LAFCOs, Cities, and Special Districts: The Challenge of Boundary Changes in the Future FRIDAY, NOVEMBER 7, 2008 UCLA EXTENSION LINDBROOK CENTER LOS ANGELES, CALIFORNIA REG # U4336 ($ 325) This intensive one-day course is essential for anyone involved with land use planning and governmental boundary changes. The evolving laws governing LAFCO and its decisions are not just about LAFCO but the future of California, how it and its communities will cope with population growth, provide adequate services, maintain sustainable communities and protect the State's valuable resources. The course provides an extensive overview of statutes and procedures to reorganize local governments. In addition to being a valuable explanation of boundary change laws and practice, it analyzes requirements to prepare Municipal Service Reviews to periodically update city and special district spheres of influence. No refund after October 31. Seminar Leader: Bob Braitman has been a LAFCO Executive Officer for more than 25 years, an Executive Officer of the California Association of LAFCOs, and is a private consultant to LAFCO, local agencies and private parties. To enroll Call (310) 825 - 9971 or go to www.uclaextension.edu * For more information please call (310) 825-7885

The old joke about the man on the street who asked a scientist for the time and instead got a two-hour lecture about how to build a watch (and the poor fellow never did find out what time it was) was played out again in Sacramento this week when the California Air Resources Board staff released its "Preliminary Draft Staff Proposal Recommended Approaches for Setting Interim Significance Thresholds for Greenhouse Gases" on Friday and presented it in a workshop on Monday. The 20-page document leaves most of the spaces for benchmark numbers blank, while proposing an elaborate process amounting to a new categorical exemption with CARB squarely at the controls. Senate Bill 97 (Public Resources Code, § 21083.05), assigned the Governor's Office of Planning and Research (OPR) the task of revising the CEQA Guidelines by June 1, 2009 to address the conundrum for planners posed by the Global Warming Solutions Act of 2006 (AB 32) in performing environmental review of projects under the California Environmental Quality Act (CEQA). One lawsuit and dozens of EIR comment letters filed by Attorney General Jerry Brown, as well as lawsuits by environmental groups, raised the stakes, while uncertainty remains about many critical questions regarding how the substantive limits set by AB 32 for GhG emissions to be achieved by 2020 should be analyzed under CEQA's long-established procedures and standards. One of the keys to simplifying CEQA review is for the lead agency to set the standards for the effects ahead of time by adopting "thresholds of significance." For purposes of AB 32, is one more molecule of GhG significant? What baseline conditions should be used to assess project effects? Should it be those in existence as of date that the project application is submitted as current CEQA law dictates, or is it some future date, such as 2020 or 2050 when AB 32 goals are to be met? In June, OPR asked CARB for guidance in helping lead agencies determine what the thresholds for GhG emissions should be, perhaps assuming that CARB would provide objective benchmarks and a scientific means to measure or estimate what a given project would likely generate. Instead, the CARB staff boldly proposed preliminary draft conceptual interim "sector-based approaches," which include criteria that are not scheduled for adoption until September 30, 2010. The staff proposal includes the remarkable conclusion that existing statutory and categorical exemptions need not be eliminated because the anticipated effects of such projects would be small (statutory exemptions, among many other projects, include prison construction, pipelines of less than a mile in length and railroad grade separation projects). Staff reported its preliminary determination that the effect of project on a site of 5 acres or less qualifying for an infill exemption (Guidelines § 15332) would not exceed emissions of 1,600 metric tons of carbon dioxide annually, without  providing any evidence or explaining how it reached this conclusion. Does this mean that local agencies could adopt 1,600 metric tons of annual emissions as a threshold of significance for other residential or commercial projects of 5 acres or less?  CARB fails to provide data meeting the legal standard for substantial evidence on which a local agency could independently adopt a "threshold of significance" for GhG emissions as contemplated by existing CEQA Guidelines. Clearly, CARB staff had some threshold in mind when it reached its conclusion about exempt projects. It would be nice if they would tell OPR and the rest of us what it is. The proposal provides examples for two types of projects – industrial and residential-commercial. Industrial projects meeting "interim" performance standards still to be set by CARB for construction, transportation and operations will be presumed to have a less than significant climate change effect, and will be "exempt" from further CEQA review. The operations must have net emissions of less than 7,000 metric tons of carbon dioxide equivalents per year. Again, it would be helpful to know what evidence or methodology CARB used to set this limit.   For residential or commercial projects, two tracks may lead to a presumption the project is "exempt."  One is already established in CEQA Guidelines § 15064 (h)(3), for a determination that the significance of the project's incremental effect is not cumulatively considerable, subject to additional conditions to be set by CARB. The lead agency must find that the project will comply with an approved plan or program to avoid or substantially lessen GhG emissions that is consistent with statewide AB 32 goals and regional transportation impact reduction targets to be established in accordance with SB 375, includes a GhG reduction inventory with regular monitoring, has specific enforceable GhG reduction targets, can be revised over time and was approved in conjunction with an EIR. Of course this begs the question of what level will qualify as "substantial". In the other track, the lead agency must find that the project complies with CARB adopted minimum performance standards "or equivalent mitigation measures" for construction and operations, the latter including four "sub-sources" for energy consumption, water, waste and transportation. For energy consumption, the proposal is to adopt the California Energy Commission's Tier II Energy Efficiency Goal (35% above 2008 Title 24 code standards). The proposal allows that the other performance standards will be more than zero (at least for the time being) and that they will be "clear and stringent," but are expected to become tighter over time. Even if all performance standards are met, the total project emissions may not exceed an annual emissions limit of some unspecified amount of metric tons of carbon dioxide equivalents per year, which CARB has yet to determine – or at least let us in on yet! – Joel Ellinwood, AICP

A 50-year extension of Napa Valley's landmark initiative preserving agricultural land is widely expected to win approval on November 4. While Napa Valley's Measure P provides a ho-hum, it signifies just how much the political landscape has changed during the last two decades. Nowadays, we take for granted that voters have the ability to amend general plans or even write their own plans; initiatives that block development without subsequent voter approval are commonplace. This November's ballot is full of these sorts of initiatives. But it was not always this way.   Slow-growth initiatives have appeared on local ballots in California since the 1970s, and they reached an early peak in 1986, when voters decided 45 local growth measures. These measures often came in the form of annual growth caps, building permit limits and infrastructure requirements. But Measure J in Napa Valley was different. The 1990 initiative was a Napa County general plan amendment that sought to preserve all agriculturally designated land. It did so by preventing any change in agricultural land use without voter approval. No more encroachment of houses, restaurants and B&Bs into the county's prized grape-growing land without voter consent. Growth would have to go into the cities or one of the very small urban nodes in the unincorporated area, unless voters were willing to allow an exception. Measure J was controversial both in substance and style. Builders, landowners and some elected officials campaigned against Measure J. The concept of locking up agricultural land was new and scary to some. The idea that voters themselves could amend a general plan appeared to be based on squishy legal ground. The general plan would no longer be a living, flexible document that the Board of Supervisors could adapt as it saw necessary – something that was either good or bad, depending on your viewpoint. After voters approved Measure J, landowner Richard DeVita and the Building Industry Association of Northern California sued, challenging virtually every aspect of Measure J. The end result was the state Supreme Court's 1995 landmark decision DeVita v. County of Napa , 9 Cal.4th 763, in which a five-justice majority made perfectly clear that voters could amend a general plan and impose subsequent-vote requirements on development.   Slow-growth advocates in Ventura quickly followed up with a Measure J copycat called the Save Our Agricultural Resources (SOAR) initiative, which voters approved. It appeared a revolution was at hand. But if there was a revolution, it has moved in slow motion. Ventura County and nearly all of its cities eventually approved SOAR initiatives . Voters in Sonoma County adopted urban growth boundaries around all the cities. Alameda County voters approved Measure J-style restrictions for the eastern part of the county. But when Measure J copycats in San Luis Obispo County and Sonoma County lost, the revolution appeared to founder . After voters approved Measure D in Alameda County during the November 2000 election, not a single similar, countywide initiative was passed until Stanislaus County voters backed the Stamp Out Sprawl initiative in February of this year. Instead, what we see are initiatives that tinker with general plans, or that block development in certain areas, or of certain types, without voter approval. In Grass Valley, for example, there is an initiative that would prohibit changes to the land use element without voter approval, and a competing initiative that would require voter approval of boundary changes and annexations. San Clemente has an initiative that would prohibit rezoning or development of open space – which may include golf courses – without voter approval.  Measure O in San Marcos would block almost any zoning change without voter approval. Redwood City has a measure that would prohibit development along the bayfront without two-thirds voter approval. You get the idea. Although Measure J may have been more of a turning point than a revolution for California as a whole, it has become political bedrock in Napa County. There is no organized campaign against Measure P, which would extend the provisions originally approved in 1990 through 2058. All five city councils and the county Board of Supervisors have endorsed Measure P. Arguments about the dire consequences of locking up ag land for a long period and killing the hospitality industry have vanished. Now that's a revolution. – Paul Shigley

Little Italy is one of San Diego's most popular neighborhoods today. In some ways a high-priced residential district with an Italian theme, Little Italy also provides an example of what a city can do to restore a down-on-its heels area. Twelve years ago, few had heard of this area north of downtown San Diego. But since the late 1990s, the area has grown and prospered. The Little Italy neighborhood dates back to the 1920s, when the area near the San Diego harbor became home to Italian immigrants who worked for the tuna industry. For years, it was common to see fishermen in the neighborhood spreading out their nets to repair them. Our Lady of the Rosary Church remained a center of community life for Italian Americans, even as later generations moved away. But the fishing industry died during the 1970s, and the area became best known for its many parking lots within walking distance of government buildings in downtown San Diego. One-third of the community was demolished in 1972, when Interstate 5 was built through the area. Thirty-six years later, Little Italy has rebounded, thanks to a real estate boom, creation of a business improvement district and the neighborhood's central location near a trolley line and the downtown railroad station. The numerous parking lots have been converted into housing. More than 1,200 new condos have been built in the neighborhood, and 3,000 new residents have moved in. San Diegans agree that formation of a Business Improvement District (BID) during the 1990s, and run by the private, non-profit Little Italy Association, was a key factor in the area's rebound. The association also runs a Community Benefit District (CBD). The Business Improvement District is funded through business tax licenses in the area and generates $90,000 a year. The Community Benefit District generates $750,000 a year through property assessments. The money from the BID and the CBD are used for maintenance and neighborhood security. The association and its executive director, San Diego native Marco Li Mandri, are the driving force behind new public spaces, landscaping and benches that now make up the streetscape, especially along India Street, the core of Little Italy. An arched entrance sign over India Street was installed in 2000 to mark the neighborhood's renaissance. From eleven Italian-related businesses in the mid-1990s, Little Italy has grown to become home to 19 Italian restaurants, 22 home furnishing stores and 11 art galleries. There's a farmer's market and art walks. In short, Little Italy is a yuppie dream – and it is one without chain stores. "We convinced the community to keep out corporate owners," said Li Mandri. "What people want when they come to a neighborhood business district is that it's not like a thousand other business districts throughout the country." The City of San Diego, which has focused on massive downtown redevelopment during recent years, also played a part in Little Italy's rebirth through its Centre City Development Corporation. The CCDC provided more than $4 million for many of the capital improvements to the streetscape, Li Mandri said. "We get capital improvement money from the redevelopment agency," he said, but the Little Italy Association provides maintenance funding for trees, trashcans, landscaping and new sidewalks. City policy changes have helped create piazzas, which Li Mandri described as wider sidewalks filled with tables, chairs, umbrellas and enhanced landscaping. "They have done no eminent domain in Little Italy," he said. "The market has driven a lot of redevelopment." The CCDC has also subsidized construction of 16 row houses, 12 affordable rental lofts and 37 low- and moderate-income apartments on a block of land the CCDC purchased. Overall, however, the CCDC owns little land in Little Italy. Li Mandri said the area grew during the real estate boom between 2001 and 2006. While the city's real estate market has declined recently, the neighborhood still is considered the most desirable neighborhood in downtown San Diego, he said. Despite the ongoing gentrification, Little Italy still contains a variety of commercial and office buildings, including auto repair shops and a Mexican consulate, according to Michael Stepner, an architect and former city planner. Li Mandri's company, New City America, has taken its lessons from Little Italy to a number of other California cities and worked to spruce up business districts with community benefit districts in San Francisco, Oakland, Los Angeles and San Jose. Not everyone is enamored with Little Italy, although the most common complaint is that an area once covered with parking lots is now one of the most difficult places to park in all of San Diego. "Outside of six or seven Italian restaurants, it's hard to see the relationship to what Little Italy once was, a working class fishing neighborhood" said University of California, San Diego political science professor Steve Erie. "It's another yuppie neighborhood." Stepner predicts that the future focus in the neighborhood will be on the waterfront, which lies a few blocks west from inland India Street. Plans for the waterfront, known as the North Embarcadero area, call for developing parks with direct links to Little Italy. Contacts: Marco Li Mandri, New City America, (619) 233-5009. Steve Erie, University of California, San Diego, (858) 534-3083. Michael Stepner, Stepner Design Group, (619) 234-2112. Derek Danziger, Centre City Development Corporation, (619) 533-7103. Little Italty Association: http://littleitalysd.com SD Redevelopment Leaders Resign Amid Scandals Redevelopment in San Diego suffered a black eye this summer when top officials of two of the city's major redevelopment entities left their jobs under a cloud of controversy. The departure of the officials raised questions about whether the city's program needs an overhaul. San Diego is an anomaly in California redevelopment. Redevelopment in downtown and the adjacent southeastern area are run by non-profit corporations that do not have the same level of public oversight as redevelopment agencies in other California cities. San Diego's redevelopment organizations are based on a model used successfully in such East Coast cities as Baltimore, whose Inner Harbor is considered a national model of redevelopment. The main downtown redevelopment agency in San Diego is called the Centre City Development Corporation (CCDC), while nearby, in a predominantly minority neighborhood, redevelopment is run by the Southeastern Economic Development Corporation (SEDC). The city also has its own redevelopment agency, which focuses on redevelopment projects elsewhere within the city. The structure of the two development corporations is now undergoing review by the City Council after presidents of both resigned. SEDC President Carolyn Y. Smith was forced to leave her job in July because of a scandal involving employee bonuses. The website voiceofsandiego.org first revealed the bonus payments. The city then commissioned an outside audit which reported that Smith had approved $872,000 in extra pay for herself and the SEDC staff from 2003 to 2008, including $89,000 for Smith alone during the 2006-07 fiscal year. The audit said the bonus program amounted to fraud. After Smith's departure, the City Council replaced the SEDC board. Centre City president Nancy Graham left her job in July, too, after she faced questions about conflicts of interest she had in negotiating with developer The Related Cos. Although she has denied any wrong-doing, Graham was charged in September with three misdemeanors by the San Diego city attorney's office. Under Graham's guidance, the CCDC in 2007 chose The Related Cos. from a field of seven bidders for a $400 million condominium and hotel project in the East Village. However, Graham did not reveal until April of this year that she and her former husband once formed a partnership with Related to develop a condominium project in Florida. According to the city attorney's office, Graham received nearly $3 million in income from the Florida development in 2006 and 2007. However, she never reported the income in conflict-of-interest statements. In September, the CCDC board canceled its negotiating agreement with Related. San Diego's downtown redevelopment has led to a boom in the area, with numerous office towers, hotels and restaurants opening in recent years, along with Petco Park baseball stadium and downtown shopping. But critics have contended that not enough emphasis has been placed on the city's public spaces and buildings, including replacement of an outdated downtown library. SEDC focused on building more shopping, housing and adding jobs in its region. Michael Stepner, a downtown planning consultant, said some of the recent personnel problems were related to the individuals, and not the set up of the two corporations. "The need for people doing the right thing doesn't change," he said. University of California, San Diego professor Steve Erie calls the two corporations "a wonderful thing for developers," because there is less public oversight. But Derek Danziger, a spokesman for CCDC, said downtown redevelopment has been a success, with the area generating millions of dollars for the city, Danziger said a primary focus during recent years has been on public infrastructure. Redevelopment money has been set aside for a new library, for example, but private fundraising efforts need to be successful before the library project moves further, he said. Stepner said redevelopment in San Diego may change over the next six months, as the city government begins debating the future of the two corporations. The City Council is considering whether the two corporations should be merged back into the city's redevelopment agency, and whether the redevelopment agency should run more like agencies in San Francisco and Los Angeles. Another options being considered is for the City Council to directly hire and fire the president of the development corporations, Danziger said.

The California Fish and Game Commission must consider listing the California tiger salamander on the state endangered species list, the Third District Court of Appeal has ruled. The court determined that the Commission should have accepted a petition filed by the Center for Biological Diversity (CBD) and considered adding the salamander to the list of species protected by the California Endangered Species Act (CESA). "The Commission acted outside the range of its discretion in denying the petition," the court concluded. Although the ruling was a victory for the environmental group, it was a blow to the development industry, landowners and local governments that for years have fought restrictions and struggled to accommodate the amphibian (see CP&DR Environment Watch , February 2006 , July 2004 ). California tiger salamanders historically lived throughout the Central Valley and the foothills of both the Coast Range and the Sierra Nevada. The species extended from Colusa County in the north to Tulare and Santa Barbara counties in the south. The salamanders breed in large seasonal ponds (vernal pools) and spend the rest of their lives within about a quarter mile of their breeding ponds. However, about 80% of the state's vernal pools have been lost to farming or urban development. Several of the salamander's distinct population segments are listed under the Federal Endangered Species Act (ESA). Five years ago, CBD submitted its petition requesting the listing for the California tiger salamander. Under the state law, the Department of Fish and Game evaluates a petition and other relevant information, and prepares a report and recommendation for the Fish and Game Commission. That panel then decides whether to accept the petition and commence a 12-month process to decide on the listing, or to reject the petition. The department staff recommended the Commission accept the petition. During a 2004 hearing, Brad Shaffer, a University of California, Davis, ecology professor and salamander researcher, testified about threats to the species, including hybridization with an imported species of salamander, loss of habitat, and competition and predation by nonnative fish and bullfrogs. Shaffer estimated there were about 4,500 breeding female California tiger salamanders remaining. The Central California Tiger Salamander Coalition, composed of development and business interests, argued against the petition. The coalition countered much of Shaffer's testimony about habitat loss, estimated the species population was as high as 700,000 to 800,000, and argued the species had adequate protection. The Commission voted 3-2 to reject the petition. It found there was insufficient information on population trends, there was credible evidence the population was not declining, testimony on loss of native wetland habitat was unpersuasive, there was insufficient information about the degree and immediacy of threats to the species, and existing protections through the federal Endangered Species Act, the Clean Water Act, the state's Porter-Cologne Act and the California Environmental Quality Act were adequate. The CBD then sued, and Sacramento County Superior Court Judge Lloyd Connelly in December 2006 ruled against the Commission. On appeal, a unanimous three-judge panel of the Third District upheld Connelly's decision. Under the Fish and Game Code and Natural Resources Defense Council v. Fish & Game Com. , (1994) 28 Cal.App.4th 1104, the standard for accepting a petition for consideration is "sufficient information to indicate that the petitioned action may be warranted," the court noted. The term "sufficient information" is defined as that which "would lead a reasonable person to conclude the petitioned action may be warranted." The term "may be warranted" means that there is a "substantial possibility" the listing could occur. The term "substantial possibility" means a greater chance than a "reasonable possibility." The court found that the CBD petition and supporting information easily passed these tests. " he information supporting the petition presents a prima facie showing that the California tiger salamander species is a threatened or endangered species within the meaning of the CESA," Third District Justice Kathleen Butz wrote. "The points raised by the Commission, concerning the strength of the information in favor of the petition, would not lead the objective, reasonable person to conclude there is no substantial possibility that listing could occur." The coalition countered only some of the points in support of the petition, the court determined. In addition, the Commission did not address the threat of hybridization or show why a dual listing under CESA and the federal ESA was not warranted in this case when 177 species already have dual protection, the court concluded. The Commission has asked the state Supreme Court to overturn the Third District. Assuming that does not happen, the Commission will have one year to decide whether to list the salamander as threatened or endangered. In the meantime, the species must receive the same level of protection the listing would provide. The Case: Center for Biological Diversity v. California Fish and Game Commission , No. C055059, 08 C.D.O.S. 11650, 2008 DJDAR 13889. Filed September 2, 2008. The Lawyers: For CBD: Amy Minteer, Chatten-Brown & Carstens, (310) 314-8040. For the commission: William Cunningham, attorney general's office, (916) 445-9555.

The California Supreme Court has accepted yet another California Environmental Quality Act (CEQA) case for review, this one involving the question of whether denial of a conditional use permit extension is subject to CEQA. In an unrelated matter, the court has dismissed a Proposition 218 case regarding assessments for a business improvement district. The CEQA case concerns Sacramento County's denial of a conditional use permit renewal for a general aviation airport near Elk Grove. The county has battled for years with the owner of Sunset Skyranch Airport over permits. Four years ago, the Board of Supervisors decided not to renew the conditional use permit because of the airport's proximity to new homes and a proposed school. The county ordered the airport to close within 180 days. A group of local pilots sued, arguing that the county could not deny the permit renewal without conducting an environmental study. They argued – and the Third District Court of Appeal agreed – that closure had implications for the Sunset Skyranch facilities, other airports and the pilots that had to be studied under CEQA (see CP&DR Legal Digest , September 2008 ). The county appealed to the state Supreme Court, and six of seven justices voted to accept the case. The questions for the court are these: Is denial of an application to renew a conditional use permit a "project" under CEQA? If the denial is a project, is it exempt from CEQA nonetheless? The case is Sunset Skyranch Pilots Association v. County of Sacramento , No. S165861. During the last few years, the state high court has shown more interest in CEQA than at anytime since the 1970s. Earlier this year, the court upheld the environmental impact report for the Cal-Fed Bay-Delta project, and it upheld the Department of Forestry's analysis of three timber harvest plans in Tuolumne County. In cases decided last year, the court rejected a program EIR for a proposed 20,000-unit housing development in Rancho Cordova because of an inadequate water analysis, and the court exempted from CEQA Solano County's adoption of an airport land use compatibility plan because it only incorporated existing general plan and zoning policies. In September, the court heard oral arguments in Save Tara v. City of West Hollywood , No. S151402 (see CP&DR Legal Digest , April 2007 ). The case concerns exactly when in the development process CEQA is triggered. The Second District Court of Appeal ruled that the city's approval of a conditional agreement with the developer of a proposed housing project should have been subject to environmental review because it committed the city to a definite course of action. The city contends environmental review so early in the process would be premature and possibly lead to repetitive review once the project is fully known. During oral argument, justices asked about the possibility of establishing a "bright line" test to determine when CEQA is triggered. An opinion is due by December 1. Other pending CEQA cases at the state Supreme Court: Communities for a Better Environment v. South Coast Air Quality Management District , No. S161190, which concerns the baseline for an EIR; Citizens for Sensible Planning v. City of Stockton , No. S159690, which involves the statute of limitations for filing a CEQA suit when a project is not properly approved; and Committee for Green Foothills v. Board of Supervisors , No. S163680, which concerns the statute of limitations for a suit when an agency declares a project could not have a significant impact. None of those three cases has been set for oral argument yet. Away from CEQA, the court transferred Dahms v. Downtown Pomona Property and Business Improvement District , No. S143165, back to the Second District Court of Appeal, Division One. The case involves formation of, and assessments for, a business improvement district. In 2006, the Second District rejected a business owner's argument that a required public hearing was conducted at the wrong time and that the assessments are not proportional to the benefits received. The Supreme Court directed the Second District to reconsider its decision in light of the recent decision in Silicon Valley Taxpayer's Assn., Inc. v. Santa Clara County Open Space Authority , 44 Cal. 431. In that case, the court threw out an open space assessment because it was a special tax that should have gone before voters. The district violated Proposition 218 by subjecting the assessments to a vote of only landowners, the court ruled (see CP&DR Legal Digest , August 2008 ).

The San Diego City Council approved a giant infill project on the site of a gravel quarry in Mission Valley during late October. The Quarry Falls project proposes 4,780 housing units in a variety of configurations, about 600,000 square feet of retail space, about 600,000 square feet of offices, 70 acres of parks and open space, and a school on the 230-acre site near the junction of Interstates 8 and 805. The developer, Sudberry Properties, presented the project as an ideal fit within San Diego's "City of Villages" concept because of a pedestrian-friendly design, the inclusion of live-work units and housing above storefronts, close proximity to the trolley and extensive public open space. The only vote against the project came from Councilwoman Donna Frye, who represents Mission Valley. She voiced concerns about traffic the project would generate in the already congested area. A group called San Diegans for Responsible Planning, organized by rival developer H.G. Fenton, has raised similar complaints in opposing the project. But Sudberry representatives said the company will provide improvements to five freeway interchanges as part of the development. Meanwhile, about 110 miles north in Carson, developers of an $850 million project on a closed garbage dump conducted a formal groundbreaking ceremony on October 14. LNR Property and Hopkins Real Estate Group actually began remedial work on the site in April, but the ceremony offered Carson city officials the chance to celebrate the unusually large infill project. Since the Cal Compact landfill closed in 1965, numerous developers and speculators have made a run at developing the 168-acre site along the 405 freeway. In the 1980s, the city approved a 2-million-square-foot shopping mall. It went nowhere. More recently, the National Football League eyed the land for a stadium. City officials, however, chose to work with LNR and Hopkins, ultimately approving a project of 1,300 apartments and condominiums, 1 million square feet of retail space and a 300-room hotel. Originally called Avalon at South Bay, the project is now known as The Boulevards at South Bay and a 2011 opening is planned.

It seems that the government always has the advantage in its ongoing legal battle with property rights advocates. But recently, property owners scored two big wins – although a government agency was responsible for one of the property owners' victories. In one case, a state court ruled that property owners in Rancho Palos Verdes who have been prevented from building for three decades because of the city's concern about landslides are due compensation for the loss of their property rights. In the other case, a federal court ruled that a Board of Reclamation mandate requiring a Ventura County water district to provide water for an endangered fish was a physical taking of the district's property . (A third case went the other when a Sierra Madre developer may have swung for the fence before the ball left the pitcher's hand.) The Rancho Palos Verdes and Casitas Municipal Water District cases appear to be landmark cases that give hope to property owners who have long chafed under government regulation. The decisions also greatly worry the regulators, who are charged with protecting the public good. Although the cases are unrelated, the decisions were handed down only days apart and they appear to mark a moment in time – a moment when the scales begin to tip in a different direction. The U.S. Supreme Court typically provides these moments every half dozen years or so. But these lower court decisions, should they stand, could prove to be every bit as important to property owners and government regulators as anything the high court has done in recent years. – Paul Shigley

In a decision with enormous potential ramifications for environmental regulation, a federal appellate court has ruled that a Bureau of Reclamation mandate requiring a Ventura County water district ensure adequate river flow for an endangered fish species was a physical appropriation of the water. The court ruled that the Casitas Municipal Water District's claims should be considered under the physical takings doctrine, not under the much narrower regulatory takings standard. The United States Court of Appeals for the Federal Circuit did not specifically rule that a compensable physical taking had occurred. Instead, the court sending that question back to the Court of Federal Claims for consideration. However, the appellate panel's 2-1 majority made clear what it thought. "By its own admission, the government required construction of a fish ladder and compelled the water to be rerouted to the fish ladder in order for the fish ladder to operate. This is no different than the government piping the water to a different location. It is no less a physical appropriation," Judge Kimberly Moore wrote for the majority. In a dissenting opinion, Judge Haldane Robert Mayer said that Casitas does not own the water in question because water sources in California belong to the public. Even if the agency does own the water, he wrote, the Bureau of Reclamation's restriction is "plainly regulatory in nature," and not physical. The ruling is somewhat similar to that in Tulare Lake Basin Water Storage District v. United States , 49 Fed. Cl. 313 (2001), in which the court ruled that appropriation of water for endangered species should be considered a physical taking (see CP&DR Environment Watch , March 2004 ). However, that ruling was roundly criticized at the time and was later disclaimed in light of the Supreme Court's decision in Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency , 535 U.S. 302 (2002), which clearly delineated the differences between a regulatory taking and a physical taking. Still, the Court of Appeals majority in the Casitas case declined to "opine on whether Tulare was rightly decided," and said, " Tahoe-Sierra did not depart from the substantial body of precedent dictating that the government's physical appropriation of a portion of a water right is compensable." The decision worries environmentalists and regulatory agencies, who fear the precedent could hamper the government's ability to reallocate natural resources for environmental purposes. In an advisory, Nossaman attorneys Alfred Smith III and Melissa Poole said the decision "could have dramatic repercussions, particularly in the western United States." Russ Baggerly, a Casitas board member who has opposed the lawsuit from the outset, told the Ventura County Star , "If it stands as good law, there isn't going to be enough money in the treasury to deal with all of the takings claims all across the country." The board has consistently split 3-2 on whether to continue the litigation. Property rights advocates, however, celebrated the decision. "The Federal Circuit reached the right decision in this case," said Nancie Marzulla, one of Casitas's attorneys. "The government's argument that it can take the municipal water district's water for any reason, without paying for the water it takes, is a breathtaking proposition." In 1956, Congress authorized the Ventura River Project, which comprises Casitas Dam, Lake Casitas, the Robles Diversion Dam and the Robles-Casitas Canal. Essentially, the dam creates a reservoir on Coyote Creek, and the canal diverts water from the Ventura River into the reservoir. After project completion in 1959, Casitas Municipal Water District took over operation of the project. A state license grants the district the right to divert up to 107,800 acre-feet of water per year from the Ventura River, and to deliver up to 28,500 acre-feet annually. In 1997, the National Marine Fisheries Service listed the West Coast steelhead trout as an endangered species. In 2003, after negotiations with the Casitas district, the Bureau of Reclamation (BOR) directed the district to construct a fish ladder at the intersection of the Ventura River, the diversion dam and the canal, and to divert adequate water for fish to reach historic spawning and rearing habitat that the water project had blocked. Casitas built the fish ladder under protest and then sued the federal government for breach of contract and an unconstitutional taking. Court of Federal Claims Judge John Wiese ruled for the federal government. The Court of Appeals for the Federal Circuit, based in Washington, D.C., unanimously upheld Wiese on the contract claims, but divided 2-1 on overturning Wiese's ruling that Casitas had presented a regulatory taking claim in which it could not prevail. The appellate panel majority built its decision on three Supreme Court cases: International Paper Co. v. United States , 282 U.S. 399 (1931), United States v. Gerlach Live Stock Co. , 339 U.S. 725 (1950), and Dugan v. Rank , 372 U.S. 609 (1963). International Paper concerned a World War I-era government directive that the Niagara Falls Power Company cut off water to an International Paper plant so that Niagara could boost hydroelectric power production. The Supreme Court determined that the government "directly appropriated what International Paper had a right to use," the appellate panel explained. Gerlach was filed by San Joaquin Valley farmers who claimed the BOR's construction of Friant Dam eliminated their access to overflow irrigation. "The Supreme Court analyzed the government's action as a physical taking," the appellate panel explained. Dugan also involved Friant and the rights of downstream water users. The Supreme Court concluded the government had physically taken the landowners' water rights. Federal government attorneys argued those three cases did not apply to the Casitas controversy because they all involved direct appropriation of water, not a restriction on the use of water. But the appellate panel majority said the situations are the same. " he government did not merely require some water to remain in stream, but instead actively caused the physical diversion of water away from the Robles-Casitas Canal – after the water had left the Ventura River and was in the Robles-Casitas Canal – and towards the fish ladder, thus reducing Casitas' water supply," Judge Moore wrote. "Similar to the petitioner in International Paper , Casitas' right was to use the water, and its water was withdrawn from the Robles-Casitas Canal and turned elsewhere (to the fish ladder) by the government." The court bluntly rejected the government's contention that a regulatory taking analysis should apply to what the government characterized as a restriction on use of a natural resource. " his case involves physical appropriation by the government," Moore responded. "The United States actively caused water to be physically diverted away from Casitas after the water had left the Ventura River and was in the Robles-Casitas Canal." The majority ruling sends the case back to the Court of Federal Claims for a determination of whether a taking occurred and what compensation, if any, Casitas is entitled to. In his dissent, Judge Mayer insisted that the lower court must also consider whether Casitas has a property interest in the water. Mayer made clear how he would rule: "California subjects appropriative water rights licenses to the public trust and reasonable use doctrines, so Casitas likely has no property interest in the water, and therefore no takings claim." Mayer continued, "The government is not appropriating or taking possession of Casitas' property, but rather is prohibiting Casitas from making private use of a certain amount of the river's natural flow under a public program to promote the common good. Labeling such an action as a physical taking blurs the line Tahoe-Sierra carefully draws between physical and regulatory takings." Still, the majority contrasted its holding with Tahoe-Sierra because the latter case "did not involve a claim of physical taking, nor did it involve water rights." The Case: Casitas Municipal Water District v. United States , No. 05-CV-168. Published September 25, 2008. The Lawyers: For Casitas: Roger Marzulla, (202) 822-6760. For the United States: Katherine Barton, Department of Justice, (202) 514-2000.

The City of Rancho Palos Verdes' 30-year moratorium on new home construction in an area the city says is prone to landslides is an unconstitutional taking of private property, the Second District Court of Appeal has ruled. The decision marks a rare takings victory for property owners in state court. The decision is also one of two potentially landmark takings rulings issued recently. In the other case, a federal appellate court ruled that the mandatory diversion of water to aid an endangered fish species is a physical appropriation of a water district's property. The Rancho Palos Verdes decision appears to be the first state appellate court ruling based primarily on the U.S. Supreme Court's 16-year-old Lucas decision, in which the high court held that a regulation that prohibits all economic use of a property is taking, except to the extent that principles of nuisance restrict the use ( Lucas v. South Carolina Coastal Council , 505 U.S. 1003). The Second District determined that Rancho Palos Verdes did not prove that building houses on the property in question would constitute a nuisance. The court also ruled that the property owners did not have to exhaust their administrative remedies – namely, file applications for exceptions to the moratorium – because the process would have been futile. Not surprisingly, views of the decision were mixed. The property owners' attorney, Stuart Miller, said the city's moratorium is a classic " Lucas taking." "We've got a city that is so extreme and unreasonable," contended Miller, who said there is no evidence his clients' land will slide. "It's an absolute ban on use, and there's no justification for it." J. David Breemer, a principal attorney with the pro-property rights Pacific Legal Foundation, which did not participate in the litigation, said the case could force cities to reconsider long-term building bans. "I think it vindicates the principle that we argue a lot – that towns and agencies can't rely on speculative concerns of harm as a pretext for a ban on building," Breemer said. "You've got to show that there would be some actual harm," But attorney Edwin Richards, who represents the city, called the ruling a bitter one for Rancho Palos Verdes and all municipalities, which may now face greater scrutiny when they restrict development because of potentially hazardous situations. "We just think that the decision puts this city, and cities in general, in a terrible catch-22 situation. They are being forced to allow development in a known landslide area with all of the hazards inherent in that," Richards said. City officials and current residents fear that additional development will exacerbate the landslide potential, Richards explained. "The lesson is a very distasteful one. Here, the city worked extremely hard to weigh the competing interests of these property owners and its citizens, and made a decision in the city's best interest," he said. "Then the court stepped in and said, ‘Nice try, but you have to pay market value for these properties.'" Dan Selmi, a professor at Loyola Law School, said the case is strikingly similar to Lucas . "It seems to fall into that pattern like Lucas – a relatively rare fact pattern where the city was unwilling to permit housing on safety grounds," Selmi said. Thus, the burden of proof was on the city and, he said, "The court thought there was something wrong with the city's evidence." Located on a peninsula that separates Santa Monica Bay from San Pedro Bay, Rancho Palos Verdes has a history of landslides. In 1957, an ancient landslide commonly known as the Portuguese Bend landslide began to move again. In 1974, a different area known as the Abalone Cove landslide began to shift. Both slides remain active, with annual movement typically measured in inches, but catastrophic slides are possible. In June 1999, the 18th hole at Ocean Trails Golf Course (now Trump National Golf Club) suddenly separated from the rest of the course by about 100 feet. The golf course is in the same area as the historic slides and about one mile south of the properties in question in the litigation. In 1978, the City Council adopted an urgency ordinance prohibiting development in the general vicinity of the slides. The city has updated the ordinance a number of times since, always allowing some exceptions, such as for repairs and renovations to existing structures. The city commissioned several studies over the years and in the mid-1990s divided the area into eight zones for purposes of remediation of residential development. The properties in question here lie in Zone 2, which covers 130 acres largely unaffected by the historic landslides. Zone 2 contains 111 lots, 47 of which are undeveloped. Much of the local controversy centers on the proper "factor of safety," a geotechnical term that describes the stability of a piece of land. A 1.0 factor of safety means that the forces of stability are equal to the forces of instability, and the property is not considered safe for building. A 1.5 factor of safety means that the forces of stability are 50% greater than the forces of instability. Geotechnical professionals consider a 1.5 factor to be the minimum for residential construction, although a lower rating may be appropriate when a great deal is known about an area's geology. In a 2002 report to the city, geologists with Cotton, Shires & Associates (CSA) said there was insufficient information to establish a factor of safety for Zone 2, but they also concluded that "development of the remaining parcels will not be of sufficient impact, in and of itself, to cause instability." In June 2002, the City Council approved the most recent moratorium resolution. It rejected the CSA conclusion that new homes could be built because the conclusion was not based on a factor of safety of at least 1.5. Under the resolution, the city would permit new home construction only if the applicant provided adequate geological data demonstrating a 1.5 factor of safety for all of Zone 2 – even though such a study would likely cost $500,000 to $1 million. The City Council adopted the resolution five months after the owners of 16 parcels in Zone 2 filed a joint application for exclusion from the moratorium. Instead of pursing the application, the property owners sued, arguing that the June 2002 resolution was a taking within the meaning of Article I, § 19 of the California constitution. A Los Angeles County Superior Court judge ruled for the city based on the administrative record. The property owners appealed, and the Second District in an unpublished 2005 ruling concluded two things. First, the court ruled the administrative record was not adequate to resolve the takings claim, so the property owners should be able to submit evidence at trial. Second, the court ruled that even though the property owners stopped pursuing their application, the takings claim was ripe for adjudication because the conclusion of the administrative process was foregone – the property owners could not prove a 1.5 safety factor for Zone 2. The case returned to Superior Court for trial, at which both sides presented expert witnesses to testify about the area's geology. Ultimately, Judge Cary Nishimoto rejected the takings claim because the land's stability was uncertain and because the city's regulation was not unreasonable. During the trial, the city agreed to pay property owners $4 million to drop their claim that the moratorium was a temporary taking. At trial and on the second trip to the appellate level, the issue of "ripeness" returned. Judge Nishimoto determined that the city's regulation was not a taking partly because Rancho Palos Verdes had an administrative process for property owners to gain an exception. Again, the Second District panel rejected the lower court's reasoning. "The City Council had already decided that Zone 2 had a safety factor less than 1.5 and was not going to be persuaded otherwise," Presiding Justice Robert Mallano wrote for the court. "We stated that plaintiffs should not be required to pay between $500,000 and $1 million to conduct a study in an attempt to prove what the city would not believe. Thus, the use of the administrative process was pointless." As in Lucas , the question was whether the regulation was justified by principles of nuisance law, Mallano wrote. And as in Lucas , the government must prove that the moratorium was justified. This the city failed to do, the court concluded. The court said that there was "nothing inherently harmful" in building a house on land zoned and subdivided for residential purposes, that uncertainty regarding land stability was "not a sufficient basis for depriving a property owner of a home," that the city's own expert testified that likely structural damage would occur in areas away from the plaintiff's properties and could be repaired anyway, and that the risk of personal injury was very low. Moreover, the court noted, the city has approved a number of moratorium exceptions for remodel or expansion of existing houses. "The risk of property damage and personal injury, as we have said, is not sufficient in any practical sense to justify applying the moratorium to plaintiff's lots," Mallano wrote. " iven the differing, and sometimes conflicting, views of numerous written reports and several witnesses, the trial court could not make a definitive finding on the safety factor, ultimately deciding that the stability of Zone 2 was uncertain. That finding is simply not adequate to satisfy the city's burden of proof under Lucas and state nuisance law." The city will ask the state Supreme Court to overturn the Second District, Edwards said. "This is a Lucas case, I agree with that. Where I disagree with the court is in how it applied Lucas ," he said. The property owners have not been deprived of their right to develop. They simply must follow the city's requirements, he urged. The larger issue, though, is the public policy for weighing competing interests, Edwards said. Both Selmi, of Loyola Law School, and the Pacific Legal Foundations' Breemer said the state Supreme Court just might accept the case. "It would not be an inappropriate case for the court to review because the city says it is a public safety concern," Selmi commented. But if the decision stands, added Beemer, it could work in combination with a federal court ruling last year that the City of Half Moon Bay's wetlands regulation amounted to a taking (see CP&DR In Brief , May 2008 , January 2008 ) "to signal that localities can't get too confident that they can go out and ban homes or rig the system so you can't build anything." If the state high court does not take the case, the parties will return to trial court for a determination of fair market value without the city's moratorium. Considering that the 16 parcels in question are large lots with ocean views in a wealthy community, the land is probably worth millions of dollars. The city's choice will be to buy the property or lift the restrictions, said Miller, the property owners' attorney. The Case: Monks v. City of Rancho Palos Verdes , No. B201280, 08 C.D.O.S. 12855, 2008 DJDAR 15265. Filed October 1, 2008. Modified October 22, 2008, at 2008 DJDAR 16091. The Lawyers: For Monks: Stuart Miller, Wellman & Warren, (949) 580-3737. For the city: Edwin Richards, Kutak Rock, (949) 417-0999.

State lawmakers need to decide what to do with the Bay Delta, "and soon," the Legislative Analyst's Office urges in a new report. The lengthy document released in late-October is mostly an overview of the state's water system, but the report concludes with several potentially controversial recommendations. The LAO recommends changing the state constitution to eliminate the policies of "first in time, first in right," and "use it or lose." According to the LAO, "The combination of these longstanding policies can lead to inefficient uses of water." The LAO goes on to recommend realigning the water rights system "to better reflect modern needs and circumstances." In addition, the LAO recommends that lawmakers "establish a state-administered water rights system for groundwater," as well as a water quality permitting system that mirrors the existing surface water system. These new programs would eliminate the need for court adjudication of groundwater rights and lead to cleanup of degraded groundwater, according to the LAO, which says that groundwater users and polluters could pay for the bulk of the new program costs. Finally, the LAO notes that all significant water system improvements "hinge on addressing current problems with conveyance of water through the Delta." The report lists three options: (1) build a peripheral canal from the Sacramento River to the State Water Project south of the Delta, (2) construct a "dual conveyance" facility that uses both a peripheral canal and conveyance of freshwater through the Delta, or (3) end water exports from the Delta to the south. "To this end, we recommend that it be a priority for the state to select an alternative to the business-as-usual conveyance approach," the report concludes. The report, "California's Water: An LAO Primer," is available on the office's website .

A Riverside County property owner needed to get a county grading permit to repair a seasonal stream's spillway, even though the state Department of Fish and Game had apparently approved the project and the Federal Emergency Management Agency had funded it. So ruled the Fourth District Court of Appeal, Division Two, in 2 1/2-year-old litigation over a $500 fine. In May 2005, a stream across John Martin's property near Temecula washed out a spillway that provided road access to a mobile home on a portion of the property. The Federal Emergency Management Agency ((FEMA) provided Martin $5,200 to repair the damage, and he commenced work. In early 2006, the Riverside County Code Enforcement Division issued citations and assessed Martin a $500 fine for grading without a permit. Martin contested the citations and fine; a code enforcement hearing officer upheld the county's action. Acting as his own lawyer, Martin sued the county, but a Riverside County Superior Court judge ruled against him. Martin appealed to the Fourth District, but the court determined it did not have jurisdiction and transferred the case to the Superior Court's appellate division. When that court also decided it did not have jurisdiction, the Fourth District took the case back. Armed with an attorney, Martin made four primary arguments to the appellate court: the Fish and Game Code pre-empts local grading legislation; the Department of Fish and Game (DFG) authorized the work in 1993 so no county permit was required; the spillway is a private road subject to an exception from the county grading ordinance; and the project qualified for an exception for moving less than 50 cubic yards of material. The unanimous three-judge panel rejected all of the arguments. "The county's grading ordinance is not a local regulation but originates in state housing law, including the Uniform Building Code," Justice Barton Gaut wrote for the court. The state law requires cities and counties to adopt building standards, including standards for grading and excavating, Gaut wrote. Both the Fish and Game Code and FEMA acknowledge the need for local permits, Gaut continued, also rejecting the contention that the grading was eligible for an emergency exemption. Martin did not repair the spillway for seven months and secondary access was available to the mobile home anyway, so there was no emergency, the court determined. The secondary access also eliminated the argument that the work was eligible for an exception as repair to a private road. As for the small project exception to the county ordinance, the court cited the Superior Court's conclusion that 221 cubic yards of material was the "more plausible" amount involved. Besides, Gaut wrote, the exception is for excavation, while Martin's project involved placing fill in a streambed. The Case: Martin v. Riverside County Department of Code Enforcement , No. E046276, 08 C.D.O.S. 12428. Filed September 19, 2008. The Lawyers: For Martin: Stephen Lindsley, Ackerman, Cowles & Lindsley, (951) 296-1698. For the county: Bruce Fordon, county counsel's office, (951) 955-6300.