If any part of Los Angeles begs for redevelopment, it would be a 2,600-acre terrain in the northeast San Fernando Valley known as Sun Valley. From a satellite, the area could be easily mistaken for a moonscape, or perhaps a bombing range. The most conspicuous land forms are four enormous pits, which are gravel quarries. Two played-out pits are enjoying second careers as landfills. Nearly half of Sun Valley is devoted to heavy industry, yet the area still has a population of 45,000 people. Seventeen percent of the community lives in poverty, and the area is a local hot spot for cancer. Just to add some spice to the challenge, the area is also a regional watershed known as Tujunga Wash and needs additional flood control. If Sun Valley is an environmental Slough of Despond, the economic story in the area is slightly more cheerful. The community, together with neighboring Tujunga, is home to 10 million square feet of industrial space, with a vacancy rate of only 2% (even if that robust industrial activity includes far more waste handlers than any other neighborhood in Los Angeles). This wealth of industrial land, sullied as it is, may help keep high-paying industrial jobs in Southern California at a time when other industrial areas are being squeezed out by the condo-building craze. As a planning exercise, then, Sun Valley offers a stimulating mix of ingredients. The industrial area wants to be cleaned up and "repurposed" as light industry, such as sound stages and other entertainment-related uses. Lankershim Boulevard and San Fernando Road, the major corridors, want to be filled in with new mixed-use developments. A historic protection designation may be appropriate for Stonehurst, a neighborhood of 60 houses built of rocks salvaged from the wash. An unsightly steam plant owned by the Los Angeles Department of Water & Power needs to be hidden by landscape or otherwise screened from view. One disused gravel quarry could be reinvented as a park plus detention basin, while another could serve as an expansion of an existing spreading yard, with newly installed wetlands and layers of gravel to scrub the filthy water. And at the north edge of Sun Valley, at the foot of the San Gabriel Mountains, the plan envisions a nature trail that could be incorporated into a continuous linear park that would eventually circle the entire San Fernando Valley. This optimistic yet achievable set of goals is a simplified summation of the Sun Valley Renaissance concept plan, prepared by the Urban Design Assistance Team of the American Institute of Architects, San Fernando Valley chapter. Sponsoring the study is the Economic Alliance of the San Fernando Valley and the CivicCenter Group. This is a fine undertaking, even more so for a set of community-minded volunteers. The best part of the plan is that it is down to earth and do-able. The most challenging part, perhaps, is finding both the money and the political libido to realize a plan that seems socially, environmentally and economically desirable. Although Sun Valley officially falls within the city's Pacoima/Panorama redevelopment area, the plan was prepared independently of the Los Angeles Community Redevelopment Agency. In the implementation chapter, the study recommends that the agency coordinate with other public agencies and help create a business improvement district in the area. While many things in the world seem to worsen over time, the Sun Valley document shows how much planning has improved – even if planning in California is most often destined to remain theoretical. The concept plan shows respect for different constituencies — property owners, industrial employers, homeowners, existing service businesses, even eco-tourists. For neighborhood revitalization, the plan proposes a set of "urban villages." Please overlook that tired nomenclature and take note of the worthwhile goal: Making neighborhoods more walkable by locating retail and service businesses within short distances of residences. And rather than scraping entire streets and building the kind of humungous meta-project currently favored by the city's redevelopment agency, this concept plan proposes to repair some structures and build others where needed, including some fashionable-looking residential mixed-use projects. In short, the plan respects the street and its existing businesses, rather than sweeping all the chess pieces off the board in the name of revitalization, which is perhaps the most perverse aspect of redevelopment driven purely by revenue requirements. The challenge, here, then, would be to find developers willing to take on small projects, rather than the capital-intensive shopping centers that are somewhat easier to finance. Most difficult to achieve, if worth trying, is the idea of modernizing and prettifying the existing industrial inventory. Industrial space is the lowest-yielding type of real estate, and the prospect of slightly increased rents is rarely enough to induce owners to make major capital improvements to existing buildings. Most quixotic, alas, is the suggestion to bring in entertainment and high-tech uses. While the suggestion has a rational basis, insofar as both industries are growing and looking for affordable space in L.A., both are industries that tend to cluster in familiar locales, rather than look for cheaper space on the edge of town. Sun Valley, however, may be able to attract some import-related businesses, given that the area is immediately north of the Bob Hope Airport in Burbank. The toughest thing about any plan is implementation, which means political support and money. Politics aside, I am having a hard time seeing where the money will come from to build all these worthwhile things. My unscientific guess (and I would be delighted to be proven wrong) is that tax increment is not going to rake in the kind of bucks necessary to rebuild the local infrastructure while providing new facades to ugly industrial buildings. I also question whether Los Angeles voters would be willing to authorize the millions of dollars in revenue bonds needed to benefit Sun Valley, which is 70% Latino and has little clout with the rest of the city. Perhaps the committee that was wise and generous enough to prepare this plan can tackle the financing next. Sun Valley begs to be redeveloped, and this plan begs to be acted upon.

When voters approved the incorporation of Elk Grove in Sacramento County in early 2000, the town had a population of about 54,000. Today, Elk Grove's population is heading past 140,000, and the city is looking at a 13,900-acre area for potential expansion. In late October, the Elk Grove City Council directed its staff to move forward with a sphere of influence expansion and future master planning effort. City officials hope to annex the area within three to four years. "This process is about building the long-term vision of Elk Grove," Councilman Gary Davis said. "We have the opportunity, I believe, to grab hold of our future." Elk Grove's population has increased dramatically because of both rapid building and the city's annexation of Laguna West, a highly touted new urbanist community just east of Interstate 5. Considering this recent history and other factors, it is no surprise that Elk Grove is looking to grow into the pastures and open space that lie to the south and east of the current city limits. The city was a reluctant participant in the Sacramento Area Council of Government's regional blueprint process that sought to reign in sprawl. Voters in the 7-year-old city have consistently elected pro-development candidates, and slow-growth organizations seem to have had trouble gaining traction, despite extensive farmland conversion and increasing traffic congestion. The city currently has no sphere of influence beyond the city limits. The proposed sphere expansion "comes straight from the general plan," explained Taro Echiburu, the city's environmental planning manager. The plan identifies two areas for potential urbanization within the sphere study area. "The city's basic goal is to have a sustainable community that has a good amount of balance — housing, retail, employment, agricultural protection, open space," Echiburu said. Earlier this year, Sacramento County officials questioned Elk Grove's rush to expand. But the most recent communication between the two governments was friendly, as Elk Grove ensured the county it would be involved while the city studies where to draw lines for the sphere of influence and urban growth areas. A bigger obstacle than local politics might be environmental considerations. Elk Grove and all of the surrounding area lies within the boundaries of the South Sacramento Habitat Conservation Plan (HCP), which has been in the works for nearly a decade. Some of the most important habitat lies along the Cosumnes River corridor, a portion of which falls within the city's sphere study area. The Sacramento Valley Conservancy has identified the Cosumnes River corridor, including all of the Elk Grove side of the waterway, as an "essential countywide open space resource area." In this fashion, the corridor could provide not only habitat, but a permanent greenbelt between the cities of Elk Grove and Galt. In addition, the Elk Grove sphere of influence study area stretches right to the Cosumnes River's 100-year floodplain. Under recently signed state law, Central Valley development will need 200-year flood protection, or a plan to achieve such protection, as of 2015. Although he conceded "the HCP does not contemplate what the city wants to do," Echiburu said there is no reason the city's southward expansion has to conflict with the HCP. The city is a participant in the HCP process and has no intention of seeing development cover the entire 22-square-mile study area. "Certainly a large amount of that would be left in open space," Echiburu said. "We are looking at 7,500 acres for potential urbanization." So far, environmentalists have remained in the background. Indeed, at a recent City Council meeting, nearly all public comment came from people complaining that their land was not included in the city's sphere study area. The process approved by the City Council includes a detailed public participation plan for both determining the sphere of influence and for the subsequent master planning effort. Under the approved process, the city will not designate new land uses within the proposed sphere area. Instead, it will define a preferred sphere of influence. Once that sphere has been approved by the Sacramento County Local Agency Formation Commission (LAFCO), the city intends to undertake a two- to three-year master planning process for the area, Echiburu said. Peter Brundage, Sacramento LAFCO executive officer, noted that there would appear to be a tension between the HCP and Elk Grove's expansion designs. But Brundage declined to speculate on where things might head. "They've never talked to me and I've never seen anything from them," Brundage said. The city expects to file a sphere of influence expansion application at LAFCO within nine months, Echiburu said. Contacts: Taro Echiburu, City of Elk Grove, (916) 478-2257. Peter Brundage, Sacramento County Local Agency Formation Commission, (916) 874-6458. South Sacramento Habitat Conservation Plan: http://www.planning.saccounty.net/habitat-conservation/overview.html

Should planning departments in California force developers to steer clear of fire-prone areas? Or should building departments force developers to fireproof their neighborhoods instead? Frankly, I'm a little tired of posing this question, because it comes up every time there's a big set of fires. But when you're looking at a couple of thousand houses lost and more than a billion dollars in property damage, it's a question you have to ask. The last time this question came along was four years ago – almost to the day – in the wake of the last enormous conflagration, in which more than 20 people died and 3,600 homes were destroyed. The answer at that time pretty clearly was in favor of fireproofing neighborhoods rather than avoiding fire-prone areas. Since then, there has been little evidence that policy is changing. But the California Department of Forestry & Fire Protection (CDF) has been thinking about it. And maybe it's worth a fresh look, if local governments are willing to think about it. As usual, perverse financial incentives built into the state system make city officials less likely to think about it. "Avoidance" is one of those good planning ideas. You simply draw a line around fire-prone areas and don't allow construction inside the line. Kind of like earthquake planning. Or classic McHargian environmental planning. But in an era when California is running out of places to put people and property rights advocates have the upper hand, avoidance is not always viewed as a viable option. To be fair, there's also some evidence that better fire mitigation at the neighborhood level is working. The turning point in the avoidance v. mitigation debate came during the last devastating fires four years ago, when the Stevenson Ranch subdivision near Santa Clarita in unincorporated Los Angeles County survived a nearby fire without much trouble. A front-page story in The New York Times documented how a wide variety of mitigation practices required by Los Angeles County building inspectors created a mostly fireproof subdivision. Most of the post-mortems focused on building codes, not planning. The emphasis was on mitigation, not avoidance. The City of San Diego, which bore much of the damage during the 2003 fires, finally outlawed wood roofs. This time around, attention again quickly turned to mitigation rather than avoidance. Even as the fires were still burning, the Los Angeles Times returned to Stevenson Ranch to confirm that it still had not burned down thanks to the effective creation of defensible space . As for the use of land use planning for avoidance, most everybody was fatalistic. Referring to the San Bernardino Mountains – again in flames this time around – San Bernardino County Supervisor Patti Aguiar told the Riverside Press-Enterprise in 2004: "A moratorium probably made sense a long time ago, if you didn't want anybody up there. But now, everybody's already up there. It's pretty darn late ." CDF, however, hasn't stopped thinking about avoidance as opposed to mitigation, and with good reason. As the state fire agency, CDF has primary responsibility for fighting wildfires — especially in rural areas, but also in semi-urban areas on the perimeter of the Southern California metropolis. CDF fights wildfires not by putting them out immediately, but by containing them and allowing them to burn out. Among other things, this appears to be a more environmentally sustainable approach, given what the experts call California's "fire-driven ecology." But when structures are present, CDF must by law focus on the structures, not on the wildlife. This often requires redeploying firefighters and other resources from containing a far-reaching wildfire to protecting a small geographical area with structures in it. In the past few months, both the state fire chief and the Legislative Analyst's Office (LAO) have tried to highlight the problems that subdivisions in fire-prone areas are creating. In a report issued last March , the LAO noted that CDF's budget had increased 83% during the last decade, from $475 million to $869 million. This fiscal year's budget for CDF tops $1 billion. The LAO attributed much of the increased cost to additional development in the wildland-urban interface, which state fire officials like to call the "WUI." In recent years, the LAO noted, the State Responsibility Area – the geographical area to which CDF must by law provide wildland fire protection – has remained stagnant at about 31 million acres. But just from 2000 to 2005, the number of houses in the State Responsibility Area increased by more than 10% – from around 780,000 to around 860,000 units. Then, at the beginning of the fire season in June, CDF Director Ruben Grijalva devoted his weekly message to an unusually detailed and insightful analysis of the wildland-urban firefighting problem. Grijalva zeroed in particularly on the development question, noting the trend of equity refugees moving away from urban areas and into wildland areas. He placed particular emphasis on the issue of watershed preservation in wildland areas, saying that low-density forest subdivisions can harm watersheds that all urban Californians depend on. In general, local jurisdictions – especially counties – have not paid much attention to these concerns. That's not surprising. As with so many other land use policy issues in California, it is at least partly a question of who bears the cost – the local governments or the state. Buried deep within the rules as to what constitutes a State Responsibility Area is a density rule. In unincorporated areas with timberlands, rangelands, or watersheds, counties bear financial responsibility for firefighting if subdivisions contain more than 3 units per acre. If a subdivision contains less than 3 units per acre, then the state has financial responsibility to pay for the firefighting. In other words, if counties are inclined to permit subdivisions in fire-prone areas to begin with – and most rural counties in California are so inclined – then they have a financial incentive to lower the density so fighting wildfires is CDF's problem. The LAO report from last spring suggested that the minimum density should be changed to remove this perverse incentive. If there's one bright spot in all this, it's Riverside County. Thanks partly to new state fire hazard maps, Riverside is taking fire risk seriously, and considering the possibility of creating a fire hazard zone similar to the 100-year floodplain that would not permit development . So not everybody has given up. And that is a good thing. Because surely if there is one thing that land use planning is well-suited for, it is mapping out hazards and helping to avoid them.

The state Supreme Court has modified its most recent California Environmental Quality Act ruling, but it rejected the losing side's request for a re-hearing. In Muzzy Ranch Co. v. Solano County Airport Land Use Commission , the court ruled than adoption of an airport land use compatibility plan qualified for a "common sense" exemption from CEQA review (see CP&DR Legal Digest, July 2007 , May 2007 ). In one portion of the opinion, the court applied the "substantial evidence test" to the issue of the exemption, even though the CEQA Guidelines and prior case law indicate that the "fair argument" standard applies to non-statutory exemptions. Under this standard, a project does not qualify for a non-statutory exemption if an argument can be made that the project might have a significant effect on the environment. In its modification, the court did not specifically name the fair argument test, but the court did remove all references to the substantial evidence test for non-statutory exemptions. The modification was filed September 12, 2007, and may be found at 2007 DJDAR 14225. A divided state Supreme Court has decided not to hear a closely watched case involving CEQA and housing elements. In an unpublished opinion issued in June, the First District Court of Appeal ruled that San Francisco should have conducted an environmental impact report for a housing element update adopted in 2004. The city argued that no environmental review was necessary because the 2004 update was not substantially different from the previous housing element adopted in 1990. But the First District accepted the argument from neighborhood groups concerned about overcrowding, traffic and impacts on business that the update required study. The state Supreme Court took extra time to consider San Francisco's request for review, but only Justices Joyce Kennard and Carlos Moreno voted to hear the case — two short of the four needed to grant review. Thus, the First District ruling stands in San Franciscans for Livable Neighborhoods v. City and County of San Francisco , No. A112987.

Local zoning trumps a valid easement, the Second District Court of Appeal has ruled. In a case from Los Angeles, the court determined that one property owner's easement on his neighbor's property was valid but unenforceable because it violated the zoning. The situation is this. John Blankenship owns a half-acre lot in Sunland, a quasi-rural area off the 210 Freeway in northwest Los Angeles. He also owns an easement, acquired by a previous landowner in 1994, on three-quarters of an acre of adjacent property. The easement permits the keeping and enjoyment of horses. The new owner of the neighboring property, Henri Baccouche, filed a lawsuit seeking to extinguish the easement on the corner of his 4-acre parcel. Both lots are zoned "residential estate." Baccouche argued that, under the city's zoning ordinance, the keeping of horses is permitted only in conjunction with a residential use. Because his property is vacant, Baccouche argued, the equine easement was invalid. Los Angeles County Superior Court Judge Elizabeth Grimes ruled for Blankenship. She found the easement valid and determined that, because Blankenship's property contains his house, the easement did not violate the city's zoning ordinance. Baccouche appealed, and a unanimous three-judge panel of the Second District, Division Four, overturned the lower court in part. The Second District agreed with the lower court that the easement is valid. However, the appellate court determined that enforcement of the easement was not permitted. Both sides and the court relied heavily on Teachers Ins. & Annuity Assn. v. Furlotti , (1999) 70 Cal.App.4th 1487. Also from Los Angeles, that case involved a commercial building's easement to use an alley shared with an apartment building. The boundary between the commercial zone and the residential zone ran down the middle of the alley, and the owner of the apartment building sought to prohibit commercial use of the residential portion of the alley, which would essentially make the alley impassible for trucks. Ruling for the apartment building owner, the court cited Municipal Code § 12.21.C.5(h): "No accessory building or use shall be located on a property in a more restrictive zone than that required for the main building or main use to which it is accessory." Thus, the use of the residential portion of the alley for commercial deliveries, loading and trash collection was not permissible. "Private agreements as to the use of property are immaterial to the validity of a particular zoning ordinance," the Teachers court concluded. In the case at hand, both properties have residential estate zoning, but that zoning does not permit the keeping of horses except as part of a residential use. "To the extent the easement purports to grant Blankenship the right to keep horses on the undeveloped Baccouche lot, it is unenforceable because it would allow a use not permitted by the zoning, as in Teachers ," the court ruled. The house on Blankenship's property does not overcome the restriction. "Section 12.03 expressly requires that the accessory use be on the same lot as the residence," the court ruled. The Case: Baccouche v. Blankenship , No. B192291, 07 C.D.O.S. 11006, 2007DJDAR 14188. Filed September 11, 2007. The Lawyers: For Baccouche: David Romley, (818) 951-9469. For Blankenship: Edward Russell, (949) 622-4333.

A settlement agreement between the City of Los Angeles and an Orthodox Jewish congregation that permits operation of a synagogue in a residential district has been invalidated by the Ninth U.S. Circuit Court of Appeals. The court ruled that the settlement agreement was essentially a conditional use permit that was granted without giving affected people — namely, the neighbors — notice and an opportunity to be heard. The lack of process violated the Los Angeles Municipal Code, which a settlement agreement may not do, the court concluded. Congregation Etz Chaim's synagogue has been litigated in federal and state court for a decade. In the mid-1990s, the congregation applied for a conditional use permit to use a house on Highland Avenue in Los Angeles's Hancock Park neighborhood for worship and services. After the city denied the application, the congregation filed a federal court lawsuit alleging a violation of civil rights, and filed a separate suit in state court. The Los Angeles County Superior Court and the Second District Court of Appeal upheld the city's denial. The congregation then returned to federal court. Citing the state court rulings, a District Court judge tossed out all of the congregation's claims except those concerning the Religious Land Use and Institutionalized Persons Act (RLUIPA), which Congress had only recently passed. In September 2001, the city and the congregation settled the lawsuit. The settlement agreement authorized the congregation to use the Highland Avenue property for worship, subject to a number of restrictions. This time, the neighbors sued, arguing that the settlement agreement violated their due process rights and local zoning ordinances. A District Court judge ruled for the congregation and the city. When neighbors appealed, the Ninth Circuit sent the case back to District Court for reconsideration in light of a state appellate court ruling in Trancas Property Owners Ass'n v. City of Malibu , 138 Ca.App.4th 172 (2005). In Trancas , the court invalidated a city's settlement agreement with a developer that approved the developer's tract maps (see CP&DR Legal Digest , November 2005). The court ruled that the city had contracted away its police power, which it may not do. The court also ruled that the agreement's exemption from density limitations amounted to a variance, which may not be granted without the city following prescribed administrative proceedings and adopting findings. The District Court found that the Congregation Etz Chaim case was different from Trancas and again ruled against the neighbors, who then went back to the Ninth Circuit. This time, the appellate court said the cases were indistinguishable. "The congregation sought, and the settlement agreement granted, permission to operate a synagogue on the Highland property. In an R1 zone, congregational worship is considered a ‘conditional use' under § 12.24, and requires a permit," Judge Barry Silverman wrote for the court. "Before allowing such a use, the city was required to comply with the ordinance's procedural formalities. Because the city did not satisfy those formalities when it entered into the settlement agreement, the agreement is invalid and unenforceable under state law." The district court found the cases were different because Trancas involved tract maps that apply to property, while the settlement agreement here was between the city and the congregation. Still, the Ninth Circuit said Los Angeles had improperly bargained away its police power "so long as the congregation is in existence." The Ninth Circuit rejected the argument that the city charter permits the city to circumvent zoning procedures to settle litigation. " Trancas clearly holds that such exemptions are illegal," Silverman wrote. The District Court also had upheld the settlement agreement because the city's rejection of the congregation's plan might have violated RLUIPA. That was not good enough for the Ninth Circuit. A federal court can uphold a settlement agreement authorizing a state or municipality to disregard its own laws only if the court finds "there has been or will be an actual violation of federal laws." But in the settlement agreement, the city specifically disclaimed any admission of liability under RLUIPA. The decision puts the congregation's record in the Ninth Circuit at 1-1. Three years ago, the court ruled that the city could not revoke a building permit that was based on the settlement agreement, even though the congregation did not process its building plans as required by the settlement ( Congregation Etz Chaim v. City of Los Angeles , 371 F.3d 1122 (2004) (see CP&DR Legal Digest , July 2004). The Case: The League of Residential Neighborhood Advocates v. City of Los Angeles , No. 06-56211, 07 C.D.O.S. 9816. Filed August 21, 2007. The Lawyers: For the league: Leslie Werlin, McGuire Woods, (310) 315-8200. For the city: Tayo Popoola, city attorney's office, (213) 978-8068. For Congregation Etz Chaim: Susan Azad, Latham & Watkins, (213) 485-1234.

A state law that permits landlords to go out of the rental business does not trump the California Environmental Quality Act, the Second District Court of Appeal has ruled. The court said that a Los Angeles County property owner cannot use the Ellis Act to avoid mitigation measures imposed on a plan to demolish apartment buildings and replace them with condominiums and new apartments. The ruling came in the long-running battle to preserve the Lincoln Place apartments in Los Angeles's Venice district (see CP&DR Places , February 2007) and appears to be a significant victory for the few remaining Lincoln Place tenants, as well as hundreds of tenants who were evicted or relocated in less-than-voluntary fashion. The court suggested that the property owner, Apartment Investment and Management Company (AIMCO), was playing a game to avoid the obligations that the city imposed while approving AIMCO's project at Lincoln Place. Those obligations are contained in the city's conditions of approval for AIMCO's vesting tentative tract (VTT) map. "We reject any argument that because AIMCO complied with the RSO's Ellis Act provisions and relocation benefits, it may go out of the rental business without reference to conditions 5b and 13 of the VTT. AIMCO specifically agreed to additional conditions in the VTT to mitigate the demolition of a very large apartment complex that has been part of the community for many years, the removal of more than 700 rent-controlled units from the marketplace, and the displacement of those tenants, in order to get permission to redevelop the land. It may not now act as if those events never occurred," Justice Laurie Zelon wrote for the court. The Lincoln Place project has an extremely long administrative, political and legal history. Lincoln Place was designed by noted architect Ralph Vaughn and built during the late 1940s and early 1950s. The 52 minimalist buildings spread across 38 acres contained 795 apartments and were connected by extensive walkways and landscaping. In 1991, Denver-based AIMCO and a local developer (who is no longer involved) proposed demolishing the buildings and replacing them with 654 market-rate condominiums, 52 moderate-income townhouses and 144 low-income apartments. The city refused to approve the project and ultimately a court found that the city's regulations were a violation of the Ellis Act ( Los Angeles Lincoln Place Investors, Ltd. v. City of Los Angeles , (1997) 54 Cal.App.4th 53 ( Lincoln Place I ); see CP&DR Legal Digest , May 1997). Partly because of Lincoln Place I , the Legislature amended the Ellis Act — a 1980s statute that ensures property owners may remove a property from the rental market — to make clear that local governments do have authority to regulate the demolition of rental properties. In 2002, the city certified an environmental impact report and approved a vesting tentative tract map. Soon thereafter, the city approved demolition permits. Tenants and historic preservation advocates sued, and a court in 2005 ruled that the city had violated CEQA by not enforcing mitigation measures before approving the demolition ( Lincoln Place Tenants Assn. v. City of Los Angeles , 130 Cal.App.4th 1491 ( Lincoln Place II ); see CP&DR Legal Digest , September 2005). Although Lincoln Place II stalled the demolition of Lincoln Place apartments, AIMCO was already well into an aggressive tenant removal program. Starting in 2004, the majority of the remaining 350 households renting apartments in Lincoln Place signed "voluntary relocation agreements." However, others refused to go, and AIMCO began serving tenants with eviction and "Ellis" notices in early 2005. In July of that year, AIMCO took nearly 100 tenants to court to force their removal. In December of 2005, AIMCO attempted to lockout the remaining tenants of 52 apartments, an incident that led to an ugly and well-publicized confrontation between tenants and sheriff's deputies. By the time the tenants association filed the present suit in June 2006, only 13 apartments remained occupied, although former tenants continue to be keenly involved in the controversy. The tenants association argued that AIMCO had not complied with two mitigation measures and a relocation plan approved as part of the subdivision map. The mitigations and relocation plan were intended to ensure that current tenants could relocate to a comparable or better unit within the new project, receive maximum relocation assistance under the city's rent stabilization ordinance, or accept one of the new affordable units with moving costs paid. Los Angeles County Superior Court Judge David Yaffe ruled against the tenants, but a three-judge panel of the Second Division, Division Seven, overturned the lower court. AIMCO argued that the mitigation measures conflicted with its Ellis Act rights and that the conditions did not apply because AIMCO never recorded the vesting tentative tract map. The court dismissed those contentions without addressing whether AIMCO — which owns more apartments than any other entity in the country — is truly going out of the rental business at Lincoln Place. The court found that the mitigation measures are within the Ellis Act's exceptions for local land use controls, that AIMCO agreed to the mitigations during the administrative process, and that AIMCO could not pretend evictions were not part of the overall project. "Throughout the approval process, tenants were told they could choose to remain on site; this promise is memorialized in conditions 5b and 13. Eviction is inconsistent with these provisions," Justice Zelon wrote. "Furthermore, prior to commencing the evictions, AIMCO did not advise the city or the tenants that it intended to abandon the project; on the contrary, as its arguments concede, the evictions are a prelude to proceeding with the project." " he mitigation conditions and other conditions in the VTT constitute enforceable covenants under CEQA, to be fulfilled before the final map may be recorded," Zelon wrote. "AIMCO cannot attempt to defeat the conditions it imposed upon itself in order to obtain approval of the VTT by ignoring such conditions or attempting to render them meaningless by moving ahead with the project in spite of them. Such conduct amounts to ‘piecemealing,' a practice CEQA forbids." In early October, the Los Angeles City Council voted not to appeal the ruling to the state Supreme Court. AIMCO could still file an appeal. In the meantime, the California Building Industry Association has asked the state high court to depublish the decision so that it may not be cited as precedent. The Case: Lincoln Place Tenants Association v. City of Los Angeles , No. B193235, 07 C.D.O.S. 11365, 2007 DJDAR 14722. Filed September 19, 2007. Modified October 10, 2007 at 2007 DJDAR 15586. The Lawyers: For the tenants association: John Murdock, (310) 450-1859. For the city: Gerald Sato, city attorney's office, (213) For AIMCO: Mark Schaeffer, Nemecek & Cole, (818) 788-9500.

A San Diego merchant who has become one of the state's leading fighters against eminent domain has not only lost his appeal of a trial court decision upholding the taking of his shop, but he has also lost a $9 million award of compensation and attorneys' fees. The Fourth District Court of Appeal ruled that Ahmad Mesdaq could no longer challenge the taking itself because he had withdrawn money that the San Diego Redevelopment Agency deposited into an account to compensate him. The unanimous three-judge appellate panel also determined that San Diego County Superior Court Judge John Meyer made numerous mistakes during the valuation phases of the litigation. The Fourth District sent the case back to the lower court for a new trial on how much the redevelopment agency owes Mesdaq. In mid-October, Mesdaq asked the state Supreme Court to review the case. In the meantime, a settlement that Mesdaq reached earlier this year with the developer who has since acquired the site of his former cigar shop appears to be in doubt. The story is one that, not surprisingly, has served as the basis for a documentary film. In 1983, Mesdaq received political asylum in the United States after the Soviets destroyed his home in Afghanistan. He attended college in San Diego and later owned several restaurants in the city's rebounding Gaslamp Quarter. In 2001, he acquired a building at Fifth Avenue and J Street for $1.3 million, and then went about overhauling the structure. In 2003, he opened Gran Havana, a cigar lounge and coffee shop that soon counted Gov. Arnold Schwarzenegger as one of its customers. But the city's downtown redevelopment arm (Centre City Development Corp.) and developer GRH, LLC, had other ideas for the prime location close to the San Diego Padres new baseball stadium and the convention center. GRH acquired 35,000 square feet of land but still needed Mesdaq's 5,000-square-foot parcel to make room for a proposed 12-story, high-end hotel. GRH made offers to Mesdaq, but he declined them. So, in April 2004, the San Diego Redevelopment Agency filed a complaint in eminent domain to acquire Mesdaq's property. The agency sought a "quick take," so it also deposited $3.1 million as probable compensation and asked for immediate possession. Mesdaq held on for a while but ultimately closed Gran Havana in 2005, and the redevelopment agency took possession of the property. Three separate trials were conducted: a bench trial to determine whether the taking was for a public use, a second bench trial regarding Mesdaq's request for pre-condemnation damages, and a jury trial to determine just compensation. Judge Meyer ruled that the taking was legitimate, but that a cleanup order the redevelopment agency had issued was unreasonable and the jury could consider granting damages for it. Later, a jury awarded Mesdaq $7.8 million — $4.2 million as fair market value for the property, $3.4 million for lost goodwill, $96,000 for lost furniture and equipment, and $78,000 for pre-condemnation damages. Meyer also awarded Mesdaq $1.2 million in attorneys' fees and costs. Both sides appealed. Mesdaq challenged the trial court ruling that the agency had the legal authority to take his property, while the agency challenged the awards. The Fourth District did not reach the merits of Mesdaq's appeal. The court noted that in August 2005, seven months after the court ruled the redevelopment agency could take the property, Mesdaq's lender, First National Bank, filed an application to withdraw nearly $1.2 million from the $3.1 million the agency had put on deposit. Mesdaq did not object and First National removed the funds to pay off the merchant's outstanding mortgage plus interest. The withdrawal of funds ended Mesdaq's ability to challenge the taking under Code of Civil Procedure § 1255.260, according to the Fourth District. The court cited the state Supreme Court's recent decision in Mt. San Jacinto Community College Dist. v. Superior Court , (2007) 40 Cal.4th 648, 666: "‘An owner cannot have it both ways. It is reasonable to require the owner to choose one or the other: either to deny the condemner's right to take the property and litigate, or to take the deposit.'" Mesdaq argued that he could continue to challenge the taking because he did not receive the funds, the bank did. But the court found no legal distinction. "The money withdrawn was used to satisfy Mesdaq's indebtedness ," Justice Joan Irion wrote for the court. "Further, the payment of Mesdaq's indebtedness with the deposit funds was accomplished with Mesdaq's explicit consent." On the redevelopment agency's appeal, the Fourth District reversed the lower court on the setting of the date of valuation, the determination of lost goodwill, legal fees and pre-condemnation damages. Again, the court leaned heavily on Mt. San Jacinto , which upheld the constitutionality of the state's "quick-take" procedure (see CP&DR Legal Digest , Aril 2007). In a standard eminent domain proceeding, the property may be valued either at the time the proceeding commences or at the start of the trial. But in a quick-take, "the land is to be valued as of the date of the deposit of estimated value which permits an order for early possession," Irion explained, citing Code of Civil Procedure § 1263.110. Judge Meyer implicitly found the $3.1 million deposit was adequate, but immediately prior to trial determined that the date of the trial would be the date of valuation. He reasoned that just compensation required the jury to consider the Gaslamp Quarter's rising property values. That was an error, the Fourth District ruled. Irion again cited Mt. San Jacinto : "‘In a quick-take proceeding, the constitutional requirement that an owner receive "just compensation" does not support a court's decision to disregard the statutory mandate because, under the constitution itself, "just compensation" is made available to the owner at the time of the deposit.'" Because Meyer insisted on the wrong date of valuation, the jury's award of $4.2 million must be set aside, the court ruled. To determine compensation for lost goodwill, Meyer permitted the jury to consider testimony from Mesdaq's expert regarding potential revenues from a restaurant on the site. However, Mesdaq did not have a restaurant or a liquor license. " he goodwill statute does not contemplate compensation for hypothetical or potential as opposed to actual goodwill lost," the court ruled in throwing out the jury's award of $3.4 million. Because the decision on attorneys' fees was based on awards that the court overturned, the trial judge ruling's on fees also was set aside. As to pre-condemnation damages, Meyer had ruled the agency's issuance of a "Polanco notice," two months before it filed the eminent domain action was unreasonable and Mesdaq was eligible for damages. A Polanco notice informs a property owner in a redevelopment project area that the agency suspects the property is emitting hazardous substances, and the notice gives the owner 60 days to respond with a remedial action plan. The trial court determined the agency issued this notice as a negotiating tactic to lower the value of the property and, therefore, Mesdaq was eligible for pre-condemnation damages. But the Fourth District said that a property owner is eligible for pre-condemnation damages only if the government's unreasonable action actually reduces the property value. "Here," Irion wrote, "there is no evidence that the agency's unsuccessful use of the notice as a negotiation tool diminished the fair market value of Mesdaq's property." What happens next with Mesdaq — and the site — is unclear. Although the redevelopment agency cleared the site two years ago and sold it to GRH, it remains a parking lot. The developer's original deadline to commence construction on the planned 334-room hotel was the first of this year. GRH reportedly offered, and Mesdaq accepted, $7.8 million to end all litigation earlier this year. However, the redevelopment agency has not approved the settlement, which may be further threatened by Mesdaq's appeal to the state Supreme Court. Mesdaq has continued to fight against the use of eminent domain for economic development purposes. He has appeared at numerous legislative hearings and is likely to be a player in the 2008 campaigns regarding eminent domain reform. The Case: Redevelopment Agency of the City of San Diego v. Mesdaq , No. D047927, 07 C.D.O.S. 10582. Filed August 31, 2007. The Lawyers: For San Diego: Bruce Beach, Best, Best & Krieger, (619) 525-1300. For Mesdaq: Vincent Bartolotta Jr., Thorsnes, Bartolotta & McGuire, (619) 236-9363.

The Ninth U.S. Circuit Court of Appeals has dismissed a mobile home park owner's attempt to invalidate San Luis Obispo County's mobile home rent control ordinance. The court ruled that Manufactured Home Communities' facial challenge of the ordinance was filed too late, the company's arguments over how the county applied the ordinance were not ready for judicial review, and the company's due process and equal protection claims were without merit. The court also declined to review the county's administrative process for considering the property owners' rent increase, because a state court has upheld the process. Manufactured Home Communities (MHC) has fought mobile home rent control ordinances in a number of cities. Now known as Equity Lifestyle Properties, the Chicago-based company owns more than 300 mobile home parks and recreational vehicle resorts in 30 states. It acquired Sea Oaks Manufactured Home Community in Los Osos in 1997 — 13 years after county voters approved a mobile home rent control initiative. The initiative capped annual rent increases at 60% of CPI and established the county Mobilehome Rent Review Board. In March 2002, MHC notified tenants in 9 of the 126 spaces that their rents would increase by an average of 185%. MHC said that the tenants had signed a standard-form 12-month rental agreement, and any lease or contract other than month-to-month was exempt from the rent control ordinance. The rent review board conducted three hearings and ultimately concluded that the agreements were month-to-month contracts no different than previous contracts that prior and current park managers had considered subject to the ordinance. On appeal, the Board of Supervisors upheld the rent review board's decision. In January 2003, MHC sued the county in federal court, arguing that its property had been taken without compensation and that the county had violated its constitutional rights to due process and equal protection. In a two-sentence order, District Court Judge Terry Hatter dismissed all of MHC's claims. MHC filed a similar suit in state court, and a San Luis Obispo County Superior Court judge also ruled against the company. An appeal of that decision is pending. The Ninth Circuit opinion written by Judge Diarmuid O'Scannlain methodically makes its way through MHC's claims. The property owner's takings claims took two forms: a facial challenge of the ordinance itself, and an "as applied" challenge. The court declined to consider the facial challenge because it was filed after the statute of limitations ended. MHC, which acquired Sea Oaks 13 years after the rent control ordinance was approved, argued Palazzolo v. Rhode Island , 533 U.S. 606 (see CP&DR Legal Digest , August 2001), eliminated the statute of limitations for facial challenges. The unanimous three-judge Ninth Circuit panel disagreed. "We read Palazzolo to require equitable tolling to protect subsequent landowners who do not receive notice of a regulatory taking or who lack standing to object to such taking prior to expiration of the limitations period," O'Scannlain wrote. "For such subsequent landowners, the limitations period must begin at the time of their acquisition of property, not at the time the original taking occurred. Thus, under Palazzolo , MHC had one year to file its facial takings claim after it acquired the property in 1997. Because MHC filed its claim in 2003, it exceeded the statute of limitations by five years." On the as-applied challenge, the court determined MHC's claim was not ripe for judicial review. To pursue such a claim, a landowner must attempt to obtain compensation through the state's procedure. In California, a landlord may seek a " Kavanau adjustment," under which future rents increase to compensate for previous confiscatory rents (see CP&DR Legal Digest , February 2004). MHC never sought a Kavanau adjustment. "Unless a complainant has sought relief through a Kavanau adjustment, he cannot file a federal complaint objecting to an uncompensated taking by the state," O'Scannlain wrote. The court dismissed MHC's arguments about why the Kavanau process would be futile and could not provide adequate compensation. MHC argued that its due process rights were violated because the county's application of the rent control ordinance violated substantive due process. MHC contended the ordinance transferred the value of MHC's property to a select group of tenants, and this transfer of value is not a legitimate state purpose. This argument was a nonstarter with the Ninth Circuit. "The Supreme Court and this court have upheld rent control laws as rationally related to a legitimate public purpose ," O'Scannlain wrote. MHC also got nowhere with its argument that the rent control ordinance unlawfully discriminated against mobile home park owners, thereby violating their right to equal protection. The court ruled the county could legitimately single out mobile home park owners because of the shortage of spaces and the impracticality of moving a mobile home. As for the county's administrative process, the court declined to consider the matter because the Superior Court had already issued a decision. The Case: Equity Lifestyle Properties, Inc. v. County of San Luis Obispo , No. 05-55406, 07 C.D.O.S. 11119. Filed September 17, 2007. The Lawyers; For Equity Lifestyle Properties (MHC): David J. Bradford, Jenner & Block, (312) 923-2975. For the county: Henry Heater, Endeman, Lincoln, Turek & Heater, (619) 544-0123.

In the face of never-ending demand for housing and concerns about eroding the job base, some cities are imposing regulations to protect their industrial lands. The three largest cities in the Bay Area have all taken steps to prevent their industrial lands from getting consumed by uses that do not generate jobs. But the issue of industrial land preservation is not confined to the Bay Area. "It seems to be a big topic all around the state," observed Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation (LAEDC). Public officials in Los Angeles, Orange and San Diego counties have all wrestled with the issue, although none has achieved great success, Kyser said. Los Angeles city planners, for example, put forth some policy recommendations "but they ran into a buzz saw of opposition from residential developers." The cooling of the housing market, however, appears to have given planners and elected officials a chance to discuss the issue of conversion in a less charged atmosphere. "When the housing boom was going on there was a great deal of pressure to use that industrial land for housing," said Oakland City Councilwoman Nancy Nadel. But the market downturn "has taken a little bit of whip out of the chariot." What makes the subject challenging in many cities and counties is the fact that not all industrial land is equal, and neither are all conversions. A further complication is that many people incorrectly assume industrial property is unnecessary in today's economy, said Kyser. For the most part, smokestack industry is gone. But that does not mean there is no need for industrial property. Kyser said Southern California's industrial properties are filled by technology manufacturing and research companies, light industrial companies that perform very specialized manufacturing, logistics companies, printing and communications businesses, and various parts of the television, movie and entertainment industries. Those are the sort of businesses that Oakland would like to see. Much of Oakland's industrial land lies on the west side, near the waterfront. During the recent housing boom, developers took a run at relatively inexpensive industrial land in West Oakland. Among the proposals (which appears to have stalled) was a project with three 30-story towers featuring industrial uses on the bottom floors, with residential condominiums above. Although some people have been happy to see fresh investment in a rough part of town, others worried about loss of jobs and gentrification. "The whole concept of smart growth is to have a jobs-housing balance, not to have all housing," said Nadel, who represents West Oakland. Several years ago, the city adopted the West Oakland plan as part of a new general plan, which for the first time specifically segregated heavy industry from residential uses, Nadel explained. But implementation of the West Oakland plan was not a priority then-Mayor Jerry Brown, who actively promoted industrial land conversions. Under Mayor Ron Dellums, the city is proceeding with adopting zoning consistent with the West Oakland plan, said Nadel, who is trying to push along the process. "The idea of housing above industry is just as ludicrous as having condos next to industry," she said. San Jose is the most recent big city to take action. In late October, the City Council unanimously approved a "framework for preservation of employment lands." San Jose officials have long complained that the city provides the housing for Silicon Valley without getting its fair share of the tech sector's economic benefits. Still, the city has routinely approved the use of employment lands for housing development. From 1990 through 2000, the city approved conversion of about 68 acres a year, and from 2001 through 2006, the city backed conversion of about 120 acres annually, according to the planning department. The City Council in 2004 approved a framework for evaluating proposed conversions. Since then, the council has approved every major conversion proposal except one. At the behest of Mayor Chuck Reed, who took office in January, planners drafted a new framework. It "focuses on strategies for preserving employment lands instead of identifying criteria or sub-areas where conversion can be facilitated," according to a staff report for the October 23 City Council meeting. "Production is increasing again as part of the new industrial economy focuses on clean technology, and the city needs to maintain an adequate inventory of light and heavy industrial lands to accommodate these demands." In general, economic development proponents back the new framework, while housing advocates are leery. "We're all trying to figure out what the implications of it are," said Shiloh Ballard, director of housing and community development for the Silicon Valley Leadership Group, a business organization and frequent housing proponent. If the framework ends up blocking housing development near transit stations, for example, it could be a problem, she said. "Mainly, we look at it through the lens of compatibility," Ballard said "If you're going to put a use next to an existing business that could threaten the existing business, you need to take a careful look at that. It doesn't mean our organization is against conversion. But we want to make sure those new residents don't become NIMBYs that complain about the existing business." This was exactly the issue in nearby Milpitas, where the City Council in October approved Fairfield Residential's plan for 659 apartments and townhouses on 20 acres of vacant industrial land within the Milpitas Technology Center. Business representatives and the city planning staff decried the land use conflicts and lost economic development potential. But the council majority backed the project as smart growth, saying it would put housing within walking distance of jobs, retail shops and transit. Greenbelt Alliance endorsed the project as responsible infill. In San Francisco, the city essentially halted residential development on 2,200 acres in a mostly industrial area south of Market Street where conversions were going strong. City planners recently released an Eastern Neighborhoods plan that proposes prohibiting new housing in areas designated for production, distribution and repair, and charging residential developers up to $4 for each square foot of industrial space converted to residential use. None of these issues are new to the City of Berkeley, which has struggled with them for two decades, said Daniel Marks, the city's community development director. A number of years ago, the city adopted a plan for industrial-oriented West Berkeley to preserve industrial properties and jobs. The plan does this with "pretty Draconian" zoning that makes shifting uses away from industry very difficult, Marks said. The pressure in West Berkeley is not necessarily from housing, but from commercial uses. "Still, the marketplace will have its way. There is a lot of vacancy down there now," said Marks, who noted that Peerless Lighting and Flint Ink have left town in recent years. Several "green" businesses have moved into the area, as have a large number of arts and crafts uses. All of that is popular in Berkeley, Marks noted. Now the city is revising the West Berkeley plan both to provide for a bit more flexibility, and to address the fact that zoning has constrained land values in the area. For example, the city might permit a new use if a landowner were to dedicate some permanent space for artists. "How do you capture some of that windfall from a change in zoning for public purposes?" Marks asked rhetorically. "That's what transfers of development rights and planned developments are all about." The long-term trend is difficult to predict. While numerous infill developers continue to pursue entitlements, the LAEDC's Kyser questions the overall demand, especially in Southern California cities that got swept up in condo-mania. "What we have seen is a lot of residential developers rushing in to convert these industrial places to lofts or condos," Kyser said. "But I think these people got caught in the sucker trap. When it came to the actual market, they had problems. The next couple of years are going to be just as interesting for these folks as it is for everyone in the housing industry." Contacts: Oakland Councilwoman Nancy Nadel, (510) 238-7003. Jack Kyser, Los Angeles County Economic Development Corporation, (213) 236-4820. Daniel Marks, City of Berkeley, (510) 981-7400. Shiloh Ballard, Silicon Valley Leadership Group, (408) 501-7859. City of San Jose "Framework": http://www.sanjoseca.gov/clerk/Agenda/102307/102307_04.05.pdf

Spurred by a land use plan intended to remove Pacific Lumber Company from bankruptcy, the Humboldt County Board of Supervisors is moving toward adopting policies that would limit residential development on land zoned for timber production. In early October, the Board of Supervisors adopted a 45-day moratorium on residential construction on lands designated timber production zone (TPZ). Two weeks later, the board directed the county Planning Commission to consider drafting an ordinance that would require a conditional use permit for a house on TPZ land. The board also directed the Planning Commission to consider, during the general plan update process, establishing separate TPZ categories for industrial and non-industrial timberlands. The board's actions have sparked a political firestorm in a county where land use compromises are elusive. Owners of TPZ land say the county is taking away a property right they have enjoyed for years and harming the very timber industry the county says it wants to protect. Environmentalists and slow-growth advocates, however, say the county is taking proper steps to ensure the heavily forested hillsides do not get carved up into large-lot housing developments. At the center of the controversy is Pacific Lumber Company (Palco). In 1986, Texas junk bond financier Charles Hurwitz's holding company, Maxxam Inc., acquired Palco, a pillar of the Humboldt County business community known for its responsible forestry practices. Under Maxxam, Palco rapidly increased timber harvesting and, in 1998, essentially forced the State of California to buy the 7,500-acre Headwaters Forest of old growth redwoods for $480 million. The Headwaters deal also placed much of Palco's 220,000 acres into a habitat conservation plan. The company has chafed at the HCP restrictions ever since and early this year declared bankruptcy, blaming the environmental regulations. In early October, Palco presented to a federal bankruptcy court in Corpus Christi, Texas, a plan for getting out of debt: It would sell 21,800 acres of TPZ lands east of Fortuna as 160-acre "kingdoms" for a high-end residential development called Redwood Ranch. Pacific Lumber said it could get $5 million apiece for the parcels. Palco's plan also calls for selling 6,600 acres of old growth forest to conservation groups or public entities for $400 million. The company's creditors have questioned the plan, especially the property values put forth by Palco. On October 23, U.S. Bankruptcy Court Judge Richard Schmidt ordered the company and its creditors to submit to mediation and return within 30 days. Only days after the Palco bankruptcy plan became public, the Board of Supervisors voted 4-1 for an urgency ordinance imposing the 45-day moratorium, which could be extended for a total of two years. Supervisors, who have been in conflicts with Palco almost continuously since the Maxxam takeover, said they had to take action to preserve the status quo and let the bankruptcy court know how dicey the Redwood Ranch plan is. The move infuriated Palco. "There is no urgency or emergency, for no project, plan or proposal to erect or construct any building or to process any building permit for TPZ zoned lands exists by or on behalf of Palco, and no such plan or project will be undertaken for many years after Palco's emergence from Chapter 11 reorganization, currently projected for 2008," wrote Frank Bacik, the company's vice president and general counsel. Because the county has permitted construction of one house on a TPZ parcel by right, other owners of TPZ land joined the opposition. "It's taking a very basic property right, which is the right to build a house on your property," said Steve Horner, general manager of Barnum Timber, which owns about 36,000 mostly TPZ acres. The market for Douglas Fir is poor, Horner explained. So, like other timber companies, Barnum sells off parcels for development to cover costs until timber harvesting is profitable again. But if the county prevents the construction of a house on those parcels, Horner said, "We're beginning to wonder whether anybody would pay anything to own these parcels." Horner and other landowners argue that the county is using the Pacific Lumber bankruptcy plan to shut down development. "They are using that bogeyman to restrict all the development on these rural lands," said Horner, who would like to negotiate a compromise. "We all have the same goal. No one says they want to cut down the forest and pave over the hillsides." Humboldt County Supervisor Jill Geist said housing construction on timberlands has been a matter of concern since the county started updating its general plan seven years ago. "All the action did was place a spotlight in this chasm we already knew existed," Geist said. Sharon Duggan, co-author of Guide to Forest Practice Act and Related Laws and an attorney who has battled Palco, defended the Board of Supervisors. "If they are allowed to do a conversion of 21,000 acres, it will open the floodgates," said Duggan, who represents a creditors committee in the bankruptcy proceeding. "We have the conversion train moving north from Sonoma County to Mendocino County to Humboldt County. This is a way for them to try to make some money." The TPZ works for timberlands the way the Williamson Act does for farmland. In exchange for managing the timber resource, property owners in the TPZ receive property tax breaks. And, because they pay a yield tax only when they actually harvest trees, landowners who never log their land can keep taxes artificially low apparently forever. This tax policy is extremely beneficial to people who want to build a house in the woods, but it does not necessarily preserve the resource, said Bill Sise, a professor of forest management at Humboldt State University. Sise is skeptical of Palco's bankruptcy plan and of landowners protesting the emerging county policy. "There are a bunch of realtors who think they are going to make a whole lot of money by selling houses on 160-acre ‘kingdoms,'" Sise said. "Nobody is stupid enough to pay $5 million for 160 acres of second-growth timber with a road going through it that's going to carry logging trucks forever." Instead of adopting new land use regulations, Sise recommends the county change its tax policy. If Pacific Lumber says its land is worth $60,000 an acre, and if second growth timber is worth about half that amount, then the county should levy an ad valorem tax on the difference. That approach would change the business plans of many companies, Sise said. Geist conceded the current tax policy is a "failure." That is why she has recommended breaking the TPZ parcels into industrial and non-industrial categories. The latter would most likely contain smaller parcels with a house, and would not receive the same tax benefits as a lot that contains only production timber. Humboldt County Community Development Director Kirk Girard noted that under state TPZ law, timber is supposed to be the primary use, while a residential use must remain secondary. If residential becomes the primary use, there could be tax implications, he said. "I think we're begging this question for other counties," Girard said. For now, the county appears headed toward new land use regulation. In the meantime, it could learn the fate of Palco's Redwood Ranch plan in bankruptcy court by the end of November. Contacts: Humboldt County Supervisor Jill Geist, (707) 476-2395. Steve Horner, general manager Barnum Timber, (707) 442-1761. Sharon Duggan, attorney for Pacific Lumber creditors, (510) 271-0825. Bill Sise, Humboldt State University Department of Forestry and Watershed Management, (707) 826-3925. Bankruptcy case: In re: Scotia Development LLC , No. 07-20027.

In Manteca — which has been in the news recently because of a huge number of foreclosures and an auction by one major homebuilder — developers will now have two additional years to complete their projects. The Manteca City Council voted 3-2 to give builders five years to complete their projects and pay negotiated development agreement fees. According to one homebuilding industry representative, foreclosures and slow sales have resulted in more than 1,000 empty houses in the city of 65,000 people. Builders said the time extension on permits and fee deadlines will ensure that builders do not add to the inventory glut. Another climate change suit has been filed by the Center for Biological Diversity (CBD). The environmental organization sued the City of Perris in Riverside County Superior Court, arguing that an environmental impact report for a 520,000-square-foot commercial project anchored by a Wal-Mart supercenter did not address the project's impact on global warming. Although Attorney General Jerry Brown has settled two California Environmental Quality Act lawsuits over global warming impacts, the CBD has vowed to press forward in the courtroom. The group is also suing over the San Bernardino County general plan and a housing development in Banning. Lassen County has approved what would be by-far the largest development in the county's history. The Dyer Mountain project is envisioned to contain up to 4,000 housing units, a ski resort, 600,000 square-feet of commercial space and three golf courses on 7,000 acres in the far northern Sierra Nevada Mountains, near the small town of Westwood. County voters cleared the way for the project in 2000 when they approved a general plan amendment and rezoning of the land. The Sierra Club and other environmental organizations have sued to halt the project. The California Partnership for the San Joaquin Valley has released the first of what it says will be regular annual reports on the state of the valley. The report makes clear that the valley faces a number of economic, education, transportation and public health challenges, but it steers clear of both dire predictions and bold policy pronouncements. Instead, the report discusses the activities of the partnership — which was created by the governor in 2005 (see CP&DR , February 2006) — and the ongoing activities of 10 working groups. Released during a partnership summit in Visalia, the report can be found at http://www.sjvpartnership.org/