Two long-running growth disputes will add another chapter — and many disputes of more recent vintage will be aired out — when voters decide on local ballot measures in November. Voters in Livermore are scheduled to consider Pardee Homes’ proposal to expand the city’s urban growth boundary to permit development of a 2,450-unit housing project. Meanwhile, voters in Monterey County will decide a referendum of a 4,000-unit specific plan for Rancho San Juan, just north of Salinas. Many other measures are on the ballot statewide. Most are located in longstanding “ballot-box zoning” hotspots, such as the East Bay, the South Bay and Redlands, rather than in areas new to land use ballot measures. Other closely watched elections are set for: • Davis, where voters will consider the 1,800-unit Covell Village project; • Three eastern Contra Costa County cities, where developers are trying to open up more land for growth; • Calabasas, where rezoning for a resort and an open space protection ordinance are on the ballot in separate measures; • Redlands, where a small residential project faces a referendum and voters also will have the chance to tighten existing growth controls; • Cupertino, where slow-growth advocates have placed three general plan amendments on the ballot. In all, voters will decide on about two dozen growth-related measures during the November 8 special election. Five years ago, Alameda County voters approved urban growth boundaries around cities and unincorporated communities in the middle and eastern part of the county. One of the main targets of that Sierra Club-backed initiative was North Livermore — several thousand acres north of Interstate 580, where the county was considering a 12,500-unit specific plan. The 2000 initiative required subsequent voter approval before development could proceed in North Livermore. (See , September 2003, December 2000, October 2000, June 2000). Two years later, the Livermore City Council adopted its own urban growth boundary. Pardee is the first developer to take a shot at expanding Livermore’s growth boundary. The Livermore Trails plan calls for 2,450 housing units, a neighborhood retail center, a 130-acre sports park, a 750-acre open space preserve, and land for a high school, an elementary school and civic buildings. Pardee proposes a variety of housing units — single-family houses, townhouses and apartments — on 450 acres, with 15% of units designated for moderate- and low-income families. Previous proposals for North Livermore were large, master-planned communities, which were not what Livermore residents want, said Carlene Matchniff, vice president of community development for Pardee. “We felt that if we scaled back the plan with fewer units and highly amenitized them, it would be acceptable to the community,” Matchniff said. “If this project is not approved, it’s hard to believe any project could be approved.” But Bob Baltzer, of Friends of Livermore, said the urban growth boundary is intended to preserve the farmland and open fields north of the freeway. “The whole reason we put that there is to prevent this type of growth. It’s not infill, it’s greenfield development,” Baltzer said. He pointed to the city general plan, which calls for extensive infill growth, including thousands of housing units in downtown. As usual, traffic is a primary source of contention. Baltzer said Livermore Trails would generate an “unbearable amount of additional traffic on city streets, as well as the freeway, which is already pretty close to gridlocked.” However, Matchniff contended that Livermore’s traffic congestion is caused by long-distance commuters who live in the San Joaquin Valley and work in the Bay Area. Livermore Trails would place housing closer to jobs, thus shortening commutes, she said. Even if voters approve of moving the urban boundary, Livermore Trails would still have to complete the planning process. Besides voting on the Pardee project, Livermore voters also will decide whether to join a regional project that expands wastewater treatment capacity. The additional capacity — in the form of an export pipeline — could not be used to serve development outside the current growth boundary unless voters approve in the future. Livermore Trails is proposed to have its own wastewater treatment plant. In Monterey County, voters are scheduled to decide whether to uphold the Board of Supervisors’ approval of the Rancho San Juan specific plan. However, the possibility exists that at least a portion of the plan may be obsolete before balloting is complete. In December, the Board of Supervisors approved the specific plan for Rancho San Juan’s 2,500 acres and the first phase of development — the 1,100-home Butterfly Villages project. Opponents then collected enough signatures on a referendum of the project’s general plan amendments. Since then, though, Butterfly Village developer HYH Corporation and county officials have discussed a scaled back first phase. In August, supervisors considered rescinding the earlier vote and canceling the election. However, development opponents urged supervisors to let the vote proceed, and a 3-2 Board of Supervisors agreed to go forward with the election. “Why put the county through the meat grinder of an election?” asked Brian Finegan, an attorney for one Rancho San Juan property owner but not HYH. “Everybody has abandoned the project that is the subject of the referendum.” But Julie Engell, chair of the Rancho San Juan Opposition Coalition, which headed the referendum and argued for the election, said the public is wary of the county’s “shenanigans.” “I believe they are trying to piecemeal it and allow everything to happen there – and more,” Engell said. “People are feeling bullied, and they don’t like it.” Development of Rancho San Juan has been a controversial topic in Monterey County for more than two decades (see , June 2003). Engell’s group and other growth activists argue that development would further drain already strained groundwater aquifers (see , June 2004) and worsen congestion on Highway 101 between Salinas and San Jose. Both Caltrans and the City of Salinas have sued the county over impacts from the Rancho San Juan project. Other local land use elections on the November ballot: • Contra Costa County : In the cities of Antioch, Brentwood and Pittsburg, voters will decide on urban growth boundary initiatives placed on the ballot by development interests. The measures attempt to head off county efforts to constrain growth within tighter boundaries. • Contra Costa County : A $21 million bond to build a new library in the City of Walnut Creek is on the ballot. • El Dorado County : Incorporation of El Dorado Hills, a rapidly-growing area on Highway 50 abutting Sacramento County with a population of about 30,000 people, has reached the ballot after years of discussion. • Humboldt County : Separate ballot measures that ask whether the county should place the Manila Community Services District and the Redway CSD in the county’s redevelopment zone are on the ballot after much public debate about the merits of redevelopment. • Los Angeles County : Measure C in the City of Calabasas is an advisory measure on whether the city should annex 152 acres on Mulholland Highway to accommodate a proposed 200-room resort and five estate homes. The project would replace an 81-lot subdivision approved by the county in 1998 but never built. Measure D in Calabasas would prohibit changes to open space zoning without two-thirds voter approval. • Los Angeles County : The City of Hermosa Beach will decide on a measure to place the “restricted open space zone” designation on the greenbelt that runs through town and the beach. The measure apparently would restrict construction of recreational facilities and parking lots, and possibly impact large commercial events on the beach. • Marin County : An advisory measure asks voters in the Bolinas Community Public Utility District whether they support a downtown parking plan that precludes meters, clusters parking spots and simplifies signage. • Monterey County : Measure W asks voters in the Monterey Peninsula Water Management District whether the district should study acquiring the system owned by California American Water. • Placer County : The Board of Supervisors has placed on the ballot an advisory measure that asks whether the county should designate 1,136 acres just west of Roseville for development of a private four-year university and adjoining community, a project backed by the Tsakopoulos family (see , August 2003). • Riverside County : In the City of Norco, voters will decide a city charter amendment to require four-fifths City Council approval of changes to agricultural, residential, hillside, planned development and specific plan zones. • San Bernardino County : The City of Redlands has two ballot measures. Measure P would tighten existing growth controls by setting new standards for traffic, noise and building heights. Measure R is a referendum of an 85-house subdivision proposed for lightly developed Live Oak Canyon. • San Mateo County : A measure in the City of Belmont would require subsequent voter approval for development of the rugged hillsides above Carlmont High School and in the San Juan Canyon. • San Mateo County : A measure endorsed by the Half Moon Bay City Council would prohibit the city from using eminent domain to take property primarily for the purpose of “increased city revenue.” • San Francisco : Proposition B is a $208 million bond to improve streets and sidewalks. • Santa Clara County : Voters in the City of Cupertino face three growth-control initiatives. Measure A would limit mixed-use and residential development to 15 units per acre. Measure B would prohibit buildings more than 36 feet tall. Measure C would require most new buildings to be set back at least 35 feet from the street. All three initiatives contain exceptions for the area around Vallco Mall. The initiatives have drawn opposition from the Sierra Club, Greenbelt Alliance and the League of Conservation voters, who argue the measures will prevent infill and transit-oriented development. But a group called Concerned Citizens of Cupertino contend that growth is overrunning schools and congesting streets. • Yolo County : The proposed 1,800-unit Covell Village project — a follow up to the Village Homes project, an environmentally oriented project built during the 1970s — is the subject of Measure X in the City of Davis. An earlier ballot measure requires voters to decide on the 400-acre project because it lies north of the current city limits. • Yuba County : An advisory measure asks voters whether a “destination resort/hotel and American Indian gaming casino” should be constructed near an existing concert amphitheater south of Marysville.

For more than twenty years, the quintessential formula for the Orange County business park has remained more or less the same: the high-rise office building that affords a good view and a sense of feudal superiority over the masses on the freeway below; the Beverly Hills pasta restaurant to put on the calories at lunchtime and the health club to burn them off after work; and the parking garage where the cars are stored 12 hours a day. In the evening the cars disappear, as the upscale workers head back to their townhouses and condominiums a few miles away. The formula has been an almost perfect business model for commercial developers, allowing them to capture every dollar of spending from both businesses and employees from dawn till dusk. Now, at last, these developers are targeting the other 12 hours of people’s lives. They’re building housing – not just conventional suburban condominium complexes, but high-rise residential towers. And, as with the high-rise office park of a generation ago, the high-rise housing trend is focused on Orange County. In Irvine, near John Wayne Airport, for example, the Bosa Development Corporation of Vancouver is building a luxury, 18-story building called Marquee Park Place for the upscale workers who spend most of their time in the high-rise office buildings nearby. It is the first residential structure in Irvine taller than four stories. Meanwhile, a 15-story condo tower is being constructed nearby, adjacent to the campus of the University of California, Irvine. Dwellings in these buildings range in price from $500,000 to about $3 million. Just a few miles away in Anaheim, several high-rises – including a 35-story condo tower – are proposed as part of The Platinum Triangle, a large urban development near Anaheim Stadium. One residential project is known as “Stadium Lofts.” And in Santa Ana, several high-rise residential towers are in the works. The city is also moving forward with the county’s tallest building, a 37-story office tower that withstood a ballot challenge in April. Growth opponents have always feared the “Manhattanization” of California. Westwood neighborhood activists in Los Angeles used to call their organization “Not Yet New York.” But the infill housing trend of the last few years has been more of a “Brooklynization” process, involving the construction of blocky four- to six-story apartment and condominium buildings, not far from employment centers, in neighborhoods already snarled with traffic. One high-profile example is the Playa Vista project near Los Angeles International Airport, but there are many others in Orange County, San Jose, and other land-constrained urban areas. High-rise living has been limited to a few select locations, such as downtown areas in Los Angeles (where high-rise office buildings from the 1970s are now being converted to condos, and where about 30 new residential and mixed-use towers are proposed) and San Diego (where a strong market has led to construction of 15- and 20-story condos throughout the downtown). In each case, extreme residential density has been supported by the context – a plethora of office jobs and a strong rail transit system. The latest high-rise trend, however, is occurring outside transit-rich downtowns. Orange County may be one of the densest urban areas in the nation, but there is no rail transit and the bus system is not widely used by middle- and upper-middle-class workers. Meanwhile, high-rise proposals have been put forward in less dense environments. In downtown Sacramento, one proposal for a rundown section of the K Street mall includes two high-rise residential buildings that would tower dramatically over the Capitol and everything else in downtown Sacramento — except for other proposed condo towers. And in Oxnard, the largest city in Ventura County, a developer has proposed three residential towers – two 48-story buildings and one 31-story building – on the current site of a Levitz furniture store along Highway 101. How far will Manhattanization go in California outside the major downtowns? And, more to the point, will it solve any housing problems that Brooklynization won’t? In Orange County, high-rise residential towers are clearly here to stay as a housing option for the upper middle class. Orange County may not have much in the way of public transit, but in every other way, it is a city. It is a dense collection of interconnected people and activities contained in a small space that is congested and expensive. Despite anecdotal accounts in the press, it’s unlikely that most people who live in these towers will walk to work. More likely, they’ll beat the traffic by driving very short distances on surface streets to UCI or the nearest high-rise pasta restaurant/office complex. In that sense, Orange County’s high-rises are a variation on the classy and venerable high-rise condo towers along Wilshire Boulevard between Beverly Hills and Westwood. Whether or not they help create critical mass for a rail transit system in Orange County is almost irrelevant. It is not clear, however, how transferable the OC high-rise idea is. Virtually all comparable urban areas in the state – except for the Westside of Los Angeles – have rail transit that will attract the high-rises around the stations. As for places like Sacramento and Oxnard, it’s not clear that they’ll ever get built. In Oxnard, at least two of the five members of the usually pro-growth City Council have come out against the towers. And in Sacramento, the high-rise idea is only one of two proposals for the K Street property and there is no guarantee that the city will pick it. Even if they do get built, it’s not clear that these second-tier high-rises will actually sop up housing demand. More likely, they’ll serve as second homes for the well-to-do – either for pleasure or for business. The Oxnard towers are clearly targeted at retirees and others from Los Angeles looking for a weekend home close to the ocean. The location is hardly at the beach, but the towers would peer from the freeway into the coastal zone to catch views of the ocean. And the Sacramento towers would almost certainly get scooped up by legislators, lobbyists, and political appointees who come to town on a Monday-through-Thursday basis – defeating the city’s goal of creating a round-the-clock street life downtown. So Manhattanization is likely to be a selective process in California, limited to a few glitzy locations like Irvine. But as California moves forward into an era of more urban housing, Brooklynization will continue to be the workhorse in most locations.

Orange County's approval of a controversial housing project in the foothills of the Santa Ana Mountains has been overturned by the Fourth District Court of Appeal. In a blunt opinion, the unanimous three-judge panel agreed with environmentalists that the Saddle Creek and Saddle Crest housing subdivisions were inconsistent with the county's general plan and that the project's environmental impact report was inadequate. The court ruled that the county did not use the general plan's prescribed method of measuring traffic impacts, improperly eased development regulations, and did not require compliance with all specific plan requirements. The court ruled that a specific plan amendment approved by the county "gives the developer an unacceptable freebie. In effect, it exempts this project from specific plan regulations on tree preservation, grading and open space, and substitutes new regulations that are less stringent. This, of course, directly contradicts the general plan policy that all new development must comply with all specific plan policies." For years, environmentalists have fought proposed development in the foothills and rugged canyons between the Cleveland National Forest and the flatlands of urban Orange County, arguing that the territory provides important habitat. The project at hand is a proposed 162-home development by Rutter Development for two adjacent, but non-contiguous sites near Cook's Corner. The project drew the attention of environmentalists, in part because it would involve the removal of hundreds of oak trees. In January 2003, the Orange County Board of Supervisors certified an EIR for the project, and approved two area plans and an amendment to the Foothill/Trabuco specific plan. The Endangered Habitats League, Sierra Club, Rural Canyons Conservation Society, Sea and Sage Audubon Society, California Native Plant Society and California Oak Foundation responded with litigation that challenged the project's general plan consistency and environmental review. Orange County Superior Court Judge Ronald Bauer ruled for the county and Rutter, a decision that the Fourth District Court of Appeal, Division Three, overturned. In its decision, the appellate court first dealt with traffic on Santiago Canyon Road. The growth management element of the county general plan sets a traffic policy requiring a level of service (LOS) of D at intersections on Santiago Canyon Road, and a LOS of C on the road. The general plan prescribes the "highway capacity manual" (HCM) as the method for determining the level of service. The EIR revealed that the project would cause the level of service on Santiago Canyon Road to drop to D/E, and later to E. However, under the "volume/capacity ratio" (V/C) method, the projected level of service was B. The county went with the V/C method. Environmentalists argued that this change violated the general plan. The court agreed, calling Rutter's argument that the county did use the proper methodology "semantic sleight of hand." "It is clear the project is inconsistent with the general plan's traffic service level policy," Justice William Bedsworth wrote for the court. "The general plan requires LOS C as determined under the HCM method, and the project does not comply. That it does so under the V/C method is of no import, since the general plan is unambiguous in demanding the evaluation be made by the HCM method." Rutter argued that two measures — namely, payment into two road improvement fee programs — would mitigate traffic impacts to a service level of C under the HCM method. But the court rejected the argument because there was no evidence of what projects the fees would fund, or of what level of service would be achieved. The court then turned to the specific plan amendment. Environmentalists argued it allowed an impermissible "balancing" of specific plan requirements and exempted the project from mandatory policies. The court agreed. The amendment altered tree removal, grading and open space requirements. Rutter argued that the amendment balanced only goals and policies, not development requirements, and that the general plan does not say all policies must be followed. The court did not buy the contention and concluded that the balancing was inconsistent with the general plan. The court also rejected the argument that the amended standards were equivalent or environmentally superior to the specific plan rules. "If the project does not comply with the general plan, neither we nor the developer can justify its approval on the basis that it appeals to us ," Bedsworth wrote. The court pointed to the amendment's requirement for "permanent open space," compared with the specific plan mandate for "natural open space." Under the amendment, permanent open space may have rock walls, utility easements, remedial grading and landscaping — items that fall outside the definition of "natural," according to the court. Next, the court considered environmentalists' argument that the EIR used the wrong threshold of significance for impacts to biological resources. California Environmental Quality Act Guidelines § 15065 (a) states that a project has a significant effect if it substantially reduces habitat for fish or wildlife species, causes a fish or wildlife population to drop below self-sustaining levels, threatens to eliminate a plant or animal community, or reduces the number of or restricts the range of an endangered, rare or threatened species. The county, however, defined "substantial effect" to mean loss or harm that "would cause species a native plant or animal community to drop below self-perpetuating levels on a statewide or regional basis, or would cause a species to become threatened or endangered." The court concluded that the county's threshold of significance was "impermissibly lenient." The environmental groups further argued that the EIR improperly deferred analysis and mitigation of project impacts. The court dismissed all but one of those contentions, concluding that the EIR put off mitigation of construction noise. After the Fourth District filed its decision, the county and Rutter asked the court to reconsider. The court refused, saying the requests for rehearing were based on analysis, contentions and authorities that should have been raised earlier. The Case: Endangered Habitats League v. County of Orange , No. G034416, 05 C.D.O.S. 6710, 2005 DJDAR 9227. Filed June 29, 2005. Order denying rehearing and granting request for publication filed July 29, 2005. The Lawyers: For Endangered Habitats League: Raymond W. Johnson, Johnson & Sedlack, (951) 506-9925. For the county: Jack Golden, deputy county counsel, (714) 834-3300. For Rutter Development: William D. Ross, (650) 843-8080.

Fallout from the U.S. Supreme Court’s recent decision permitting use of eminent domain to aid private development continues to rain down on the state Capitol. With two weeks remaining before the Legislature adjourned, it was unclear whether any eminent domain bill would pass this year. However, lawmakers did ensure that no constitutional amendment limiting eminent domain made the November special election ballot. The eminent domain controversy also has focused new attention on a redevelopment project in California City, in which the city used redevelopment and eminent domain powers to lure a Hyundai automobile test track. Although the Supreme Court’s decision has little direct impact on the California City situation, detractors — including the attorney general’s office — have called the project a “poster child” for redevelopment abuse. That charge comes at a time when defenders of eminent domain use are pointing to the state’s redevelopment laws as assurance that local governments must use eminent domain sparingly. In Sacramento, the Senate Local Government Committee conducted an informational hearing on the Supreme Court’s decision in . In a 5-4 decision issued in June, the Supreme Court upheld the Connecticut city’s taking of a handful of residential properties to make room for an economic development project (see , August 2005, July 2005). The committee meeting attracted a full house, including lawmakers who are not committee members, but no decisions were made. Instead, sharply contrasting viewpoints came to the forefront. Timothy Sandefur, of the Pacific Legal Foundation, and Michael Berger, of Manatt, Phelps & Phillips, presented testimony from the property rights perspective and were bolstered by state Sen. Tom McClintock (R-Thousand Oaks), who argued that cities abuse redevelopment powers. Representing public agencies’ point of view were Bill Higgins of the League of California Cities’ Institute for Local Government, and Joseph Coomes, Jr., of McDonough, Holland & Allen. McClintock peppered them with hostile questions, but they received a friendlier reception from Democratic lawmakers. Sandefur and Berger recommended that lawmakers: • Clarify the definition of “public use” for which eminent domain may be used • Tighten the definition of “blight” • Increase the amount of time in which to challenge a blight designation • Shorten the period during which the government may designate property as blighted. Higgins and Coomes urged a more cautious approach and provided examples of successful redevelopment projects. They and Chief Deputy Attorney General Rick Frank noted that California laws regarding redevelopment and eminent domain are not the same as laws in other states. The hearing did not directly address the three constitutional amendments and five bills lawmakers introduced in response to . As went to press, none of the bills had passed, although it appeared some action was possible before the Legislature went home on September 9. The legislation is: • ACA 22 (La Malfa) and SCA 15 (McClintock). Identical constitutional amendments (which require voter approval) that seek to prohibit the taking of private property for private use (see , August 2005). • AB 590 (Walters). Would prohibit government agencies from using eminent domain to take private property for private business development. • AB 1162 (Mullin) and SB 1026 (Kehoe). Similar bills that would impose a two-year moratorium on the taking of private, owner-occupied residences for private use. During the moratorium, the California Research Bureau would study 10 years worth of government condemnations of owner-occupied homes for private use. • SCA 12 (Torlakson). A constitutional amendment that would prohibit the use of eminent domain to take owner-occupied residences for private use. • SB 53 (Kehoe). Essentially restates a number of existing provisions of redevelopment law regarding eminent domain. • SB 1099 (Hollingsworth). Prevents the taking of agricultural property unless the government agency retains ownership, or the property is transferred for use as a health care facility, for public utilities or for transit facilities. McClintock and other Republicans clearly believe they have a political winner in their proposed constitutional amendments. Fearing they could get left behind, Democrats responded with Torlakson’s constitutional amendment, and the Mullin and Kehoe legislation. In general, redevelopment supporters and local governments oppose the Republican legislation. However, they also worry that the Democrats’ proposed two-year moratorium would stall or kill redevelopment projects that are in-process. During the post- controversy, redevelopment supporters insisted that eminent domain abuse is exceedingly rare in California. Even property rights advocates have been hard-pressed to name instances in which local government took decent housing to accommodate a private development. With both sides on the lookout for abuse, the California City project has received increased scrutiny. California City is a largely undeveloped city of 11,500 people spread over 203 square miles of the western Mojave Desert. Three years ago, the city added 15,000 acres to an existing redevelopment project area. The city then went about acquiring roughly 200 parcels, which it turned over to Hyundai for construction of a test track and associated facilities (see , May 2004). Some property owners sold willingly, but dozens of others sold only after the city commenced eminent domain proceedings. About 15 holdouts are still in court. In the meantime, Hyundai has built its 4,300-acre project. Some California City residents filed a validation action challenging the redevelopment project area expansion. That lawsuit has ground forward slowly but is scheduled for trial this month in Kern County. The condemnation proceedings are on hold until the court decides the validation lawsuit. In July, the attorney general’s office filed an amicus brief in the validation action arguing that the city’s basis for placing the property into a redevelopment area — that the parcels were irregularly shaped, too small to use and lacked road access — were bogus. “This is not a case in which there are some vacant parcels in a deteriorated city — parcels that should be included in the redevelopment area so that slum conditions can be properly addressed,” the brief states. “This entire area is bare land.” June Ailin, an attorney representing some California City property owners, welcomed the attorney generals’ interest. But she questioned whether the matter was worthy of the attention it has received. “I have talked to a number of people who do not understand that this is not an eminent domain case,” Ailin said. “I don’t think has anything to do with this care, or has anything to do with the eminent domain cases .” California City officials, who tried to keep the attorney general out of the validation lawsuit, contend they have done no wrong in bringing a $50 million private investment and about 100 jobs to town. Contacts: Timothy Sandefur, Pacific Legal Foundation, (916) 419-7111. Bill Higgins, Institute for Local Government, (916) 658-8250. California City redevelopment validation action: , Kern County Superior Court Case No. 248874JIK.

The Second District Court of Appeal has issued another ruling in the long-running controversy over the proposed demolition of a garden apartment complex in Venice. The latest ruling allowed both sides in the debate to claim victory. The court ruled that the City of Los Angeles had violated the California Environmental Quality Act (CEQA) by not imposing mitigation measures in conjunction with a permit to demolish five of the apartment buildings. Those mitigation measures — which included photographing buildings and making site plan drawings — were contained in an environmental impact report. However, in the unpublished portion of its opinion, the court ruled against Lincoln Place tenants. They had argued that the EIR failed to adequately address the historical value of the apartment complex, and that the city should have revised the EIR when new information became available. Lincoln Place Apartments, located about one mile from Venice Beach, is a collection of 50 L- and U-shaped apartment buildings containing 795 one- and two-bedroom units. The 33-acre project was built in 1951 with green spaces, landscaping and winding streets. Forty years later, the owners proposed a “redevelopment project” that involved demolishing the buildings, and replacing them with 654 condominiums, 52 moderate-income townhouses and 144 low-income apartments. In 1993, the city published a draft EIR, which concluded that Lincoln Place did not meet the city’s criteria for cultural or historical significance. Only one person, a graduate student, challenged this conclusion. The final EIR maintained the apartment complex lacked historical significance. But, because post-war, multi-family developments had not received much academic study, the EIR recommended mitigation measures. Prior to demolition, the buildings had to be offered for sale and removal to a new location, and photographs and drawings were to be prepared. In 1995, the city Planning Commission approved the project but was reversed on appeal by the City Council. Seven years of litigation ensued, during which the Second District Court of Appeal ruled that the city’s process for issuing demolition permits on rental properties violated a state law (the Ellis Act) that lets landlords go out of business. ( , 54 Cal.App.4th 53; see , May 1997). By late 2002, the project was back in the city’s hands. The City Council’s Planning and Land Use Management (PLUM) Committee conducted a hearing, at which the tenants said new information had come to light regarding the apartments’ significance. The tenants had learned that Ralph Vaughn had designed Lincoln Place. Vaughn was a well-known African American architect who designed movie sets and celebrities’ homes. Additionally, the California Office of Historic Preservation had nominated Lincoln Place for listing on the National Register of Historic Places (a nomination that the keeper of the National Register later returned to the state for more information). The tenants said the new information required preparation of a revised EIR. Still, the PLUM Committee, and then the City Council, found that the new information was not enough to require a new EIR and approved the project. At roughly the same time, the landowners applied for permits to demolish five structures on Lake Street. Based on the landowners’ contention that the demolitions were not part of the redevelopment project, the Department of Building and Safety approved the permits without mitigations. A group called the 20th Century Architectural Alliance appealed to the Board of Building and Safety Commissioners, which denied the appeal. The owners subsequently tore down several buildings. After the City Council’s approval of the project, the tenants association and the architectural alliance filed separate lawsuits. The tenants argued that the EIR was wrong in its conclusion that the buildings were not historically and culturally significant. The architectural alliance contended that granting the Lake Street demolition permits violated CEQA. Los Angeles County Superior Court judges ruled against both the tenants and the architectural alliance. Both filed appeals, and the Second District consolidated the appeals. The court then upheld the EIR but ordered the city to void the demolition permits. In the published portion of its ruling, the court rejected the city’s handling of the demolition permits. The city and the property owners argued that the Lake Street demolition permits were not part of the redevelopment project; therefore, compliance with the EIR conditions was not required until construction started. The court, however, found that the distinction the city and property owners were drawing was “disingenuous at best.” “ he city and the owners cannot have it both ways,” Justice Earl Johnson Jr. wrote for the unanimous three-judge panel. “If the Lake Street demolition is not part of the Lincoln Place redevelopment project, then it requires a CEQA review. If the Lake Street demolition is part of the Lincoln Place redevelopment project then the owners must comply with the conditions on demolition imposed in the project approval or conduct further CEQA review to determine if those conditions are no longer feasible.” The demolition of existing buildings has always been part of the owners’ plan, the court noted. “Having placed these conditions on the demolition segment of the redevelopment project, the city cannot simply ignore them. Mitigating conditions are not mere expressions of hope,” Johnson wrote. The court ordered the city not to issue demolition permits for any Lincoln Place structures unless the applicant complies with the EIR conditions or the conditions are modified as part of a supplemental EIR. In the unpublished part of the opinion, the court upheld the EIR. The court ruled that the EIR and the city’s conclusions regarding the new information were supported by substantial evidence. Since the advent of the latest rounds of litigation, the property was sold to new investors, who are continuing to pursue demolition but have not revealed construction plans. And three weeks after the Second District ruled, the state Historical Resources Commission determined that Lincoln Place is eligible for listing on the California Register of Historic Resources. The Case: , No. B172979, 05 C.D.O.S. 6182, 2005 DJDAR 8444. Filed July 13, 2005. Modified August 11, 2005 at 2005 DJDAR 9775. The Lawyers: For the tenants association: Susan Brandt-Hawley, (707) 938-3908. For 20th Century Architectural Alliance: Jan Chatten-Brown, (310) 314-8040. For the city: Kim Rodgers Westhoff, city attorney’s office, (213) 978-8104. For real parties in interest: Alan Abshez, Irell & Manella, (310) 277-1010, and Jonathan B. Cole, Nemecek & Cole, (818) 788-9500.

After heavy lobbying by the energy industry, the federal government has inserted itself into California’s intensifying debate over proposals to build import terminals for liquefied natural gas (LNG) along the coast. Although it adds a new dimension of contention to the debate, the move by Congress to shift authority over terminal siting to the Federal Energy Regulatory Commission (FERC) will do little to quell what is shaping up to be one of the hottest environmental controversies to face the state in a generation. Nor will the federal government’s new role affect the projects furthest ahead in the permitting process. Liquefied natural gas is conventional natural gas that has been chilled to about 260 degrees below zero. At that temperature, the gas becomes a liquid and occupies only 1/600th of its original volume, making it feasible to transport it by ship in giant insulated tanks. The United States has four LNG import terminals — one each in Massachusetts, Maryland, Georgia and Louisiana —where the ships dock and unload their liquid cargo, which is then warmed to turn it back into a gas and either stored in tanks onshore or piped directly into the local gas utility’s transmission system. There are no import terminals serving the West Coast. But if energy companies get their way, there soon will be. Frustrated by the slow pace of regulatory approval — a process that typically involves numerous permits and reviews by local, state and federal agencies — the energy industry has been lobbying heavily over the past four years to streamline LNG terminal siting. The industry got most of what it wanted in the federal energy bill, which grants FERC “exclusive authority to approve or deny an application for the siting, construction, expansion or operation of an LNG terminal,” which the bill defines as “all natural gas facilities located onshore or in state waters” that are used to import or export gas. Paradoxically, the bill does not affect the two terminal proposals off the Ventura County coast that are leading candidates to be California’s first LNG terminal. They would be in federal waters and are therefore governed by another federal law, the Deepwater Port Act, which explicitly grants the governor of a neighboring state the power to veto LNG terminals in waters beyond the state’s 3-mile limit. Opponents of LNG development have been harshly critical of the effort to bypass state and local authority, which remained in the energy bill despite coastal lawmakers’ efforts to remove it. “Cutting the states out of any real role in LNG siting decisions is dangerous and unwarranted,” said Rep. Lois Capps (D-Santa Barbara). “This is a power grab by the administration.” Still, there is little doubt about market demand. Driven by a growing gap between stagnant domestic gas production and rising demand, energy companies have submitted plans for about 40 LNG import terminals in North America, including nine that could serve the West Coast: three in Oregon, four in Southern California and two in Baja. Those projects that have prompted the most controversy are one proposed for Long Beach Harbor — a regulatory long shot, given its proximity to a densely populated urban area and one of the busiest container ports in the world — and the two off the coast of Ventura County: Crystal Energy’s Clearwater Port would occupy an old oil platform 10.5 miles from land; BHP Billiton’s Cabrillo Port would be a floating terminal 14 miles offshore. Each port would receive two to three tanker shipments a week and would be capable of handling 800 million cubic feet of LNG per day, a quarter of the state’s residential gas consumption. To make their case for the terminals, the companies have painted a grim picture of impending crisis. “California now faces a severe energy shortage,” Crystal Energy warns on its website and in a brochure distributed throughout Ventura County in support of its proposal. “As the natural gas shortage drives the price of electricity up, business and jobs are disappearing from California.” The most vocal project opponents have made similarly hyperbolic claims, warning that accidents or terrorist attacks on tankers or terminals handling flammable LNG could unleash an apocalyptic cascade of tragedy and destruction. “A fiery inferno would engulf everything for 30 miles,” Oxnard attorney Tim Riley warns on his widely visited anti-LNG website. Neither of the extreme scenarios is accurate, according to independent energy analysts and safety experts. Domestic natural gas production is not keeping pace with U.S. demand, but the gap so far is a small one. It’s even smaller in California, where gas demand has fallen 20% during the past four years and is not projected to rise significantly for two decades. And according to a recent study by Sandia National Laboratories, the most extreme scenarios described by LNG safety skeptics — vast conflagrations that incinerate everything within a 30-mile radius of a tanker terminal — are highly improbable. Liquefied natural gas imports currently account for about 2% of the nation’s gas supply, according to the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy. In its long-range forecast of supply and demand, the EIA projects that LNG imports are likely to increase to 15% of supply by 2025, driven by the combination of steadily increasing demand and flat or diminishing production from tapped-out domestic gas fields. “Our traditional supply basins in the United States are not keeping pace with demand,” said Rick Morrow, Southern California Gas Company’s vice president for customer service. Handling the increased load won’t require 40 new import terminals. According to the National Petroleum Council, an industry panel that advises the U.S. secretary of energy, all that is needed is expansion of the four existing U.S. terminals, plus construction of seven to nine more distributed among the nation’s Atlantic, Pacific and Gulf coasts. The West Coast market cannot absorb more than the capacity of one or two LNG terminals over the next decade, analysts predict. It is unlikely that any of the Southern California terminal proposals will be first out of the gate. San Diego-based Sempra Energy has received permits and is nearly ready to begin construction of an LNG terminal 14 miles north of Ensenada in Baja. That port will have a capacity of 1 billion cubic feet of gas a day and is expected to begin operation in 2008. About half that gas will be delivered to Mexico, according to the company. The other half will be available for sale to California customers, including Sempra’s corporate subsidiary, Southern California Gas Co. Contacts: Crystal Energy, (805) 830-6312. BHP Billiton, (805) 604-2785. Rep. Lois Capps, (202) 225-3601. California Energy Commission: www.energy.ca.gov/lng/index.html Federal Energy Regulatory Commission: http://www.ferc.gov/industries/gas/indus-act/lng-what.asp

The next round of housing element updates will be delayed by two years for all of Southern California outside of San Diego County and for the Bay Area. The two-year postponement might be extended to all jurisdictions except San Diego, although state officials have not made that decision. The state Department of Housing and Community Development has issued a formal letter delaying the regional housing needs allocation process (RHNA) for the Southern California Association of Governments (SCAG) region from 2006 to 2008. State officials have told representatives of the Association of Bay Area Governments (ABAG) orally that the RHNA process for the ABAG region also will be delayed two years — from 2007 to 2009 — although ABAG has not yet received formal, written notification of the postponement. Whether the state will grant postponements to other regions is uncertain, although the possibility is under discussion. Jurisdictions covered by the San Diego Association of Governments are not eligible for postponement and were supposed to file updated housing elements by June 30, although only one of 18 cities did so. The delays concern affordable housing advocates. “It extends the current planning for two years, and those two years were not planned for in housing elements,” said Mike Rawson, an attorney for the California Affordable Housing Law Project. “Failure to plan for this two-year period will result in the delay of development of housing units.” But SCAG Executive Director Mark Pisano said he doubted that the delay in his region would have significant implications “in terms of actual housing needs and production.” Said Pisano, “We know we have needs.” The process is supposed to work this way: State demographers and planners estimate how many housing units, and for what income levels, the state will need over a period of time. They assign the needed units at various income levels to all regions of the state. Councils of government (COGs) then allocate the region’s fair share among all cities and counties in the region. The cities and counties use their fair share numbers to update their general plan housing elements. Housing elements are supposed to be updated ever five years. The process works better on paper than in practice. The allocation of units to regions and within regions often involves difficult, and political, negotiation and even litigation. And no round of house element updates has ever lasted for only five years. Janet Ruggiero, Citrus Heights community development director and longtime American Planning Association leader, questioned whether planning for a five-year period was the best approach. “What are we really trying to achieve? What’s the best way to do it? The five-year window may not be reasonable any more,” she said. The SCAG delay was contemplated in legislation approved last year (AB 2158, Lowenthal), which permitted SCAG to coordinate the RHNA process with planning for the regional transportation plan update, which occurs every three years. Under the previous schedule, SCAG was supposed to make a final allocation of local shares of new housing by June 30 of this year, and updated housing elements for the 200 cities and six counties in the SCAG region were due June 30, 2006. Those deadlines have now been pushed back by two years. The transportation plan is still due in 2007. With the postponement, jurisdictions in the nine-county ABAG region would have until June 30, 2009, to complete housing element updates. Of course, it would have been impossible for SCAG to meet the previous schedule because state officials have not determined the region’s fair share of statewide housing need. The state has not produced the numbers because there is no money in the budget. In fact, although SCAG leaders have talked for a while about synchronizing housing and transportation planning, money appears to be the major factor behind the RHNA delays. As part of a budget trailer bill passed in 2004 (SB 1102), state lawmakers narrowed the housing element requirement, and reinstated authority for cities, counties and councils of government to charge fees to pay for the RHNA process and housing element updates. Based on SB 1102, the Commission on State Mandates earlier this year ruled that the RHNA process and housing element updates are not reimbursable mandates — meaning that cities, counties and COGs are supposed to raise the money by levying fees on developers. Downshifting of the state’s budget problem to lower levels of government is not politically popular at the lower levels. Plus, said ABAG spokeswoman Kathleen Cha, COGs have no ability to charge developers. “The bottom line is there is no money for us to do the RHNA process,” Cha said. Pisano insisted that the SCAG postponement was based primarily on the desire to coordinate housing and transportation planning. Last time, the agency received one set of population projections for housing needs and a different set of estimates for transportation planning purposes, “and that caused a conflict,” Pisano said. Janet Huston, HCD Director of Communications and Government Affairs, said the agency recognizes SCAG’s intent. “The goal is to allow SCAG to sync up housing and transportation planning.” “The issue of resources is also a major factor,” Pisano acknowledged, “but the state is indicating that we can look to transportation for funding.” Some people argue that the system could shake loose funding from other sources, as well. For example, the state budget contains $5 million for HCD to grant to councils of government for regional “blueprint” planning. That money, either directly or indirectly, could pay for the RHNA process. Affordable housing attorney Rawson expressed skepticism that SCAG and ABAG could not find the money in their budgets to fund the process. Cha, however, said that ABAG’s 2000-01 RHNA process cost about $700,000, and the next round will cost even more because of additional data and analysis requirements. “There is no funding source to do this,” she said. Sam Mistrano, deputy director of the Southern California Association of Non-Profit Housing, was reluctant to assign blame for the delay, but he lamented it nonetheless. “It does on the one hand make sense to have the RHNA be processed along with the transportation numbers. On the other hand, it’s hard to figure out what the cities are doing right now,” Mistrano said. “The market is such that it is producing a lot of housing that no one can afford.” Accurate statistics regarding production of housing units for various income levels would be useful, Mistrano said. The RHNA process could help, but it is always difficult to measure actual production of affordable housing units, he said. Interestingly, the delays for SCAG and AGAB housing element updates come at a time when housing element compliance is at an all-time high — 72% of cities have certified housing elements, according to HCD — and HCD Director Lucy Dunn is crisscrossing the state talking about the importance of planning for housing. During a recent speech to a League of California Cities conference, Dunn insisted that there is a connection running from planning for housing to plan implementation to actual housing construction. She pointed out that the 72% of jurisdictions with certified elements are producing 80% of the state’s housing units, including about 90% of the multi-family units. Dunn, other HCD officials and some lawmakers have also talked about increasing incentives for housing production, as well as increasing penalties for failure to adopt certified housing elements and blocking housing development. Business Transportation and Housing Agency Secretary Sunne McPeak has insisted in speeches that every city must provide for its own natural population growth as well as employees of its home companies. Although those messages have not always been popular with local government elected officials and planners, they find acceptance among affordable housing advocates and builders. Now, the RHNA delays have housing advocates asking questions. Contacts: Mike Rawson, California Affordable Housing Law Project, (510) 891-9794. Sam Mistrano, Southern California Association of Non-Profit Housing, (213) 480-1249. Janet Huston, California Department of Housing and Community Development, (916) 324-4477. Mark Pisano, Southern California Association of Governments, (213) 236-1961.

Few housing policies are as inherently controversial as inclusionary zoning — the requirement that market-rate home builders provide a certain percentage (usually 10% to 20%) of their new units for very low-, low- or moderate-income families. Inclusionary zoning is commonly a way that cities and counties propose to meet their fair-share housing requirements. Typically, for-profit homebuilders strongly oppose inclusionary policies because, the builders argue, market-rate builders and buyers end up subsidizing homes for people of more modest means. Affordable housing advocates and non-profit builders just as strongly endorse inclusionary zoning as one important way to provide housing for low- and moderate-income families. But last year, when the Non-Profit Housing Association of Northern California (NPH) announced it had received grants from seven foundations for the purpose of accelerating adoption of inclusionary housing policies, the Home Builders Association of Northern California (HBANC) asked to start a discussion. “It seemed like we had a lot of common areas we could explore,” NPH Executive Director Dianne Spaulding recalled of the initial meeting. So six representatives of each group met intermittently for about a year. The end result was the release in August of a report, “On Common Ground: Joint Principles on Inclusionary Housing Policies.” The report contains a number of recommendations for planners and local governments. More than anything, “On Common Ground” emphasizes flexibility in how market-rate builders satisfy inclusionary requirements. The report recommends permitting builders to provide differing types of for-sale units, donate land to local government or a non-profit developer, construct units off-site under certain conditions, and pool or transfer credits for providing affordable units. “To the extent that communities have affordable housing policies, we should make sure those policies are as efficient as possible,” said Joseph Perkins, President and CEO of the home builders group. “Many jurisdictions have just a one-size fits all approach as to how to provide for affordable housing.” For an example, Spaulding pointed to a joint venture in Hayward involving the for-profit DeSilva Group and the non-profit Eden Housing. Under the city’s policy, DeSilva would have had to provide 26 houses in its project for moderate-income buyers to satisfy the inclusionary zoning requirement. Instead, the two developers worked out a deal with the city in which DeSilva donated three acres elsewhere in town for development of about 75 apartments for very low- and low-income residents. DeSilva got to build the project it wanted, Spaulding said, while about three times as many restricted units were provided, and for the poorest families. “Our problem is not development at the market rate. That’s historically the situation in the Bay Area,” Spaulding said. The flexibility provisions might be the easy part of the report. Harder to sell will be the funding recommendations. The report urges local governments to raise money via bonds or other measures, waive or subsidize processing and impact fees for inclusionary units, and devote at least 50% of redevelopment tax increment to affordable housing. The law now requires 20% of tax increment go to housing. Perkins said he expects a negative initial reaction to the funding recommendations. But, he contended, local funding has a multiplier effect that makes other policies and funding more productive. “This is a burden that should be shared by all,” Perkins said. “Local jurisdictions need to share the burden with the home builders, the for-profit and the non-profit builders.” A number of changes, Spaulding emphasized, would cost cities and counties very little: adopting more flexible policies, pre-entitling land, providing greater density bonuses, and excluding affordable units from building permit caps. According to Spaulding, 55% of the Bay Area’s 110 cities and nine counties have inclusionary zoning. The two organizations will now press the other 45% to adopt inclusionary policies, and will ask the 55% with existing policies to make changes. Contacts: Dianne Spaulding, Non-Profit Housing Association of Northern California, (415) 989-8160. Joseph Perkins, Home Builders Association of Northern California, (925) 820-7626.

A lawsuit challenging a Wal-Mart store on the grounds that it would create downtown urban decay was rejected by the Third District Court of Appeal. The court did rule, however, that the Central Valley city of Anderson needed to require additional money to pay for the project’s fair-share for improvements to a freeway interchange. The ruling stands in contrast to a recent decision by the Fifth District Court of Appeal over construction of two Wal-Mart supercenters in Bakersfield. In , 124 Cal.App.4th 1184 (2004), the court ruled that the city needed to address the potential for projects to cause urban decay, consider the combined impacts of two shopping centers, and correlate the projects’ air quality impacts to effects on human respiratory health (see , January 2005). In the City of Anderson in Shasta County, FHK Companies had proposed building a 184,000-square-foot Wal-Mart supercenter, which would operate 24 hours a day and combine a typical Wal-Mart store with a full supermarket. The development, located close to Interstate 5, was proposed to include several other buildings and a gas station. The developer eventually severed the gas station from the plans. In contrast to , the Court of Appeal in the Anderson case determined that the city had studied potential urban decay. The city found that the supercenter would compete on a regional basis with stores in Red Bluff and Redding, and with outlying shopping centers in Anderson, rather than only with downtown’s businesses. The city’s own study did find that two downtown pharmacies would be impacted by the Wal-Mart, but other downtown businesses “may actually benefit from increased local retail traffic,” Acting Presiding Justice Rod Davis wrote for the court. “As a small, growing town with a population of 9,500, city noted that its potential for urban decay is less than that of a typical declining ‘rust-belt’ city.” In its ruling, the court noted that the city’s report on urban decay, “along with the studies from other communities and the public comment, present substantial evidence that the project could add to the blight in the city’s central business district. But a good argument can be made that city also presented substantial evidence that the project will not do so.” Steven Herum, the attorney for Anderson First Coalition, the group that brought the suit, said, “I think the appellate court took too deferential of a method of reviewing the City Council’s actions.” Art Friedman, an attorney for Wal-Mart, agreed that the case was about the court being deferential in such circumstances. “Where the city considers and analyzes an indirect economic impact of a development project’s potential to cause urban blight, the courts are going to be deferential as long as the city’s conclusion is supported by substantial evidence,” Friedman said. The unanimous three-judge panel did rule in favor of the Anderson First Coalition on a traffic matter involving improvements to an interchange at Deschutes Road on Interstate 5 near the project. According to CEQA Guidelines 15130 subdivision (a)(3), a single project’s contribution to a cumulative impact is deemed less than significant if the project is required to implement or fund its “fair share” of a mitigation measure designed to alleviate the cumulative impact. To be sufficient under CEQA, the court said that the Wal-Mart development’s fair share mitigation fee must be $657,930, instead of the $611,214 fee specified in the mitigation measure. “ e have had to consider the coalition’s claim that the I-5 interchange improvements and the project’s fair-share mitigation fee toward those improvements were too speculative to be considered adequate mitigation measures,” Justice Davis wrote The court rejected several other claims by the Anderson First Coalition, which had argued that the EIR for the project had two significant defects, described in the ruling as “the elusive and inadequate descriptions regarding the project’s total size, and the inadequate traffic and air quality analyses for the entire project.” But the court said the gas station portion had been dropped from the project and should it be proposed again, “ t will have to be environmentally reviewed as to its own impacts and together with the project as to its cumulative impacts.” The case: , No. C047605, 05 C.D.O.S. 5899, 2005 DJDAR 8085. Filed June 30, 2005. The Lawyers: For Anderson First: Steven Herum, Herum, Crabtree and Brown, (209) 472-7700. For the city: Michael C. Fitzpatrick, (530) 245-4391. For Wal-Mart: Arthur Friedman, Steefel, Levitt & Weiss (415) 403-3205

An appellate court panel has overturned a lower court’s decision ordering Community Bank of Central California to return $4.4 million to King City. The city says the money was a deposit, and the city wants the money back. The bank says the money was collateral for a bank loan to the developer of a downtown redevelopment project. Because the developer defaulted on the loan, the bank wants to keep the money. Monterey County Superior Court Judge Kay Kingsley had ruled for King City. However, the Sixth District Court of Appeal determined that Judge Kingsley made a number of errors, including not permitting the bank to perform discovery, the process by which the bank would obtain facts known by the city. According to the Sixth District’s decision, the facts of the case are anything but clear, and the lower court should not have issued a ruling without knowing more. Among the outstanding questions are whether the City Council — or the redevelopment agency board, which has the same members as the City Council — authorized the deposit with the bank, and whether the money was city general fund money, or redevelopment agency money. The amount of money at issue is nearly as much as King City’s annual general fund budget. Last year, King City arranged for a loan from Monterey County and closed nonessential offices for a period in order to avoid bankruptcy. In early 2000, the council/redevelopment board approved a proposal to loan money from the King City Revolving Loan Fund to Town Square Partners, the developer of a block-long redevelopment project featuring a cinema, offices, retail stores and a community college satellite campus. The project, completed several years ago, was intended to anchor a downtown renewal. In March 2000, the redevelopment agency board approved a loan of up to $3.85 million to Town Square Partners. In April 2000, the city treasurer deposited about $3.8 million into an interest-bearing, two-year certificate of deposit at Community Bank. At about the same time, the mayor assigned the money to the bank as collateral for a $3.8 million debt incurred by Town Square Partners. Several months later, the city increased its deposit to $4.4 million. Again, the mayor signed an “assignment of deposit” stating the money was collateral for the Town Square Partners loan. A couple years later, the city notified the bank that the city intended to redeem the CD. The bank refused because the developer was unwilling, or unable, to repay the loan. On April 3, 2003, the city filed a petition for writ of mandate demanding that the bank immediately return the $4.4 million “in general fund monies.” The legal process then moved very quickly. On June 11, 2003, Judge Kingsley ruled that the action taken in February 2000 did not comply with certain Government Code regulations. She decided that the “action” was not authorized by law, and, therefore, was “a gift of public funds.” The bank appealed, and a unanimous three-judge panel of the Sixth District overturned the lower court. Much of the appellate court’s opinion addressed procedural issues, especially the trial court judge’s heavy reliance on minutes of council/board meetings, unwillingness to allow some evidence into the case and refusal to permit discovery by the bank. The Sixth District clearly was dissatisfied with the city’s presentation of the facts and with the city’s procedural maneuvering — which the court referred to as the “city’s kaleidoscope of ever-shifting claims, contentions, sidesteps and deflections.” The Sixth District found that the city “made no attempt to establish that the funds in question were deposited with bank ‘for safekeeping.’ There is no testimony by the treasurer or any other city official that anyone intended the funds to be held by bank as ordinary city assets, let alone assets subject to withdrawal on demand. On the contrary, such evidence as appears in this record suggests the opposite — that everyone concerned intended the deposit to be placed at risk as security for a loan by bank to a third party.” The court repeatedly sided with the bank’s assertion that more facts need to be presented, among them evidence of where the money originated. The city contended the money is from the general fund; the bank argued the money appeared to come from a 1998 redevelopment bond. “ urely city was quite capable of disclosing the true history of the funds,” Presiding Justice Conrad Rushing wrote for the court. “Its persistent failure, indeed refusal to do so should have raised alarm bells as to the true nature and merits of its claims, as least as presently pleaded. “Issues about the true ownership, source, or character of funds are rarely resolved merely by consulting the title on a given account or asset. In the absence of contrary authority — and city has offered none — we will not give dispositive effect to the label city chooses to attach to funds in its custody,” Rushing continued. The Sixth District found that the lower court’s near total reliance on “official minutes and resolutions” was erroneous. At the city’s urging, the trial court barred other evidence as inadmissible. The Sixth District conceded that courts do not accept testimony from current or former public officials concerning legislative actions. However, where the issue is the “collective intent of the legislature … courts may and must consult extrinsic evidence including circumstances and information known to the legislature at the time of the enactment, public records of the collective deliberations and expressions of intent collectively adopted by them.” The minutes, the Sixth District noted, are confusing about which entity’s funds were being loaned and exactly what the council/board authorized. The court returned the case to the trial court for further proceedings. The Case: , Nos. H026888 and H027166, 2005 DJDAR 9344. Filed August 2, 2005. The Lawyers: For King City: David Alan Juhnke, Sinsheimer, Schiebelhut & Baggett, (805) 541-2800. For Community Bank: Richard Carlston, Miller, Star & Regalia, (925) 935-9400.

The director of the state Department of Conservation has standing to sue a local agency over mining and reclamation plans approved by the local agency, the state Supreme Court has ruled unanimously. The ruling was a clear victory for state enforcement of the Surface Mining and Reclamation Act (SMARA), which regulates all surface mines in California. The Supreme Court overturned a divided appellate court panel, which had ruled that only the State Mining and Geology Board — and not the department’s director — had standing to sue, meaning the director did not have the authority to seek judicial review of an alleged impropriety. “ he Legislature has not crafted SMARA to deprive the director of standing to seek mandate as a remedy when a local lead agency approves allegedly inadequate reclamation plans or financial assurances,” Justice Kathryn Werdegar wrote for the court. “Rather, correctly understood, the director’s standing to prosecute this petition for a writ of mandate derives from his ‘beneficial interest’ — under SMARA and, generally, as a state officer charged with serving the public interest — in the adequacy of approved reclamation plans and financial assurances.” “To deny the director standing here would free surface mine operators who manage to obtain local lead agency approval of inadequate reclamation plans or financial assurances to do less than SMARA requires” Werdegar wrote. Adopted in 1975, SMARA (Public Resources Code § 2710 et seq.) requires surface mining operators to receive approval for reclamation plans that specify how mined land will be treated so the land is usable in the future, and to provide financial assurances that reclamation will be completed. Ten years ago, the conservation director and the Mining and Geology Board sought to enforce SMARA regulations on Loring Brunius, who was operating Weber Creek Quarry and Diamond Quarry in El Dorado County without approved reclamation plans or financial assurances. Brunius successfully fought the state’s attempt to close the mines when he filed plans with the county. The conservation director commented that the plans and financial assurances were inadequate, but the county approved them in 1997, along with a mitigated negative declaration. The director sued the county, alleging that the reclamation plans violated SMARA; that the financial assurances were inadequate; that the county’s mitigated negative declaration was inadequate under the California Environmental Quality Act (CEQA); that the county had erroneously concluded Brunius had a pre-SMARA vested right to operated Weber Creek Quarry without a permit; and that the county unlawfully let operations expand at Diamond Quarry. The trial court ruled that the director did not have standing to challenge the vested rights or the SMARA matters, and dismissed the CEQA claims. In a 2-1 decision, the Third District Court of Appeal ruled that the director did not have standing to pursue any of the claims — a decision hailed by mining trade associations that had intervened in the litigation. The state Supreme Court then accepted the case, but only to decide the procedural question of whether the director of Department of Conservation had standing to seek relief in court. According to state’s high court, both the Third District majority and the dissenting justice incorrectly analyzed the issue of the director’s standing to sue. The high court reviewed at length the director’s role in the regulatory scheme. The director may review and comment on “every reclamation plan submitted to a lead agency for approval.” Those comments are advisory, but “the general interest his review serves, patently, is SMARA compliance,” Werdegar wrote. Once a city or county approves a reclamation plan, the director has authority to ensure state law and the reclamation plan are implemented. Under certain circumstances, the director may even seek forfeiture of the financial assurances and undertake mine reclamation. Thus, state law gives the director “a substantial interest in reclamation plans and financial assurances being both legally consistent with SMARA and practically adequate to accomplish SMARA’s goals and state reclamation policy,” the court ruled. The court did not divide the distinction between the director and the Mining and Geology Board that the Third District found. And, the court pointed out, in this case there was no evidence the board disapproved of the lawsuits. In fact, the board was so dissatisfied with El Dorado County that it assumed lead agency functions from the county. However, even then, the board could not retroactively alter the reclamation plans in question because the county had already approved them. So there was no conflict between the director’s lawsuit and the board’s assumed role as lead agency. The high court also upheld the director’s standing in regards to the vested rights and CEQA claims. “If a local lead agency’s erroneous recognition of a vested right to mine were immune from judicial review, the department could find itself without leverage to enforce the Legislature’s intention that the operator conduct and pay for reclamation,” Werdegar wrote. And, the court held, the director “was entitled to adequate CEQA information.” The court sent the eight-year-old case back to El Dorado County Superior Court for further proceedings. The Case: , No. S116870, 05 C.D.O.S. 6967, 2005 DJDAR 9534. Filed August 8, 2005. The Lawyers: For the Department of Conservation: Richard Thalhammer, deputy attorney general, (916) 445-9555. For El Dorado County: Mark Harrison, The Diepenbrock Law Firm, (916) 446-4469. For Loring Brunius: David Becker, Becker & Runkle, (530) 676-6464.

President Bush’s signature on the federal transportation bill in August opened the spigot for $21.6 billion in federal money for California. The bill funds hundreds of specific projects, ranging from a $25 million “non-motorized transportation pilot program” in Marin County to carpool lanes on the San Diego Freeway in Los Angeles to a study of a new transportation corridor between western Riverside County and Orange County. And the bill received praise from numerous California officials, including Gov. Schwarzenegger, new Los Angeles Mayor Antonio Villaraigosa and regional transportation planners. However, it is clear that the Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users of 2005 (SAFETEA: LU) is no panacea for solving California’s infamous traffic congestion. Although the bill raises the minimum return of gas tax to each state from 90.5% to 92%, California remains a “donor state.” Additionally, some of the projects earmarked for funding are already complete or are safety retrofits, meaning that the federal dollars for those projects will do nothing to increase capacity or mobility. In fact, the second follow-up to the Intermodal Surface Transportation Efficiency Act of 1991 is markedly different from its predecessors in the number of projects for which money was specifically earmarked. The bill provides money for 350 projects in California and 6,300 nationwide, thousands more than received “earmarks” in the previous transportation bills. The earmarks raised questions about true need. For example, the nine-county Bay Area region, home to some of the country’s worst traffic congestion, received earmarks totaling $733 million. Meanwhile Kern County, which has about 10% of the Bay Area’s population, received $726 million in earmarks. The difference? House Ways and Means Committee Chairman Bill Thomas hails from Bakersfield. Just before Bush signed the bill, Thomas boasted to the of the “gift to Kern County.” The largesse heaped on Kern County did not go unnoticed by supporters of the Alameda Corridor East (ACE) project, a planned $2.5 billion rail corridor running from the Los Angeles railyards through the San Gabriel Valley to Pomona. Spurred by ongoing growth at the ports in Los Angeles and Long Beach, the ACE is intended to expand rail capacity and eliminate many at-grade crossings. The Southern California Association of Governments (SCAG) made the ACE project its top priority. At one time during the two-year debate over the transportation bill, ACE was in line to get close to $900 million. In the end, the project received $178 million, an amount that angered the area’s largely Republican congressional delegation. The southern half of the ACE corridor also went lacking. The $600 million OnTrac project headed up by the City of Placentia received $39 million; local proponents had sought $225 million. The limited federal allocation appears to mean the end of the plan to dig a trench for the rail line through Placentia (see , February 2005). Still, SCAG officials were publicly upbeat about SAFETEA: LU. They noted that the ACE project did receive enough money to move forward, an I-405 carpool lane got $130 million, and expansion of the Desmond Bridge, which serves the ports, received $100 million. “We are encouraged by the growing degree of regional cooperation,” SCAG spokesman Jeff Lustgarten said. “Historically, other regions have done a better job of getting behind one or two specific projects.” Ellen Roundtree, director of governmental affairs for the San Diego Association of Governments, noted that the transportation bill imposes a number of new requirements for planning, mitigation and “consultation,” and places Indian tribes into the process for the first time. “We think consultation is good, and we think public participation is good,” Roundtree said. However, what exactly Congress means by “consultation” is unclear, she said. In other interesting twists, the transportation bill exempted the BART extension to San Jose from new Federal Transit Administration cost-effectiveness standards. The bill language helps keep the struggling project alive. In the San Bernardino County city of Rialto, the bill transferred 200 acres of federal land to the city, a move that could permit the city to close the general aviation airport. The city would like to see industrial development on the site. For the most part, SAFETEA: LU maintains the principles of ISTEA, such as emphasizing multi-modalism, links between transportation projects and air quality, and regional decision making. The bill even increases funding for metropolitan planning organizations by 25%. Paul Zykofsky, director of land use and transportation programs at the Local Government Commission, endorsed the bill’s provisions making “Safe Route to School” a federal program for the first time, and making permanent the Transportation, Community and System Preservation program. As a pilot project in the last transportation bill, TCSP funded innovative projects such as a study of zoning code reform in Fresno, Zykofsky said. Still, there is an impression that the bill wrongly favors highways at a time of rapidly rising gasoline prices. Anne Canby, president of the transit-oriented Surface Transportation Policy Project, expressed disappointment “that Congress chose not to augment commitments to local decision-makers, raise transit’s share of total funding, increase eligibility for freight and passenger rail investment, improve the environment by dedicating resources to cleaning up highway runoff, and promote more walking and bicycling.” More than anything, though, SAFETEA: LU makes clear that local agencies will have to pay for future capital improvements. SCAG spokesman Lustgarten said projections are that state and federal funds combined will pay only 25% of transportation project costs by 2030. Thus, the absence of the $470 million project to widen Interstate 5 in Los Angeles County from the list of SAFETEA: LU earmarks may be a sign of the future.