A few weeks ago, property rights advocates lost three big court cases. It's not unusual for June to be an important month for legal opinions because the U.S. Supreme Court wraps up its work before going on summer hiatus. But it is usual for property owners to go oh-for-June. What gives? Is this big news? Or is it only a temporary halt in property rights advocates' long, slow drive toward success? The answer is somewhere in the middle. The property rights movement has made huge strides against government land use regulation during the last 25 years - but not many of those strides have come lately. At the Supreme Court, at least, government regulators and property owners have been deadlocked for at least a decade. Landowners may turn more often to ballot measures for relief, as they did in the case of Oregon's Measure 37. Or they might pray for President Bush to appoint more hard-line judges. In the meantime, there is little they can do but wait. The big headlines, of course, were for the Supreme Court's 5-4 ruling to uphold the use of eminent domain by the City of New London, Conn., to take land from private landowners for transfer to a private developer - a tactic frequently used in California (see , Page 6). But in the San Remo Hotel case from San Francisco, the court ruled unanimously that property owners who lose a takings case in state court can't re-try the case in federal court. Additionally, the California Supreme Court upheld the constitutionality of the Coastal Commission over property rights advocates' claims that the system of appointing commissioners violated separation of powers principles. All three opinions were issued in the same week. In a perverse way, the week was reminiscent of the landmark month of June 1987, when the U.S. Supreme Court handed the property rights movement two of its most highly publicized victories. In , 482 U.S. 304, which was decided on June 9, 1987, the Supreme Court broke the longstanding stalemate in the arena of regulatory takings by ruling that First English Church could sue the county in state court and seek monetary damages for a regulatory taking. In , 483 US 825, decided on June 26, 1987, the court struck down the Coastal Commission's practice of demanding lateral easements along the beach as a condition of approval for virtually all building permits. This decision rejected the notion of “indirect nexus” and laid down the rule that a development exaction must have a direct relationship to the impact of the project; otherwise, the exaction constituted a regulatory taking. At the time, these rulings were considered the leading edge of a property rights revolution. The takings question had laid dormant for more than 50 years before property rights lawyers took up the cause during the late1970s. Theirs was a mostly uphill battle until the rulings, which appeared so revolutionary that total victory for the property rights advocates appeared to be only a matter of time. That was 18 years ago. Since then, we have seen some evolution, but - at least in the courts - no revolution. The property owners won only by a 6-3 vote, and they won 5-4. The First English Church eventually lost its takings case in California state court. Exactions did not get trimmed back in the wake of . Mostly, the connection with the project was just better documented, at considerable expense to cities and developers. What followed next was a series of Supreme Court cases that muddied the waters. In , 505 US 1003 (1992), a majority opinion by Justice Antonin Scalia favored the property owners but laid down a confusing set of rules that has proven difficult to understand or follow. (It was the basic philosophy of the Oregon Measure 37, however.) In , 512 U.S. 687 (1994), the high court ruled that exactions must be roughly proportional to the project's impacts, but everybody in California was already following that principle. The court ruled in favor of the Tahoe Regional Planning Agency twice. In , 533 US 606 (2001), the Supreme Court did reinstate a property owners takings claim on a wetlands issue, but only by a 5-4 vote. Property rights advocates have had a tough time at the high court mostly because of two Republican appointees who don't follow ideology - Californian Anthony Kennedy, who was appointed in 1988 after the bruising and failed attempt by President Reagan to appoint strident Robert Bork, and David Souter, who was unknown state court judge when he was appointed by President George H.W. Bush in 1990. In both cases, a Republican president chose not to challenge a Democratic Congress. Both Kennedy and Souter voted with the majority in the New London case. went to the property owner because Kennedy joined the majority. In many ways the most interesting of the recent court rulings is - partly because it was unanimous and partly because it shows how much legal history prior to would have to be undone for the property rights revolution to prevail. In , the hotel owners challenged the city's right to charge a fee of $567,000 as a condition of approving the conversion of their hotel from residential to tourist use. The hotel owners sued in federal court but got sent state court. There the hotel owners lost all down the line, culminating in a 2002 California Supreme Court ruling. After that, the owners sued again in federal court, and the right to sue was appealed all the way to the Supreme Court. The underpinning of the majority's ruling in was the Supreme Court's last ruling on regulatory takings prior to . All through the 1980s, the court struggled with the question of whether a landowner could be compensated for a regulatory taking, because a regulation is temporary, not permanent, and can be changed at any time. Chief Justice William Rehnquist eventually solved the problem in by inventing the “temporary taking.” But two years earlier, in , 473 US 172 (1985), the court ruled that a property owner with a regulatory takings claim had to exhaust all remedies in state court before going to federal court. This laid the groundwork for the majority ruling in San Remo. The hotel owners lost in state court; therefore, there is no recourse in federal court. Although the issue at hand was decided unanimously, the court split 5-4 on the whether to reconsider . A concurring opinion by Rehnquist (in which Kennedy joined) questioned why a property owner can pursue a First Amendment claim in federal court but not a Fifth Amendment claim. Of course, property owners are eagerly hoping that President George W. Bush will appoint more strident Supreme Court justices in the future so that the revolution may at last be completed. This is clearly a possibility. For example, Bush has just appointed California Supreme Court Justice Janice Rogers Brown to the D.C. Circuit Court of Appeals, apparently grooming her for the Supreme Court. Brown dissented in the California Supreme Court's 2002 ruling ruling, calling the fee “extortion.” On the other hand, in June, Brown signed a concurring opinion in the Coastal Commission case, saying that legislation giving the commissioners fixed terms solved a constitutional defect. If the court had declared the Coastal Act unconstitutional, 30 years of regulatory decisions would have been thrown into doubt - something no conservative justice would have been comfortable doing. There's a difference between being a strident “conservative” on social and economic issues and being a true judicial conservative. The property rights revolution has never completely succeeded because justices such as Souter, Kennedy, and Sandra Day O'Connor - all appointed by Republican presidents - have been cautious about overturning precedent. There is no guarantee that Janice Rogers Brown or anybody else will take a more aggressive approach once they get on the high court.

A redevelopment plan covering more than 10,000 acres in San Jose has been upheld by the Sixth District Court of Appeal. The court ruled that the city had proven that blight existed in the six sub-areas of the project. The court dismissed many of the arguments presented by the redevelopment opponent because she did not offer them while the city was considering the redevelopment plan. The court determined the opponent had failed to exhaust her administrative remedies regarding most of the contentions. In 1999, the San Jose Redevelopment Agency began surveying neighborhoods for inclusion in a new redevelopment project area. Eventually, the proposed area contained 22 neighborhoods in six, non-contiguous sub-areas. Most neighborhoods, but not all, were in or near downtown. The city formed an advisory project action committee and prepared a preliminary report assessing blight. In May 2002, the advisory committee endorsed the “Strong Neighborhoods Initiative (SNI) Project Area” but recommended limiting the redevelopment agency's eminent domain power. The following month, the City Council (which also heads the redevelopment agency) agreed to limit use of eminent domain, removed two neighborhoods from the project area and adopted the redevelopment plan. On July 24, 2002 - 29 days after the City Council's decision - attorneys for Elaine Evans (who owns three downtown properties) delivered to the city a 12-page letter detailing objections to the redevelopment plan. A city attorney responded with a letter saying that Evans had raised the objections too late and that the city had met the requirements of the Community Redevelopment Law (Health and Safety Code § 33000 et seq.). Evans then filed a lawsuit alleging that there was not substantial evidence in the record to support the city's findings of blight, that the city had improperly included non-blighted property and non-contiguous property in the project area, that the plan did not include specific projects, and that there was no evidence that private enterprise alone could not accomplish redevelopment. Santa Clara County Superior Court Judge Leslie Nichols found that Evans had failed to exhaust her administrative remedies by not raising specific challenges before the city adopted the redevelopment plan. On the merits, Judge Nichols ruled that the city had complied with the redevelopment statute. In its decision upholding Nichols, the Sixth District dealt at length with the administrative process. According to statute and case law, a public agency must have the opportunity to respond to factual issues and legal theories before the agency's actions are subjected to judicial review, the appellate court pointed out. The plaintiff in a lawsuit need not raise the issues during the administrative process, but someone must do so before a court may consider them, the Sixth District said. Evans argued that the agency had been put “on notice” as to the nature of the issues. But that was not enough for the Sixth District. “ or the most part the objections raised regarding the SNI redevelopment plan during the administrative proceedings were too general to alert the agency to the host of alleged technical deficiencies in the report that were asserted in the trial court,” Justice Patricia Bamattre-Manoukian wrote for the unanimous three-judge panel. Evans contended that a letter from a property owner in an area known as the Mitchell Block and her own July 24, 2002, letter preserved her rights in court. However, the Sixth District quickly dismissed the “Mitchell Block letter” because it related to a specific part of downtown that the city ended up deleting from the project area. And the Sixth District, like the trial court, refused to consider the July 24 correspondence and the city's response because they were not part of the administrative record. “Appellant's letter was not only received 'after the hearing,' it was received after all of the written responses had been approved and the ordinance had been passed adopting the SNI redevelopment plan. Thus the agency could not have responded to her objections 'before adopting the redevelopment plan,'” Bamattre-Manoukian wrote, citing Health and Safety Code § 33363. “Appellant offered no explanation why her letter of July 24, 2002, could not have been submitted sooner, particularly since she contends she was actively involved throughout the administrative process and had discussed her objections to the blight analysis with other residents.” Still, while the court refused to consider the July 24 letter's specific objections to methods and data in the existing conditions report prepared by Keyser Marston Associates, the court conceded “there were various general objections made during the administrative proceeding to the finding of blight in the SNI project area. There were also objections that non-blighted property was improperly included … .” So the Sixth District considered the merits of Evans' arguments - but without her specific objections to the existing conditions report. Evans sought help from a string of cases in which courts threw out redevelopment plans because the city failed to prove that blight existed. In each of the cases from Murrieta, Mammoth Lakes, Diamond Bar and Upland, redevelopment opponent had successfully challenged the methods and findings of existing conditions reports. But those cases were not applicable here because Evans had failed to challenge the report during the administrative process, the court ruled. Thus, the city could rely on the Keyser Marston report, which provided enough evidence of blighting conditions in the project area, the court ruled, As for non-blighted areas being included in the project area, the court found that objections had been raised administratively regarding inclusion of the Naglee Park neighborhood near San Jose State University. However, the city responded by saying that Naglee Park was part of a larger area that had deteriorated buildings, poor site conditions and a lack of parking. That response was good enough for the court. The Case: , No H026802, 05 C.D.O.S. 3620, 2005 DJDAR 4905. Filed March 29, 2005. Ordered published April 28, 2005. The Lawyers: For Evans: Michelle Madriaga, Howrey, Simon, Arnold & White, (650) 463-8100. For the city: Sandra Lee, city attorney's office, (408) 277-4454.

Approval of a tentative parcel map does not prevent zoning changes from applying to the subdivision, the Fourth District Court of Appeal has ruled. In a case from Orange County, the court ruled that the county could enforce provisions in a specific plan adopted after the county approved a four-lot parcel map for 9.2 acres within the specific plan area. The specific plan requires developers to get a site development permit before proceeding with grading. Developer Thomas Hafen argued that he was eligible for a grading permit because his project was approved before the county adopted the specific plan's site development permit requirement. The appellate panel disagreed. In a commentary for the , Bingham McCutchen attorneys Daniel Curtin Jr. and Bryan Wenter wrote, “Although the court did not break any new ground with this decision, it offered a reminder of the importance of vested rights to land development in California.” Indeed, the Fourth District based its decision largely on the state Supreme Court's nearly 30-year-old decision in ., 17 Cal.3d 785 (1976). “ he court concluded a public entity may enforce changes in zoning regulations notwithstanding prior subdivision approval unless the owner or developer (1) has obtained a building permit for an identifiable structure, and (2) has performed substantial work in reliance thereon,” Justice Raymond Ikola wrote for the court. It was in response to that the Legislature approved laws permitting development agreements and vesting tentative maps, both of which permit developers to lock-in existing zoning regulations. In the case at hand, however, the developer did not have a building permit, a development agreement or a vesting map. Instead, what the developer had was a four-lot tentative parcel map originally approved in August 1990, which was kept alive for a decade with various extensions, and a final map that he recorded in December 2000. In 1991, however, Orange County supervisors adopted the Foothill/Trabuco Specific Plan (FTSP) for 6,500 acres in the foothills of the Santa Ana Mountains. The specific plan states that “all grading activities must first have an approved site development permit,” even if a grading permit is not required. “Clearly,” Justice Ikola summarized, “grading issues are at the very heart of the FTSP, its environmental and aesthetic concerns, its substantive and procedural regulations, and its design guidelines.” Still, in July 2001, Hafen's engineer argued in a letter to the county that his client needed no discretionary permit - namely a site development permit - to proceed with grading. “We have four legal lots and no one has the power to tell us that these lots cannot be developed unless there are public health and safety concerns,” Civil Engineer George Polycrates told the county. “We made an agreement with the government.” When the county stuck to its position that Hafen had to comply with the specific plan and get a site development permit, Hafen sued. He argued that the county had a ministerial duty to issue a grading permit - an argument accepted by Orange County Superior Court Judge W. Michael Hayes. He ruled that the county's approval of the tentative parcel map prior to adoption of the specific plan gave the developer “certain vested rights as to the approval of the final map.” He further found that the specific plan did not constitute a zoning ordinance that would allow the county to impose additional conditions on the tentative map. The county appealed, and the unanimous three-judge appellate panel disposed of the trial court's ruling in short order. The court first reviewed and its exception for a developer who has a building permit. Hafen had no building permit. The court then considered whether the specific plan amounted to a change in zoning regulations for Hafen's property. The court said yes and cited the zoning code, which states, “ ll land use, development and improvements shall conform to the provisions of the adopted specific plan.” “Even more notably,” Ikola wrote, “Zoning Code § 7-9-139, entitled 'Grading and Excavation,' provides, in subdivision (a): 'Grading and excavation regulations adopted in a specific plan shall supercede this section.' The Zoning Code itself placed the FTSP at the top of the zoning pyramid.” Government Code § 65961 prohibits a local government from imposing additional conditions on the issuance of a permit based on a tentative map for five years. But the specific plan in this case constituted an exception, the court ruled. Besides, the specific plan was a zoning change, not a change to parcel map conditions. “ nder the Avco rule, the Zoning Code sets the preemptive course,” the court held. The Case: , No. G033970, 05 C.D.O.S. 2968, 2005 DJDAR 4005. Filed March 4, 2005. Ordered published April 5, 2005. The Lawyers: For Hafen: Karen J. Lee, Newmeyer & Dillon, (949) 854-7000. For the county: William Haluck, Koeller, Nebecker, Carlson & Haluck, (949) 864-3400.

A lawsuit challenging the City of Stockton's decision to privatize its water, wastewater and storm drain systems is headed back to trial court, where a judge will reconsider whether the city's contract with a private company is exempt from environmental review. Nearly two years ago, San Joaquin County Superior Court Judge Bob McNatt ruled that the contract was not categorically exempt from the California Environmental Quality Act (CEQA). The decision was a victory for groups who opposed a privatization agreement. However, in March 2004, Judge McNatt vacated that decision because the city had recently pointed to a Government Code section that might provide an exemption. The opponents appealed McNatt's order. A three-judge panel of the Third District Court of Appeal, however, determined that McNatt's order was not appealable. The Third District ruling placed the case back in front of McNatt. In February 2003, the Stockton City Council voted 4-3 to approve a 20-year contract worth $600 million with OMI, Inc., of Colorado and Thames Water, a British subsidiary of the German company RWE. City officials and OMI-Thames contended that the contract would save the city's utility customers $100 million over 20 years. City officials further said the agreement provided the only way for the city to afford to improve the treatment of wastewater. The city's decision came despite vociferous opposition from people who were skeptical of handing over essential infrastructure to a private company. The decision also came only two weeks before Stockton voters approved an initiative requiring voters to decide on any utility privatization worth more than $5 million. Three groups - Concerned Citizens Coalition of Stockton, the League of Women Voters of San Joaquin County, and the Sierra Club - sued the city. They argued that the city should have completed an environmental review before signing the contract, which city officials said was categorically exempt from review. Judge McNatt initially agreed with the privatization opponents. But then the city and OMI-Thames pointed the judge to Government Code § 5956.6, subdivision (b)(1). It states that an agreement between a local government and a private entity for the design, construction, reconstruction or lease of certain fee-producing infrastructure does not require CEQA compliance. Rather, CEQA applies to project development. McNatt then decided that his original ruling “may have been premised on an error of law” and he granted the city and OMI-Thames a new trial. Opponents appealed and even gained the support of the state attorney general's office. But the Third District determined that, despite the wording of McNatt's order, the judge had not granted a new trial. Instead, the court ruled that McNatt had granted “alternative relief” under Code of Civil Procedure § 662. “ t is apparent the trial court did not intend to 'grant a new trial as to any issue in the sense of granting a “reexamination of an issue of fact” as though no trail had been previously had,'” Justice Ronald Robie wrote for the court, citing , (1937) 21 Cal.App.2d, 138, 150. “Instead, what the trial court intended to do was reopen the case to determine the effect on the case, if any, of Government Code § 5956.6(b)(1).” Reopening the case in this fashion is not subject to appeal, the court held. McNatt “merely determined that the statute apply,” Robie wrote. Once McNatt decides whether the statue does apply, either party may then appeal that decision, the court ruled. The Case: , No. C046524, 05 C.D.O.S. 2956, 2005 DJDAR 3947. Filed April 4, 2005. The Lawyers: For Concerned Citizens: Brian Johnson, Shute, Mihaly & Weinberger, (415) 552-7272. For the city: John Briscoe, Stoel Rives, (415) 617-8900. For OMI-Thames Water Stockton: James Meeder, Allen, Matkins, Leck, Gamble & Mallory, (415) 837-1515.

The City of Berkeley and the University of California (UC) are at odds over a 15-year land use plan adopted earlier this year. The city contends that the UC plan burdens city-funded services and does not protect city desires regarding off-campus development. University officials defend the plan, saying that the school benefits the community in many ways and that the plan guarantees UC consultation with the city for any off-campus project. In February, the city filed a lawsuit over the Long Range Development Plan. The two sides are negotiating. In the meantime, UC is moving ahead with plan implementation - and the city is taking steps to increase revenue it gets from the university. “The City of Berkeley does not oppose all new development by the university,” Mayor Tom Bates said earlier this year. “However, this community must have a meaningful say in how, when and where new growth occurs - particularly development that takes places off the campus. And we must be compensated fairly for the city services we provide.” Bates's comments prompted this response from UC: “The university is sympathetic to the financial challenges facing the city and, as a member of this community, the campus wants to enhance the city's neighborhoods. That is why the campus offered to increase significantly its direct annual payments to the city, earmarking funds for city services and neighborhood improvements. Unfortunately, city officials rejected our offer.” The UC Board of Regents adopted the 2020 Long Range Development Plan in January, after a two-year planning process. The plan proposes to accommodate up to 4,000 additional students and 2,800 additional workers. The plan calls for: o 2.2 million square feet of space for academic and support programs, an increase of 18%. About half of this space would be built off-campus. o 2,600 new beds of student housing, a 32% increase. The housing would be built in numerous areas within walking distance or within a 20-minute transit ride of campus. o 2,300 additional parking spaces, a 30% increase. Five hundreds of these spaces would be deferred until after 2020 if a bus rapid transit project along Telegraph Avenue gets under way by 2010. Since adoption of the plan, the university has started preliminary work on the Chang-Lin Tien Center for East Asian Studies, details of which UC rolled into the long-range plan. The university has also started construction on a replacement for Stanley Hall, which UC demolished last year. The new building will provide space for bioscience facilities. Preliminary work also is under way for a new information technology center. Later this year, UC hopes to begin construction of the first off-campus project since LRDP adoption - a child-care center. That project will test the LRDP's design principles for fitting university development into the community, said Kerry O'Banion, project manager for the long-range plan. The long-range plan is similar to a city's general plan, O'Banion explained. “It's a framework that gives us a set of principles and guidelines to work from,” he said. The details of, and environmental review for, specific projects will be handled as the university addresses individual projects in the future. The regents adopted the previous long-range plan for the Berkeley campus during the late 1980s. The new plan differs in several ways. “The main point is that it's much more explicitly tied to the academic plan,” O'Banion said of the 2020 plan. “The objectives in the long-range plan you can tie directly to the academic goals.” Additionally, the new plan contains a number of sustainable design features that attempt to reduce operating and maintenance costs; provides guidelines for where certain types of buildings should go; has design guidelines; and places a stronger emphasis on redevelopment. “It's a built-out environment. Every piece of land has a use of some kind on it,” O'Banion said. For new buildings and facilities, campus planners are eyeing places that are underused, obsolete or seismically questionable, he added. However, the fact that the city and campus are already intensely developed is a factor that underlies the city's concerns. The city's issues with the plan can be divided in three primary areas, said Cisco DeVries, the mayor's chief of staff. First, the city needs to have more meaningful input into what development occurs off-campus. Under state law, the university can build just about anything it wants. The LRDP is “vague” about what will get built off-campus, DeVries said. The second issue is parking. Adding 2,300 parking spaces will only further congest Berkeley's famously jammed streets, city officials contend. The third issue is money, specifically fees for municipal services that the city provides. City officials say the city provides $13.5 million worth of services to UC every year, a tab that will increase by $2 million annually under the LRDP. The city's lawsuit argues, “The university does not commit under the LRDP to pay for the impacts on city services used by the university or to lessen those impacts through effective mitigation.” “For example,” added DeVries, “we provide the entirety of the university's fire protection and ambulance services. We essentially provide a fire department for a community of 50,000 people at no charge.” University officials have indicated they are willing to talk about the issue, but the two sides appear to be getting only farther apart. In March, the City Council decided to pursue a 10% tax on UC parking fees. University officials contend such a levy would violate the state constitution's prohibition against taxing state agencies. In April, the City Council voted to more than triple the sewer service fees charged to UC, which are currently at $450,000 a year. UC officials responded that the city's fee methodology was flawed and that there is another year left on a 1990 agreement regarding sewer fees. There is one other money issue: Paying for new facilities. Housing and parking generate enough revenue to pay for themselves, according to O'Banion, but everything else relies on a combination of campus funds, state funds, and donations. The Legislative Analyst's Office has recommended not funding LRDP projects until UC justifies the need. The LRDP supposedly provides for 4,000 additional students, yet UC Berkeley has already added those students with existing facilities, according to the LAO. “Therefore, it is unclear why 2.2 million gross square feet of buildings would be needed to accommodate enrollment,” the LAO reported. University officials say the system's oldest campus needs continual updating and additions to maintain its place as one of the world's top research centers. Contacts: Kerry O'Banion, University of California, Berkeley, Facilities Services, (510) 643-3362. Cisco DeVries, Berkeley Mayor Tom Bates's office, (510) 981-7103. Long Range Development Plan: www.cp.berkeley.edu/LRDP_2020final.htm .

Santa Cruz County is not allowed to regulate the height of mobile homes because state law has pre-empted the possibility of a local ordinance, the Sixth District Court of Appeal has ruled. The Mobilehome Parks Act (MPA) governs the construction and installation of mobile homes in California and prohibits additional regulation by local governments, the court ruled. “ t is clear that the Legislature intended to limit local authority for zoning regulation to the specifically enumerated exceptions of a mobile home park may be located, vehicle parking and lot lines, not the structures within the parks,” Presiding Justice Conrad Rushing wrote for the unanimous three-judge panel. The litigation was spurred by the state Department of Housing and Community Development's issuance of a permit in 2001 to Kenneth Waterhouse, the owner and operator of Yacht Harbor Manor Mobilehome Park in unincorporated Santa Cruz. Waterhouse sought and received permission to install a two-story mobile home. Two months before HCD approved Waterhouse's application, the Santa Cruz County Board of Supervisors adopted an ordinance prohibiting mobile homes in mobile home parks from exceeding one story or 17 feet without county approval. After Waterhouse won approval from the state, the county sued him to block installation of the two-story home. A trial court judge ruled against the county, which appealed but lost again. The question for the Sixth District was whether the Mobilehome Parks Act (Health and Safety Code § 18300 .) pre-empted the county's ordinance. Cities and counties have general police powers to enact laws and regulations to protect the public, but that power is superceded when a state law “fully occupies” a field. The Sixth District found that the Mobilehome Parks Act fully occupied the field, but the county pointed to , 79 Cal.App.4th 1318 (see CP&DR Legal Digest, June 2000), in which the court ruled that the Mobilehome Parks Act did not prohibit the county from enforcing rent control regulations. The county also noted exceptions in the state law that allow the county to zone for mobile homes and mobile home parks, to regulate parking, signs and perimeter walls, and to create and adjust mobile home park lot lines. The court ruled, however, that neither nor the statutory exceptions addressed the construction of mobile homes. “does not support the county's position in this case,” Rushing wrote, and the exceptions do not provide “the county authority to regulate the structure of mobile home units within the parks.” Rushing continued, “ two-story mobile home, if it meets the construction standards, can be installed in a mobile home park, provided it meets the lot line requirements. The MPA provides no authority to localities to regulate whether or not a double-wide or triple-wide is installed in its parks. Similarly, there is no authority to regulate whether a two-story unit is installed.” The Case: , No. H024127, 05 C.D.O.S. 2813, 2005 DJDAR 3787. Filed March 30, 2005. Modified April 28, 2005 at 2005 DJDAR 4921. The Lawyers; For the county: Dwight Herr, county counsel's office, (831) 423-5800. For Waterhouse: David Spangenberg, Spangenberg & Ritson, (707) 473-4340. For the Department of Housing and Community Development: John Davidson, attorney general's office, (415) 356-6365.

Although I know little about Scottish history, I seriously doubt that the Scotsmen of the early 1400s who invented golf ever thought about the environmental impact their delightful new pastime would bring to the as-yet-undiscovered shores of California. Intent on whacking leather balls filled with feathers, those same 15th Century Scotsmen probably did not think that their seemingly innocent diversion from herding sheep would ever be the rationale behind something as weird as the Santaluz development in North San Diego County. The 3,800-acre Santaluz is innovative, to be sure, perhaps too much so. The very look of the site plan inspires queasiness, at least to my conservative eyes. In contrast to other site plans, which look like street maps or parks, the plan of Santaluz looks like the abdomen of a female frog, full of eggs. Swimming amid those frog eggs are creatures resembling long green nematodes. These nematodes, in fact, are the fairways of a golf course. For those who have lived in outer space for the past several decades, it may be necessary to explain that it is impossible, nay, , to build an upscale, suburban housing development without a golf course. (Enacted during the administration of the first President Bush, the law is known as the Universal Right of the Affluent Americans to Have Access to a Golf Course from Their Back Yards Act of 1989.) Santaluz offers a very-low-density estate housing scheme consisting of 850 homes and house lots, of which 300 are the circular kind. The other houses are conventional, home-builder "product." All of this, naturally, is tucked behind locked gates. The large lot sizes allow the houses to be separated from one another by distances of 100 to 200 feet, which is an important point of sale in a development that retails in the fantasy of making homeowners feel like landed gentry. The circular lots, which the developers describe as “curvilinear,” start at around $775,000 for six-tenths of an acre, and soar upward to $2.45 million for four acres. Those prices do not include the cost of the house. Much of the oddity of this site plan is the byproduct of the lofty environmental aims of Santaluz, which is being developed by a partnership of DMB Associates Inc. and Woodrow Taylor Homes. The things I called frog eggs are in fact circular home lots, which are a genuine innovation (unless you want to give credit to those mysterious crop circles that appeared in Great Britain a few years ago). Ingeniously, the circular home lot allows the home buyer the hitherto unheard-of opportunity of spinning the floor plan around on an imaginary turntable, until she has selected the very best view. It is as hard to argue with the marketing sense of this appealing idea as it is difficult to justify it architecturally. Traditionally, we design houses to respond to particular landscapes and solar orientations. We might add more shade on the south and west exposures to cut down on the summer heat, for instance, and provide windows in other places to capture prevailing breezes. In the anti-architectural logic of Santaluz, however, a pre-existing home design is spun on the roulette wheel of the homeowner's imagination, with little or no acknowledgement of the sun or any other natural forces that may invade the sun-drenched hills of the San Dieguito River basin. Seen from the air, the houses of Santaluz may remind viewers of a wall of clocks in a travel agent's office, where the hour hands point in all directions to indicate different time zones. The sight of a group of houses twirled around at different compass points may discomfit some hide-bound urban planners, who make a compulsion out of lining up buildings in the same direction, but so what? The point-it-where-you-like-it idea is a genuinely creative gambit on the part of the developer because it plays into the ancient Anglo-American fantasy of owning a country house. We may steer our house in a direction outside of the view of other people's houses. This makes us feel like gentleman farmers surveying the broad lands of our estates. In other words, Santaluz is suburbia pretending to be rural. You can almost hear the cows lowing - that is, if the Codes, Covenants and Restrictions of Santaluz allowed cows, which they don't. Maybe I am making too much out of the seeming eccentricities of Santaluz. Fairness dictates I disclose that this development won awards from the both the Building Industry Association and a Gold Nugget Award for “Best Land Plan” from the Pacific Coast Builders Conference. The project was even a finalist for an Urban Land Institute award of excellence. If the experts like Santaluz, who am I to naysay their judgment? As an attractive, money-making development, I think Santaluz is a sure-fire hit. As a model of urban or suburban organization, I think it is disorderly, but that is a matter of taste. As an environmental event, which is more important, I think Santaluz is indefensible. The development is one of many instances of high-priced, low-density housing subdivisions masquerading as environmental “sensitivity.” The developers may have been able to snow the local Board of Supervisors with talk of limited environmental damage, but I do not buy it. Even if the homes are of low density today, the existence of roads, electrical conduit and sewer mains ensures this neighborhood will soon be expanded with additions and guests houses and eventually subdivided. In other words, Santaluz is the opposite of good environmental stewardship. The proper way to protect fragile lands is to concentrate housing in a limited area, thus maximizing open space and minimizing natural habitat fragmentation. While golf courses are popping up in all kinds of sensitive settings, I think they are inappropriate in the extreme, because the green turf of golf courses is neither public open space nor habitat for birds and animals. But golf is the opiate of the middle classes, and developers and their lenders have learned to build links along with housing as a means to ensure pre-sales. What was good for 15th Century Scotland, however, may not be ideal for 21st Century California. But why concern yourself with a problem for the future? Right now, it's your turn to tee off while I tuck into my latest vodka tonic. God, it's beautiful here!

Developers suffered two losses during recent special elections. Voters in the fast-growing Riverside County city of Murrieta recalled the mayor and nearly threw out a second councilman. Meanwhile, the San Luis Obispo electorate rejected a 650,000-square-foot power center and the finance deal supporting the project. At the May 3 election in Murrieta, three pro-growth members of the City Council faced recall. Voters ousted Mayor Jack van Haaster from office by a 51-49 ratio. Councilman Kelly Seyarto narrowly survived the recall with 50.7% of the vote, while Councilman Doug McAllister easily staved off the recall by winning nearly 55% support. Citizens formed a group called Rescue Murrieta in the parking lot following a City Council meeting in June 2004, group spokesman Edward Faunce said. That night, the City Council approved a large day-care center proposed by van Haaster's daughter and rezoned land from large-lot residential to commercial to accommodate a proposed shopping across the street from a brand new shopping center. Those projects were on streets that were already gridlocked at certain times of the day, Faunce said. Rescue Murrieta targeted van Haaster, Seyarto and McAllister for recall because they often formed a 3-2 pro-growth bloc. Van Haaster received additional criticism for meeting privately with four Planning Commission members regarding his daughter's application for the 400-child day-care center. That project got cut in half, and van Haaster later apologized for intervening, but the political damage had apparently been done. "They didn't follow the general plan," Nancy Knight, a recall proponent and replacement candidate for McAllister's seat, said of the recall targets. "Multi-family housing is one of the big issues. They have really burdened our city with a lot of these high-density, multi-family housing projects." Development interests bankrolled the campaign to keep the embattled officials, pouring more than half a million dollars into the campaign. Two branches of the Building Industry Association, Lennar Homes, Barratt American and at least four other development interests wrote five-figure checks to support the incumbents during the city's most expensive election ever. Van Haaster was replaced by retired Air Force Colonel Rick Gibbs, who easily topped 20-year-old Casey Evans in balloting to replace the mayor. Rescue Murrieta endorsed Gibbs, but he is not a member of the organization. Still, the change on the City Council was apparent within minutes of Gibbs assuming office, when the council voted 4-1 to appoint Councilman Warnie Enochs as mayor. Frequently on the short end of 3-2 votes, Enochs has been on the council for 10 years but was never before selected mayor. During the same period, Van Haaster served six years as mayor and Seyarto, who voted against Enochs' appointment, two years. Murrieta has experienced nonstop growth since it incorporated in 1991. In May, the Department of Finance reported that Murrieta has grown 92% in the last five years to a population of 85,100. “The need to bring the infrastructure up to catch up with the rooftops is overwhelming,” said Rescue Murrieta's Faunce. “Our streets are not up to par. Our schools are overcrowded. It's almost an impossible job.” Infrastructure was also an issue in the April 26 San Luis Obispo special election, specifically how to pay for an overpass across Highway 101 to a proposed power center. Under a development agreement between the City of San Luis Obispo and developers of the Dalidio Ranch Marketplace, the developers would have fronted most of the funding for the overpass. They would have been repaid up to $22 million through a sales tax “rebate.” The city also would have contributed development impact fees to the overpass. Detractors said the development agreement was key in solidifying opposition to the project, which the City Council approved last year. In the referendum, voters rejected a general plan amendment (Measure A) 51.4% to 48.6%, and they defeated the rezoning (Measure B) 52.3% to 47.7%. The vote against the development agreement (Measure C) was a slightly more convincing 52.9% to 47.1%. “If this was just a bunch of liberal left, environmental activists, we couldn't have done it,” said Ben Romo, a campaign consultant for a group called Save San Luis Obispo. “The residents of San Luis Obispo recognized that this was a deal that was going to cost the city money. … We had a number of supporters who have never opposed a development in their lives.” An alliance of slow-growth advocates and downtown merchants emerged during the campaign. The groups, who have not always been friendly in the past, feared that that the power center would harm downtown, which is already facing a difficult seismic retrofit project. “Some people who often don't agree on things were agreeing on this,” said Jan Marx, a member of Save San Luis Obispo, land use attorney and former council member. “We want to be a town with a vigorous downtown and a greenbelt.” The referendum vote does not necessarily mean the project is dead. Because the city never completed annexation of the 131-acre site, property owner Ernie Dalidio and developer Bill Bird have filed an application with San Luis Obispo County. They pursued a project with the county previously but did not get far because the Board of Supervisors said the development belonged in the city limits. As approved by the city, Dalidio Ranch Marketplace would have had 650,000 square feet of retail space, including a Lowe's Home Improvement Center, Target, Whole Foods, Old Navy, and a hotel. There also would have been 60 housing units. Bird told San Luis Obispo of that the project proposed for the unincorporated area would be “similar.” Contacts: Ed Faunce, Rescue Murrieta, (951) 296-0288. Nancy Knight, Murrieta City Council candidate, (951) 677-2459. Jan Marx, Save San Luis Obispo, (805) 541-2716. Ben Romo, Save San Luis Obispo campaign consultant, (805) 570-5187. Dalidio Ranch Marketplace: www.dalidioranchmarketplace.com .

Legislation that would permit certain redevelopment agencies to extend the life of redevelopment project areas has stalled for the year. Four Assembly bills hit a roadblock in the Assembly Housing and Community Development Committee when Chairman Gene Mullin (D-South San Francisco) decided that a broader discussion of redevelopment time extensions was necessary. Also stalling in the Capitol was a bill that would permit the Port of Los Angeles to tap redevelopment tools. Meanwhile, a bill that would alter the definition of “blight” to allow tax-increment financing of transit-oriented developments remains alive but faces an uncertain future this year. Under the last major round of redevelopment reform (AB 1290 from 1993), redevelopment projects must expire by January 1, 2009, or after 40 years, whichever is later. In 2001, lawmakers approved SB 211, which permits 10-year project extensions within tight constraints (see , July 2001). However, only one redevelopment agency (Sacramento) has been able to take advantage of SB 211. It appears that SB 211's requirements are too strict, said California Redevelopment Association (CRA) Executive Director John Shirey. Some agencies are highly leveraged and cannot afford SB 211's mandate that an additional 10% of tax increment be spent on low- and moderate-income housing, he said. Some agencies are reluctant to accept the emphasis on low-, very low- and extremely low-income housing that is required by SB 211 and a follow-up measure, SB 701 from 2002. Some agencies cannot pass SB 211's stringent blight test, even though projects are incomplete, Shirey said. The CRA did not take a position on any of this year's time extension bills and, in fact, was caught off guard by the legislation, Shirey said. He endorsed Mullin's call for a “holistic approach” to the issue. One of the agencies sponsoring legislation this year is the San Jose Redevelopment Agency, which backs AB 1472 (Coto). That bill is intended to provide a 10-year extension to a project area in north San Jose's “Golden Triangle” that is scheduled to terminate in 2033. The extension is important now because the city usually issues 30-year debt to finance infrastructure. The bill would permit an extension based, in part, on either physical or economic blight. “We have been particularly hard hit here with job losses and vacant buildings, but we have a difficult time with the physical blight ,” said Harry Mavrogenes, executive director of the San Jose Redevelopment Agency. Additionally, SB 211's requirement that tax increment get spent on affordable housing within the project area is a problem for San Jose, which pools its tax increment, he said. The agency has plans for 32,000 housing units and 26 million square feet of industrial and office development on about 600 acres. Such development would need at least $500 million worth of infrastructure, yet the San Jose Redevelopment Agency, the state's largest redevelopment agency, has seen tax increment revenue decline by 25% in recent years to $148 million annually. Mavrogenes defended the development as “smart growth” because it would be in an existing urban area with a light rail line. If the development does not occur in North San Jose, the growth - especially the housing - will probably move to the edge of the region, leading to further traffic congestion, he contended. Although the San Jose bill stalled, Mavrogenes endorsed Mullin's decision to take a broad look. “I think it's obvious from the collection of these bills that SB 211, which is the mechanism available to these agencies, has some problems,” Mavrogenes said. The San Jose bill will apparently get no hearing in the Legislature this year. Neither will AB 517 (Hancock), which would give the Berkeley Redevelopment Agency an extension solely for low- and moderate-income housing projects; AB 921 (Daucher), which proposed 25-year extensions during which a redevelopment agency would keep only half of the tax increment; and AB 1167 (Chu), which would provide a 10-year extension to the El Monte Community Redevelopment Agency for transit-oriented development projects. A broader transit-oriented development bill appears to still have a chance at passage this year. Senate Bill 521 by Senate Transportation and Housing Committee Chairman Tom Torlakson (D-Antioch) would amend the statutory definition of blight to include the lack of high-density development within a transit village development district. The measure would permit redevelopment efforts within approximately one-quarter mile of a rail transit station. The area would not have to be “predominately urbanized,” as required by current redevelopment law. However, the project would have to get approval from the California Infrastructure and Economic Development Bank. The bill also would permit development by-right within transit village development districts adopted after January 1, 2006, meaning that a city or county could not require environmental review or discretionary permits if a project complies with a plan. Backers of SB 521, including BART and the California Chapter of the American Planning Association, contend the legislation would encourage growth that makes better use of infrastructure. Indeed, a Senate Local Government Committee bill analysis says, “ he substantial public investment in rail transit does not pay off if local officials fail to promote private development around rail transit stations.” Still, plenty of opposition exists. No Republican on the Senate Local Government Committee voted for SB 521. Los Angeles and Santa Clara counties oppose the bill because they fear the loss of revenue and worry about watering down the definition of blight. Even the CRA opposes SB 521. “While CRA supports the building of more housing closer to transit facilities,” Shirey wrote to CRA members, “we are opposing SB 521 unless amended to address our concerns about a redefinition of blight that will be hard to defend and state approval of redevelopment projects.” While the debate over the Torlakson bill is likely to continue this year, consideration of a bill that would let the City of Los Angeles establish a redevelopment project area at the port has ended. The bill, AB 1330 by Assemblywoman Betty Karnette (D-Long Beach) met stiff resistance in the Assembly Local Government Committee, where only one of seven members voted for the legislation. In addition to Los Angeles County, which would lose an estimated $25 million to $50 million in annual revenue, bill opponents included the San Pedro and Peninsula Homeowners' Coalition, a citizen group that has been a port watchdog for years. The redevelopment project, which would be governed by the mayor-appointed Board of Harbor Commissioners, would help fund a 400-acre, eight-mile-long retail, office and residential development along the waterfront. “It's bad enough that the port wants to do this giant commercial project on the waterfront,” said Homeowners' Coalition President Noel Park. “But we think it's inappropriate for a public agency with a cash flow of $600 million a year to tap into the tax increment for this.” The Assembly Local Government Committee agreed. A committee bill analysis stated, “ he conditions that exist in and around the harbor do not fit the state criteria for declaring blight and establishing a redevelopment area; the port is not an economic burden to the area, but a multi-billion dollar revenue-generating industry.” The bill appeared to be a way for the port to get past the State Lands Commission, which has jurisdiction over tidelands. The Commission strongly opposes the proposed waterfront development. Neither a Karnette aide nor a port spokeswoman was willing to talk about AB 1330. One final redevelopment bill that appears headed for approval is AB 1390 (Jones), which has already passed the Assembly. It would extend to 10 years the statute of limitations for enforcing the requirement that 20% of tax increment be setaside and spent for low- and moderate-income housing. The bill is a response to a 2003 court decision that the Escondido redevelopment agency did not have to reimburse the housing fund for underpayments that occurred more than three years prior to a lawsuit seeking enforcement. The appellate court in , 110 Cal.App.4th 1288 (see , September 2003), cited the three-year statute of limitations. Contacts: John Shirey, California Redevelopment Association, (916) 448-8760. Harry Mavrogenes, San Jose Redevelopment Agency, (408) 794-1000. Noel Park, San Pedro and Peninsula Homeowners' Coalition, (310) 832-5720. Assembly Housing and Community Development Committee, (916) 319-2085.

The First District Court of Appeal has blocked a developer's request to collect from its courtroom opponents the cost of preparing the administrative record in a California Environmental Quality Act lawsuit. The court held that the developer, Hayward 1900, Inc., was not eligible for the money because the City of Hayward had improperly delegated preparation of the administrative record to the developer. In 2002, the Hayward Area Planning Association, the Hayward Hills Property Owners Association and Greenbelt Alliance filed a lawsuit against the City of Hayward and the Hayward Unified School District over the environmental review for a controversial, long-discussed subdivision in the hills of the East Bay city. Hayward 1900 was the real party in interest. The project opponents later dismissed their claims against the school district. In June 2003, Alameda County Superior Court Judge Bonnie Lewman Sabraw ruled against the project opponents and awarded costs to the city and Hayward 1900. Hayward 1900 then sought $50,421, all but $228 of which was for preparation of the administrative record. The project opponents - who had never agreed to have the developer prepare the record - asked the court to reject the developer's bill because preparation of the record was the city's responsibility, because various costs included in the $50,000 bill were unreasonable, and because the bill included costs of preparing the school district record, which the district had waived. The trial court found some of the costs to be excessive, so the developer reduced its bill to $20,359. But the project opponents asked the appellate court to bar any cost recovery for the developer's preparation of the administrative record. A unanimous three-judge panel of the First District did just that. The decision centered on interpretation of one portion of CEQA, Public Resources Code § 21167.6. “Section 21167.6 authorizes only three ways to prepare a CEQA record, none of which were followed in this case,” Justice Linda Gemello wrote for the court. “The three alternatives are (1) that the public agency prepare and certify the record; (2) that the petitioner prepare the record, subject to certification by the public agency; or (3) that the parties agree to alternative method of preparing the record, subject to certification by the public agency. The city's delegation of the task to the real party in interest without obtaining the consent of plaintiffs was inconsistent with this statutory scheme.” Hayward 1900 argued that the statute did not bar its cost recovery, and the court conceded that the statute is ambiguous. Still, the intent of the statute is to minimize the cost of record preparation, and none of the usual restraints on cost preparation were in place here because of the city's unilateral delegation of record preparation to the developer, the court determined. The plaintiffs could not control costs because they were given no choice on the arrangement with the developer, the city itself did not submit a bill that it was forced to justify in public, and the city did not attempt to control the developer's costs, Gemello noted. “Although courts have allowed public agencies to collect the labor costs of outside assistance when they prepare the record under § 21167.6, subdivision (b)(1), no court has condoned the unilateral delegation of the task to a party with an interest in the litigation,” Gemello wrote. Thus, the court ruled, the developer's cost recovery must be denied. The Case: , No. A104903, 05 C.D.O.S. 2993, 2005 DJDAR 4033. Filed April 5, 2005. The Lawyers: For Hayward Area Planning Association: Jewell Hargleroad, McInerney & Dillon, (510) 465-7100. For Hayward 1900, Inc.: Philip Aktins-Pattenson, Sheppard, Mullin, Richter & Hampton, (415) 434-9100.

When a development project straddles the coastal zone boundary, the Coastal Commission may not use its jurisdiction over the portion of the project within the coastal zone to influence development outside of the zone, the state Supreme Court has ruled. In a case from Los Angeles's West Side, the court rejected the Sierra Club's argument that the Commission should have exerted authority over portions of a project located outside the coastal zone, but which could impact the coastal zone. The ruling was the second loss at the state's high court for opponents of Catellus Residential Group's West Bluff project, on a hill overlooking the Ballona Wetlands. Last December, the state Supreme Court ruled that affordable housing mandates for projects within the coastal zone did not apply because none of West Bluff's proposed houses or other private facilities were located within the coastal zone ( Coalition of Concerned Communities, Inc. v. City of Los Angeles , (2004) 34 Cal.4th 733; see CP&DR Legal Digest , January 2005). The project, for which construction began in 2003, is on 45 acres, 12 of which lie within the coastal zone. As approved by the City of Los Angeles, all 114 houses would be on the 33 acres outside the coastal zone. Still, the project needed a coastal development permit because Catellus proposed building a road from the Pacific Coast Highway through the coastal zone to provide access to 85 of the new houses. In addition to the street, the developer planned to build some storm drainage facilities and other infrastructure in the coastal zone. The Coastal Commission approved a permit for the coastal zone development in 2000. Environmentalists sued the Coastal Commission, arguing that the state panel should have denied the permit because the coastal zone construction would enable out-of-zone development that could impact resources within the coastal zone. Environmentalists lost at the Superior Court level and in the First District Court of Appeal. The California Supreme Court then took up the case, and, in a mid-May decision, ruled unanimously against environmentalists. At the high court, the Sierra Club presented a number of arguments, but the most important one was that the Coastal Act required the Commission to consider the impacts in the coastal zone of the houses. The Sierra Club contended that the housing development would be visually incompatible with the scenic area and could harm Ballona Wetlands, an environmentally sensitive habitat area (ESHA). The Commission countered that it did consider those impacts - to the extent they were related to development within the coastal zone. But, the Commission said, the Sierra Club wanted the Commission to use its jurisdiction over the proposed road to gain jurisdiction over the entire project, which would violate the Coastal Act. The state's high court accepted the Commission's argument. The court pointed out that the Commission conditioned its permit on bluff-face stabilization work, drainage improvements, bluff-face re-vegetation and the retirement of development rights on 15 parcels between the wetlands and the proposed houses. " he record makes clear that the Commission did in fact consider the ways in which the proposed development outside the coastal zone would produce impacts within the coastal zone, and the ways in which the proposed development inside the coastal zone, as further conditioned by the Commission to implement the Coastal Act's standards, would address those impacts," Justice Ming Chin wrote for the court. "The Commission's actions in this regard were proper under the Coastal Act." What the Commission correctly refused to do, Chin continued, was condition a permit for coastal zone based on changes to the portion of the project located outside the coastal zone. The Commission rebuffed environmentalists' request to tie the coastal development permit to fewer houses, more open space and a greater setback between houses and the edge of the bluff. In siding with the Commission, the court pointed to a 1978 amendment to the Coastal Act. The Legislature approved the amendment to Public Resources Code § 30604, subdivision (d) after the state attorney general issued an opinion that said the Coastal Commission may "deny permits on the basis that the portion of development outside the coastal zone would have adverse environmental impacts inside the coastal zone." The Legislature specifically refuted that opinion. " egarding developments straddling the coastal zone boundary, the Legislature intended to divide permit authority between the Commission and all other local public entities having jurisdiction over portions of the development outside the coastal zone," Chin wrote. The Sierra Club further argued that a portion of the Coastal Act - Public Resources Code § 30200, subdivision (a), which says that all public agencies considering activities outside the coastal zone must consider direct impacts on coastal zone resources - applied here. The Sierra Club said that the Coastal Commission was approving activities in the coastal zone that would support development outside the zone that could harm coastal resources in violation of § 30200 subdivision (a). However, the court found that this provision does not apply to the Coastal Commission. Even if it did, the Commission could not use it to overrule other public agencies, the court ruled. The Sierra Club also argued that the Commission's action was inconsistent with the California Environmental Quality Act and that it conflicted with the Commission's duties under the federal Coastal Zone Management Act. The high court rejected both arguments. The Case: Sierra Club v. Coastal Commission , No. S116081, 2005 DJDAR 5757. Filed May 19, 2005. The Lawyers: For Sierra Club: Frank Angel, (310) 314-6533. For the Coastal Commission: Hayley Peterson, deputy attorney general, (619) 654-2540. For Catellus: Robert Crockett, Latham & Watkins, (213) 485-1234.

Most government budget crises get bailed out by increasing tax revenue, and the current situation in California appears to be no exception. With tax receipts on the rise throughout California, Gov. Arnold Schwarzenegger was able to throw several billion dollars into the kitty as part of the “May revise” - the annual revision of the governor's budget proposal to the Legislature. The surprise is that he threw the money at transportation instead of education. Though faced with daily television attack ads from the state teachers' union, Schwarzenegger gave education only about $100 million. Meanwhile, he has earmarked about $1.3 billion to fund Proposition 42 - the 2002 ballot initiative that sets aside sales tax on gasoline for transportation projects but which has been suspended by the Legislature every year since. Another $2.5 billion will go toward reducing the budget deficit. The governor's plan has highlighted the increasing tension between local governments and educators, who increasingly must lobby in Sacramento for pieces of the same pie. But Schwarzenegger may also have painted himself into a corner on transportation, because he now must decide which Davis-era, Democrat-driven transportation projects he wants to fund under Proposition 42. The governor also appears to be picking a fight with the Legislature over how the money is spent, because he is tying the transportation funding to a package of three bills that Republicans like and Democrats don't. The truth of the matter is, even if he gets what we wants, he's still surrounded by Democrats and must, to a certain extent, move on a Democratic agenda. It's no secret that the state's transportation construction accounts are almost broke. Most State Transportation Improvement Plan (STIP) projects have been postponed for at least two years, and STIP funding - usually well in excess of $1 billion a year - dropped to less than $300 million in 2004-05. Virtually no funds are currently flowing into design and construction of highway projects by Caltrans. Schwarzenegger rationalized the idea of putting funds into transportation construction rather than operating funds for education by arguing that the revenue boost is a one-time bump of several billion dollars caused by a recent tax amnesty. In so doing, he is attempting to differentiate himself from Gov. Gray Davis, who got the state into a bind by using rapidly increasing revenues in the years of the Internet bubble to fund increases in state operating programs that benefited his labor union supporters. Schwarzenegger's strategy has been supported by nonpartisan Legislative Analyst Elizabeth Hill, though her staff contended that the tax amnesty portion of the revenue increase was a minor portion of the overall rise. But Schwarzenegger has run into stiff partisan opposition in the Legislature itself. “This governor just doesn't get it,” said Assembly Speaker Fabian Nunez, a Democrat and former labor union official. But that is not the end of it. Schwarzenegger has tied funding Proposition 42 to passage of his “GoCalifornia” proposal - a package of three bills designed to speed up the highway construction process mostly through privatization. The three bills are: o AB 850 (Canciamilla), which would permit private companies to build more toll roads. o AB 1266 (Niello), which would permit Caltrans to start building a project when the first phase is designed, rather than waiting for the entire project to be designed. o SB 705 (Runner), which would permit Caltrans to let design-build contracts for transportation projects. The last two bills are meant to address the Caltrans project delivery problem - the fact that transportation projects get stuck in a bottleneck inside the agency at the design and environmental review stage. But the Runner bill in particular is likely to face opposition, as it would take some projects out of the hands of unionized engineers at Caltrans. Contracting out design work has been a major issue between Caltrans and the union for several years, especially as the project delivery problem has gotten worse. Even if the Legislature approves Schwarzenegger's budget and the GoCalifornia bills - both of which are big ifs - the governor still faces the tough political question of which projects to fund under the Transportation Congestion Relief Program (TCRP). By funding Proposition 42, Schwarzenegger does not get full discretion over how to spend the money. The measure requires that about half of the money go to fund at least some of the 141 projects contained in the TCRP, with the remainder split between the STIP, local road improvements, and public transit. The problem for Schwarzenegger is that the TCRP list of 141 projects is a Democratic list devised by the Davis administration in 2000. The Davis list - jokingly called the “G-TIP” at the time - favored urban Democratic areas at the expense of suburban and rural Republican areas, and tended to provide about 30% of the funding required for very large projects - enough to drive the STIP funds in their direction (see , July 2000, August 2003). This list was memorialized with the passage of Proposition 42 in 2002; however, no allocations have been made since that time because Proposition 42 has been suspended each year in the name of a “budget emergency.” One of the first things Schwarzenegger tried to do after ousting Davis in 2003 was to jettison the TCRP, but he failed. Now he is faced with having to pick and choose from among Davis's pet projects. Business, Transportation, and Housing Secretary Sunne McPeak has been coy about which TCRP projects would get funded, saying only that it is up to the California Transportation Commission. But the CTC is made up of gubernatorial appointees, most of whom come from the construction and development industry. In its most recent report to the Legislature, the CTC identified about 40 TCRP projects ready for construction, totaling about $1 billion in TCRP funding. The two biggest projects are the Wilshire Boulevard busway in Los Angeles and a set of high-occupancy vehicle lanes in the “Orange Crush,” where the 5, 55 and 22 freeways meet in Orange County. All of the other large projects are rail or bus projects, including grade separations for Alameda Corridor East; a light-rail project in North San Diego County; and significant passenger rail improvements in Los Angeles County. Few highway projects - and few Northern California projects - are on the list. It is entirely possible, of course, that Schwarzenegger will not get what he wants on transportation. The Democratic Legislature, backed by the teachers union, might shift the money to education. Or the Democrats may stand in the way of the GoCalifornia bills, forcing Schwarzenegger to act on his threat not to restore Proposition 42. But even if everything goes his way, the Republican governor and his transportation commissioners will still be stuck funding a list of urban Democratic projects. So in this case, maybe Gray Davis will have the last laugh after all.