Deputy County Counsel Jay Vickers, "We have no policy with regard to the Quino checkerspot." What about following the Endangered Species Act? "That's up to the federal government," said Vickers. "They're basically trying to get around the policy," said Ray Johnson, an attorney for the EHL, which had sued over the exemption. But in mid-November, Trask dismissed the EHL lawsuit on the basis of the board's revised policy. The group is considering filing suit over the board's failure to do an environmental review before enacting the latest policy, Johnson said. The red, brown and yellow spotted Quino checkerspot butterfly only lives in a few places in Riverside and San Diego County, Johnson said. At one time the inch-long insect was one of the most common butterflies in Southern California, he said. The butterfly lives on plantago, a shrub found in the hilly country of Riverside County. In February, the county's planning director said that the butterflies had not held up any of 300 projects that had been reviewed since its listing, according to the Riverside Press Enterprise. The county supervisors in February also asked its staff to analyze what would happen if it stopped policing every new rodent and insect on the endangered species list, because the new listings are affecting development projects that have already been approved, the paper said. Two supervisors also suggested eliminating the county's Habitat Conservation Agency. Other contentious endangered species in the county have included the Stephens kangaroo rat, the California gnatcatcher and the Delhi sands flower loving fly. Riverside County has been dealing with endangered species issues since the listing of the kangaroo rat a decade ago, but many political leaders have resisted a full-scale planning effort to protect the species. The lawsuit is Endangered Habitats League v. County of Riverside, No. RIC 314330. Contacts: Dan Silver, Endangered Habitat League, (323) 654-1456. Ray Johnson, attorney for Endangered Habitat League, (909) 506-9925.

Two local governments in Nevada have won the right to sue the federal government over alleged failure to prepare an environmental impact statement prior to implementing a water-rights acquisition plan in the Lahontan Valley. The Ninth U.S. Circuit Court of Appeals has ruled that Churchill County and the City of Fallon do have the standing to sue the Secretary of the Interior under the federal Administrative Procedures Act. The local governments claim the Interior Department should have prepared a programmatic EIS on the water-acquisition plan or on the combined effect of the plan's actions prior to implementation. Instead, the Interior Department prepared a final EIS later on. The water-rights acquisition plan was called for by the passage of the Fallon Paiute Shoshone Indian Tribes Water Rights Settlement Act of 1990. This law was designed to resolve a series of complex water-rights dispute arising from the federal government's diversion of water in western Nevada for the Newlands Reclamation Project. Among other things, the law called for a reallocation of water to improve wetlands in the Lahotan Valley that had been damaged by the water diversion. Under the water rights acquisition plan, the U.S. Fish & Wildlife Service is authorized to purchase land or water rights to transfer water back to improve 25,000 acres of wetlands in the Lahotan Valley. The Service is permitted to buy land from willing sellers only. In November 1996, Fish & Wildlife announced plans to purchase 55,000 acre-feet of water from within the Carson Division of the Newlands Reclamation Project, and acquire rights to 35,000 additional acre-feet through leasing and other methods. The Carson Division is located within Churchill County and near the City of Fallon. The Interior Department issued a final EIS but refused to prepare a programmatic EIS on the combined effect of the plan with other programs in the area. Churchill County and Fallon sued under the Administrative Procedure Act claiming a violation of NEPA. U.S. District Court Judge Edward C. Reed Jr. ruled that the county and the city did not have standing because they had failed to show that the plan would result in imminent injury to them. Meanwhile, a local power company, Sierra Pacific Power Company, sought to intervene as a defendant in the city/county action. Judge Reed permitted Sierra Pacific to intervene in the remedial phase of the case but not in the phase dealing with the merits. On appeal, a three-judge panel of the Ninth Circuit overturned Judge Reed, concluding that the city and the county do have a right to appeal. The panel affirmed Judge Reed's ruling on Sierra Power, however. In order to have standing, Churchill County and Fallon had to prove that there has been a final agency action adversely affecting them and that their injury falls within the zone of interests protected by the section of the National Environmental Policy Act which they claim was violated. The county and the city produced several claims of proof. Among other things, the two local governments argued that the projects would cause environmental harm to land they own, including increased fire hazard, airborne particles, erosion, changes to the groundwater supply, and reduced quality of local drinking water. "It is reasonable that the transfer of a significant amount of water rights from the area adjacent to and surrounding County and City lands will affect those lands adversely," the Ninth Circuit wrote. In arguing against the city and county position, the Interior Department argued that the city and the county had "failed to show the imminence of their injury." The Ninth Circuit ruled that the Interior Department was paying too much attention to the "imminence" issue; imminence is not necessary, the court ruled, because the potential injury is beyond the control of the city and county. "In this case, although it is not clear when further land purchases will occur and water rights will be transferred to the wetlands, it is clear that the Secretary intends to purchase 55,000 acre-feet of water rights in the Carson Division - in County and near City - and has already started. One estimate of the time involved is that it will take twenty years for all the purchases and transfers. ... County and City do not have to wait for all purchases and transfers to be completed before they have standing. They have shown that their injury is not hypothetical or speculative, but is imminent, and redressable by the courts." The court affirmed the trial judge's ruling that Sierra Pacific should be permitted to intervene only in the remedial phase of the trial, not the merits, because the company does not have a "significantly protectable" interest in compliance with NEPA. The Case: Churchill County v. Babbitt, No. 97-15508, 98 Daily Journal D.A.R. 11189 (issued October 29, 1998). The Lawyers: For Churchill County and City of Fallon: Antonio Rossmann, (415) 861-1401. For Department of the Interior: Fred R. Disheroon, Assistant U.S. Attorney, Washington, D.C.

In the Animorph series of children's novels, teenagers receive a forbidden power from space aliens: the ability to "morph" or change their natural form into those of various animals. This morphing ability enables the children to do many things otherwise impossible for human beings, such as performing reconnaissance missions in the form of hawks, or fighting underwater in the form of sharks, and literally becoming flies on the wall. (This last-named ability is a source of envy among journalists.) If adolescents can morph, however, so can cities and city agencies, at least in the City of Upland. This city of 67,000 people in San Bernardino County has found it useful to change identities on several occasions in order to help build a senior center and 130 rental units of senior housing in the city's downtown area. First the city became - or, more accurately, created - a non-profit homebuilder to build the senior housing, while forming another non-profit private foundation to own the project. The resulting tale is instructive both in the efficiencies that government can achieve by assuming a private-sector alter ego-as well as the complex nature of projects that make such shape-shifting necessary. Upland's goal was straightforward: the city wanted to use its redevelopment housing money to build senior housing in the city's downtown historic district. The senior housing would be paired with a city-owned senior center, which would be open to the public. The choice of location reflected the city's desire to bring some badly needed foot traffic, and captive retail dollars, to Upland's underused downtown. The plan is laudable socially as well as commercially: Bringing seniors downtown, rather than relegating them to suburban isolation, seems more desirable than the typical practice of apartheid for the elderly. In another nice gesture, the city invited future residents to review the plans and suggest changes-something that does not happen in every seniors project, which tend to be either banal or institutional, or both. The local historical society lobbied for a neo-Craftsman design, in keeping with the character of downtown Upland. (The final design features generously gabled roofs and a river-stone façade.) The morphing process - otherwise known as home building - began when the city's redevelopment agency and housing authority put together a housing task force to determine the scope of the project. At that point, the task force metamorphosed into a non-profit builder, known as Upland Community Housing Incorporated. The non-profit board included two councilman appointees, two Housing Commission appointees, and 11 city residents. And in order to sell federal low-income tax credits, the city created another entity, Upland Senior Housing Limited Partnership, in which the city is a general partner, while the buyer of the credits, Edison Housing Capital, is a limited partner. Why, then, did the city choose to create a non-profit homebuilder? Martin Trabing, Upland's redevelopment director, offered a number of reasons. "A non-profit creates a vehicle that gives you the opportunity to be more competitive for state and federal funding and allows more flexibility in making decisions," he said. Unlike a project managed directly by city council, the non-profit board need not comply with Brown Act requirements to open all meetings to the public. And a private company can react quickly to crises of the moment, as developers often need to do, according to Trabing: "You need to be able to call people on the phone at night and make decisions, not only in the design phase but in the construction phase as well," he said. Control, however, was a more profound reason for going private, the Upland official said. "This project was so important to the community that we didn't want to hand over control" to another developer, he said. The community wanted to make the decisions itself. A third-party developer hired by the city might skimp on construction out of concern for the bottom line. But the non-profit would arguably build more carefully, because it has an eye out for long-term maintenance costs. Despite good planning in the beginning, the construction became complex, in large part due to the complex nature of the financing. Although the housing and the senior center were designed as a single concept, The housing and senior center had two separate contractors, who worked concurrently. (The projects were divided because they had different funding sources, each with its own requirements.) Five funding sources in all financed the housing and senior center: To raise equity for the senior housing, the city netted $3.285 from the sale of the tax credits. (The city had applied five times before receiving the tax credit allocations, "which is a record," said Trabing.) Permanent financing of $2.15 million came from HUD Risk Share program and the California Housing Finance Agency tax-exempt Bonds. The city's redevelopment agency contributed a deferred loan of $2.82 million, and Bank of America supplied a construction loan of $5.40 million. The redevelopment agency contributed $2.82 million. For the senior center, HUD provided a $2.2 million loan guarantee. "It got pretty complicated, but we had no choice," Trabing said. Coy D. Estes Senior Housing opened last year fully occupied, with a five-year waiting list. The project is 85% affordable units and 15% market rate. The limited partnership manages the housing, while the city manages the Gibson Senior Center. Perhaps there are ironies about public-sector agencies creating private non-profits to accomplish public business without the hairsplitting of public process. Then again, if cities are going to be developers, they may as well function as much like developers as possible, rather than making construction a political process. Beyond morphing, the story of Upland's senior housing development is yet another illustration of how damnably difficult it is to build low-income housing in California, despite strong public-policy support for such housing. I find it hard to comprehend why public agencies have to put themselves through major changes to build a modest number of apartment units for people of limited means. Perhaps if I morph myself into an elephant, I will gain the wisdom to understand.

Efforts to build retail centers in the Inland Empire city of Redlands have all the drama and twists and turns of a soap opera these days. Jilted suitors seeking justice, promises made and then broken, dashed hopes � and the arrest of one popular shopping center developer � are all part of a long-running battle over development in the slow-growth, upscale city. Not surprisingly, the matter has ended up in court. At least eight lawsuits have been filed. The city's legal fees so far are approximately $500,000. Redlands sits on prime land near Interstate 10 in San Bernardino County. Over the years its residents have approved a number of ballot measures to curtail its growth. The most recent, 1997's Measure U, has played a role in many of the current lawsuits. Measure U, which passed with 57.2 % of the vote, was based in part on a developer's proposal to build the Citrus Plaza shopping center on county land next to the city. The measure requires all development within the city's sphere of influence to conform to city standards and requires socioeconomic studies to be made of development projects. But since its passage, shopping-center development has been at a standstill. "We've been at a moratorium for over 10 months," said City Councilwoman Pat Gilbreath, due to the city's efforts to develop socioeconomic studies called for in the measure. Gilbreath, who says she's for moderate growth, is often in the minority on city council votes. Gilbreath said it could be as long as six months before the matter is resolved. City Councilwoman Geni Banda said she hopes the socioeconomic studies can be resolved in November. She described the studies as looking at the costs of such things as infrastructure improvements, traffic problems, and loss of trees caused by new development. "Measure U is not the scary monster that builders have purported it to be," Banda said. Citrus Plaza was the first of three shopping centers proposed. The 125-acre, 1.2-million-square-foot shopping center would be built on land that is adjacent to Redlands and was expected to be annexed into the city. The project was approved by the county after talks with the city broke down, according to the Los Angeles Daily Journal. Redlands then sued the county, naming the center's developer, Majestic Realty, as the real party in interest. Redlands won that lawsuit, which has been appealed. Majestic is now suing the city over its agreement with the developers of another shopping center, Timberlake Group International, which plans to build the 450,000-square-foot, 45-acre Cities Pavilion. The pavilion will be an entertainment center with numerous movie theatres, similar to the Irvine Spectrum in Orange County. "The project is subject to Measure U...because the approvals were formalized after Measure U went into place," said Robert Crocket, Majestic's attorney. Majestic filed two lawsuits over Cities Pavilion, including a challenge under the California Environmental Quality Act and a lawsuit alleging that the development agreement was defective. The CEQA suit charges that the city failed to meet general plan requirements for parking when the project was downscaled. Majestic has continued to move forward with its plans for Citrus Plaza, despite the lawsuits, said Banda. "None of that is personal," she said. "That's just business." Gilbreath said that the city council's majority modified legal descriptions and property covered in the Cities Pavilion project in 1998 after Measure U was passed. She said she believes this put it under Measure U's standards. But Banda said that the development agreement for the Cities Pavilion project was approved in October 1997 before Measure U passed. The city's attorney has said that the development agreement was valid when the city council accepted it, she said. Meanwhile, Timberlake Group International's president Tim Alexander and consultant Jane Un were arrested and charged in September with real estate fraud, unrelated to the project. A preliminary hearing for Alexander is set for the beginning of December. Alexander's attorney, Andrew I. Roth of Riverside told the Daily Journal" "There's some very powerful interests that are affected by the project." Alexander, according to company spokesman Fred Cassle, "is conducting an investigation to see who's behind it ." Cassle said the arrest has slowed down things, but Alexander is still moving forward with the project. He said that construction of the first phase of the project is expected to begin later this year. Banda said both Alexander and Un have not been convicted of any crimes, and the city would open itself to more litigation if it dropped that project. None of the charges against them had anything to do with the Cities Pavilion project, she noted. Lawsuits have also been filed for over a third retail center, called Redlands Crossing, 475,000-square-foot project that was to be built on 45 acres by Zelman Development of Los Angeles. After Measure U passed, the plans were withdrawn, according to the Daily Journal, and state and federal lawsuits were filed by the developer, charging violation of due process and environmental law violations. The suits seek a total of $24 million in damages. Banda charged that Redlands Crossings' developers "walked away" from the project after missed deadlines brought the project within the scope of Measure U. "The only thing that doesn't exist anymore is Redlands Crossing, because they walked away," she said. "If they had stayed, they'd probably be the shopping center right now." An attorney for Redlands Crossing did not return a phone call seeking comment. If Majestic's large Citrus Plaza project goes forward with a proposed movie theater, it may hinder Timberlake's Cities Pavilions, Banda indicated, because the town can't support that many theater complexes. Gilbreath said tenants for the retail centers have not been announced, although she's heard that Target, Barnes and Noble and Edwards Cinemas were among the companies being wooed. Banda said that taxpayers may not get stuck with the cost of the city's legal fees, noting that it might be a negotiable item in settlement talks. Crockett, Majestic's attorney for its suits over Cities Pavilion, said that two sides had met during the week of October 12 to discuss settlement. Contacts: City Councilwomen Pat Gilbreath and Geni Banda, (909) 798-7533. Robert Crockett, Latham & Watkins, (213) 485-1234. Robert Cassle, spokesman for Timberlake Group International, (619) 523-0455.

A Republican lawmaker who tried earlier this year to end the standoff between counties and prospective cities by creating a state subsidy for incorporations has abandoned that plan and instead will try next year for an outright repeal of a 1992 state law that has effectively kept new cities off the map. Following a legislative hearing in October on his plan to require state government to reimburse new cities for the costs of traffic enforcement and wildlands fire protection now borne by state agencies, Assemblyman Bruce Thompson of Fallbrook said it is clear that idea isn't going to fly. ‘"We're going back to my original bill to do away with revenue-neutrality," Thompson said in an interview. "If it gets down the road and the counties back off a little bit, then maybe the state can kick in some revenues." At the hearing, he received a pledge of support from Senate Majority Leader Richard Polanco, D-Los Angeles. At issue is a six-year-old state law intended to help ease the pain to counties created by the so-called ERAF tax shift, which required counties to transfer a portion of their property taxes to school districts. The revenue-neutrality law protects the remaining county property-tax revenues by mandating that if new cities are carved out within their boundaries, counties must be left financially whole. To accomplish that, new cities are assessed an annual mitigation fee that must be paid their host county for 25 years. The fee, calculated by the county Local Agency Formation Commission, is to cover the costs of general county services that would continue to be provided to residents of the new city — services such as prosecution of crimes, medical care for the poor, public health inspections, foster care and the like. This zero-sum formula has had the effect of slowing city-creation to a near standstill. In the period between the passage of Proposition 13 in 1978 and the adoption of the revenue-neutrality law in 1992, an average of six new cities were created each year — a significant increase from the ‘60s and ‘70s, when the threat of property tax increases slowed the rate of incorporation. Since 1992 only two new cities have been formed — Shasta Lake in Shasta County and Citrus Heights in Sacramento County. The latter was the only the true test of the revenue-neutrality law, and its application has been bitter and litigious — with the legal battle finally ending in August when the county agreed to accept annual mitigation payments of $2.2 million rather than the $5.6 million originally set by the Sacramento County LAFCO (CP&DR, September 1998). The issue has created another point of contention in the strained relationship between cities and counties, and also reopened old arguments about the role, structure, and authority of LAFCOs. Most of these issues were aired at the October 14 interim hearing, which was ordered this summer by the Senate Local Government Committee when it declined to act on Thompson's AB 2147. The bill incorporated a consensus plan drafted in April by representatives of the California State Association of Counties and League of California Cities. AB 2147 included language that would have changed the way LAFCOs calculate the revenues and service costs of new cities and also allowed for a reevaluation of mitigation payments owed to counties if a LAFCO's original fiscal estimates didn't pan out. Its most innovative provision would have required the state to transfer to new cities revenues equal to the amount of savings it would realize from no longer having to provide traffic enforcement, and in some cases fire protection, to the newly incorporated areas. The argument for including the state in the revenue-neutrality formula was most aggressively advanced by Truckee City Manager Stephen Wright, who noted that his city's incorporation relieved the California Highway Patrol of traffic-control responsibility for 140 miles of streets. In addition, the city now contracts — at $100,000 a year — with the California Department of Forestry and Fire Protection for fire-suppression services on land the CDF previously serviced at no cost to local taxpayers. "It is a windfall to the state of California," argued Wright. Despite support from local governments, the idea of using state funds to solve the local revenue-neutrality problem ran into trouble at the hearing, in part because of the political might of the state public safety agencies. Rising to the defense of the CHP, which objected to the plan, Polanco declared simply: "It's not fair." Thompson didn't rule out the idea of providing some sort of direct state financial incentives to promote incorporations. But he made clear his view that counties are using the revenue-neutrality law to protect their political turf. ‘The county arguments don't stack up anymore," he said. "They did when counties were in the red, but that's no longer the case. Right now, counties are holding incorporation proponents hostage up and down the state....It's about money, but it's also about power." Of the 22 city-incorporation movements in the state that are in limbo because of the revenue-neutrality roadblock, three are in Thompson's north San Diego County Assembly district — including his home community of Fallbrook. If the revenue-neutrality law were repealed, Thompson said, "I don't know if there would be a rush toward new incorporations, but there definitely is a pent-up demand. The problem right now is that communities can't make a decision at all." Even before passage of the revenue-neutrality law, city incorporations have been contentious ever since the passage of Proposition 13, which took away the ability of new cities to levy their own property taxes to cover the costs of providing municipal services. ‘Every incorporation since 1990 has resulted in litigation," said LAFCO consultant Walter Kieser, testifying before the interim hearing. "We absolutely have to address this." The hearing assembled incorporation proponents from Fallbrook, Elk Grove in Sacramento County and Rancho Santa Margarita in Orange County, as well as officials from affected counties. The cityhood proponents were united in their plea that the revenue-neutrality law be repealed. Dan Briggs, a cityhood proponent in Elk Grove, called the law "a major obstacle to our incorporation efforts....It's hard to explain to voters that they will have to pay a fee to the county and to convince them it's not extortion." Pat Leary of CSAC said the counties organization will adamantly oppose efforts to repeal revenue-neutrality, saying, "The very fiscal future of counties is at stake." Sacramento County Administrative Officer Robert Thomas testified that the effect of repealing the law would be to leave the county responsible for serving pockets of poverty in unincorporated areas. He urged lawmakers to seek a comprehensive fix of local-government financing in order to "eliminate boundary-line decisions based on cherry-picking of high-revenue areas." The issue of cityhood for newly developing areas — or for longstanding communities located in unincorporated areas — has long been a contentious one because it encompasses so many other power and money issues associated with local government. Incorporations were rampant during the postwar era, when California's suburbs were growing rapidly, but they slowed considerably after the creation of county Local Agency Formation Commissions in 1963. LAFCOs have veto power over incorporations and must find both that they are fiscally viable and logical in terms of geography and government organization. Because California's LAFCO law permits decentralized decisionmaking — there is a LAFCO in every county but there is no state appeals board — each county has developed its own "model" of cityhood. Ventura and Santa Clara counties, for example, have long pursued a policy of channeling virtually all urban growth into cities. In Sacramento County, on the other hand, two-thirds of the population lives in unincorporated territory. Citrus Heights was only the fifth city incorporated in a county of 1 million people, and the first new city created in half a century. This "model" of unincorporated communities has placed the county government in the role of "municipal government" for most of the county's suburbs, thus exacerbating the strife between suburban cityhood proponents and the county government. In Orange County, by contrast, the county government has sought to work with cityhood proponents under the revenue-neutrality law to find a "middle ground" that will allow the cities to incorporate. The affluent, fast-growing areas of south Orange County have been a breeding ground of cityhood activity, and the county's weakened financial condition following the 1994 bankruptcy forced county officials to accommodate cityhood efforts. Contacts: April Manatt, consultant, Senate Local Government Committee, (916) 445-9748. Assemblyman Bruce Thompson, (909) 699-1113.

The City of Los Angeles should not be held liable for landslide-related damage to a property in the Pacific Palisades even though it violated municipal code requirements because the code sections had been repealed and the statutes of limitations had run out, the Second District Court of Appeal has ruled. The case involved a house owned by Paul Haggis that was damaged by a landslide triggered in the 1994 Northridge earthquake, and later condemned and demolished by the city. After the house was demolished, Haggis filed a claim with the city under the Tort Claims Act. The city denied the claim and then Haggis sued, arguing that the city violated four municipal code section between 1966 and 1979, thus preventing Haggis from discovering the true condition of the property when he purchased it in 1991. In particular, Haggis argued, that in the ‘60s and ‘70s the city failed to record notices of substandard condition; issued permits to permit reconstruction and expansion of the house after prior landslides without requiring dangerous conditions to be corrected; and failing to halt or prevent work on the property until the substandard conditions had been supplied. But the appellate court ruled in favor of the city. Beginning in the late ‘60s, the home now owned by Haggis suffered from a series of landslide-related problems. In 1966, a landslide undermined the integrity of the property and the city declared the home unsafe. The city notified the property owner to comply with relevant codes but did not record that notification. In 1970 — the problems still having not been corrected — the landowner asked the city for permission to relocate the home away from the landslide-damaged bluff. The city approved the project but did not subject the homeowner to a city requirement to swear knowledge of the landslide problems in an affidavit The construction project went forward in 1971 but the city did not demand that the landowner file a land stabilization plan as required under city code. Further changes and expansions to the home occurred up through 1977, but the city still did not require the property owner to comply with the relevant city codes. When Haggis bought the property in 1979, the geological instability was not visually apparent, nor did Haggis learn of the problem from any purchase or loan documents because of the city's failure to record its notices. The appellate court ruled in favor of the city on several grounds. First, the appellate court agreed with the city's argument that the city is immune from liability under Section 818.6 of the Government Code, which provides that a public agency "is not liable for injury caused by its failure to make an inspection ... of any property ... for the purpose of determining whether the property complies with or violates any enactment or contains or constitutes a hazard to health or safety." Second, the appellate court found that Haggis's action is precluded by Code of Civil Procedure Section 337.15, which prohibits a plaintiff from seeking liability on problems related to real estate development that were created more than 10 years before the action was filed. Although the law was originally written to deal with lawsuits against developers, the court concluded it applies equally to public agencies. "There is no rational reason to construe section 337.15 as intending to single out public agencies as liable for latent construction defects discovered beyond the ten-year period, while all others involved in the development process, with perhaps even greater responsibility for a particular loss, are insulated from liability." The Case: Haggis v. City of Los Angeles, No. B108947, 98 Daily Journal D.A.R. 10805 (issued September 17, 1998). The Lawyers: For Haggis: William R. Hart, Hart, King & Coldren, (xxx) xxx-xxxx. For City of Los Angeles: William L. Waterhouse, Assistant City Attorney, (213) xxx-xxxx.

U.S. Supreme Court justices gave mixed signals during the oral arguments in the Del Monte Dunes case, a closely watched dispute from California that may determine whether developers should have the right to compensation for unreasonable delays because of land-use regulations. However, it appears the high court will not issue a sweeping decision on the question of whether developers have the right to a jury trial in such cases. The muddled arguments and questions suggested the court's decision might be less momentous than the opposing forces in the property rights debate had expected. Conservative justices appeared sympathetic to arguments to uphold a $1.45-million jury award that a California developer, Del Monte Dunes, won after an unsuccessful, five-year effort to build an oceanfront residential development in the City of Monterey. "When you have a consistent process of turning down one plan after another, isn't there some point where you begin to smell a rat?" Justice Antonin Scalia said during the oral argument on October 7. But some justices voiced doubts that the developer had successfully made the case that its property had been unconstitutionally taken. "Isn't it always true," Justice John Paul Stevens asked, "that there will be some time in the permit application process when a property owner is blocked from making use of its land?" Stevens is the only former city attorney on the high court. Still other justices confessed puzzlement about some of the issues in the case, including the question whether developers are entitled to a jury trial in inverse condemnation cases in federal court. "I don't know what to do with this case," Justice Stephen G. Breyer said at one point. The justices' questions in the hour-long argument left opposing advocates in the property rights debate uncertain about how broad a decision to expect. "I came away pretty baffled," said John Echeverria, a professor at Georgetown University Law Center who filed a brief in the case for several environmental groups. But a leading property-rights advocate said she was "cautiously optimistic" that the court will enlarge landowners' right to compensation in taking claims. Nancie Marzulla, president of Defenders of Property Rights, said she was looking for a new "intermediate standard" that examines the reasonableness of the government's actions under "a higher level of scrutiny." The case stemmed from a plan to develop a 37.6-acre parcel once used as an oil tank storage zone and now viewed as environmentally sensitive by Monterey officials. The original developer, Ponderosa Homes, sought approval in 1981 to build 344 residential units on the site. Over the next five years, the city rejected four more plans. The last of the plans called for 190 units. By that time, Ponderosa had sold the land to Del Monte Dunes. The city had imposed requirements that all but 5.1 acres of the tract be set aside for public space, private landscaped space, or private and public streets. In its last action, the city said the developer needed to consult with the U.S. Fish and Wildlife Service on how to preserve habitat for an endangered insect, the Smith Blue Butterfly. At that point, Del Monte Dunes filed suit against the city under the federal civil rights law, 42 U.S.C. section 1983. By the time the case was tried, it had sold the tract to the state for a nature preserve — and made an $800,000 profit. But a federal court jury ruled that the city's refusal to approve the construction amounted to a "temporary taking" of property and awarded the developer $1.45 million in damages. Earlier, the judge in the case had ruled that the city had not violated Del Monte Dunes' due process rights because its actions were not arbitrary or capricious. In appealing the Ninth Circuit's decision upholding the jury award, the city presented three separate questions to the Supreme Court. But two of the issues, including the developer's right to a jury trial, appeared either to disappear or diminish in importance during the arguments. On the jury trial issue, Justice Ruth Bader Ginsburg pointed out the suit had been filed before the Supreme Court's 1987 decision, First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, requiring states to provide compensation for government overregulation of property. Since states now have to give landowners a remedy in their own courts, Ginsburg said, the jury trial issue will apply only to the federal court cases "that are still hanging around from the 1980s." Michael Berger, the veteran Los Angeles property rights litigator representing Del Monte Dunes, agreed. The justices also appeared uninterested in another issue the city had raised. San Francisco attorney George Yuhas, representing the city, argued the Ninth Circuit was wrong to have judged its actions under the "rough proportionality" test established by a 1994 decision, Dolan v. City of Tigard, 512 U.S. 374. That test, Yuhas said, applied only to so-called exactions — provisions for public use of land as a condition of approving development or construction. Justice Sandra Day O'Connor, who usually backs landowners in property-rights cases, appeared to agree, suggesting the court might simply set aside that part of the Ninth Circuit's ruling. Several of the court's conservative justices, however, voiced strong sympathies for the developer's frustrations with the city's handling of the permit applications. Chief Justice William Rehnquist and Justice Anthony Kennedy both emphasized the five-year span covered by the various applications to proceed with the project. "Isn't the history relevant to the reasonableness of the city's actions?" Kennedy asked. "The landowner here thinks that it was essentially getting jerked around," Scalia said. Yuhas defended the city's handling of the applications. But both he and Deputy Solicitor General Edwin Kneedler, supporting the city, spent more time arguing that there had been no taking because Del Monte Dunes had not been deprived of all "economically viable use" of the property. They both noted that the developer's own expert witness testified that the property was worth $3 million while the construction applications were pending. In his turn, Berger argued that the unreasonableness of the city's actions satisfied a separate test for a temporary taking — that the regulations were not substantially advancing a legitimate government interest. But liberal-leaning justices questioned how the jury could find the city's actions unreasonable if the judge had already ruled on the due process claim that the regulations were not arbitrary. "I guess there's some intermediate standard between arbitrary and not advancing a state interest," Stevens remarked doubtfully. In closing, Berger said the issue in the case was simply whether the Fifth Amendment's takings clause would be enforced. "People like this developer need to know that when they deal with their local regulating agency, their rights will be protected," he said. "They can't be simply abused and strung along at the city's whim." Afterward, Echeverria said the case posed a "fundamental issue whether arbitrary and capricious actions come under the Takings Clause at all." "It's arguably an issue the court has yet to address," he said. "If the court's going to resolve that, it would be a very important ruling." The Case: City of Monterey v. Del Monte Dunes at Monterey, Ltd., 97-1235 The Lawyers: For City of Monterey: George Yuhas, (415) 392-1192. For Del Monte Dunes: Michael Berger, (310) 449-1000. Kenneth Jost, a former editor of the Los Angeles Daily Journal, is a staff writer for Congressional Quarterly and author of The Supreme Court Yearbook.

An interviewer once asked the celebrated designer Charles Eames how he dealt with the issue of accepting compromises in his work. "I have never been forced to accept compromises," Eames replied, "but I have willingly accepted constraints." The answer is a subtle, even wily, one; it's the kind of statement whose truth slowly creeps on you and changes the way you think. Eames, in effect, issued a challenge to all designers to regard constraints not as forces that erode design, but as the very essence of design itself. It is hard to imagine a more constrained place in which to build a residential community than in the proposed Rio Vista subdivision in Cathedral City, a small town in Riverside County not far from Palm Springs. Constrained, because the climate in Cathedral City is as harsh as can be found in Southern California: temperatures can rise to 120 degrees at the height of summer. A stone's throw from a freeway and the Southern Pacific railroad, Rio Vista can also be noisy. The area is subject to sandstorms that can pile up mounds of sand like snowdrifts in Vermont. And the area is a flood plain, where detention ponds are necessary to contain the fury of 100-year floods. Another set of constraints on Rio Vista, arguably of a more positive kind, are the Ahwahnee Principles, which the city has adopted as part of its general plan. Framed by a group of designers that included Peter Calthorpe, Andres Duany, Elizabeth Plater-Zyberk and Stefanos Polyzoides, the Ahwanee Principles are the Decalogue of the New Urbanism. This brief document sets forth the worthy and by-now-familiar tenets of the new thinking in urban design, including the desirability of walkable streets with slow-moving cars, oriented around community centers and transit stations that can easily be reached by foot. The principles also emphasize a "comprehensive" community that includes employment centers as well as housing for people with differing scales of income. Too often, the New Urbanism is responsible for — or has been used as window dressing for — developments that are little more than exercises in nostalgia. Some New Urbanist developments are not site-specific, and do not reflect in their design the climate, or culture or regional nature of the locale. In the case of Rio Vista, however, the site planning firm, Warkentin Partnership, had little choice but to respond to local conditions. That's fine by principal Bill Warkentin, who said he is opposed to the sort of subdivisions that "look as if they could have been built anywhere." Although still in a preliminary phase, Warkentin's scheme for Rio Vista is notable for not being a cookie-cutter product. In point after point, the master plan attempts to address the realities of the site, and, where possible, to use them as the basis positive design features than enhance the quality of life. A good example is the way that the site plan handles the flood retention basins that traverse the middle of the plan. Measuring 100 feet across and eight feet deep, these basins are too narrow for conventional parks and ball fields. Warkentin makes the flood basins into virtues by making them the scenic median of the area's main drag, Rio Vista Boulevard, which is split into two single-directional roads with the basin in between. The basin itself is beautified with xeriscape planting, and activated with hiking trails and exercise equipment. Another environmental accommodation that harmonizes well with the Ahwahnee agenda are Warkentin's plans to plant the residential streets mesquite trees. As a desert native that does not require watering, the tree works well in Cathedral City. The canopy of the mesquite allows some light to filter through, so a future arbor formed of mesquite canopies meeting above the street does not promise to be a dark place but a (comparatively) cool street of dappled light — a pleasant idea that encourages walking in otherwise unbearable heat. In accordance with Ahwahnee, the plan features a neighborhood commercial center that parallels the freeway, a four-acre park that may someday contain a "swimming lagoon," a traffic circle that slows down cars and serves as an excuse for a three-acre park in its interior. Inventively, the designers have also provided eight small "pocket parks," and arranged them, in sets of four, on the Four Corners of an intersection. Bunching up the parks in this way makes them appear larger, while maximizing the impact of the green space on the street. Yet another refreshing accommodation to climate is a set of schematic suggestions for housing design. (Arranged in six "villages," Rio Vista would contain up to 1,392 dwelling units, of which 1,000 would be single-family homes.) Although the houses are not yet designed — those designs would probably be commissioned by the merchant builders who buy into Rio Vista — Warkentin has created an intriguing set of guidelines for residential architecture. Unlike nearly all the new housing in Las Vegas, for example, which is based on housing in Southern California and is entirely unsuitable for the desert, Warkentin has proposed a prototype house that responds to the climate both in its orientation perpendicular to breezes, as well as through design features that emphasize passive solar heating and cooling. In addition to the abbreviated front yard, with a short fence for privacy, Warkentin has proposed shading outdoor living areas with "brises soleil," or walls that admit only a small amount of light through narrow windows or shutters; the walls, of course, provide some protection from the region's blowing sand. In accordance with Ahwahnee, the plan encourages, but does not require, the use of rear-loaded alleys. (Warkentin also suggested that four houses could be pulled together so that their respective patios could together form one large courtyard — a worthwhile idea for maximizing shaded outdoor space in which children could play.) Some of the environmental mitigations at Rio Vista do not sound particularly picturesque, such as a 15-foot soundwall that would block the noise from the freeway. And a set of fences that would be located along a wash just west of the project (not shown on the map) would make use of barricades, not unlike snow fences, which can shield the community from blowing sand. Those examples aside, Rio Vista is impressive for the inventions of the designers that takes pragmatic protections against heat and wind and sand and monsoon-strength flood, and turns them to good advantage as attractive elements of a New Urbanist plan. As the project remains unbuilt, I obviously reserve final judgment. But much credit must be given to Warkentin for making so many silk purses out of the environmental sow's ear of Rio Vista. The big lesson of Rio Vista is that Ahwanee/New Urbanist approach may turn out to be workable and useful in an extreme climate with many environmental constraints. To some people, such a conclusion might seem obvious. But as mentioned earlier, New Urbanist developers have not always opened their eyes to their surroundings and let the environment participate in the design. Ironically or not, the many constraints on Rio Vista may help make this desert subdivision a more livable place than in some subdivisions in much milder climates.

After a roller-coaster ride lasting several months, the beach town of Santa Cruz has finally approved a scaled-down plan to expand its historic boardwalk area — and election results in November's city council races are expected to offer a public referendum on the council's decision. The proposed expansion is the latest development issue to divide Santa Cruz -— a college town known for its environmental, non-traditional bent that has undergone a series of bruising growth and redevelopment battles in the last decade. When the boardwalk expansion was first introduced, a majority of the progressives on the city council thought they'd found a way to increase the city's commercial base while improving housing for residents and finding additional revenues for the city. However, when strong public opposition surfaced, the proposed plan was significantly changed. Santa Cruz's boardwalk area includes a historic amusement park and roller-coaster that date back to the turn of the century. However, the boardwalk is separated from the city's strong downtown by a group of run-down neighborhoods — including the ethnically mixed Beach Flats neighborhood, where some houses would be purchased and razed by the city for the project. Less than a decade ago, Santa Cruz underwent a similar battle over redevelopment of the downtown, which was largely destroyed by the Loma Prieta earthquake. After the ‘'quake, several historic buildings were quickly razed by city officials. Downtown merchants and social activists then engaged in a lengthy dispute over whether the reconstruction of downtown should seek to upgrade the area or continue to accommodate its considerable homeless and transient population. In similar fashion, the boardwalk proposal pitted the city's business community against social activists, with the city government itself caught in the middle. Under the original proposal, the Santa Cruz Seaside Co., owners of the historic amusement park, planned a 1.4-acre expansion of the 12-acre boardwalk, a 225,000-square-foot-shopping center, realignment of a street, and construction of a parking garage and a nature center, with the city condemning residential property nearby. The properties were 19 apartments in the Beach Flats neighborhood, which housed 48 residents. The Seaside Co. was to contribute money or land toward construction of affordable housing, and provide public improvements such as bicycle paths. Additionally, a traffic shuttle from downtown was planned to reduce the impact of increased traffic on local neighborhoods. Beach Flats is considered the city's most rundown neighborhood. Nearly all its residents are renters. The neighborhood sits directly behind the Boardwalk amusement park and is surrounding by old motels and a hilly area of restored Victorian homes. Downtown Santa Cruz is about one mile further inland behind the neighborhood. The plan had already been reduced in size before it reached the council for vote last month: the shopping center would have only 125,000 square feet, and the parking garage and nature center were both eliminated. The plan unanimously adopted by the seven-member city council last month dropped all of the major commercial components of the plan. The only items approved were construction of a 275-room hotel conference center and up to 28 units of low-income housing and public improvements such as building rehabilitation. A traffic shuttle is still planned, but funding for it and other improvements will have to come from other sources. Opposition to the expansion ran 2 to 1 at public hearings, according to Mayor Celia Scott, who criticized the expansion for the traffic it would create and for the removal of homes. "The community had a very strong history of consensus building after the earthquake," which destroyed the city's downtown, said Planning and Community Development Director Eileen Fogarty. But that consensus wasn't reached on the boardwalk plan, and now Fogarty's department will continue to meet with citizens to develop a plan that meets their approval. One factor that may have galvanized opposition was construction earlier this year of a "power center" on the eastern entrance to the city, according to activist Doug Rand, a leader of Beach Area Working Group, which opposed the amusement park's expansion. In many cities, construction of boxy Petsmart and Office Max buildings doesn't ruffle many feathers. But in Santa Cruz, "It's like a Trojan horse coming over the hill from San Jose," he said. To the city's social activists, the power center created the impression that commercial interests were gaining greater influence in the city — and a backlash against that influence spilled over into the boardwalk discussion. The boardwalk is a major source of income to the city, contributing $500,000 in parking and admissions tax revenue each year plus tax-increment money for redevelopment projects. It drew 3.2 million visitors last year, making it the 14th most visited attraction in the nation, according to the San Jose Mercury News. Ted Whiting II, vice president of operations for the Santa Cruz Seaside Company, said he was disappointed by the city council's decision, but the company would take "a wait and see" approach. He said each element of the plan would have gotten its own discretionary review before permits were issued. The total plan encompassed 205 acres. "It was an area plan, he said. "No one project was approved. People didn't understand that." The plan was drawn up after numerous public hearings and meetings, but Mayor Scott and others said the meetings didn't take community concerns into account. Rand said that four members of the council who had originally backed the beach plan "betrayed their own electorate." When the final decision on the plan was made October 6, opponents were already discussing the possibility of a referendum on the subject and a capacity crowd packed the council chambers. Rand said that opponents were pleased that the boardwalk expansion and realignment of Third Street were removed from the plan. There are "mixed feelings," he said, on the hotel/conference center, which will have "tremendous impact on the beach area." The new hotel will retain some of the components of the historic Bahia Hotel, which is currently on the site and dates to the 1920s. Rand, a longtime community activist, said that the goals of revitalizing the area "are admirable." But with a plan that wiped out the Beach Flats neighborhood, he said, "we couldn't identify the public benefit here." Election results in November will serve as a referendum on the plan, he said. Three opponents of the plan are running for the city council. He said that opponents of the beach plan are still considering legal action to challenge the plan's environmental impact report. While deciding on the boardwalk's future, the Santa Cruz City Council also voted in October to accept a settlement with the Seaside Co. on some acreage near the boardwalk. Rand said that settlement might also be the subject of a legal challenge. At issue is about four acres of land along the San Lorenzo River, which ends at the boardwalk. The land is currently used for parking, but a portion may be turned into a park under the settlement. An opponent of the boardwalk expansion plan wrote to the State Lands Commission last year that the Seaside Company was using tidelands as a parking lot, and that the land belonged to the public. "The whole area has been underwater and is...public tideland," Rand said. Under the state constitution and the city charter, the land is supposed to be public, he said. The Lands Commission determined that actual ownership of the site was a murky question. Under the settlement the state gets 20 % of the land, which will then be leased to the city. Seaside gets clear title to the rest. Contacts: Ted Whiting II, Vice President, Santa Cruz Seaside Company, (831) 423-5590. Doug Rand, Beach Area Working Group, (831) 458-3434. Celia Scott, Mayor, (831) 429-3540. Eileen Fogarty, Planning and Community Development Director, (831) 429-3555.