How the heck do you plan a city when no one knows what the world of retail sales will look like in 10 years? That's a question I've pondered for some time, and it came to mind again with the recent news that Gottschalks is officially going out of business . Gottschalks' closure closely follows Mervyns' late 2008 shut-down and the more recent shuttering of Circuit City. In a number of California cities, Gottschalks and Mervyns were located in the same mall or shopping district. Soon, those cities will have two 60,000-square-foot boxes sitting empty. The Gottschalks' announcement comes at a time when shopping mall owners across the country are struggling mightily. As evidenced in this story from the Bay Area , General Growth Properties is barely hanging on. General Growth owns more than 200 malls, including some in California that are downright iconic. And, as Bill Fulton has been reporting , auto malls and automobile dealers face a very uncertain future. What's a planner to do? I know, I know, we're all supposed to have gotten past Euclidian, used-based zoning. That's so 20th century. But even if we want to embrace form-based zoning , we still need to have a feel for how people are going to buy food, cars and other goods in the future. It used to be that retail cycles lasted about a generation. By the end of the 90s, however, retail cycles were down to about seven years. That was the length of time it took for lifestyle centers to bypass power centers as the hottest retail properties. The explosion of Internet sales compressed the cycles even further. (It wasn't that long ago that we all made jokes about Jeff Bezos losing hundreds of millions of dollars a year.) Now, the recession is throwing everything into doubt. Some cities have seen their sales tax receipts fall every quarter for more than a year. A recent analysis for the Santa Clara Valley Transportation Authority forecast that sales tax revenue, after inflation, would be flat through 2036. Local governments have made many questionable land use and economic development decisions since Proposition 13 elevated the importance of sales tax as a local revenue. Cities and counties have not only accommodated, they have subsidized the latest retail trends. Some of those decisions look even more questionable today, but at least most of them literally paid off for a while. The questions remain: Now what? Should we continue to plan as if the retail world of 2005 will return after the recession ends? Do we stick with general plans adopted five or 10 years ago that assume retail growth will continue ever-onward? Are planners wasting their time processing projects that will be obsolete before the developer even breaks ground? What are cities to do with what appears to be a glut of retail space? In a way, we're lucky. We have a period of time to answer these questions, because nobody has money to build much of anything right now. – Paul Shigley

PLANNING COMMISSIONERS TRAINING THURSDAY, APRIL 16, 2009         CALTRANS DISTRICT 7 HQLOS ANGELES, CALIFORNIA   The Public Policy Program convenes daylong training sessions designed for planning commissioners from local jurisdictions across the state of California. The sessions provide useful tools to assist commissioners in preparing for planning commission meetings so that they have a better understanding of agenda items. Pertinent and timely information is offered by field experts to support commissioners' efforts to make informed decisions, giving them the opportunity to discuss matters of interest with other commissioners from cities across California.  WHO SHOULD ATTEND? Planning commissioners and those who work closely with planning commissioners. FEES AND CREDIT: $55 REG # U8816      Urban Planning 865.4   0.5 CEU  CEU Noncredit Program   TOPICS INCLUDE: • How to Communicate with the City Council • Local Governments Role in Developing Green Communities • Transportation-Related Air Pollution Exposure • Developing Around Transit DATE, TIME, AND LOCATION: Thursday, April 16, 2009 9:00 am - 3:30 pm Caltrans District 7 Headquarters   SEMINAR SPEAKERS: •  William (Bill) Fulton is President of Solimar Research Group and a Senior Scholar at the School of Policy , Planning, and Development at the University of Southern California. •  Woodie Tescher is a Principal and Director of Urban Planning and Design for EIP Associates, a division of PBS&J. •  Dr. Arthur M. Winer is a Distinguished Professor of Environmental Health Sciences and a core faculty member in the UCLA Environmental Science and Engineering Program, of which he was the Director between 1989 and 1997.  •  Susan DeSantis is President of SDS/Associates a regional and local policy planning consulting firm.   MORE UPCOMING PLANNING COMMISSIONERS TRAINING SEMINARS!! June 18, 2009 – REG# U8817 July 16, 2009 – REG# U9095 Go to http://www.uclaextension.edu/  for more details!

On one block of East 14th Street in downtown San Leandro, Chinese characters fill most of the storefront signs. One block to the north, most signs are in Spanish. A couple blocks farther north, men wearing turbans chat on the sidewalk – near Thai and Greek restaurants. Less than a block off the East 14th commercial corridor lie charming, well-maintained bungalows. A bit farther off the main drag are five-story apartment buildings, a BART station surrounded by a sea of parking lots and, in the other direction, a bustling nine-year-old library with its own parking ocean. Downtown San Leandro is clearly in transition. A working-class city with a large industrial base located just south of Oakland, San Leandro's suburban past and its more urban future are present at the same time. Now, the city has big plans to transform its downtown into a truly urban, pedestrian-oriented place that takes full advantage of the BART station and a planned bus rapid transit line. The city adopted a transit-oriented development strategy for a 500-acre area in 2007, and in March the City Council unanimously approved the first project to implement the strategy – a 100-unit affordable housing complex, with space for programs and services, right next to the BART station. This month, the city is set to approve a larger, market-rate condominium project that will contain 200 housing units and 5,000 square feet of ground-floor retail space. "This isn't transit-oriented development, it's pedestrian-oriented development," San Leandro Senior Planner Phil Millenbah said of the city's overall plan. "If it's not good for walking, it's not going to be good for transit." The city's approach has won plaudits from developers, the business community, environmentalists and transit supporters, while the response has been mixed among homeowners and affordable housing advocates. The recently approved affordable housing project in particular drew opponents who complained the apartments would attract crime and burden schools. Affordable housing advocates, meanwhile, have expressed concerns about gentrification. Thus far, a unanimous City Council has stood behind the development strategy and projects. "I believe it will create a vibrant downtown and help combat climate change. I also believe that the developers have done an excellent job with community outreach," City Councilman Michael Gregory said upon approving the affordable housing project. San Leandro was founded on the east side of San Francisco Bay in 1855 and incorporated in 1872. For decades, it was a predominately Portuguese enclave. Over the years, agriculture and oyster harvesting gave way to heavy industry. Until the 1950s, an Oakland-to-Hayward streetcar line ran through town. The city's flourishing downtown began to fade after World War II, and it nearly died entirely once Bay Fair mall opened on the southern edge of town during the late 1950s. The city created its first redevelopment project area in 1961, but the city's redevelopment efforts were largely guided by suburban priorities, explained Community Development Director Luke Sims. In the early 1980s, for example, the redevelopment agency subsidized development of an automobile-dominated commercial center with a large parking lot right in the heart of downtown. Redevelopment efforts are now headed in a more urban direction, said Sims, and planners see the unfortunate downtown commercial center as an "opportunity site." Momentum for a more vibrant downtown began to build during an update of the city's general plan earlier this decade, according to Sims. In 2005, the Metropolitan Transportation Commission awarded the city a $450,000 grant to prepare a station area plan. After lining up an additional $51,000 grant from the Alameda County Transportation Improvement Authority, the city spent nearly two years in a planning process spanning dozens of public meetings, workshops and field trips. The process concluded in September 2007 with adoption of the "Downtown San Leandro Transit-Oriented Development Strategy." The transit-oriented development strategy's land use plan. (Source: BMS Design Group) The plan covers 502 acres within a half-mile radius of the intersection of East 14th, Davis and Callan streets. The area contains many building blocks for downtown success, including heavily-used AC Transit bus stops, future bus rapid transit stops, a 37-year-old BART station, the civic center, the library, a handful of historic structures, three parks and a fairly tight street grid, as well as demographic diversity, a weekly farmers market, a community theater and numerous churches. At the same time, many sidewalks are narrow, street lighting is poor, there are few good public gathering spaces, vacant lots dot the area, and many retail and office buildings face parking lots rather than the street. The plan speaks to "a new kind of development" that emphasizes medium to high densities, mixed-uses and fewer cars. The plan could accommodate an additional 3,400 residential units, 120,000 square feet of retail space and 718,000 square feet of offices, with the majority of new housing and offices in close proximity to BART. Planners identified 88 acres of opportunity sites within the area, mostly in the form of parking lots, vacant industrial sites and underused parcels. The plan also calls for streetscape improvements to make walking and bicycling more enticing, and for connecting the grid where railroad tracks, expansive intersections and San Leandro Creek now pose barriers. The plan encourages new development by increasing housing densities to upwards of 100 units per acre, permitting taller buildings (the area around the BART station has no height limit) and reducing parking requirements. In fact, said Planning Manager Kathleen Livermore, the city went from having some of the region's greatest parking requirements to some of the leanest. Multiple-family units that used to require 2.25 to 2.5 parking spaces each need only 1 to 1.5 spaces apiece within the plan area. The vicinity of the downtown BART station today (top), and as envisioned in 20 years. (Source: Urban Advantage.) New San Leandro Chamber of Commerce CEO David Johnson, who spent many years working on Oakland economic development, praised the plan for its anticipation of a public shift to transit, for not overdoing the retail component in a way that competes with the existing 14th Street corridor, and for leaving pleasant residential neighborhoods alone. "This city is very good about bringing the community to the table. This dialogue that has been going on is thorough and respectful," Johnson said. The first major project to comply with the plan is Westlake Development Partners' San Leandro Crossings project. It involves a 100-unit affordable housing component called "The Alameda" on a 1.25-acre vacant industrial site next to the BART station. The nonprofit Bridge Housing will develop and operate The Alameda, which is the first non-senior apartment complex approved in more than two decades, according to city officials. Next up is the 200-unit market-rate condo project on a 2.2-acre BART parking lot, which BART is swapping for a piece of Westlake's property. Future phases of the Crossings could include another 400 units, plus office and retail space. A $24 million Proposition 1C grant makes the Crossings project feasible. The grant will fund a $10 million parking garage to replace the lost parking lot and other infrastructure. Westlake has owned its property since the 1980s, but the city's plan and commitment have only recently made development attractive, said Gaye Quinn, a consultant to San Mateo-based Westlake and a San Leandro city planner herself 20 years ago. "We're very fortunate that the consensus around this TOD was there before we proposed our project," Quinn said. "Westlake understood that being a part of a cohesive city plan took a lot of the risk away from the entitlement process they would have to go through." The Alameda, which is receiving a $9 million city redevelopment subsidy, drew opposition from a group calling itself Save San Leandro. Group leaders presented several hundred petition signatures against the project and complained about the subsidy, potential crime and "those people" who will live in the units. The Alameda, however, won the endorsement of environmentalists, the social justice group Congregations Organizing for Renewal and business owners. Jim Hussey, who owns Marina Mechanical, a construction and service company located across town, said he has not heard a compelling argument against any aspect of the Crossings project. "I've got employees who have been with me for six or seven years who rent a bedroom from a family member just so they can live near work," Hussey said. "That land has been sitting there empty for a long time. Taking this empty site and doing something with it will have a positive impact." The battle over the Crossings may be only a preview, as city planners expect the vast majority of new housing units during the next two decades to be built downtown. And once the economy turns around, those units could come on line fairly quickly. "We do have a lot of people getting their entitlements now so they can hit the ground running when the market comes back," Livermore said. San Leandro is not alone among East Bay cities in its desire to build a downtown that takes full advantage of BART and other transit. To the south, both Hayward and Union City have adopted and started to implement similar plans (see CP&DR Redevelopment Watch , December 2007 , March 2007 ). To the north, downtown Berkeley is booming around a BART stop, and developments at the Rockridge and Fruitvale BART stations in Oakland are considered urban models. Contacts: Luke Sims, Kathleen Livermore and Philip Millenbah, San Leandro Community Development Department, (510) 577-3371. David Johnson, San Leandro Chamber of Commerce, (510) 317-1403. Gaye Quinn, Quorum Real Estate Group, (415) 970-9820. Downtown Transit-Oriented Development Strategy: www.ci.san-leandro.ca.us/CDTODOview.asp . San Leandro Crossings: www.ci.san-leandro.ca.us/slcrossings.html .

The City of Walnut has sued the neighboring City of Industry over the environmental study for a proposed football stadium and 560-acre commercial project. Industry last year approved an office and retail development on the site, near the junction of Highways 60 and 57. Since then, developer Majestic Realty has altered the project to include a 75,000-seat stadium for a professional football team and numerous entertainment venues (see CP&DR Places , June 2008 ). Walnut requested a new environmental impact report (EIR) on the revised project. Instead, Industry approved a supplemental EIR. Walnut's suit argues the supplemental document does not adequately address noise, traffic, air, lighting, aesthetic and other impacts. The suit also says Industry should have provided information in languages other than English, because many area residents speak foreign languages. Interestingly, football stadium detractors have started a recall drive against three Walnut officials – Mayor Mary Su and Councilmembers Joaquin Lim and Nancy Tragarz – because they have not opposed the stadium strongly enough. The controversy over two lightening-rod projects in Loma Linda has concluded with the City Council rescinding its approval of the projects. The city in 2005 approved the Orchard Park and University Village projects totaling about 2,500 housing units and 1 million square feet of commercial space on 300 acres of orchards along Mission Road and California Street. Project opponents gathered petition signatures to force referendums on the two projects, but a Superior Court judge threw out the referendums because of technical defects. An appellate court last year reinstated the referendums (see CP&DR , September 2008 ; CP&DR Local Watch , December 2005 ). Instead of placing the referendums before voters, the City Council in March rescinded its approvals. In the meantime, Loma Linda voters approved a slow-growth initiative that would prohibit such high-density projects. More recently, Lewis Group, the University Village proponent, has approached the city about a much smaller project containing single-family houses and apartments. After five years of planning and negotiation, Forest City Enterprises has dropped a proposed 85-acre, mixed-use project in downtown Fresno. The developer said it could not raise the $100 million needed to advance its plan to redevelop 85 acres of industrial land just south of a minor league baseball stadium with an wide range of housing, retail, entertainment venues and offices. Forest City's departure disappointed the city, which granted the developer exclusive negotiating rights in 2004. The Center for Biological Diversity (CBD) has announced the formation of the Climate Law Institute to pursue legal challenges and lobby policymakers on matters concerning climate change. Over the last decade, the Tucson-based CBD has become the country's foremost player in Endangered Species Act litigation. The new climate institute, for which the CBD reports a five-year, $17 million budget, is based in San Francisco. The new institute's website is here . The Schwarzenegger administration and state agencies are taking adequate steps to ensure $42.7 billion worth of infrastructure bonds are spent for their intended purposes, according to a report by the state auditor. Two years ago, the auditor reported there was a "high risk" the state would not use the bond proceeds in the most effective and efficient manner. In the new report, the auditor found that a governor's executive order and new state agency controls should provide assurance that bond funds get used as promised. The report is available on the state auditor's website . A separate report by the state auditor found that agencies have not taken adequate steps to dispose of surplus properties since the release of a critical 2001 audit. Eight years ago, the auditor concluded the state did not carefully evaluate properties' usefulness to determine whether a sale was warranted. The auditor recommended adoption of new procedures and appointing a single entity with broad oversight of state properties. The latest report found the state has taken some steps, but the auditor concluded, "The state still lacks assurance that underused or unused properties are sold to generate revenue or are put to better use. The state continues to operate without having empowered an existing agency or a new commission or authority to oversee and scrutinize the property-retention decisions of individual agencies although we recommended it do so eight years ago." The auditor noted that Caltrans has established goals, performance agreements and reporting mechanisms that have resulted in the sale of numerous unneeded parcels since 2001. But the auditor was critical of the reliability of Caltrans' property database. The new report is available here .

A Butte county landowner who claimed that flood control measures undertaken and approved by Butte County amounted to inverse condemnation had all of his arguments rejected by the Third District Court of Appeal. The court ruled that the strict liability standard that applies in most inverse condemnation cases does not apply in the flood control context. Instead, the court determined a rule of reasonableness applied to the claims, and the landowner did not prove that the county acted unreasonably. Developer William Hauselt purchased a 94-acre almond orchard along Highway 99 about one mile north of the Chico city limits in 1988 with the intent of developing a housing subdivision. Ten years later, Hauselt sued Butte County, arguing that actions of the county had caused flooding of his property and that the county had prevented him developing his land. He sought compensation for inverse condemnation. Hauselt argued that the county had converted Keefer Slough, which forms the northern boundary of his property, into a major drainage facility. He pointed out that the county allowed drainage systems for the nearby Carriage Estates and Wildflower Estates subdivisions to pipe runoff into Keefer Slough. He said the county permitted the developers of those subdivision in 1992 to raise the slough's north bank above the level of the south bank, which lies on his property. He said a bridge the county built over Keefer Slough in the early 1990s increased flows because the old bridge acted as a plug. He cited the 1995 North Chico specific plan, which identified Keefer Slough as the area's primary drainage channel even though it had inadequate flood capacity. And he said the county altered the flow of storm-damaged Rock Creek in a way that increased Keefer Slough flood flows. He further argued the county had improperly prevented him from developing his land, although apparently the county rejected only one subdivision proposal. Butte County Superior Court Judge Steven Howell ruled the county's activities were not unreasonable conduct that would result in inverse condemnation liability. Howell also found that Keefer Slough is a private watercourse and that the statute of limitations had expired for the contentions regarding the neighboring subdivisions' drainage systems. The judge did award Hauselt $1,034 for a temporary taking because the county placed material on his property to prevent flooding on a nearby street. On appeal, Hauselt argued the trial court judge failed to decide the "central issue" of whether the county had implemented a 1979 master storm drainage plan that converted Keefer Slough and his property into a public drainage hub. The Third District said Judge Howell had in fact decided the issue and specifically stated in his ruling that the county did not adopt the plan or construct the facilities in the plan. The trial court determined the county had instead implemented a drainage system employing on-site detention ponds, such as those in the Carriage Estates and Wildflower Estates subdivisions, to slow drainage into Keefer Slough. Hauselt further argued that the rule of strict liability applied because the matter involved flood damage resulting from a public flood control project. The Third District disagreed with this reading of the law and instead cited the state Supreme Court's ruling in Locklin v. City of Lafayette , (1994) 7 Cal.4th 327, 366: " ith respect to flood control projects, the public agency is liable only if its conduct posed an unreasonable risk of harm to the plaintiff, and that unreasonable conduct is a substantial cause of the damage to the plaintiff's property. The rule of strict liability generally followed in inverse condemnation is not applicable in this context." Hauselt contended there was no evidence for the trial court's rulings that the county was not responsible for Keefer Slough's maintenance, that the county played no role in raising Keefer Slough's north bank, and that the county's projects did not increase water flow or volume in Keefer Slough or on Hauselt's property. The appellate court would have none of this. "First, even assuming for the sake of argument that these findings are unsupported and that the county did engage in these actions, for plaintiff to prevail under the applicable law here – the reasonableness rule – he must still show that the county acted unreasonably and that he took reasonable measures to protect his own property," the court ruled. "Plaintiff has not argued that the county acted unreasonably." Moreover, the court said, Hauselt forfeited his arguments because he failed to cite evidence unfavorable to him. The court pointed to evidence that the slough is privately owned, that a private berm existed on the north bank before either neighboring subdivision was built, and that the county had not permitted an increase in the height of that berm. The court also upheld the statute of limitations ruling regarding drainage from Carriage Estates and Wildflower Estates. Hauselt contended that because the damage was ongoing, the five-year statute of limitations did not apply. The court disagreed and said the five-year deadline for a possessory action involving real property applied. The drainage ditch in question was shown on a 1976 subdivision map, the county accepted the subdivisions' drainage improvements in 1989 and 1991, and Hauselt testified he discovered the ditch and pipes in 1992. All of those dates were more than five years before Hauselt filed his inverse condemnation suit in March 1998. The Case: Hauselt v. County of Butte , No. 054927, 09 C.D.O.S. 3705. Filed March 23, 2009. The Lawyers: For Hauselt: Gary Livaich, Desmond, Nolan, Livaich & Cunningham, (916) 443-2051. For the county: Stephen Horan, Porter Scott, (916) 929-1481.

The City of Patterson's in-lieu affordable housing fee has been invalidated by the Fifth District Court of Appeal, which rejected the city's methodology for setting the fee. Homebuilders celebrated the decision as a victory in their long fight to constrain development fees, while affordable housing advocates and municipal attorneys described the ruling as limited. Like about one-third of cities and counties in California, Patterson imposes inclusionary zoning that requires market-rate homebuilders to provide a certain percentage of units to low- or moderate-income households. And, like many jurisdictions, Patterson permits builders to pay an in-lieu fee rather than build the actual units. Patterson based its in-lieu fee on the 642 affordable units the city was allocated in the 2002 Regional Housing Needs Assessment (RHNA) for Stanislaus County. Development of those 642 units would require a subsidy of $73.5 million, according to a city consultant. The city divided that figure across the 3,507 "unentitled units" in town as of January 2005 to reach an impact fee of $20,956 per unit. The court, however, could find "no reasonable relationship" between the extent of the city's affordable housing need and the development of either the unentitled lots or the particular subdivisions at issue in the litigation. "It is the first case that says affordable housing type of fees can be measured by the same kind of generally prevailing reasonable relationship standard that applies to fees in general," said attorney David Lanferman, who represented the Building Industry Association (BIA) of Central California in the lawsuit. "You need to have at least some evidence that the fees are related to the burden created by the development's impact." California courts have not applied the Nollan/Dolan heightened scrutiny standard of review to legislatively adopted fees, Lanferman said. The Fifth District did not apply heightened scrutiny but, because the subdivision in question was the subject of a development agreement that permitted a "reasonably justified" fee increase, the court used the standard from the state Supreme Court's decision in San Remo Hotel v. City and County of San Francisco , (2002) 27 Cal.4th 643 (see CP&DR Legal Digest , April 2002 ). In San Remo , the court insisted on a "reasonable relationship" between fees and impact. Thus, The Fifth District ruled, citing San Remo, there must be "a reasonable relationship between the amount of the fee, as increased, and ‘the deleterious public impact of the development.'" That holding, said Lanferman, is significant because it is the first application of the San Remo standard, and it means that cities and counties must show a connection between construction of market-rate housing and the need for affordable units. However, Mike Rawson, an affordable housing advocate and attorney with the Public Interest Law Project, said builders may be reading too much into the decision. "It's a little to early to tell the legal implications. It's a very narrow holding," Rawson said. The court merely ruled the fee justification study was not related to how the city applied the fee to the subdivision, he said. Rather than viewing the fee as replacing the 10% of affordable units the project did not provide, the city relied on its RHNA number to determine the fee. "I think this is a peculiar case," he said. Sacramento attorney William Abbott, co-author of Exactions and Impact Fees in California , said Patterson got off track when it used its RHNA number, which had no relationship to the project at hand. "That analysis is not a nexus analysis, it's a state housing policy," he said. "This is not how most agencies generate housing fees." Abbott said the court's application of San Remo was not a big deal. Rather, the case illustrates that when a city puts everything into a contract such as a development agreement, the city loses its deferential standing in court, he observed. The project at issue here is two subdivisions containing 214 single-family residential lots within the larger Patterson Gardens development. In January 2003, the city approved a development agreement with Morrison Homes for the two subdivisions. The agreement provided the developer with four options for meeting the city's inclusionary housing mandate. Morrison could build affordable units, develop senior housing, obtain affordable unit credits from other developers or pay an in-lieu fee when building permits were issued. At the time the development agreement was approved, the city's in-lieu fee was $734 per market-rate unit, but the agreement noted the city was preparing a new fee schedule and Morrison would be bound to the revised fees. Since 1995, the city had assumed the in-lieu fee revenue would leverage additional federal grants and loans to provide adequate funding. The new fee schedule marked a policy change. It placed the entire burden of meeting the city's RHNA affordable housing allocation on market-rate builders. The RHNA allocated to Patterson 235 units of very low-income housing, 182 units of low-income housing and 225 moderate-income units, which together would require a subsidy of $73.5 million. In March 2006, the city adopted the new fee of nearly $21,000 per market-rate unit. Morrison Homes and the local BIA sued, but San Joaquin County Superior Court Judge David Vander Wall upheld the housing fee as reasonable. On appeal, the builders argued the fee increase violated the development agreement because the fee was not "reasonably justified." The city argued that phrase in the agreement meant typical legal requirements had been waived. But the court found existing law would still apply to the fee increase. Patterson's fee, the court determined, was not substantially different from the fee in San Remo, which San Francisco imposed on hotel owners who converted residential living units into tourist hotel rooms. Hence, Patterson needed to prove a reasonable relationship between the fee and the project's impact. The city apparently made little attempt to demonstrate a nexus existed, instead contending the fee justification study "clearly shows the need for affordable housing generated by the new construction." That argument appeared to miss the point. "The record in this matter reveals no reasonable relationship between the extent of the city's affordable housing need and the development of either (1) the 214 residential lots that constitute the two subdivision owned by developer or (2) the 3,507 unentitled lots identified in the fee justification study," Justice Betty Dawson wrote for the court. "No connection is shown, by the fee justification study or by anything else in the record, between this 642-unit figure and the need for affordable housing associated with new market-rate development." The court initially filed its decision in late January. After the BIA asked the court to publish the decision, the court significantly reworked the most important part of the opinion and then approved the publication, meaning the opinion may be cited as legal precedent. The court modified the opinion one more time after the initial publication. In the meantime, Patterson has changed its fee structure again. The city now requires builders either to provide 15% of units as affordable or to pay an amount that will fully fund the units' development. The Case: Building Industry Association of Central California v. City of Patterson , No. F054785, 09 C.D.O.S. 2617, 2009 DJDAR 3027. Filed January 30, 2009. Modified and ordered published March 2, 2009. Modified and rehearing denied March 20, 2009, at 2009 DJDAR 4327. The Lawyers: For the BIA: David Lanferman, Sheppard, Mullin, Richter & Hampton, (415) 434-9100. For the city: George Logan, city attorney, (209) 357-1431.

Suddenly, for the first time in 30 years, Washington is the center of the government money world. This is turning things upside down for the planning and development establishment, as local officials, developers, transportation leaders and others flood the nation's capital in search of dough. But what will all the dough do? And how will it shape the growth landscape of California over the next few years? Local government revenue in California is dropping and is likely to fall further over the next year or two. The state government, having finally passed a budget designed to dodge a $40 billion deficit, is now facing a brand new deficit of at least $8 billion. Sacramento's fiscal plight shifts the focus to Washington, from which money appears likely to flow out quickly to the hinterlands for the foreseeable future. There is, of course, the stimulus package – about $800 billion, which includes an odd bag of tax cuts, social safety net provisions, backfilling of state and local budget cuts, and a few pots of money that might actually stimulate the economy and create jobs that did not exist previously. In theory, the stimulus money could make a big difference, not just in keeping local governments in California afloat, but also in shaping the future of the built environment because of all the capital projects that could be funded. But the interplay between the stimulus and the state budget creates some conflicting priorities, because the federal money is often designated for capital expenses, while the state cutbacks will likely affect operating expenses. For example, the stimulus contains almost $7 billion for transit capital projects. This means local transit operators in California can go to the feds for money to buy new buses. At the same time, however, the state budget package eliminated all "State Transit Assistance" money, which is used for both capital and operating expenses, and of course the "Transportation Development Act" revenue – sales tax on gasoline which gets sent to the locals primarily for transit – is going down. That means local transit service will probably be cut everywhere in the state. So local agencies may be able to buy new buses with federal money and … park them. (Now that ought to make it easier to meet those AB 32 greenhouse gas emission reduction goals!) At the same time, there are a few areas where locals may actually get some additional money to move things forward in a significant way. These include the augmentations to the community development block grants and also the energy conservation block grants. The energy grants in particular could provide locals with a whole new source of money to pursue smart growth efforts in the short term. Locals can use these funds for a variety of things, including building codes, transportation demand management, and even zoning ordinances that promote smart growth. Most of the money will flow directly to the locals, but some will be given out on a competitive basis by the California Energy Commission. The stimulus package contains a variety of other pots of money as well that might help in planning and development. For example, every jurisdiction will get additional community development block grant money, which, of course, must be targeted to low-income neighborhoods. And there is a variety of pots of money designed to help the homeless, because there will probably be more homeless people. The big pot of money, however, is reserved for highway infrastructure – almost $30 billion, which will go to the states, though metropolitan planning organizations will have some authority to allocate funds. The Obama administration is making it very clear that the money has to be spent within 120 days. At the same time, some lobbying groups – for example, Smart Growth America and its spin-off organization, Transportation For America – are gearing up for a state-level effort in California to put some kind of smart growth "screen" on how the money is spent. Given the time factor – and the idea that the projects being funded are the ones that happen to be "shovel-ready" – it is hard to imagine Smart Growth America's approach actually working. For example, it is pretty clear that one of the reasons Gov. Schwarzenegger pushed for environmental review exemptions for certain highway projects (see CP&DR Insight , March 2009 ) was to clear the way for stimulus money. Few of those projects – which include widening stretches of Highway 50 and Highway 99 – would likely pass smart growth muster It is much more plausible to see the inside-the-Beltway smart growth crowd winning some successes on the coming transportation and climate change bills, which are much more policy-driven. The reauthorization of the federal transportation bill – a once-every-six-years event – has even more significance this year because the gas tax no longer generates as much revenue as it used to and nobody quite knows where else to turn to get more. Nobody on Capitol Hill wants to propose an increase, though Schwarzenegger did propose it on the Sunday news programs during late March. Then there is the federal climate change bill. Because it could provide an enormous source of additional money for something , every lobbyist inside the Beltway is jockeying for a piece of it. That is because that in limiting carbon emissions, the federal government will probably auction off at least some of the emissions "allowances," raising as much as a trillion dollars over the next couple of decades for environmental protection. Finally, there's the possibility of Stimulus Round 2, which most everybody in Washington expects will be pumped out, needed or not, later this year or possibly next year. Add it all up, and what you have is a return to the 1960s and '70s – the pre-Reagan years – when everybody expected the federal government to pay for everything and local politics was, in large part, the art of lobbying Washington for dough. Federal money in particular is likely to play an enormous role in funding capital projects over the next five years at least – perhaps the next 10. For now, all this money seems likely to simply reinforce existing growth patterns, though in the long run things may change.

A sharply divided U.S. Supreme Court has issued a ruling limiting environmental organizations' ability to challenge U.S. Forest Service regulations. The five-judge majority ruled that five environmental groups lacked legal ability – or "standing" – to challenge Forest Service regulations exempting salvage-timber sales of 250 acres or less from statutory environmental review provisions because the organizations could not show they suffered concrete harm from the exemptions. In a dissent by Justice Stephen Breyer, the four-judge minority characterized the ruling as "counterintuitive." Five environmental organizations, including the Sierra Club and Earth Island Institute, filed a lawsuit in late 2003, after the Forest Service exempted a 238-acre timber sale in California's Sequoia National Forest from the typical public notice, review and appeal procedures contained in federal statutes. The Bush administration had enacted Forest Service regulations exempting salvage-timber sales of 250 acres or less and fire-rehabilitation projects of less than 4,200 acres from normal reviews. The Burnt Ridge project involved salvage logging in a portion of the national forest that had burned in 2002. The organizations and the Forest Service settled the dispute over Burnt Ridge when the Forest Service halted the timber sale and promised to permit public comment if the project returned. Still, the organizations wanted to press their claims regarding six other Forest Service regulatory exemptions that did not apply to Burnt Ridge. A District Court judge permitted the lawsuit to proceed, and in 2005 invalidated five of the exemptions and issued a nationwide injunction against their application. The Ninth U.S. Circuit Court of Appeals later ruled that the exemptions not at issue in Burnt Ridge were not "ripe" for judicial review ( Earth Island Inst. v. Ruthenbeck , 490 F.3d 687 (2007)). Still, the Ninth Circuit upheld the lower court's ruling on two exemptions regarding prior notice and comment, and appeals procedures that were applicable to Burnt Ridge. The issue for the Supreme Court, then, was whether the organizations had standing to challenge any of the Forest Service's exemptions. Writing for the majority, Justice Antonin Scalia said that the organizations could demonstrate standing only if the challenged regulations would have a particular, concrete effect on the groups. Once the groups settled the Burnt Ridge dispute, though, the groups could not make that showing, according to Scalia, who was joined by the usual group of Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Anthony Kennedy. "We know of no precedent for the proposition that when a plaintiff has sued to challenge the lawfulness of certain action or threatened action but has settled that suit, he retains standing to challenge the basis for the action (here, the regulation in the abstract), apart from any concrete application that threatens imminent harm to his interests," Scalia wrote. Scalia said that affidavits from group members – which explained the members' interests in national forests and how they would be harmed if the exemptions remained in place – that were filed after the Burnt Ridge settlement were submitted too late to establish standing. Scalia thought little of the affidavits anyway, writing, "Accepting an intention to visit the national forests as adequate to confer standing to challenge any government action affecting any portion of those forests would be tantamount to eliminating the requirement of concrete, particularized injury in fact." In a dissent joined by Justices John Paul Stevens, David Souter and Ruth Bader Ginsburg, Breyer said the majority was setting the bar unreasonably high for plaintiffs. He noted that the Forest Service had admitted it planned to exempt thousands of salvage-timber sales in the near future. "The court," wrote Breyer, "holds that the Sierra Club and its members (along with other environmental organizations) do not suffer any ‘concrete injury' when the Forest Service sells timber for logging on ‘many thousands' of small (250-acre or less) woodland parcels without following legally required procedures – procedures which, if followed, could lead the Service to cancel or to modify the sales. Nothing in the record or the law justifies this counterintuitive conclusion." According to Breyer, there was no basis for the court to ignore group members' affidavits, which, he wrote, "adequately show a ‘realistic threat' of injury to plaintiffs brought about by reoccurrence of the challenged conduct – conduct that the Forest Service thinks lawful and admits will reoccur." The ruling pleased private logging companies and the American Forest and Paper Association, but it was unclear what the Obama administration thought. It was the Bush administration that sought review of the Ninth Circuit's decision, and the case was argued last October. Environmentalists, who had received amicus support from California Attorney General Jerry Brown, said that future lawsuits would have to contain more detail about specific harm resulting from challenged regulations. The Case: Summers v. Earth Island Institute , No. 07-463, 09 C.D.O.S. 2568. Filed March 3, 2009. The Lawyers: For Summers: Edwin Kneedler, Department of Justice, (202) 514-2203. For Earth Island Institute: Matt Kenna, Western Environmental Law Center, (970) 385-6941.

Voters in Lodi rejected redevelopment, while those in Alamo said no to incorporation of a new city during municipal balloting on March 3. In Los Angeles, voters narrowly rejected two charter amendments, one for a solar energy program, the other for fiscal incentives for business development. Only in Glendora did the electorate provide a positive response to proposed change. A measure rezoning the site of a former automobile dealership for other retail uses passed easily. Redevelopment has been a controversial topic in the San Joaquin County city of Lodi for years. In 2002, the City Council dropped a plan to establish a redevelopment project area after opponents gathered enough signatures to force a referendum. But the idea never completely died, and the City Council last year approved a 2,100-acre project area covering much of the older, east side of town. Again, opponents forced a referendum election, but this time the question actually went on the ballot as Measure W. Opponents argued that redevelopment would saddle Lodi with debt, permit the redevelopment agency to use eminent domain on behalf of special interests and take money away from schools and the county. "This Lodi ordinance binds our city for the next forty years," stated one flyer against redevelopment. "No to Waste – Lodi doesn't need another layer of government." Proponents contended redevelopment would provide the best tools to revitalize a poor part of town, and they noted the City Council had prohibited use of eminent domain. Still, opponents carried the day, as 54.1% of voters overturned the council's redevelopment plan. "Lodi has a small but very vocal group of people who really distrust government. We have more than our share of referendums," said Mayor Larry Hansen, Lodi's mayor and retired police chief. A city of 63,000 people, Lodi is one of the few San Joaquin Valley cities where growth control measures and big-box limitations frequently make it onto the ballot. The Measure W defeat, said Hansen, "was really frustrating to me because those who understood it are just baffled why the community wouldn't help itself." He blamed the loss on the negative campaign against redevelopment and the timing of the election for a period when nothing else was on the ballot and the economy is bad. Still, the problems persist, he said. "What's your plan?" Hansen demanded. "You still have 100-year-old sewer pipes. You still have neighborhoods that are run down. People still need affordable housing. The sad thing is, we have no money to address these issues." However, Lodi Councilwoman Joanne Mounce, a redevelopment opponent, said the city has raised nearly $30 million through utility surcharges – enough to fund necessary infrastructure maintenance and upgrades. She denied the city's east side is blighted. "I've always felt the plan was a smokescreen for economic development, not for all of these other things," said Mounce, who decried incentives for developers and businesses. "I just think there needs to be reform of redevelopment on the state level." In Contra Costa County, voters overwhelmingly denied Alamo's bid to become the state's 481st city. Opponents agued that the Contra Costa Local Agency Formation Commission's comprehensive fiscal analysis overstated revenues and underestimated expenses, especially for law enforcement. The opponents – who included Cecily Talbert Barclay, co-author of Curtin's California Land Use and Planning Law – presented their own study that said the new city could face an almost immediate deficit that would prompt either service cuts or higher taxes. The proposed city of about 16,700 people and 10 square miles would have been based on a contract model more commonly seen in Southern California. The city would have had only about 10 employees, with private firms and other public agencies providing most services. However, the new city would have gained control of the politically sensitive topics of planning, roads and parks. The incorporation drive stemmed in part from the Board of Supervisors' decision a few years ago to convert a local land use advisory council from elected to board-appointed. The incorporation drive failed, as Measure A received only 35.6% support. In Los Angeles, voters defeated a charter amendment that would have required the Department of Water & Power (DWP) to install and operate 400 megawatts of solar energy facilities on city properties by 2014. Measure B provided a major component of Mayor Antonio Villaraigosa's renewable energy proposal, and Villaraigosa easily won re-election over token opposition during the March municipal election. But Measure B opponents said the solar program was ill-conceived, would have relied on DWP's union employees when it should have been open to competitive bidding, and would have raised electricity rates. Although Measure B lost 50.5% to 49.5%, Villaraigosa vowed to press forward with additional solar installations. Measure E, the economic development charter amendment, fared even worse, as 52.3% of voters said no. The proposal would have given the city clear authority to provide economic incentives to retain or attract businesses. The city already provides numerous incentives to developers and businesses, but the charter is unclear on the city's authority. Currently, incentives require City Council approval. Measure E would have clarified the charter and permitted city staff to offer incentives. Skeptics cited a city controller's report that found the city does a poor job of ensuring subsidized developers provide promised public benefits. Voters in the San Gabriel Valley city of Glendora endorsed the rezoning of the site of a former Hyundai dealership located in the Glendora Marketplace shopping area. Previously, the site was reserved for automotive-related uses. The Measure C zoning approved by 70.0% of voters permits up to 100,000 square feet of general and specialized retail, including restaurants and department stores.

A former San Joaquin County political operative who was convicted of corruption in 2005 has had five of 17 guilty counts thrown out by the Ninth U.S. Circuit Court of Appeals. The appellate panel overturned counts of attempted extortion against Monte McFall but upheld conviction on 12 counts of extortion, mail fraud and witness tampering. A former Water Reclamation District 17 board member and Stockton-based lobbyist, McFall was charged with illegally trying to block Calpine from competing with his client, Sunlaw Energy, for the right to build a power plant at the Port of Stockton. He was also charged with, among other things, shaking down a company called Golden State Developers for $50,000 to $100,000. Federal prosecutors indicted McFall, then-San Joaquin County Sheriff Baxter Dunn, former county Supervisor Lynn Bedford, and Allen Sawyer, who was chief deputy director of the Governor's Office of Criminal Justice Planning, in September 2004. Dunn, Bedford and Sawyer all pleaded guilty to mail fraud or making false statements. McFall went to trial and was convicted in March 2005, as was a former aide to Bedford. McFall was sentenced to 10 years in prison and a $50,000 fine (see CP&DR In Brief , April 2005 , February 2005 ). The Ninth Circuit, however, found that McFall was not guilty of attempting to extort Calpine. According to the court, McFall, Dunn and Sawyer formed a company that had a contract with Sunlaw that would pay them handsomely if Sunlaw won the right to build at the port. They pressured Calpine to withdraw from port competition; when Calpine refused, McFall and his partners drew up a resolution raising environmental, health and safety concerns about a Calpine project in neighboring Alameda County. Bedford sponsored the resolution, which the San Joaquin County Board of Supervisors passed 4-1. McFall's participation in that activity, the Ninth Circuit ruled, did not amount to a conspiracy to commit extortion. Because of an improper jury instruction, the Ninth Circuit overturned McFall's conviction on attempting to extort money from Golden State Developers in exchange for delivering Bedford's vote. Part of McFall's case could be retried, or he could have his sentence reduced. He remains in prison in Arkansas. The Ninth Circuit ruling in United State v. McFall , No. 07-10034, 09 C.D.O.S. 2860, was filed March 9.

The future of Bay Area Rapid Transit (BART) service in the South Bay became less clear in March. The Santa Clara Valley Transportation Authority (VTA) learned in March that a planned extension of BART from Fremont into downtown San Jose and on to Santa Clara will be delayed by an unknown number of years because of lower-than-expected sales tax revenues. A VTA consultant reported that after inflation is considered, sales tax revenues will remain flat through 2036. Revenues from the Measure A 2000 sales tax override for numerous transportation projects will generate only about $7 billion, rather than the expected $11 billion. Estimated to cost $6 billion, the 16-mile BART extension had been scheduled for completion by 2018. Faced with the poor revenue forecast, Valley Transportation Authority officials now say they may build the extension in segments, with the final piece to downtown San Jose and Santa Clara not being completed before 2025. The news of the sales tax revenues arrived only five months after Santa Clara County voters approved an additional one-eighth-cent sales tax for the BART project. In the meantime, two former BART board members and a transit advocacy organization have sued the Metropolitan Transportation Commission and the Alameda County Transportation Improvement Agency for allocating $313 million to help fund a 5.4-mile BART extension through Fremont to the city's Warm Springs District. The group Transportation Solutions Defense and Education Fund and former BART Directors Sherman Lewis and Roy Nakadegawa argue that a 2000 Alameda County sales tax measure bars use of that revenue source for the Fremont project until full funding for BART to Santa Clara is assured. The Alameda County agency has allocated $224 million in sales tax revenue to the project. The plaintiffs also say MTC cannot shift $91 million in bridge toll increase money from a proposed Dumbarton Bridge train project to the BART extension. The plaintiffs have asked a judge to block construction of the line to Warm Springs, which is scheduled to begin this summer. The Santa Clara County BART extension would take off from the Warm Springs station.

Since our previous blog on the possibility that auto malls – like regional malls – will soon become retail dinosaurs, the California press has glommed onto the idea big time. This is partly, of course, because auto sales are in the news in other ways. A few cities, for example, are offering auto sales tax rebates as part of their "local stimulus package," while other jurisdictions have provided loans to car dealerships . First came Brandon Lowrey in the Los Angeles Daily News , who used Palmdale's auto sales tax rebate as the hook for a story about how much auto sales tax is declining. He quoted a Los Angeles city official as guessing that auto-related sales tax revenue dropped 21%, or $2.1 million, during the fourth quarter. Then, Brooks Edwards in the Victor Valley News took the story one step further, reporting on San Bernardino's plans to offer a sales tax holiday for about 10 days, starting this Wednesday (March 25) and slopping over two weekends, to April 5. Of course, neither reporter explained how eliminating sales tax on automobiles will help increase city sales tax revenues. And this morning, Big Dan weighed in on the topic. Sacramento Bee political columnist Dan Walters took note of the general decline in auto sales and appeared to come down on the side of broadening the sales tax to include services as well as goods. Stay tuned. The auto-mall-as-dinosaur story isn't going away anytime soon. – Bill Fulton