San Francisco and the Bay Area residents have waited many years for a new transbay terminal in downtown San Francisco, and they have approved taxes to fund the long-planned project. However, the proposed multi-modal transit station could get waylaid by cost concerns, competing interests and even a giant condominium tower being built where a rail line is planned. Prospects for the project — estimated to cost about $2 billion to build, and $4 billion in total when financing costs are included — improved in June when the San Francisco Board of Supervisors unanimously approved an environmental impact report. But a 51-story condominium project being built in the path of a rail line into the terminal has led to a lawsuit and increased expenses. The current transbay terminal building, 55 years old and decaying, stands out in the gentrifying Mission Street corridor in San Francisco. Surrounded by high rises, the building serves as a terminus for a number of bus lines throughout the region. When the Bay Bridge opened in the 1930s, the terminal was also used by trains crossing the bridge. Today, the transbay terminal is better known as a gathering place for homeless people, and has no connections to the major train lines in the region. Amtrak lets off its passengers across the bay in Emeryville. The new transbay terminal is supposed to tie Bay Area transit threads together. Caltrain riders from the South Bay would arrive by a new underground line at the terminal, and could quickly connect to BART and Muni trains via a block-long automated walkway. In addition, a proposed bullet train connection would whisk passengers to Los Angeles in 2.5 hours. The estimated cost of the terminal is $1 billion, with the 1.3-mile underground train extension costing $977 million more. Plans for the building include a 600,000-square-foot building of six stories. It would serve buses from transit districts in San Francisco, Marin, Sonoma, Alameda, Contra Costa and San Mateo counties, along with Greyhound. Six train tracks will be built on the bottom floor. Redevelopment of the surrounding neighborhood would also increase, with the addition of 3,200 housing units, retail stores, offices and a hotel. The transbay project is being overseen by the Transbay Joint Powers Authority (TJPA), whose members are the major project stakeholders — San Francisco, the Alameda Contra Costa Transit District, and the Peninsula Joint Powers Board, which runs Caltrain. Of immediate concern is resolving a dispute with developer Jack Myers, who is pursuing plans for a 432-unit condominium project adjacent to the terminal site. Construction on the Myers property began in May. Only days before the terminal's EIR was approved, San Francisco planners slapped a stop work order on Myers' project, claiming that the building permit was not valid. The property has had building permits since 1991, but previous owners were unable to build, according to Adam Alberti, a spokesman for the JPA. Myers took control of the parcel last year. Alberti said that the landowners were informed of the situation as the EIR was underway, and the parcel was identified in the EIR as one of 23 properties necessary for the rail line project. But Myers is not backing away from the condominium project. "We're going to get the building permits back and we're going to construct the project," said Tim Tosta, an attorney for Myers Development. "They were fully vested and the building was under construction." Several scenarios have been considered for resolving the impasse: The Board of Supervisors could reroute a train tunnel around the property; Myers could agree to a buyout of the land or a land swap; or the TJPA could acquire the property through eminent domain. A decision appeared to be close in late July. Funding for the transbay terminal comes from more than a dozen sources, including a $1 bridge toll increase that Bay Area voters approved in March, sales tax revenue from San Francisco, and a future ticket charge on transbay commuters. Caltrans is turning over $290 million worth of land in the area that will be sold to finance the project. All but $182 million of the needed funding has been identified. However, $475 million for the train extension depends on whether state voters approve a bond measure to build the proposed high-speed rail system. Originally slated to appear on this November's ballot, the bond measure has been delayed until 2006 or 2008. If the high-speed rail is not funded, the Caltrain extension may not get built. Alberti, TJPA spokesman, said the train tracks can be added later if the funding is not available when construction begins. Current plans are for the project to begin in 2005, with completion by 2012. The approval of the EIR capped a 30-year planning effort to rebuild the terminal. Past San Francisco mayors have been less than enthusiastic about the project. As expected, though, opponents filed lawsuits challenging the EIR in mid-July. Myers filed one of the lawsuits, arguing that the study did not account for his planned residential tower. A group of architects, engineers, business owners and property owners who favor an alternate transbay terminal one block from the current site filed the other lawsuit. The competing proposal backed by the EIR litigants could be built $1 billion to $1.5 billion cheaper than the project that has been approved, according to Jon Kaufman, executive vice president at Solem and Associates, a public affairs firm in San Francisco. The lower cost is because most of the land for the alternate project is currently used for parking lots, and because the project would use a different alignment for an underground rail line, he explained. Kaufman also said the competing plan would not require construction of a new temporary terminal while the old one is torn down, and would allow the current terminal site to be sold for real estate development once a new terminal is in place. "It's a huge expense," Kaufman said of the approved project. "It's much more expensive than it needs to be." But the TJPA's Alberti said the temporary terminal will be more of a parking lot, and not much of a structure. Tosta, Myers' attorney, likened the terminal project to gambling. "You might as well go to Las Vegas and put your money on the table," he said. But Alberti said the project will serve the region. "It is an expensive project," he said, adding, "It's going to cost us a lot less today than to build it tomorrow." Contacts: Adam Alberti, Transbay Joint Powers Authority, (415) 227-9700. Jon Kaufman, Solem & Associates, (415) 788-1829. Tim Tosta, Steefel, Levitt & Weiss (415) 403-3343. Transbay Joint Powers Authority: http://sfgov.org/site/tjpa

With Sacramento bogged down in the annual battle over the state budget, it appears that the Schwarzenegger administration may not push forward a housing agenda before the legislative session concludes on August 31. But whether or not the administration gets behind legislation this year, it is apparent that administration officials led by Business Transportation and Housing (BTH) Secretary Sunne Wright McPeak are devising broad housing policies. During the week of July 19, McPeak conducted two days of intensive discussions with representatives of numerous interest groups, including development, local government, low-income housing, agricultural and environmental organizations. Outside planning and policy experts also participated. It appears that the administration is headed toward a policy to require cities to designate a supply of land for 20 years worth of housing growth. The details, however, remain fuzzy. One of the major questions is whether the 20-year supply would be part of a local agency’s housing element or the land use element. The state reviews and certifies housing elements, which are also frequently the subject of lawsuits by affordable housing advocates. Where exactly counties would fit into the 20-year land supply mandate also is unclear. Environmentalists and agricultural interests are concerned about the 20-year land supply requirement. They appear willing to accept the notion only if it is accompanied by a requirement for an urban growth boundary and possibly increased review of environmental impacts — conditions opposed by builders and some local government representatives. The administration also is reported to be weighing changes to the regional housing needs assessment process. Affordable housing advocates, though, want to ensure that any changes do not favor market-rate housing at the expense of low-income units. Also under discussion are amendments to the California Environmental Quality Act (CEQA) and to general plan law with the goal of providing more certainty to project proponents. The idea is to “front load” the planning process with the intent of minimizing project-by-project battles. Environmentalists, though, are very wary of tinkering with CEQA and can usually round up enough opposition to kill substantial CEQA bills. For months, at least some of the discussion has centered around SB 558 (Ducheny), which McPeak said the administration intends to use as a vehicle for housing policy. As originally introduced last year, SB 558 would have required cities and counties to designate a 20-year supply of land. The California Building Industry Association and the Home Ownership Advancement Foundation (a collection of large homebuilding companies) co-sponsored the legislation. The Senate passed the bill in January, but the 20-year land supply requirements remained poorly defined. The bill then morphed into what appeared to be a dream bill for developers. It would have required cities and counties to adopt community plans for all sites designated for housing development. Local governments would prepare master environmental impact reports for these community plans. Once that advance planning work was done, builders — in theory — would have an easy time because individual projects that were consistent with a community plan would not undergo full CEQA review. An analysis for the Assembly Local Government Committee strongly questioned this approach. “Unlike previous legislation concerning CEQA exemptions for development, this bill is not a focused policy initiative,” the bill analysis stated. “It would apply to all residential development, from a small infill development to subdivisions of hundreds or thousands of homes on the suburban fringe. It makes no pretense of encouraging either smart growth or affordable housing.” The Assembly Local Government Committee rejected the community plan approach, and passed the measure only after all of the offending provisions were removed. As of late July, SB 558 was a “spot bill” awaiting amendments. Capitol insiders expressed doubt that the administration would try to advance SB 558 or any other piece of legislation with substantial housing policies, in part because time is so short before lawmakers adjourn and in part because of uncertainty over the state-local fiscal relationship. “This stuff has been changing weekly,” said one legislative staff member. “It may never get anywhere.” Still, representatives for the League of California Cities and for the California Building Industry Association continue to negotiate over a housing bill. Those rather unusual talks are driven partly by the League’s desire to get the builders’ substantial political muscle on the cities’ side during the ongoing fight regarding state-local government finance. With their police powers, cities could, in turn, make life easier for the builders. A working group of League and CBIA representatives has met twice in Oakland – and once was joined by McPeak. “We’re talking at kind of a broad, conceptual level,” said Richard Lyon a CBIA lobbyist. “What we would like to do is provide a better planning process so that land on a long-term basis could be identified and entitlements accompanying the land could be provided.” League lobbyist Daniel Carrigg said that a front-loaded process that is heavy on community involvement could actually help city councils because they would not have to reopen old fights every time a project is proposed. But the difficult part is balancing developers’ desire for certainty with local control and public input. And any new approach must have some flexibility simply to account for changes in market conditions, Carrigg added. Lyon said that the builders and the League have not made any great breakthrough and have drafted no specific measures that could be placed into SB 558 or another piece of legislature. “Whether we’re able to get anything done this year remains to be seen,” he said. Some believe that McPeak and other members of the administration may be laying plans for a full-scale policy initiative next year. The Department of Housing and Community Development has commissioned a study headed by University of California, Berkeley, Professor John Landis on infill sites throughout the state to determine the existing capacity for housing construction. That study is due this fall and could provide a basis for state policy decisions. A former Contra Costa County supervisor, McPeak was executive director of the Bay Area Council, a fairly progressive business group, before accepting the governor’s appointment to BTH late last year. During her time at the Bay Area Council, McPeak spoke strongly about housing being a key component of a region’s overall economic well-being. She also advocated linking housing with investments in infrastructure. McPeak has carried those themes with her to Sacramento. During recent speeches, McPeak has advocated “anti-dumb growth” and making the most efficient use of infrastructure. And, according to people who participated in the recent meetings at McPeak’s office, the secretary is willing to go for broke. During a recent speech to the Solano Economic Development Corporation, McPeak said, “This administration has made it clear the state’s economic success relies on adequate housing, and that means a radical change in land use planning.”

Nearly every project falls a little short of its initial promise, and nearly every project loses some of its visionary luster in the translation from idea to fact. Even with limited expectations, however, Playa Vista comes as an unpleasant jolt. The 1,085-acre housing development immediately south of Santa Monica is the most striking example I know of the discrepancy between a plan and on-the-ground reality True, the outlines of the elegant plan we first saw nearly 15 years ago are vaguely discernible in this incongruous cluster of newly made residential blocks on the Los Angeles waterfront. That plan had promised New Urbanist residential streets amid gardens and trees, sprinkled with small parks throughout. But, today, these streets are filed with massive, square, four-story apartment buildings of unvarying and unrelieved bulk that appear to have been extruded like ingots from some giant furnace. What’s more, the buildings are tricked out in gaudy dress, like truck drivers in drag. One building is a mediocre pastiche of Irving Gill, while another is a Saturday-morning cartoon of Josef Hoffmann. Despite builders’ rigid compliance with rules requiring a continuous “street wall” of buildings along the sidewalk, these streets are not walkable. The narrow sidewalk is intimidated by the massive buildings, which are separated from the sidewalk only by a thin green margin. Nothing here is charming or carries any conviction, not even the cheerful Babbittry of the homebuilder. The entire effort seems forced, and the mood is one of intense psychological oppression. In case readers suspect that this description is a told-you-so snub by a Playa Vista hater who would attack anything whatsoever built on or near the Ballona wetlands, please be informed that I am not one of them (although there are many). I have endorsed Playa Vista throughout years of planning and politics, primarily because I support affordable housing in crowded and expensive West Los Angeles, and because I hoped the promise of fine residential streets and a mix of housing types would succeed. In fairness, the promised public amenities of Playa Vista, voluminously codified during the 1990s, have all been kept: There is a mix of housing for people of all incomes. There is a high ratio of open space to buildings, even if much of that open space is flat, unshaded grass. Here and there, one can see the electric buggies that the developers promised as a gadget-crazy alternative to driving. (What’s the matter with bicycles?) And whether or not I like the housing, it does add critically needed units in Los Angeles: For the approximately 1,400 units that remain to be built in the first phase of 3,200 units, there are 40,000 names on a waiting list. At this moment, though, it is difficult to remember that Playa Vista, or at least its site plan, had been one of the great promises of the New Urbanism. Early in the planning stages, Andres Duany and Elizabeth Plater-Zybek, co-founders of the Congress of New Urbanism (CNU), were involved in the planning, and Plater-Zybek remained involved with the project for years. Later, Stefanos Polyzoides and Dan Solomon, two of California’s best-known urban designers and also CNU co-founders, consulted on the project. In its earliest stages, Playa Vista was imagined by designers as a group of different housing types and different scales, designed in varying styles by many architects. The original vision of Playa Vista was a walkable place with little of the uniformity usually imposed by developers. This was a genuinely exciting idea for one of the largest urban infill projects in the country. Much later, after further “charrettes,” or all-day design sessions, architects and homebuilders reportedly agreed that much of the project would have to be four stories to be profitable, according to Ken Agate, the former Playa Vista marketing director who remains a consultant. Despite this move from creativity to uniformity during the charrettes, many New Urbanist planning principles remained in place: The sharp corners, the streets lined with buildings, the emphasis on landscape, the notion of locating stores and transit within walking distance of homes. With so many “correct” design guidelines, how could the final result turn out so dismally? The easy answer, which is not exactly right, is that the money men took control of an unconventional project that they were too crass to understand. The financiers and merchant homebuilders cheapened and conventionalized Playa Vista to maximize their profit. That kind of cheap shot will satisfy the Playa Vista haters, I suppose, but I think the real answer is more subtle. The project fell into some crevasse between the intentions of the original designers and the practices of conventional homebuilding. It’s as if the builders followed the letter of the design, but not the spirit. In particular, there seems to be a fundamental problem with the building type. For some reason, the buildings at Playa Vista are not “boulevard buildings,” to borrow architect Jan Van Tilburg’s memorable phrase. Height, by itself, is not the problem; much of Paris is covered in six-story apartment blocks, while Boston’s Back Bay, arguably the finest planned community in America, is made up four-story townhouses and apartments. But the buildings at Playa Vista, at least the ones finished so far, are conventional apartment buildings pretending to be row housing. Conventional apartment buildings have one explicitly public area – the entrance – while the rest of the building and facade are private, in the sense that the facades were not really designed with an awareness of passers-by. Row houses (think San Francisco, Philadelphia, New York, Boston) are explicitly urban because they “acknowledge” the public realm with formal and attractive facades while still protecting privacy with a small setback — usually a beautifully kept garden or miniature lawn, The narrow, green band-aids of Playa Vista are inadequate setbacks. The very features that make the row house seem public — front steps or “stoops,” a covered entrance or portico, a garden in front — are also the very things that protect the homeowner from public intrusion. Playa Vista, for the most part, lacks these protectors of privacy. We feel like intruders while walking by the balcony of a private apartment because there is no spatial or architectural intermediary. Quite literally, we can reach out and touch the hibachi, folding chair and guitar resting on the balcony. The housing seems vulnerable to the street, while the street, having no design or public character of its own, feels like an adjunct to the housing compound. Add narrow sidewalks and a lack of shade trees, and the result is claustrophobia. The disillusionment is unavoidable for anyone who held out hopes for Playa Vista. It is doubly dismaying for the many people who risked their careers and political reputations to support what they thought would be a progressive piece of planning. For my part, I am glad that new housing exists, especially the 25% that is reserved for low- and moderate-income renters and buyers. But once in Playa Vista, I cannot wait to get out — to get back in Los Angeles, on Sepulveda Boulevard’s strip of fast food, low-end retail and pawn shops. At this moment, it looks like the Golden City.

A state appellate court has rejected a claim that a Coastal Commission permit condition requiring the dedication of a public access to the beach was a taking. The court ruled that the lawsuit should have been filed 20 years earlier, and that an agency’s more recent acceptance of the “offer to dedicate” did not give the landowner a new chance to sue. The decision by the state’s Second District Court of Appeal mirrors a 2002 decision by the Ninth U.S. Circuit Court of Appeals, which also rejected a property owner’s takings claim for being filed long after the statute of limitations had expired. ( , 288 F.3d 375; see , May 2002). In recent years, state agencies have formally accepted a number of dedications of easements or land that were required by the Coastal Commission during the 1970s and 1980s. State agencies have also become more aggressive about enforcing the public access routes required by the Commission. These activities have spurred litigation by a number of property owners, who argue that the required dedications were unconstitutional under the landmark case , (1987) 483 U.S. 825. In , the U.S. Supreme Court ruled that the Coastal Commission’s requirement that a landowner provide a public access to the beach in exchange for a permit to build a house violated the takings clause of the Fifth Amendment because there was no reasonable relationship between the project’s impact and the condition of approval. Since , the Commission has imposed the requirement of coastal access on far fewer development applicants (see , August 2002). However, courts have refused to apply ’s “nexus” requirement to permit conditions approved prior to the ruling. Thus, recent litigation by landowners has failed. The case at hand involved a permit condition imposed in 1981. At that time, the Adamson Companies sought a permit from the Coastal Commission to expand a mobile home park on Point Dume in Malibu. The Commission approved the application on the condition that Adamson provide an “offer to dedicate” (OTD) land several miles away to provide for public recreational use. Adamson did not challenge the condition and in 1983 executed the OTD, which was promptly recorded. The Commission transferred its rights in the OTD to the Coastal Conservancy. In August 2002, the Conservancy accepted the OTD, drew up plans for public improvements and prepared to record its acceptance. But the Serra Canyon Company, Ltd., which had acquired property from Adamson in 1992 as part of a lawsuit settlement, sued the Coastal Commission. Serra argued that the original permit condition was involuntary and unconstitutional, so any attempt to accept the OTD was prohibited. The Los Angeles County Superior Court ruled that the statute of limitations was 60 days from the Commission’s imposition of the condition. Serra appealed, but a unanimous three-judge panel of the Second District, Division Two, upheld the lower court. In its opinion, the court cited Code of Civil Procedure § 1094.5 and , (1994) 26 Cal.App. 4th 516, a case in which the court rejected a Malibu property owner’s challenge of deed restrictions imposed on a previous landowner because of the statute of limitations (see , June 1997, August 1994). The present case was similar, the Second District determined. “Adamson agreed to the condition imposed by the Commission and executed the OTD, thereby accepting the benefit of the permit,” Presiding Justice Roger Boren wrote for the court. “Serra, the successor owner of the property, is bound by Adamson’s waiver of its right to seek timely writ review.” In , the landowner followed the proper procedure for an inverse condemnation claim by promptly seeking relief in court, Boren noted. Not so in the present case. “Serra attempts to avoid the finality of the Commission’s original permit decision by arguing that it is merely challenging the Conservancy’s acceptance of the OTD. No matter how the action is styled, it remains a collateral attack on a decision that has been final for two decades,” Boren wrote. “The current claim derives solely from the Commission’s 1981 permit condition, not from the formalities involved in enforcing that condition.” Boren then cited the Ninth Circuit’s decision in Daniel, concluding, “By accepting title to property with full knowledge that it is subject to an existing, recorded OTD, a landowner cannot claim that the exercise of the OTD amounts to a ‘taking.’ To secure a benefit (i.e. a development permit),the prior landowner conveyed away the very interest that the present owner now claims is being ‘taken’ by the government,” Boren wrote. The Case: , No. B165314, 04 C.D.O.S. 6245, 2004 DJDAR 8451. Filed June 15, 2004. Ordered published July 13, 2004. The Lawyers: For Serra Canyon: Paul Shoop, Shoop and Leanse, (310) 456-1957. For the Commission: Rosana Miramontes, deputy attorney general, (213) 897-2000.

In the latest round of a battle that began during the late 1980s, the City of St. Helena has won an appellate court ruling stating the Napa Valley Wine Train is not a public utility to be regulated by the Public Utilities Commission. The decision appears to mean that the city has sole jurisdiction over the design and operation of the Wine Train’s long-proposed station in downtown St. Helena. From 1996 through 2003, the Public Utilities Commission (PUC) issued no fewer than seven formal rulings on the status of the Wine Train. The Commission swung back and forth on the question of whether the Wine Train provided transportation and, therefore, was a public utility. But a unanimous three-judge panel of the First District Court of Appeal annulled all PUC decisions “to the extent they deem the Wine Train a common carrier providing transportation subject to regulation as a public utility.” The Wine Train, which began operating in 1990, carries tourists on a slow ride from Napa to St. Helena and back. The 36-mile round trip makes no stops and takes about 3 hours. Gourmet meals and fine wines are served. The train does run special tours that stop at a few wineries near Yountville (about halfway between Napa and St. Helena). The Wine Train has long argued that it is a railroad subject to the PUC. The Legislature passed a bill in 1990 that appeared to place the Wine Train under the sole jurisdiction of the PUC. St. Helena and many Napa Valley winemakers and grape growers have fought the Wine Train continuously, saying it does not provide meaningful alternative transportation, blocks roads and driveways, and gives the valley a carnival atmosphere. St. Helena officials have contended that a Wine Train stop in their town would flood the city’s quaint but congested streets with hundreds of tourists, many of them in search of a public restroom. After losing the most recent rounds at the PUC, St. Helena asked the court to intervene. Although it cited the procedural history in detail, the court needed only seven paragraphs of its published opinion to decide the merits of the case. The state Supreme Court’s decision in , (1962) 57 Cal.2d 373, has long helped define “transportation” as “the taking of persons or property at some point and putting them down at another.” The PUC and the Wine Train argued that the Golden Gate Scenic Steamship definition of transportation was not applicable, but the court disagreed. “We see no reason to depart from the ordinary meaning and find the Wine Train does not provide ‘transportation,’” Justice Timothy Reardon wrote for the court. “Presently, the Wine Train does not pick up passengers at one location and put them down at another location. Rather, the Wine Train provides a round-trip excursion from Napa. Throughout the proceedings, the PUC has made much of the fact that the approved project envisioned up-valley stops and connections with shuttles that would transport passengers to wineries and other points of interest. The PUC alleges the proposed project has not been realized because the Wine Train has not been permitted by the city to have an up-valley station. We are not persuaded by this bootstrap argument. In essence the PUC is arguing that before the Wine Train can function as a common carrier, it must be granted the powers of a public utility to pre-empt local jurisdiction. “The fact that they Wine Train could provide transportation in the future does not entitle it to public utility status now,” Reardon wrote. The court cited two of the PUC’s own decisions that said sightseeing is not a function of a public utility. ( , (1998) 78 Cal.P.U.C.2d 292; , (1981) 7 Cal.P.U.C.2d 128.) The Wine Train, the First District ruled, is a sightseeing service. And even if the Wine Train had a station in St. Helena, “it could be argued that any transportation provided would be incidental,” the court held. In the unpublished portion of its opinion, the court rejected arguments that St. Helena’s claims regarding PUC decisions from 1996 were barred by the statute of limitations. The PUC’s most recent decisions implicated the earlier ones, and the city filed on time to challenge the recent decisions, the court determined. The court also ruled that the city was not barred from arguing that the Wine Train was not a public utility simply because the city had asked the PUC in 1988 to regulate the Wine Train as a public utility. At that time, the Wine Train contended that only federal transportation authorities could regulate it, and locals feared there would not be adequate environmental review unless the state PUC intervened. The Case: , No. A104466, 2004 DJDAR 7459. Filed June 21, 2004. The Lawyers: For the city: Patrick Power, (510) 446-7742. For the PUC: Randolph Wu, PUC general counsel, (415) 703-2015. For the Wine Train: James Squeri, Goodin, MacBride, Squeri, Ritchie & Day, (415) 392-7900.

Yolo County officials have voted to use eminent domain to purchase the 17,300-acre Conaway Ranch. The ranch, which lies between Woodland and West Sacramento, contains 15,900 acres of productive farmland, endangered species habitat, open space, rights to 50,000 acre-feet per year of water, natural gas sources, and flood control value. The county is acquiring the property to prevent private interests from purchasing the land with intent to develop the property or transfer the water out of the county, according to Yolo County Supervisor Helen Thomson. She contended that the county is invoking eminent domain due to the nature of the bidding process, which is closed and confidential. If Yolo County ultimately uses eminent domain to purchase the Conaway Ranch, it may be the largest piece of property ever condemned by a local agency in the state. The county aims to preserve the present state of the land. However, if the property were to remain in private hands, the ability to develop or transfer the water would be highly restricted because of the county’s land use and water transfer policies. Many people say that regulations may achieve the same effect as the purchase. In 1990, PG&E Properties, a subsidiary of PG&E Utilities, purchased the ranch for $35 million. This purchase and others throughout the state were made with the idea that profits from development could be thrown in the company pot. In the case of the Conaway Ranch, quite the opposite occurred. As early as 1992, the Conaway Ranch Conservancy Group, made up of PG&E Properties and other local business interests, planned to develop as much as 2,500 acres to provide homes for 35,000 to 40,000 new residents in the City of Woodland. They also drew up plans for 500 to 600 acres of commercial and industrial development, including a 30,000-seat amphitheater comparable to Shoreline Amphitheatre in Mountain View. They poured millions of dollars into development plans, transportation studies, public outreach, and generous donations to local interests. At the time, Woodland, with a population of about 43,000, had some growth choices to make. There was no doubt that the development proposals would bring homes, jobs, and revenue. But local residents and officials wondered aloud about the fate of farmland, natural resources, and water rights. By 1996, all development plans had been abandoned because it had become clear that local desires lay elsewhere. PG&E Properties, which had since bought out all the other partners, put the land up for sale for $68.5 million. The company said that that an agri-business interest should have the land. Yolo County, its cities and other regulatory agencies attempted to mobilize and pursue a joint purchase of the ranch. Before they had a chance, PG&E Properties withdrew the property from the market. In 2001, the property was transferred from PG&E to National Energy and Gas Transmission (NEGT) under a corporate restructuring process resulting from the California electricity mess. NEGT subsequently filed for bankruptcy and, after a review of assets, was forced to sell the Conaway Ranch. In May of this year, NEGT placed an add in the seeking parties interested in purchasing the ranch. The Yolo County government agencies reconvened and succeeded in forming the Conaway Ranch Joint Powers Authority (JPA) representing Yolo County, it’s four cities, UC Davis, and the Yolo County Flood Control and Water Conservation District. The JPA was charged with evaluating funding options for purchasing the land. Alvarez and Marsal, the firm handling the sale for NEGT, announced that it would entertain offers using a closed and confidential bidding process. The county and the JPA said they could not participate in the confidential bidding process. So on July 8, the Yolo County Board of Supervisors voted unanimously to use eminent domain to purchase the property, adopting a “Resolution of Necessity” attempting to establish legal grounds for the process. The county announced an offer of $50 million, which NEGT promptly rejected. Negotiations, however, are under way. Stuart Somach, an attorney for the county, said NEGT’s reaction was not surprising and the amount on the table could easily change. Because the ranch is unincorporated territory, Yolo County is the lead agency in the condemnation, not the JPA, which would lead a negotiated purchase. The JPA has publicly supported the use of condemnation action and has pledged to support to the county to the extent possible. Still, the county has stated that it is prepared to “go it alone” if necessary. Thomson, an outspoken champion of this cause, said the Conaway Ranch condemnation was the first time during her 33 years of public service that she has voted for the use of eminent domain. She said eminent domain is necessary to protect a number of public interests: Water rights, water supply, and water security for Yolo County landowners, residents, and businesses; agricultural resources; public health and safety; local and regional flood control alternatives; open space and rural recreation; and the ability to manage natural resources for environmental purposes. According to Chris Unkel of The Nature Conservancy, the Conaway Ranch is one of the few locations in the state that provides habitat for the endangered Swainson’s hawk, and one of two locations remaining in the Central Valley with real capacity for restoring the habitat of native fishes. The ranch also provides an important stop for migratory birds. The real issue, said Unkel, is that the ranch’s productive farmland provides important habitat for the rare hawk. Habitat restoration would require only a small reversion of farmland, he said. In approving the use of eminent domain, Yolo County supervisors did so with a provision that the land use not be physically altered. Yet even people who support the county’s goal are wary of the route the county has taken. Blake Harlin, a Yolo County Farm Bureau board member, said that while the Farm Bureau supports the goals of maintaining the current land use and the purchase by local authorities, the Farm Bureau is opposed to the use of eminent domain and frustrated by the lack of detail put forth by the JPA. The Nature Conservancy, which has been involved with the JPA to examine funding opportunities, agrees in principle with the plans, yet The Nature Conservancy also opposes the use of eminent domain, according to Unkel. Once a deal is done, local interests and authorities would convene and form a management JPA in which stakeholders such as the Farm Bureau and The Nature Conservancy would be involved. In the meantime, they have been asked to “have faith,” and offer their support, said Harlin. The deal is as much about water rights as it is about land use. Local interests and officials have expressed deep concern that a sale of this property to a private developer could mean the transfer of water to another area, the fallowing of some of Yolo County’s most productive land, and the loss of a precious source of water for future Yolo County growth. However, according to Thomson and Somach, the county has strict laws in place that would make it very difficult for a private developer to transfer water out of the county. During the early 1990’s, the county adopted an ordinance that prohibits the transfer of water out of the county in cases where the use of additional groundwater would be required to make up for the loss. All of Conaway’s 50,000 acre-feet of water would fall under this restriction, Somach said. But, he noted, the ordinance would allow the transfer if it were approved by the Board of Supervisors. County officials such as Thomson argue that the restrictions on land use and water rights are major factors in setting the market value of this land, and that potential future projects should not be considered when establishing market value. Contacts: Helen Thomson, Yolo County supervisor (530) 666-8622. Stuart Somach, Somach, Simmons & Dunn, (916) 446-7979. Blake Harlin, Yolo County Farm Bureau (530) 308-6594. Chris Unkel, The Nature Conservancy (916) 449-2852. Yolo County background material: http://www.yolocounty.org/org/bos/agendas/2004/070804s/09.pdf

The California Supreme Court has accepted for review a case in which lower courts ruled that a state agency may not provide tax-exempt bond financing to religious schools. The California Statewide Communities Development Authority (CSCDA) sought to provide tax-exempt bonds to assist Oaks Christian School in Westlake Village, California Baptist University in Riverside and Azusa Pacific University. The schools sought the money to build classrooms, athletic fields, offices and other capital improvements. The authority filed a validation action in Sacramento County Superior Court in hopes of having the proposed bonds declared legal. But a Superior Court judge ruled that CSCDA’s proposal violated article XVI, §5 of the state constitution, which prohibits the government from aiding any church or religious sect, or supporting any school controlled by a religious organization. In a 2-1 decision, the Third District Court of Appeal upheld the lower court. Neither court addressed federal constitutional issues, although dissenting Third District Justice George Nicholson wrote that he believed the CSCDA bonds would not violate provisions of either the state or federal constitution. The state Supreme Court voted unanimously to accept the case. It is , No. S124195.

A state appellate court has upheld an environmental impact report for a 96-unit condominium project in downtown Oceanside. The court rejected arguments that the environmental impact report failed to analyze a reasonable range of alternatives, did not address the project’s impact on neighboring residents and did not require adequate mitigation of biological impacts. The proposed project is a 96-unit condominium, two-building development on 7.5 acres next to the San Luis Rey River and within Oceanside’s downtown redevelopment project area. The project site is next to Mira Mar Mobile Community, a 173-unit mobile home park. Relying on a redevelopment project area master plan, the city adopted a tiered EIR (called the final supplement EIR, or Final SEIR) and approved a tentative map for the project in May 2002. Mira Mar residents and the mobile home park’s owner, Logan Boggs, sued, arguing that the city violated the California Environmental Quality Act (CEQA) in a number of ways. San Diego County Superior Court Judge Michael Anello upheld the Final SEIR. The project opponents appealed, but a unanimous three-judge panel of Fourth District Court of Appeal upheld the lower court decision. The appellate court dealt first the question of alternatives. The final SEIR contained a “no project” alternative; reduced-density alternatives of 10 and 28 single-family lots, respectively; and a 95-unit, single-structure condominium development. The project opponents argued that the no project alternative discussion was misleading because it did not indicate that the proposed project would result in the loss of open space and coastal sage scrub habitat, and because the Final SEIR should not have speculated that future proposals for the site could have greater impacts. The court disagreed, saying that the impact of the no project alternative was “self evident” and that the impacts of the project itself were described elsewhere. As for the Final SEIR’s speculation, the court ruled, “ his comment merely acknowledges the reality that a disapproval of the instant project would inevitably result in the proposal of some other project.” Project opponents contended that the reduced density alternatives were bogus because they were not feasible. But the court said their inclusion was fine. “Although the city ultimately rejected these alternatives as ‘infeasible,’ this conclusion does not imply these alternatives were improperly included for discussion,” Justice James McIntyre wrote for the court, citing CEQA Guidelines § 15126.6, subdivision (a). “Alternatives included in an EIR need only be ‘potentially feasible,’ meaning they are ‘capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, social and technological factors.’” The opponents argued that the 95-unit condo was an inappropriate alternative because it would actually have a greater impact that the proposed project. The court agreed but said it did not matter. “While we do not condone the city’s inclusion of an alternative that does not further CEQA’s purposes, we find the error was not prejudicial,” McIntyre wrote. Finally, opponents said the Final SEIR should have addressed alternative locations, which the study did not contain. But the court ruled, “Because the proposed project was consistent with the city’s existing plans, policies and zoning, we conclude a review of alternative sites was not necessary.” The court then turned to the Final SEIR’s analysis of impacts. Project opponents said the proposed condominiums would block their ocean view, sunlight and ocean breezes. As proposed, buildings 22 and 35 feet away from mobile homes would tower more than 30 feet above the mobile homes. But the city determined that the impact was not significant. The city’s policy draws a distinction between public views and private views, and the project was designed to protect public views. Therefore, the court explained, the city could determine the project’s impact on the mobile home park was not significant. As for the loss of coastal sage scrub habitat, the court noted that the Final SEIR requires the loss of 0.86 acres of habitat must be offset 3-to-1 with the creation, restoration and permanent preservation of habitat elsewhere on the site. The state Department of Fish and Game, the U.S. Fish and Wildlife Service and the Coastal Commission all accepted the mitigation, the court pointed out. The court also ruled that the city’s findings were supported by substantial evidence in the record. The Case: , No. D042070, 04 C.D.O.S. 5252, 2004 DJDAR 7183. Filed May 17, 2004. Ordered published June 15, 2004. The Lawyers: For Mira Mar: D. Wayne Brechtel, Worden, Williams, Richmond, Brechtel & Gibbs, (858) 755-6604. For the city: Pamela Walls, assistant city attorney, (760) 435-3979. For real party in interest CH Oceanside: Ronald Rouse and Brian Fish, Luce, Forward, Hamilton & Scripps, (858) 720-6300.

If you tried, you probably could not design a better candidate for extinction than the California tiger salamander. It matures slowly and breeds rarely, individuals seldom managing to mate more than once in a lifetime. Its habitat is restricted mainly to low-elevation grasslands, which in California have been converted almost entirely into agricultural fields hostile to its survival. It breeds and lays its eggs almost exclusively in vernal pools, ephemeral bodies of water that have all but disappeared from the state as a result of urban development and farming. Cars smash tiger salamanders. They get washed down storm drains, trapped in utility boxes, caught behind curbs. Parasites infest them and cause deformities. Their larvae are eaten by a wide range of introduced species. It is not a surprise that California tiger salamanders are rare. What is unusual is the remarkably slow pace at which the regulatory establishment has moved in response to repeated alarms about the species' status, as well as the way the stocky little amphibians have become central figures in a pair of unrelated controversies. As early as 1966, biologists recommended that the salamander be included on the first federal endangered species list. The California Department of Fish and Game (DFG) first proposed protections for it in 1972. The tiger salamander was formerly categorized as a state species of special concern in 1994, but, it was not until 2000 that the species received formal federal protection. The U.S. Fish & Wildlife Service (USFWS) recognizes three distinct salamander population segments, which are so far removed from each other that interbreeding among them is unlikely. The Santa Barbara County population was listed as endangered in 2000. The Sonoma County population was designated an endangered species under an emergency action in 2002, and permanently listed as endangered in 2003. The Central California population, which persists mainly in scattered locations along the edges of the Central Valley, was proposed for listing as threatened in May 2003. The Center for Biological Diversity (CBD), an environmental organization that has been using the USFWS as a punching bag in court for the past few years (see CP&DR Environment Watch , November 2001), has played a key role in the provision of federal protection for the salamander. The center sued the agency and won emergency listing of the Santa Barbara population in 2000. It filed a petition to have the Sonoma County population listed in 2001 and then sued when the agency failed to act on the petition within the statutory deadline. That suit led to a settlement under which USFWS agreed to the emergency listing of the Sonoma population and proposed listing the Central California population as threatened. In January 2004, CBD filed a petition with the state to have tiger salamander populations statewide listed under the California Endangered Species Act (CESA), contending that at least 118 development projects are under way in current or potential California tiger salamander habitat — proof, CDB argues, "that the species does not receive sufficient protection under either the California Environmental Quality Act or the federal Clean Water Act." Kassie Siegel, an attorney with the Center for Biological Diversity and one of the primary authors of the petition, said she expects the state Fish and Game Commission to respond formally to the CESA listing proposal at its August 5 meeting. The deadline for the USFWS to issue a final ruling on the status of the Central California population was May 15, 2004, but the Bush administration has filed a request with the court asking for a delay of up to six months. The judge conducted a hearing on that request on June 10. While the state and federal governments dawdle, the salamander has become embroiled in the politics of growth control and Indian gaming. Both these controversies have their epicenters in Sonoma County. According to the biologists, the entire Santa Rosa Plain was prime salamander breeding habitat, dotted with vernal pools from Windsor to Petaluma. First farming and then urban development eliminated most of that habitat, leaving the salamanders confined to a tiny fragment. "The remaining breeding sites all occur in an area 5 miles long by 4 miles wide in southwestern portion of the city of Santa Rosa, as well as parts of Rohnert Park and Cotati, which are experiencing explosive growth," according to the CBD petition. CBD's involvement in the Sonoma County case came at the invitation of Citizens for a Sustainable Cotati, formed in 2000 to fight a 35-acre industrial park proposed near Highway 101 and Highway 116. The group argued that the park was too large for Cotati, which has only about 7,000 residents, and would contribute to urban sprawl. The salamander also became a tool of local residents opposing a casino proposed in Rohnert Park by the Federated Indians of Graton Rancheria — a tiny tribe that had run into fierce opposition to a previous plan for a casino near San Pablo Bay. Development industry heavyweights have waded into the fight, spending plenty of money and calling in political favors to battle protections for the salamander, which could disrupt plans for housing and commercial development not just in Sonoma County but in the foothills along the edge of the Central Valley. "These are the areas that are primo for new tract homes and vineyards," Siegel said. Leading the fight is the Central California Tiger Salamander Coalition. Its members include the California Association of Winegrape Growers, California Building Industry Association, California Business Properties Association, California Cattlemen's Association, California Chamber of Commerce, Home Builders Association of Northern California, International Council of Shopping Centers, International Mass Retail Association and the Wine Institute. "Based on the review of information on the status of, and threats facing, the species, the Central California CTS Coalition believes that the Central California population of the California tiger salamander is not currently threatened with extinction or likely to become threatened with extinction in the foreseeable future," according to a report submitted to USFWS by the coalition's law firm, Sheppard Mullin Richter & Hampton. According to Siegel, the Bush administration cited the coalition's formal response to the USFWS listing proposal during the June 10 hearing as "new evidence" of scientific uncertainty that warranted a delay in release of the final status determination for the Central California salamander population. Contacts: Robert Uram, Sheppard Mullin Richter & Hampton, (415) 774-3285. Kassie Siegel, Center for Biological Diversity, (909) 659-6053, ext. 302. Jim Nickles, U.S. Fish & Wildlife Service, (916) 414-6572.

The City of Los Angeles may not revoke a building permit issued to a religious congregation that relied on the permit to commence a demolition and construction project, a divided panel of the Ninth U.S. Circuit Court of Appeals has ruled. The court ruled that under the doctrine of equitable estoppel, the congregation had a vested right with which the city could not interfere. The ruling came in a case involving a long-running conflict between Congregation Etz Chaim and the city. Beginning in the mid-1990s, the congregation began using a house on South Highland Avenue in the city’s Hancock Park district for worship services. The neighbors complained about noise and traffic. When the congregation applied for a variance and conditional use permit for the activities, the city rejected the plan because of incompatibility with the surrounding residential neighborhood. The congregation sued the city but lost in Superior Court and at the state Court of Appeal. The congregation then tried federal court, but its arguments regarding the violation of constitutional rights were quickly dismissed. The congregation’s only remaining claim concerned the city’s alleged violation of the Religious Land Use and Institutionalized Persons Act of 2000, which restricts the government’s police powers. While that claim was pending in court, the congregation and city signed a settlement agreement ending the litigation. The settlement allowed the congregation to conduct worship services at the house with certain conditions. The congregation then filed plans to expand the existing house from 3,400 square feet to 8,150 square feet. After three months of review, the city’s building department issued building and grading permits on March 13, 2002. Work began on June 4 of that year, but neighbors immediately complained and the city issued a stop-work order about one week later. The congregation returned to federal court to get the order lifted. District Court Judge Harry Hupp ruled for the congregation. The city appealed, but the Ninth Circuit panel ruled 2-1 for the congregation. The district court and Ninth Circuit majority held that the city was barred from revoking the permit because the congregation had a vested right. “A developer’s right to develop property pursuant to its proposed plans vests when: (1) a valid building permit issues and (2) the developer performs substantial work and incurs substantial liability in good faith reliance on the permit,” Judge Johnnie Rawlinson wrote for the court. The congregation had paid more than $21,000 for permits and more than $15,000 for demolition work. The city argued that the estoppel doctrine did not apply because the congregation had failed to comply with the settlement agreement and city ordinances. This is where the court divided. The agreement required the congregation to send correspondence to Associate Zoning Administrator Daniel Green. Instead, the congregation sent its application — and a copy of the agreement — to the building department, which reviewed the application with the assistance of a deputy city attorney. The court majority ruled that the congregation’s filing complied with a different part of the agreement and that “the buck stops with the city.” In a dissenting opinion far longer than the majority’s ruling, Third Circuirt Court Judge Ruggero Aldisert (sitting by assignment) said the issue was not close. “ he ‘reasonable and commonsense interpretation’ of the settlement agreement is that it required the congregation to contact Mr. Green to make the quasi-judicial determination of whether the building and remodeling plans complied with the agreement. Indeed, such an interpretation is not only permissible but is compelled by the terms of the settlement agreement and the provisions of the Municipal Code,” Aldisert wrote. The building department did not have the authority to issue the permits without approval from the zoning administrator, so the permits were not valid, Aldisert wrote. Therefore, the estoppel doctrine should not apply, he concluded. The Case: , No. 0256487, 04 C.D.O.S. 5224, 2004 DJDAR 7214. Filed June 16, 2004. The Lawyers: For the congregation: Kathryn Davis and Susan Azad, Latham & Watkins, (213) 485-1234. For the city: Claudia McGee Henry, senior assistant city attorney, (213) 485-5419.

A new agreement between the state and five Indian tribes promises to give local governments far greater oversight of casino development projects than ever before. The agreement was part of a state budget package that had yet to be ratified as went to press. Other parts of the budget package included a deal between Gov. Arnold Schwarzenegger and local governments that promised a two-year shift of money from local governments to the state in exchange for a constitutional amendment that would prohibit future shifts. While the state-local financing portion of the budget was stalled in the Legislature, it appeared likely that state lawmakers would approve the new compact with the Indian tribes. The new agreement with the tribes would benefit local governments in several ways. First, the tribes agreed to finance a $1 billion bond. The state will receive the bond proceeds almost immediately to pay for transportation projects that were in the suspended Traffic Congestion Relief Program. Second, and maybe more importantly for local agencies, the tribes agreed to prepare a “tribal environmental impact report” (TEIR) before undertaking any project on Indians land that would serve gambling activities and that may have a direct or indirect impact on the off-reservation environment. Based on a TEIR, a tribe must negotiate with affected communities regarding mitigation and public service responsibilities, according to an analysis by the California State Association of Counties (CSAC). If the parties do not reach an agreement, an arbitrator would take up the matter. If a resolution still is not reached, the government could take the tribe to court. The Tribes also agreed to abide by the California Building Code and Public Safety Code, to allow state inspectors to check new construction, and to permit the state to prohibit occupancy of unsafe buildings, according to the governor’s office. Under the 1999 compact that Gov. Gray Davis negotiated with tribes, local governments essentially had no say at all over casino projects (see , July 2003, July 2000). “From our perspective, it addresses all the deficiencies in the 1999 agreement,” said DeAnn Baker, a lobbyist for CSAC. “It’s everything we asked for. Unfortunately, it’s only five tribes.” Those five tribes are the Pala Band of Mission Indians, the Pauma Band of Luiseno Indians and the Viejas Band of Kumeyaay Indians, all based in San Diego County, the Rumsey Band of Wintun Indians, who have a reservation in Yolo County, and the United Auburn Indian Community, which has a casino near Roseville. In exchange for the concessions, those five tribes may expand beyond the limit of 2,000 slot machines. The tribes also get exclusivity on Nevada-style gambling through 2030. Gov. Schwarzenegger said the compact “begins a new financial partnership” between the tribes, communities and the state. Whether other tribes will sign similar compacts is uncertain. The sticking point for other tribes appears to be sovereignty, which the new agreements compromise. Also, approval of either of two gambling initiatives on the November ballot will void the compacts. Still, CSAC estimates that 13 other tribes already have 2,000 slot machines and about 10 others have at least 1,500 slots — and it appears the only way these tribes may expand is by signing similar agreements with the Schwarzenegger administration. “We’re happy with the precedent the new agreement sets,” Baker said. The local-state finance portion of the budget was locked up because a number of legislators from both parties — led by Assemblyman Darrell Steinberg (D-Sacramento) — were holding out for broader reform. They wanted to provide cities and counties larger shares of property taxes so that local officials would look more favorably at housing development in comparison with sales tax-generating retail development. The holdouts had Legislative Analyst Elizabeth Hill on their side. Hill reported that the deal Schwarzenegger cut with CSAC, the League of California Cities, the California Redevelopment Association and the California Special Districts Association “locks in place the current flawed state-local fiscal structure, imposes added fiscal stress on many local governments and is not structured in a fashion that addresses long-term state fiscal goals.” Under the deal, which includes a proposed constitutional amendment, only voters could approve substantial changes to the state-local funding system. Fred Silva, an analyst at the Public Policy Institute of California and former consultant to the Legislature, said the budget negotiations opened the window to real reform. But Silva said he was pessimistic that anything substantial would come of the process. “If you can’t do it here, at a time like this, then you can’t do it,” Silva said. The local government entities that negotiated the deal, however, continued to lobby for it. “The local government agreement does not ‘lock in’ a flawed system,” CRA Executive Director John Shirey protested in a June 28 memorandum to members. “It will provide substantial protection to local governments, protect existing and the new property taxes received in exchange for VLF and allow future reforms with voter approval.” Broader reform is not possible until local entities have revenue guarantees, the local government representatives contended.

Some of the most desirable office jobs are leaking overseas, and no one seems to know how to plug the hole in the employment dike. If the globalization trend continues as expected, it could dampen demand for commercial development and affect economic development strategies throughout California, especially in the Bay Area. Several recent reports by academics, economists and other analysts have identified common trends. Companies are moving technology and “back office” jobs from the United States to India, China, the Philippines, Ireland and other foreign companies. But it is not any one sector of the economy that is moving overseas. Rather, the sorts of jobs at risk have similar qualities, according to a study released last fall by the Fisher Center for Real Estate & Urban Economics at University of California, Berkeley. According to the Fisher Center study, these jobs: • Involve no face-to-face customer service • Create mostly information • Rely heavily on the telephone and Internet • Require little social networking • Can be set up easily elsewhere • Pay far more in the United States than overseas. The Fisher Center estimated that as many as 15% of the jobs in the Bay Area are at risk, a higher percentage than elsewhere in the state or nation because of the region’s predominance of technology, office and service workers. The Bay Area’s extraordinarily high pay scales also are a factor. Where a computer programmer in Silicon Valley often makes $70,000 to $80,000 annually, a person doing the same work in India makes about $10,000 — a difference that more than covers any increase in travel and long-distance communications costs. The Fisher Center study arrived on the heels of a study by Forrester Research, which does market analysis for large companies. Forrester estimated that 3.3 million service industry jobs would move offshore by 2015. More recently, a study prepared for the Urban Land Institute and Columbia University’s Paul Milstein Center for Real Estate suggested that jobs are moving overseas even faster than Forrester estimated. Mirroring the Fisher Center report, the ULI/Columbia study said that a number of business processes are going offshore, such as bill processing, medical transcription, loan servicing, tax return preparation, and almost anything involving data collection and manipulation. The report, by M. Leanne Lachman, an executive-in-residence at Columbia, laid out implications of the trend, namely, continued high office vacancy rates, little development of new offices, and a potential dearth of jobs for well-educated workers. “The baby boom echo generation, which is almost exactly the same size as the boomer cohort, is now entering the labor force and will help to replenish the supply of potential workers,” Lachman wrote. “Those relatively well-educated young people are the ones for whom meaningful entry-level jobs must be created — a priority that should be one of America’s highest, particularly as entry- and mid-level software development, data processing, financial analysis, due diligence and other procedural jobs are offshored.” Even biotechnology and nanotechnology companies — which have been cast as potential saviors of the California economy — are setting up research and development shops in China, Russia and India, countries were scientists and engineers receive a fraction of the salary they command in the United States. However, there is a lack of consensus about how big the “problem” is and whether there is anything policymakers and economic development professionals can do. “This is very controversial, politically,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. Still, there is little doubt that the affected jobs are some of the most highly prized in a community. “What I hear from people is that this is the ‘next manufacturing,’ and we’ve lost hundreds of thousands of manufacturing jobs,” said Jeff Finkle, president and CEO of the International Economic Development Council (formerly the Council for Urban Economic Development). “As we are starting to watch back office operations disappear, it’s a concern. I don’t think many of us conceived of Dell Computer or CompuServe moving their back office jobs to India. But they have. If you have a question about your CompuServe account, you talk to someone in India who speaks pretty good English.” For years, economic development professionals fought for back office operations, especially in the Midwest and East. But communities in California’s Central Valley and rural areas have also tried to lure back office jobs as stable employment not based on natural resources or agriculture. For example, two years ago the City of Redding provided about $700,000 worth of fee subsidies to attract a 400-employee Blue Cross claims processing center from nearby Red Bluff. A few years ago, call centers were hot prospects in much of California, but many call centers have since moved overseas, noted Kyser. Kyser somewhat downplayed the impact on the Los Angeles region of office jobs going overseas. “We’ve seen offshoring going on in manufacturing for a long, long time, and yet we still have a very low industrial property vacancy rate, at least in L.A. County,” he said. What is changing in Southern California is “the profile of the office space user,” Kyser said. Larger companies are consolidating, and smaller companies are leasing space in the urban core. No one seems sure why the evolution is occurring or how to respond, Kyser said. But, he added, “The business of economic development has to shift.” Back office operations, call centers and, to some extent, technology research and development facilities have often been located in suburban environments. Still, Dave Feehan, president of the International Downtown Association, is watching the offshoring trend. “There are towns that have really made their living in the last 10 years by being back office centers,” Feehan said. Offshoring could lead to a shortage of entry-level or lower-level professional jobs in cities, he said. Urban centers can avoid a major hit easier than suburbia, though, because downtowns are more “elastic,” Feehan said. Downtown spaces can be converted to a variety of commercial or residential uses, while a suburban business park really has only one use, he said. The trends are enough to force economic development professionals to reconsider assumptions. “It’s a confusing time for many communities,” said Finkle. Contacts: Jeff Finkle, International Economic Development Council, (202) 223-7800. Dave Feehan, International Downtown Association, (202) 393-6801. Jack Kyser, Los Angeles Economic Development Corporation, (213) 236-4820. Urban Land Institute/Columbia University report, “The New Exports: Office Jobs,” http://research.uli.org/content/Reports/PolicyPapers/IPS_Lachman.pdf Fisher Center for Real Estate & Urban Economics report, “The New Wave of Outsourcing,” http://repositories.cdlib.org/iber/fcreue/reports/1103