California’s judicial system uses a fast-track approach to bring cases to trial quickly, but the state’s plans to repair the aging courthouses in which trials are conducted are on a slow track. It is a case of maintenance deferred, leading to decrepit courtrooms and unsafe, seismically unfit buildings. Under the Trial Court Facilities Act of 2002, superior courts around the state are being transferred from county ownership to the state. The transfers should be completed by 2007, with the state taking over all but the most unsafe buildings. To fix the courthouses and provide for future growth, the state needs $6 billion, a hefty figure at a time of budget deficits. The Judicial Council, the state agency that oversees courts in California, had proposed a $4 billion bond measure for the November 2004 ballot to pay for deferred maintenance. However, the Legislature ignored all bond measures during its recent session as it grappled with the budget, according to Kim Davis, acting director of the Office of Court Construction and manager for the Administrative Office of the Courts, the staff arm of the Judicial Council. Davis said the Legislature could vote on the bond measure in January, providing enough time for it to make the November 2004 ballot. To help address the need for additional court facilities, filing fees and criminal fines increased at the beginning of this year and are expected to generate about $70 million a year for courthouse construction. Davis said that courts would need about $2 billion to prepare for growth over the next 20 years. Problems with courthouses include security, earthquake safety, access for persons with disabilities, and lack of space for juries and new courtrooms. The most frequently cited security concern is when in-custody defendants walk through courtroom halls in front of jurors and witnesses, with the potential to threaten those parties. Ideally, the prisoners would enter through a separate entrance. In 2000, a Judicial Council study found that of the 451 court facilities in the state, 41% have no way to bring jailed defendants to courtrooms without using public hallways. The same study found that 23 of the state’s 451 court facilities were in trailers, 25% percent of courtrooms had no space for a jury, 54% needed earthquake repairs, and 68% had inadequate security. Davis pointed to lax security at a courthouse in Marin County, where a judge was killed and an assistant district attorney was paralyzed in a 1970 shooting. She said the facility still has inadequate security today. The state government began taking over the courts in 1997, according to Mike Roddy, regional director of the Administrative Office of the Court in Central California, and former executive officer of the Sacramento County courts. Budgets and employee salaries are now paid by the states, rather than the counties, and taking over the facilities during the next four years is the final part of the process, he explained. Roddy spoke with while he drove to the offices of the San Joaquin County Superior Courts in Stockton, where he was beginning negotiations with that county as part of a program to turn over its facilities. San Joaquin is one of the three counties in the state (the others are Riverside and Solano) to participate in a pilot transfer program. After turning over their court facilities, counties will continue to provide maintenance-of-effort payments to the state. The payments will be capped at current levels, and the state will cover future growth and cost increases. In addition, each county is preparing a master plan for court growth over the next 20 years. Those plans are due by December. In San Bernardino County, officials are planning for 22 new judges and support staff by 2020, said Tressa Kentner, executive officer for the county’s courts. That’s in addition to the ongoing seismic retrofitting going on at the county’s courthouse in downtown San Bernardino and construction of a $4 million juvenile dependency court that began in June. Davis said such building is unusual for counties, with most waiting for the state to pay for upgrades when it eventually takes control of the facilities. Even with the improvements in San Bernardino, the backlog is tremendous. Kentner said of her county’s 14 court facilities, only 1 doesn’t need significant work. California Supreme Court Justice Ronald George told the State Bar convention in September that the courts were hit with a total of $104.5 million in budget cuts in this fiscal year, forcing reductions to programs intended to provide greater public access to the judicial system, among other things. With the state unable to maintain existing judicial services, money for better courthouses is likely to remain in short supply. And even if the bond measure gets on the ballot, there is no guarantee voters who have heard about nothing but state budget deficits for two years will approve it. Davis and others said they are unaware of any opposition to their proposal. Still, will a generation of California voters who were educated in portable classrooms really mind that court is conducted in a trailer? “I would hope we place some value on the third branch of government,” said Roddy. “Courthouses have historically been community symbols.” Kentner agrees that courts need to look nice and be safe. “People should have a sense what they’re doing there is valued and important,” she said. A safe and appealing courthouse adds to the vibrancy of cities’ economies, as lawyers seek offices and frequent nearby restaurants. Roddy said a study in San Diego indicated that having the main courthouse downtown was a major boost to the economy. And Kentner said that when the U.S. Bankruptcy Court and state Court of Appeal moved from San Bernardino to Riverside several years ago, it hurt the downtown San Bernardino economy to the benefit of Riverside. Contacts: Kim Davis, acting director, Office of Court Construction and manager, Administrative Office of the Courts, (415) 865-7971. Mike Roddy, regional director, Central California, Administrative Office of the Courts, (916)263-1900. Tressa Kentner, court executive officer, San Bernardino County, (909) 387-6500.

The City of San Jose Redevelopment Agency cannot use its power of eminent domain to escape from a contract that gave a company an exclusive right to negotiate a development agreement, the Sixth District Court of Appeal has ruled. The city could not use eminent domain because there was no real property involved — only a contract that did not establish an interest in real property, the unanimous three-judge panel held. The ruling is another setback in San Jose’s attempt to redevelop a downtown parking lot with a mixed-use project. While this litigation was proceeding, the company chosen by the agency to redevelop the site, Palladium Co. of New York, backed out of the project (see , May 2002). In 1997, the Redevelopment Agency entered into an agreement with San Jose Parking, Inc. (SJP) that gave the company an exclusive right for 10 years to negotiate a disposition and development agreement for the Fountain Alley parking lot. The company was also allowed to operate the parking lot and keep the revenues. In exchange, the company was to pay $25,000 per month for the first five years. If the city and SJP failed to reach a development agreement, the city would refund the monthly payments and half of the interest. Three years later, the Urban Land Institute provided the city with a study that identified the Fountain Alley parking lot as a key parcel in downtown redevelopment. The ULI recommended development of a mixed-use project with housing and shops. In January 2001, the agency entered into an exclusive negotiating agreement with Palladium for the proposed mixed-use project. The following month, SJP sued the agency, seeking a restraining order and demanding that the agency negotiate with SJP for the mixed-use development. In April, the agency filed its eminent domain action seeking to condemn SJP’s interest in the parking lot as established by the 1997 contract. An agency appraiser set the value of SJP’s interest at $3.7 million. After a trial, Santa Clara County Superior Court Judge William Martin ruled for the agency. On appeal from SJP, the Sixth District overturned the trial court’s ruling and held the agency could not acquire SJP’s interest via eminent domain. The agency presented numerous arguments to prove that its agreement with SJP conveyed an interest in real property as defined in Health and Safety Code § 33391. All of the arguments failed. “Since the Legislature has chosen to limit agency’s eminent domain power to the power to condemn real property while granting other entities the power to condemn property, whether real or personal, we think a strict interpretation of the meaning of real property is warranted,” Presiding Justice Conrad Rushing wrote. The agency argued that the contract was similar to an option to purchase. The court, however, ruled that a long line of cases established that “an option contract relating to the sale of land conveys no interest in the land.” Among other cases, the court cited , (1939) 14 Cal. 2d 73, , (1981) 123 Cal.App. 3d 701, and , (1882) 106 U.S. 252. The agency pointed to , (1974) 13 Cal.3d 684, in which the court held that the government’s taking of an unexercised option to purchase land was compensable. But the Sixth District held that only addressed the issues of compensation and fairness — not the power to condemn. The agency contended the agreement with SJP was similar to a lease. The court would not accept that argument, either. The agreement specifically stated that it did not grant SJP “any leasehold interest,” the court noted. Furthermore, as SJP’s monthly payments were potentially refundable, the agreement did not require the payment of rent, which the court called a “fundamental attribute of a lease.” The agency argued that the agreement had the attributes of a license. Again, though, the court ruled, “ ase law makes clear that licenses create no interest in real property.” Finally, the court addressed an argument put forth on the agency’s behalf by the California Redevelopment Association. The association contended the agreement’s language expressly stating that the agreement did not convey an interest in property was merely standard language that made clear the agency was not disposing of an interest in land. The court held that this argument supported the court’s conclusion: If the agency had not disposed of an interest in land, then there was no interest for the agency to condemn. The Case: , No. H024871, 03 C.D.O.S. 6740, 2003 DJDAR 8442. Filed July 29, 2003. Modified September 3, 2003 at 2003 DJDAR 9913. The Lawyers: For San Jose Parking: Norman Matteoni, Matteoni, Saxe & O’Laughlin, (408) 441-7800. For Superior Court: T. Brent Hawkins, McDonough, Holland & Allen, (916) 444-3900. For the agency: C. Donald McBride and Robert Fabela, city attorney’s office, (408) 277-

An outwardly conventional apartment complex in Orange County does not clamor for attention in the same way as an architectural milestone like Frank Gehry’s Walt Disney Concert Hall in downtown Los Angeles. But it might be that the suburban apartments, easily overlooked, will have a greater long-term impact on average Californians than L.A.’s spectacular new icon. Merely mentioning these two projects in the same breath — the cocoa-and-latte-colored apartments set on a landscaped slope in Aliso Viejo versus the titanium-clad clipper ship in full sail on Bunker Hill — seems incongruous if not laughable. And I am not suggesting the apartment house is a masterpiece comparable to Gehry’s $274 million concert hall, or even a masterpiece at all. What I am suggesting, however, is that the apartment complex opens new possibilities in combining high-density housing with open space, and that possibility may have more to say about our future way of life in urban California during coming decades than the gasp-inducing concert hall. For all its conventionality, City Lights in Aliso Viejo does a number of strikingly original things that suggest it is the developer’s carefully considered prototype. Shea Homes’ clear intent is to rethink the configuration of high-density apartments so that they are desirable to middle-income households. (The 792-unit project has a density of about 50 units per acre.) The most obvious innovation here is a centralized parking structure in the center of the site, around which the housing wraps like a square doughnut. Pedestrian bridges link the parking structure to units on all four levels, and in all four directions. For most people, the walk from the parking stall to the front door is no longer than a few hundred feet at most. And those bridges are not dark, scary tunnels but open-air catwalks with clear sightlines. Shea Senior Vice President Don Gause said that centralizing the parking was, in part, an attempt to find an alternative to podium housing, which requires developers to build a ground-level parking structure, and then build all the housing atop the structure. At the risk of sounding patronizing, I am not convinced that Shea Homes understands the full potential of its own invention. The really important aspect of this project — and its Bay Area counterpart in Dublin, Waterford Place — is the enormous freedom offered in site planning by separating parking from housing. With cars, garages and driveways out of the picture, the site planner could arrange residences into an old fashioned campus with courtyard housing, could string together row houses on the perimeter with an enormous green space in the middle, could use the conventional New Urbanist scheme of small, pedestrian-only streets, or could create nearly anything else. What is tantalizing here is the possibility of creating a private green where children may run or ride their bikes for long distances without having to negotiate car traffic. In the case of Waterford Place and City Lights, the developer has made a cautious step toward exploring the versatility of the car-free plan by arranging the units around courtyards. The concept is imperfect because not all units in these double-loaded corridors (like the traditional hotel arrangement with units on both sides of a central hallway) have a view into the courthyard. The courtyards themselves are not ideal. Four-story walls on all sides of a courtyard may make an otherwise pleasant space seem a little claustrophobic. But make no mistake: Even with its defects, this approach is an improvement over the long, narrow, hotel-like corridors of traditional apartment complexes. In other places of the site plan, we see that Shea has not taken full advantage of the open space opportunities afforded by the car-free site plan. The apartments are set back from the street behind a swath of suburban, neither-yours-nor-mind kind of landscaping that is less about providing usable space than establishing a spatial buffer between the units and the street. I saw the City Lights project during the same week in September when the festivities surrounding the long-awaited opening of Disney Hall were occurring amid fanfare. There was even an accompanying celebratory show of Gehry’s work at the Museum of Contemporary Art, across the street from the new concert hall in downtown Los Angeles. It is unfair to Gehry, a great inventor, to complain that his buildings are one-offs, just as it is ungracious to cavil at the concert hall, which is a jewel in the thread-bare fabric of downtown Los Angeles. But it is also time to think about the tension in architecture between buildings that are unique and buildings that are prototypes. Arguing that architects should focus on useful prototypes rather than unique art objects has obvious limitations: Are we supposed to criticize the Parthenon or Michelangelo’s dome at St. Peter’s in Rome because they cannot be reproduced economically on every other street corner by cost-cutting developers? Where the argument gains traction, perhaps, is as a counter-balance to the value system of architects and their status-seeking clients that now places a higher premium on monument-making than on solutions that could affect the lives of millions of people, both living and unborn. A reasonable person will shrug shoulders and say the world is big enough for both masterpieces and production housing. True enough. Yet that is not the end of the story. While I doubt that City Lights has the potential to make the history books in the same way as Disney Hall — the latter’s masterpiece status already has been vouchsafed — City Lights may be part of a long line of projects that value open space and pedestrian-oriented living. When a national builder such as Shea commits itself to these values, that is a signal that the market is prepared to accept some new ideas about high-density housing, and that ideas formerly dismissed by commercial types as “impractical” and “unfeasible” have a chance of entering the mainstream. Presciently, Shea seems to understand that single-family housing in much of California is becoming out of reach for all but the rich. The challenge to builders is to devise a better “product” for upscale renters, although there is no reason why the same basic strategy would not be available to builders of affordable homes. Simply for opening new possibilities for large commercial builders, City Lights’ contribution should not be overlooked.

It's perhaps premature to ask what changes smut peddler Larry Flynt would make to the General Plan Guidelines, or where buxom billboard celebrity Angelyne stands on the latest wrinkles in the California Environmental Quality Act. But with the recall election only a month away -- and two statewide propositions on the special ballot along with the recall -- it's not too early to speculate on how the whole October 7 circus will affect the world of planning and development in California. The circus comes at an interesting time, and it has intriguing components. Though never a strong advocate of land use reform, Democratic Gov. Gray Davis has gradually begun to tackle land use and growth issues, partly because of legislative mandates and partly because of the inclinations of his appointees. Prior to the recall, the conventional wisdom was that most of his likely Democratic successors — including Treasurer Phil Angelides and Attorney General Bill Lockyer — would probably tackle land use issues head-on. But a light recession, a deep budget deficit, and a different governor could throw that assumption out the window. Perhaps the most overlooked part of the October 7 ballot is Proposition 53, which would earmark 1% of the state's general fund for infrastructure investment. Voters might not notice Proposition 53 at all, given the recall circus and the presence of Proposition 54, Ward Connerly's controversial ballot measure restricting the collection of racial and ethnic data, which is sure to get far more publicity. As governor, Davis is responsible for implementing one of the most important growth policy changes in California during the last decade — AB 857, which requires state agencies to pursue infill development, compact greenfield development, and agriculture and open space protection as statewide goals (see CP&DR, October 2002). Davis placed the Governor's Office of Planning and Research in charge of implementation and, in a related move, promised to issue the Environmental Goals and Policies Report, which essentially serves as the governor's growth policy statement. No governor has issued this report in 25 years, not even Davis's predecessor Pete Wilson, who as a lawmaker carried the legislation requiring it. The AB 857 implementation plan is required to go to the Legislature this fall. But if Davis is out of office on October 7, what will happen to these efforts? If Lt. Gov. Cruz Bustamante succeeds Davis, the efforts might continue. However, Bustamante has already begun to distance himself from Davis — in supporting a repeal of the car-tax increase, for example — so he might take a different approach on growth as well. The conventional Republican politicians in the race are mostly conservative. In his race against Davis last year, Bill Simon issued a thoughtful and comprehensive — though very market-oriented — policy paper on housing and growth (see , September 2002). State Sen. Tom McClintock, an anti-tax activist, can be counted on to toe the anti-regulation line. As for Arnold Schwarzenegger, he has not tipped his hand yet about planning and development or, indeed, many policy issues at all. And he may not do so before the election. Yet despite the hype surrounding his campaign, Schwarzenegger may take growth policy seriously. His position as a moderate Republican -- and his experience as a real estate investor -- makes for an intriguing set of possibilities. Schwarzenegger is positioning himself as a fiscal conservative and a social liberal. He's also relying heavily on political advisors to former Gov. Wilson. Although land use reform at the state level typically is viewed as a Democratic issue, moderate Republicans are often the most credible purveyors of innovative land use ideas. Wilson was a growth management mayor in San Diego and went to Sacramento with a strong land use reform agenda. In the 1980s, New Jersey's land use reform was engineered by Tom Kean, a moderate Republican governor. And while Florida's growth management law was signed by Democratic Gov. Bob Graham, it was largely implemented by his moderate Republican successor, Bob Martinez. Still, it is not surprising that moderate governors often get caught up in hardball Republican politics on land use issues sooner or later, especially if a recession is looming and Republicans want to hammer development regulations as the cause. Wilson got sidetracked from land use reform by a recession, a budget deficit, and his need to cater to Republican right-wing legislators. Martinez had to back off of Graham's deal to place a sales tax on services to pay for infrastructure required by the Florida growth management law, a move that harmed the law's effectiveness from the get-go. Schwarzenegger has no policy record except his support of an initiative favoring preschool funding last year. Yet his track record as a business investor suggests that he has a working knowledge of both greenfield and infill development issues. His portfolio features several major investments in development projects. The actor owns a big chunk of Santa Monica's Main Street and also invests in the construction of AMC movie theaters — both of which have benefited from a wide variety of public urban development subsidies. He also has major investments in a shopping mall near Akron, Ohio, and a real estate investment company focusing on the Sorrento Mesa area north of San Diego. Obviously, Schwarzenegger's approach would be driven in part by his appointees and in part by practical politics. If he selects moderate Republicans as cabinet secretaries and department heads — as Wilson did, at the beginning of his administration — then we might see further movement on implementing AB 857, reforming CEQA to favor infill projects, and the like. If Schwarzenegger himself is personally interested in these issues — as he might be, given his business record — then we might see the kind of gubernatorial shove these issues often need to move forward. If, on the other hand, Schwarzenegger finds himself in the same kind of situation that trapped Wilson — needing caveman Republicans in the Legislature to pass a budget, especially during a recession — he might find growth policy expendable. A lot depends on the perception of who has got political power after the recall. Gov. Schwarzenegger would have much more clout if he wins with 45% of the vote rather than 15%. Although we don't know where Arnold is coming from, we should not overlook the candidates who have taken on planning and development issues head-on in this campaign. In an interview in the , former child actor Gary Coleman positioned himself as strongly pro-infill and even called for a return of the days of urban renewal. "We got so much land that's not being used; we could do so much with that," he told the . "We could move people away for a year and bring them back into something nice. Move a thousand people out, make sure you leave enough space for them to come back, but you've added value to the place, a new mini-mall, a couple of hundred more houses." He also positioned himself in favor of express buses and light rail. So far this stance has not given Coleman's campaign much traction. Then there is the hilarious columnist Steve Lopez, who is running a write-in campaign as an ongoing joke in his column. Lopez has not been afraid to deal with land use in the campaign. When the Coastal Commission was considering whether to legalize a Malibu pitch-and-putt golf course built illegally by big Davis contributor Jerrold Perenchio, S-Lo figured he could wheedle a big contribution out of Perenchio too. He showed up at Perenchio's house with his clubs but was turned away at the security gate. True to form, S-Lo holed out from a weed patch in the middle of Pacific Coast Highway. As for Angelyne, we assume she's against restrictions on billboards.

The November election in the City of Fairfield could provide a significant indicator of how the city of 103,000 people will grow during coming years. After many years of supporting pro-growth officials, the electorate will cast ballots on a policy that requires voters to decide on changes to the Solano County city's urban limit line, which the City Council tightened last year. The election will mark the latest phase in Fairfield's evolving growth politics and policies. For three years, the Fairfield City Council has had its first slow-growth majority, which took office following the voters' 9-to-1 rejection of an expansive urban growth boundary initiative backed by development interests. In 2002, the council approved a comprehensive amendment to the general plan that tightened the city's urban limit line by excluding areas around Travis Air Force Base and in an area north of the Interstate 80 and I-680 interchange. After the council adopted the new general plan, an odd collection of environmentalists, farmers, Air Force veterans and anti-tax advocates qualified an initiative for the ballot that would lock in place the tighter urban limit line and a new "Travis Reserve" until 2020 unless voters approved amendments. In May, the council voted 4-1 to adopt the initiative rather than place it on the ballot. Pro-growth advocates responded with a referendum on the growth measure; the referendum qualified for the November ballot. Although the vote concerns specific planning measures, the choice is seen in town as the old policies of rapid greenfield growth on the edge versus slower-paced infill and redevelopment. "Fairfield in the past gerrymandered, we made cherry-stems — which aren't even legal anymore. We did all kinds of leapfrog development," recalled Mayor Karin MacMillan, who backed the initiative. Today the council opposes that approach to development. But without the requirement of voter approval for urban limit line changes, the policies of the past could return with three votes of the council, she said. Councilman John English, however, said he voted against adopting the initiative because, "It has nothing to do with the growth element. It has to do with taking the decisions out of the hands of the people who are elected." Any councilmember who backs development outside the urban limit line adopted in 2002 or in the Travis Reserve would have to answer to voters, English said. English is only one faction of the referendum supporters. He said he backs the 2002 general plan amendment, except that he would permit construction of affordable housing for military personnel in the Travis Reserve. The Chamber of Commerce, which backs the referendum, opposed the 2002 general plan changes. In a recent newsletter, the chamber contended that the general plan "limits new industrial areas to locations riddled with wetlands, vernal pools and endangered species." An inventory by the city found that Fairfield could accommodate at least 10,000 housing units and 35 years worth of commercial and industrial development inside the current growth boundaries. At 37 square miles, Fairfield is geographically large for a city with its population. Both sides say they want to protect Travis — which is Solano County's largest employer — from future base closings. Although it may be difficult to imagine the Bush administration shuttering military bases, many people remember the pain induced by the base closures of the 1990s, including the closure of Mare Island Navy Shipyard in nearby Vallejo. Prior to 2002, the Fairfield general plan designated lands north and east of Travis as a future growth area. The revised general plan keeps those lands in their agricultural state, said Associate Planner Dave Feinstein. The idea, Mayor MacMillan said, was to give Travis room to expand while preventing new homes from encroaching on the base, especially near the flight path. But the Chamber of Commerce contends the initiative "has nothing to do with protecting Travis AFB." Instead, the Chamber argues, the measure creates a "no-growth ring around the entire city," and that the restriction will prevent the development of housing to serve officers and enlisted personnel at Travis. The Chamber argues that the cost of housing is a strike against Travis in any future base closing proceedings. Despite a troubled economy in the Bay Area, housing prices in northern Solano County and Fairfield have increased by roughly 20% during the last year, with the median for both now at about $300,000. No one seems to be serious about shutting down growth in Fairfield, so the argument over how to grow is central to the November election. The new general plan scaled back the city's outward expansion by blocking growth near Travis and in the middle Green Valley. In exchange, the city targeted eight areas within the city limits for increased density and infill development, Feinstein said. Greenbelt Alliance backs the general plan because it speaks to "compact, attractive development" on infill sites with transit orientations, said Greenbelt Field Representative Natalie DuMont. The organization contends the city should focus on revitalizing existing districts, in part by approving residential projects in what have been purely commercial areas. "There are a lot of vacancies. There is a lot of strip mall-type development that is not getting foot traffic," DuMont said. She and others hope a new county administration building on the edge of downtown will bring new life to downtown, which has made a slow march back to life since the 1980s. Construction on the county building began this year. Ernest Kimme, of the Solano County Orderly Growth Committee, contended the new general plan policies address Fairfield's "sprawl problems" by sparing productive agricultural land near town and pushing growth to existing districts. Kimme's organization has been involved in the growth wars for more than 20 years, helping pass two countywide initiatives that steer urban development to incorporated areas. Those same activists have helped elect the Fairfield City Council's current majority. MacMillan, who leads that majority, said she wants to see well-designed, mixed-use projects. "We're trying to be as creative as we can be. You need to have a good housing mix. You need to have a good jobs-housing mix," she said. Councilman English said he is "all for vertical development" and downtown redevelopment. But he doubts whether those who want to rein in growth on the edge will actually support high-density infill when the time comes. "I'd love to build affordable housing, starter homes. African Americans and other minorities can't get their first leg up," said English, who is African American. "We need to start putting action to our words." During an August hearing, the council split over a 9-acre mixed-use proposal of 70 townhouses, 17 live-work units and four commercial buildings. MacMillan backed the plan, but two other councilmembers refused to support the housing component. The council ended up sending the proposal back to the Planning Commission, which unanimously rejected the plan earlier. Contacts: Karin MacMillan, Fairfield mayor, (707) 428-7395. John English, Fairfield councilman, (707) 428-5680. Dave Feinstein, Fairfield planning department, (707) 428-7448. Natalie DuMont, Greenbelt Alliance, (707) 427-2308 Ernest Kimme, Solano County Orderly Growth Committee, (707) 447-1555.

A developer's allegation that a City of San Dimas general plan amendment was an unconstitutional taking has been rejected by the Second District Court of Appeal. The owner of 200 acres in the foothills of the eastern San Gabriel Valley city contended that a general plan amendment aimed at protecting natural resources was unconstitutional on its face. The landowner — NJD Ltd. — argued that the general plan amendment denied "all economically viable use of the property" by reducing potential building densities. The court, however, determined that some development was still allowed under the general plan amendment. The court suggested that what NJD was actually contesting was how the general plan amendment was applied to NJD's property. " hether there is no economically viable use of plaintiff's property absent a change in the allowable density is a question that exceeds the reach of a facial challenge to Amendment 99-1," Presiding Justice Paul Turner wrote for the court. "It presents a concrete controversy as to the application of the zoning restrictions to plaintiff's particular property. Plaintiff's argument with respect to the restrictions set forth in the general plan does not render its facial challenge viable." In July 1997, the city imposed a moratorium on development in the northern foothills area — about 3,000 acres, one-third of which are privately owned and undeveloped. Two years later, the city adopted general plan amendment 99-1, which reduced permitted building densities and emphasized protection of natural resources. During the two-year interim period, NJD purchased 200 acres of undeveloped land in the foothills. Unhappy with the city's planning, NJD filed a lawsuit alleging violations of the California Environmental Quality Act (CEQA) and contending the amendment was an inverse condemnation of the property. Different Los Angeles County Superior Court Judges ruled against the CEQA claim and the takings argument. The landowner appealed, and a unanimous three-judge panel of the Second District, Division Five, upheld the lower court. The appellate court published only the portion of its opinion addressing the takings claims. In the decision, Justice Turner provided something of a primer on takings law. There are two types of challenges to a zoning statute — facial and "as applied." The facial challenge, courts have said repeatedly, is the tougher argument to win because the landowners must prove that the mere enactment of the regulation constitutes a taking, according to Tuner, who cited , (2002) 535 U.S. 302 (see , May 2002) and , (1997) 520 U.S. 725 (see , June 1997) The California Supreme Court has distinguished the two types of takings this way: A facial challenge considers "only the text of the measure itself, not its application to the particular circumstances of an individual," Turner wrote, citing , (1995) 9 Ca.4th 1069. Meanwhile, an as-applied challenge considers the specific application of a facially valid ordinance to an individual or class of individuals. At the trial court level, NJD contended the general plan amendment was facially invalid because it denied "all economically viable use of the property" — terminology derived from the U.S. Supreme Court's 1994 landmark case. But NJD also sought to introduce evidence as to the regulation's economic affect on its land. Los Angeles County Superior Court Judge Judith Ashmann-Gerst blocked introduction of that evidence. The appellate panel upheld Ashmann-Gerst, ruling that the only thing at issue in NJD's lawsuit was the regulation itself. "Plaintiff is making a facial challenge to Amendment 99-1. As such, the legal issue plaintiff presents is what the United States Supreme Court characterized as ‘whether the "mere enactment"' of Amendment 99-1 constitutes a taking, i.e. denies the "‘owner economically viable use"' of the hillside property," Turner wrote. Clearly, some economically viable uses were still permitted, the court noted, contrasting the regulation with the regulation struck down in Lucas that prohibited construction of any habitable structure. The San Dimas general plan amendment permitted single-family dwellings on every existing lot and on new parcels of 5 to 80 acres. The regulation also allowed equestrian uses, commercial communications facilities and public utility facilities. And the city included a variance procedure. Thus, the court held that the facial challenge failed. In the unpublished portion of the ruling, the court upheld the environmental impact report for the general plan amendment and the related zoning change and specific plan. The Case: , No. B160784, 2003 DJDAR 8574. Filed July 31, 2003. The Lawyers: For NJD: Karen J. Lee, Newmeyer & Dillion, (949) 854-7000. For the city: Vickie Land, Brown, Winfield & Canzoneri, (213) 687-2100.

An appellate court has overturned a Superior Court decision requiring the City of Escondido to reimburse the city redevelopment agency's housing fund for 13 years worth of underpayments. The appellate panel instead ruled that, because of the statute of limitations, the city had to reimburse the housing fund for only three years worth of underpayments. From 1985 to 1998, the city's redevelopment agency designated only 20% of net tax increment for the low and moderate income housing fund — not 20% of gross tax increment, as required by state law. The Superior Court ordered the city to reimburse the housing fund about $5.6 million for all of the years of underpayments and lost interest. The Fourth District Court of Appeal overturned that decision, saying a three-year state of limitations applied. The ruling is an important one for government agencies, said Jennifer McCain, Escondido assistant city attorney. "It's a novel concept to say there is no statute of limitations," she said. "You need to have certainty. Otherwise, it could be fiscally unsettling for the agency." But Catherine Rodman, the housing attorney who brought the suit, called the decision a "horrible" precedent and vowed to seek a state Supreme Court review. When Escondido's redevelopment agency came into existence in 1985, the city signed a contract with the county under which the county kept a percentage of the gross tax increment before remitting the rest of the revenues to the redevelopment agency. The contract called for 20% of net tax increment to flow into the housing fund. As early as 1989, the agency's own attorney warned that this method of calculating the housing set-aside was improper. When the city refused to amend the contract, the city sued the county. But in 1992, a trial court upheld the contract because there was no third party seeking relief. In 1998, Hogar Dulce Hogar (Home Sweet Home), a group of poor people who live in the redevelopment project area, sued the city over the miscalculated housing set-aside. The city agreed it had been shorting the housing fund but disagreed with Hogar Dulce Hogar over the amount that had to be reimbursed. The city also argued against other requests of the group for a court order limiting the redevelopment agency's planning and administrative expenses, requiring the city to maintain housing funds in one account, and repay interest on a debt for the 1991 purchase and rehabilitation of a mobile home park whose residents may or may not have been low- or moderate-income. San Diego County Superior Court Judge Michael Anello ruled for Hogar Dulce Hogar on reimbursing the housing fund but otherwise sided with the city. The group and the city appealed portions of the decision that they lost. A unanimous three-judge panel of the Fourth District, Division One, ruled for the city. In the appeal, Hogar Dulce Hogar argued that the three-year statute of limitations in Code of Civil Procedure § 338, subdivision (a) did not apply under the rule of "delayed discovery." That rule suspends the statute of limitations, often in fraud cases, to protect plaintiffs who are ignorant of their right to sue. But the appellate court ruled that delayed discovery only applied in instances where the plaintiff could not know the facts. That was not the case here because the city had discussed the situation numerous times in public meetings. "A discovery rule is not appropriate, where, as here, a public agency's violation of a statute is a matter of public record and the violation is being asserted by a plaintiff which has no direct beneficial interest in the outcome of the litigation," Justice Patricia Benke wrote for the court. "As the agency points out, the deficiency in the agency's payments to its housing fund were the subject of public meetings and public records," Benke continued. "There was no attempt by the agency to conceal its payment to the housing fund." "Moreover," Benke wrote, "redevelopment agencies could not operate with any fiscal certainty if, by virtue of application of a discovery rule, there was essentially no limit on the time in which their calculation of amounts due their respective housing funds could be challenged." The court remanded the case to the Superior Court for recalculation of the amount to be reimbursed to the housing fund. McCain said the amount will probably be in the neighborhood of $1 million. She noted that the county agreed to amend the contract in 1998 and the city has contributed 20% of gross tax increment to the housing fund ever since. In the unpublished portion of the case, the Fourth District upheld the lower court's rulings in favor of the city regarding planning and administrative costs, keeping three separate accounts for various housing revenues and obligations, and the mobile home park purchase. The court also ruled that the city was not responsible for obligations of the redevelopment agency, which is actually a state agency. The Case: , No. D039163, 03 C.D.O.S. 6724, 2003 DJDAR 8411. Filed July 29, 2003. The Lawyers: For Hogar Dulce Hogar: Catherine Rodman, San Diego Advocates for Social Justice, (619) 233-8474. For the city: Jennifer McCain, (760) 839-4608.

A long-planned 115-acre lagoon restoration project in Del Mar is on track after an appellate court rejected neighboring property owner's lawsuit over the restoration. Two to three years worth of work to restore San Dieguito lagoon could begin as soon as 2005. The project at the mouth of the San Dieguito River is one of half a dozen lagoon restoration projects in central and northern San Diego County. Some projects remain in the planning stages, while several others — including the Batiquitos Lagoon restoration in Carlsbad — are complete and in the monitoring stages. "The lagoons in north San Diego County are pretty degraded," said Ellen Lirley, a coastal planner for the California Coastal Commission. "A lot of it is due to sedimentation from upstream. A lot of development has occurred in close proximity, so the species stay away." All of the projects are similar. Dredges or other heavy equipment remove sand to open the mouth of the river, ensuring tidal action flushes the lagoon. Non-native plants are replaced. And scientists monitor the situation to determine when further intervention is necessary to keep the wetlands healthy. Advocates say the projects are important because they return some of the few remaining Southern California coastal wetlands to a more natural state, which is beneficial to fish, birds and other wildlife. And the projects are important to public health because they prevent the accumulation of stagnant water that lets mosquitoes breed and causes fish to die. Many of the creeks and rivers actually carry more dry-season water nowadays because of urban and agricultural runoff, Lirley explained. But because beach sand can naturally close off river mouths, the non-natural summertime trickles accumulate at the end of rivers, exacerbating stagnant water problems. And with West Nile Virus moving into California, mosquitoes are a bigger concern than they have been for decades. "It's definitely much healthier to have a healthy water body next to you than one with stagnant water and dead fish," said Doug Gibson, executive director of the San Elijo Lagoon Conservancy. "It's definitely a necessity to keep these open." But while the projects along the San Diego County coast are similar, public reaction has not been. Volunteers and contractors have been actively restoring the San Elijo Lagoon in Encinitas — including opening the river mouth — since 1994 and have earned widespread support. An even older project at Penasquitos Lagoon also has been well-received. Yet the project at San Dieguito Lagoon, which has been 10 years in the planning stages, has had to overcome strong local opposition. Gibson and San Dieguito River Park Joint Powers Authority (JPA) Executive Director Dick Bobertz said the difference is that wealthy homeowners live next to the San Dieguito Lagoon and the beach, while the San Elijo and Penasquitos projects are at state beaches. "We worked on getting support from everybody — the residents, the businesses, the cities," Gibson said. "They did it at San Dieguito, too, but they couldn't get the residents on board." Different but related groups of Del Mar's beachfront homeowners have fought the San Dieguito JPA and the City of Del Mar's river mouth opening projects, which have been ongoing since 1999. Some of the residents' houses are in the surf zone (some structures have tenuous legal status) so residents are very concerned about anything that could affect the beach. They also are concerned about the impacts of increased public access that would come with new trails at a restored lagoon. Residents argue that opening the San Dieguito River mouth might decrease the amount of sand on the beach south of the river. They further contend that because Southern California river mouths close off naturally, the lagoons should be freshwater wetlands. "There are reasonable and rational alternatives that don't require this huge expenditure of funds" and don't allow plumes of pollution to be flushed onto the beach, said Ronald Zumbrun, an attorney for a group called Citizens United to Save the Beach, which includes beachfront homeowners. In July, an appellate court allowed to proceed a lawsuit filed by that organization over the city's efforts to keep the river mouth open. Despite that lawsuit, the city has continued its project, which can cease once the JPA's more extensive project begins. In a lawsuit against the JPA, a group called the Del Mar Sandy Lane Association argued that the EIR for the project was based on speculative modeling. The owners won that argument and others against the EIR at the trial court level. But in an unpublished ruling issued in August, the Fourth District Court of Appeal upheld the EIR, including the modeling. Bobertz and other lagoon restoration advocates — as well as the scientists who did the modeling for the EIR — say that opening up the river will allow more sand to naturally replenish the beach. And sand dredged from the river mouth opening will be used to preserve beaches, according to the lagoon restoration plan. A number of developers and cities are interested in the various lagoon restoration projects as mitigation for development, the Coastal Commission's Lirley said. Generally, volunteers or entities without much money have written the lagoon restoration plans, so developers can play an important role by funding the restoration work. In fact, Southern California Edison will fund the San Dieguito Lagoon restoration project — estimated to cost $50 million to $100 million — as mitigation for continued operation of the San Onofre nuclear power plant. The utility is responsible not only for initial capital costs, but for ongoing maintenance of the lagoon as long as San Onofre remains open. Edison also must fund an endowment for perpetual maintenance. Bobertz said the JPA would start working in earnest on getting permits for the project now that the Sandy Lane litigation is finished. The JPA needs permits from about 14 different agencies — everyone from the cities of Del Mar and San Diego to Caltrans to the U.S. Fish and Wildlife Service. "There is a lot of room for more arguing," Bobertz said. "but we're hoping it won't be too bad because all of these agencies commented on the environmental document." Barring additional litigation, construction could commence in 2005. Contacts: Dick Bobertz, San Dieguito River Park Joint Powers Authority, (858) 674-2275. Ellen Lirley, California Coastal Commission, (619) 767-2370. Doug Gibson, San Elijo Lagoon Conservancy, (760) 436-3944. Ronald Zumbrun, attorney for Citizens United to Save the Beach, (916) 486-5900. San Dieguito JPA website: www.sdrp.org

Remember the frightening things your mother used to tell you in the name of safety when you were a child? If you went running around with scissors in your hand, you could put out an eye. Or if you went back into the swimming pool too quickly after eating, you could double up with cramps and drown. The same scare tactics may work on cities. Try this: If you do not bring your housing element into compliance, you could lose your military base! True, the idea is far-fetched, but it is the possible denouement to the convoluted story of the Los Angeles Air Force Base and efforts to keep it in Southern California. Not everyone has heard of the Los Angeles Air Force Base, which has few pilots, no airplanes and no runways. The base, in fact, is little more than a large office complex that sits on the borders of Hawthorne and El Segundo in southern Los Angeles County. Known also as Systems Acquisition Management Support (SAMS), the base is the procurement arm of the service, employing 4,000 military and another 3,500 civilian personnel. The local community is understandably eager to keep the base, which is a hub of the regional economy. But locals are jittery about the future of the base. According to Hawthorne City Councilman Gary Parsons, Pentagon officials view the base as too costly to run, and concern is also growing over the seismic safety of the dozen-plus buildings of the existing base. While nobody knows when the next round of base closures are to be announced, local officials see an urgent need to move quickly. The Air Force came up with a genuinely entrepreneurial idea — a land swap — to pay for the facility. (The Defense Authorization Act of 2001 provided the land-swap mechanism.) It works like this: A developer or team of developers agrees to build an entirely new building for the Air Force, in exchange for military land. By demolishing the current 860,000-square-foot complex in favor of a new 560,000-square-foot facility that is more economical to operate, the developers are saving the military up to $115 million in construction costs, and another $3 million a year in operating costs. With those savings, the theory goes, the Pentagon will have no further need to move the base. After soliciting proposals, the Air Force chose a team of developers consisting of Catellus Development Corporation of San Francisco, Morgan Stanley Real Estate Fund and Kearny Real Estate Company, a real estate fund affiliated with Morgan Stanley. The developers plan to build 750 housing units on the site of the existing base after the base is demolished, and another 280 units on a separate military-owned site. So far, it sounds like a good deal for the Air Force and a rich deal for the developers. At this point, though, our story starts to get a little squirrelly. The cities of Hawthorne and El Segundo support the deal, but both had difficulties with the proposed development. Hawthorne is an aging middle-class and lower-middle-class residential community. El Segundo, on the other hand, is a well-manicured atoll of office buildings with a limited amount of housing. El Segundo originally wanted retail development on the base site, but Hawthorne residents, worried about traffic, opposed that idea. El Segundo did not want housing, which could conflict with surrounding industrial development. Hawthorne, which borders the property on three sides with residential neighborhoods, volunteered to annex the property and place it in a redevelopment project area. New, for-sale housing would be a boon for Hawthorne, where 70% of housing is rental. So the plan now is to demolish the base, build the new housing in Hawthorne and construct the new base in El Segundo. Still being worked out, the financial deal has the developer "crediting" Hawthorne for three land parcels. Hawthorne, together with Los Angeles County, will issue up to $25 million in bonds to help pay the cost of building a new base. Property taxes and tax increment from the new houses will service the bond debt, meaning that Hawthorne redevelopment monies would pay for a project in El Segundo! The developer will lease the new base to the Air Force to close part of the $10 million financial gap. But the cities may now be endangering the very project they are trying to protect by over-reaching. In an effort to protect the unusual deal, the cities asked their local Assemblyman to propose a statute (AB 658, Nakano) that would shorten the period during which people could file lawsuits over the proposed annexation from 60 days to 30 days. A Senate Local Government Committee analysis looks askance at the bill, noting that Hawthorne does not have a valid housing element, and without one cannot be said to have a valid general plan. The lack of a valid general plan, in turn, makes the city vulnerable to redevelopment lawsuits because state law requires a finding of consistency between the general plan and the redevelopment plan; without a valid general plan, no consistency finding is possible. Litigation is a concern because some local homeowners oppose the density of the project, which at about 19 units an acre could be called "low-medium" in this area. If lawsuits derail the base project, the Pentagon could just possibly elect to send the whole kit and caboodle somewhere else, to disastrous effect on the local economy. In July, lawmakers amended the bill, saying the shortened time to sue cannot take effect until the state certifies Hawthorne's housing element. The Senate Local Government Committee passed the amended bill with no votes to spare. As of late August, the bill still needed Senate approval and Assembly concurrence. While that amendment improves AB 658 somewhat, the bill remains highly questionable as a tactic to protect the base insofar as the bill itself could become a lightning-rod for lawsuits, rather than the means to deflect them. In short, the bill sounds self-defeating. The moral is clear: If you go running to Sacramento with an ill-conceived bill, you could lose your most prized employer. At least, that's what your mother would say.

A Huntington Beach property tax override intended to fund employee retirement benefits violated Proposition 13, a divided Fourth District Court of Appeal panel has ruled. The court majority held that the tax override approved by voters in 1978 allowed the city to assess property owners only for retirement benefits offered at that time � and not for increased benefits the city had given to employees since. Huntington Beach officials estimated the city would have to refund about $27 million that taxpayers paid from 1997 to 2001. The City Council voted 5-2 not to ask the state Supreme Court to consider the case, even though the Fourth District ruling was 2-1. As of mid-August, the City Council was considering issuing a judgment bond to generate cash for refunds. The ruling appeared to allow the city to continue collecting a portion of the tax. Twenty-four other cities and Santa Clara County have similar tax overrides to pay for retirement programs, according to a Senate Local Government Committee report. At least some of those jurisdictions are certain to face lawsuits similar to the one that hit Huntington Beach. During the same June 1978 election in which state voters approved Proposition 13, Huntington Beach voters backed a city charter amendment allowing the city to participate in any retirement system, rather than only the state-run system. The charter amendment also permitted the city to impose property taxes to meet its obligations for the retirement system � a provision in the city charter since 1966. In the years since 1978, the city has increased retirement benefits it offered employees, relying on the tax override to fund the benefits. Proposition 13 capped property taxes at 1% of assessed value. But it contained an exception � Article XIII A � 1, subdivision (b) � for overrides to pay for indebtedness approved by voters prior to July 1, 1978. In December 1999, the Howard Jarvis Taxpayers Association and Huntington Beach resident Charles Scheid filed a lawsuit contending that the tax override for the 1999-2000 fiscal year violated Proposition 13. Orange County Superior Court Judge Robert Gallivan ruled for the Jarvis association and Scheid. Judge Gallivan concluded the measure that city voters approved in 1978 did not "commit the city to an indebtedness for future enhancements in the type or level of city employee retirement benefits beyond those to which city employees were entitled at the time of the election." Thus, taxes levied to fund enhanced retirement benefits violated Proposition 13, he ruled. The city appealed and a Fourth District, Division Three, panel upheld the lower court. The city and dissenting Justice William Bedsworth relied heavily on , (1982) 31 Cal.3d 318. Interestingly, the court majority also relied on but offered the case a different reading. In , the state Supreme Court ruled that a tax override approved by City of San Gabriel voters in 1948 could be used to fund retirement benefits for employees hired after July 1, 1978. The city and Bedsworth argued that logic could be extended to cover new benefits offered after July 1, 1978. But the majority said no. "In the trial court, city asserted that the new <1978> charter language gives it the right to levy an excess tax for virtually anything, including �giving a house � to every employee as they retire � as long as it's a retirement related purpose.' City's construction of the exception created by subdivision (b) eviscerates Proposition 13," Justice William Rylaarsdam wrote. "Under city's interpretation, it would have virtually unfettered power to spend whatever sum of money and levy excess taxes to obtain the revenue, as long as the expenditure was designated �retirement.' This was one of the very things Proposition 13 was enacted to combat," Rylaarsdam wrote. "For any obligations not approved prior to Proposition 13, the tax is automatically capped, regardless of the charter or the voters' intent," the majority opinion continued. "Instead, the voters must intend to authorize a tax in excess of the 1% limit for a specific obligation." The authorization to participate in a retirement system does not constitute a prior obligation, and in this case indebtedness "does not encompass benefits the city added after the passage of Proposition 13." In his dissent, Justice Bedsworth said that the Huntington Beach case was just like the case. " s the Supreme Court explained in , Proposition 13's exemption for excess taxation approved by the voters may be applied to future obligations under a city's retirement plan, even when those obligations are not yet entered into or known at the time of approval, as long as the future obligations would have been anticipated by the voters," Bedsworth wrote. "Unfortunately, the majority opinion � build its analysis on the purported distinction between �obligations,' which can be funded by the tax override provision, and the �benefits' voluntarily offered to city employees in the wake of Proposition 13," the dissent continued. "In my view, this analysis ignores the city's charter provision expressly giving the council continuing discretion to establish reasonable and appropriate fringe benefits." The court ordered the city to refund overpaid taxes collected since 1997. The city stopped collecting the tax in 2001. The Case: , No. G029292, 03 C.D.O.S. 6726, 2003 DJDAR 8423. Filed July 30, 2003. The Lawyers: For Jarvis: Jonathan Coupal, (916) 444-9950. For Huntington Beach: Steven L. Mayer, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, (415) 434-1600.

The Ninth Circuit Court of Appeals has upheld the constitutionality of a Riverside County sign and billboard ordinance because of its content-neutral approach to regulation. The ruling means that four signs along Highway 91 owned by the two billboard companies that brought the lawsuit are illegal. The outdoor advertising companies had argued that the ordinance violated their First, Fifth and Fourteenth Amendment rights. At issue were two ordinances — what the court called the "original" ordinance regulating signs and structures, and the "new" sign ordinance that the county adopted in July 1999. Two of the four signs in question were built under the original ordinance, and two were built under the new ordinance. The companies, Valley Outdoor and Regency Outdoor Advertising, also maintained a leasehold for two unconstructed billboards in the same area. The original ordinance distinguished between off-site and on-site signs and imposed more extensive regulation on the off-site models. The new ordinance treated all signs the same. The ordinance also stated that all existing signs were deemed illegal unless they were erected in compliance with county ordinances in effect at the time of construction. Valley and Regency filed a lawsuit in early 2001 asking the district court to declare the original ordinance and the new ordinance unconstitutional on their faces and as the ordinances applied to Valley and Regency's situation. Federal District Court Judge Ronald Lew ruled that the new ordinance was unconstitutional on its face only insofar as it "defines the legality of signs in terms of their compliance with the ‘original' sign ordinance." Lew further ruled that this "grandfather" provision could be severed from the rest of the new ordinance, which he upheld. The sign companies appealed but got no further with a three-judge panel of the Ninth Circuit. In the opinion by Judge Betty Fletcher, the appellate court never expressly stated what was unconstitutional about the new ordinance's grandfather provision. Instead, the court focused on the severability of the grandfather provision from the rest of the ordinance. "Grammatical severance is not a problem because both provisions are self-contained," Fletcher wrote. "Functionally, the statute remains perfectly operational without the grandfather provision, and the zoning, size and height restrictions also function independently." Furthermore, the legislative intent remained intact without the grandfather provision. After slicing off the grandfather language, the court upheld the remaining standards in the new ordinance. " he zoning, size and height restrictions are themselves constitutional because they are content-neutral ‘time, place and manner' restrictions that are ‘justified without reference to the content of the regulated speech, … serve a significant governmental interest, and … leave open ample alternative channels for communication of the information,'" Fletcher wrote, citing , 453 U.S. 490 (1981). "We conclude that the appellants' billboards are illegal for one simple reason: They fail to meet the content-neutral zoning, size and height restrictions in both the original ordinance and the new ordinance," Fletcher wrote. The Case: , No. 02-55475, 03 C.D.O.S. 6767, 2003 DJDAR 8539. Filed July 31, 2003. The Lawyers: For Valley Outdoor: Paul E. Fisher, Fisher & Associates, (949) 476-4400. For the county: Randal R. Morrison, Sabine & Morrison

The $99 billion 2003-04 state budget signed in August by Gov. Gray Davis contained almost nothing to cheer the planning and development community. The budget added another layer to an already complicated system of funding local government, shifted money away from redevelopment agencies, cut funding for some land use programs, and appeared to delay many of the toughest decisions for at least a year. Advocates of local government and planning generally agreed that the budget could have been worse. Yet some details were still unknown as of late August because they were tied up in trailer bills and cleanup legislation. One of the budget cornerstones is the "triple-flip." This calls for half of local sales tax revenues to go to the state, which will replace the funding lost by cities and counties with an identical amount of property tax revenue shifted away from schools. State general funds will replace the property tax revenues lost by school districts. The triple-flip is to remain in effect for five years — long enough to retire $10.7 billion in bonds that are financing part of the state budget deficit. "I don't think it will have any implication for local government," League of California Cities Legislative Director Dwight Stenbakken said of the triple-flip. "It won't change behavior. Whatever we lose in sales tax is replaced with property tax. It's still a sales-tax-based system." California Redevelopment Agency Executive Director John Shirey agreed. "It doesn't have any affect on land use policy or redevelopment," he said of the triple-flip. Local government representatives are concerned about the precedent of Sacramento grabbing local sales tax revenue in exchange for backfill dollars. "The most skeptical point of view is that this is probably another promise that will be broken when there's another fiscal crisis, which could be next year,' Stenbakken said. Some people see the triple-flip as a short step toward a permanent tax swap that would make cities and counties less dependent on sales tax and more dependent on property taxes. Assemblyman Darrell Steinberg (D-Sacramento), one of the brokers of the budget deal, is expected to pursue a tax swap again in 2004 with his AB 1221. Negotiations over the bill are ongoing. One unresolved question of the triple-flip concerns re-implementation of the full one-cent sales tax at the local level once the state no longer needs the money. Returning to a 1% local sales tax could trigger a Proposition 218 election, although lawmakers did include language intended to raise the local sales tax rate to its previous level automatically. The budget hits redevelopment agencies with a one-way shift of $135 million. That amount of property tax revenues will go from redevelopment agencies to schools. This makes the 2003-04 budget the second in a row to move money from redevelopment agencies to school districts. The shift is more than last year's $75 million, but it is a small fraction of what the Davis administration had proposed (see CP&DR, June 2003, February 2003). The CRA's Shirey was pleased that lawmakers did not make the shift permanent, as the governor's office had proposed. But given that the 2004-05 budget is already projected to have an $8 billion deficit because of all the one-time cuts in this year's budget, Shirey said he expects to see another shift of redevelopment revenues when the governor's next budget is presented next January. One worrisome aspect of the shifts away from redevelopment agencies is that the state continues to take money that has been committed long-term by the agencies, said Sande George, lobbyist for the California chapter of the American Planning Association. The legislation that implemented the transfer, SB 1045, allows redevelopment agencies to "borrow" up to 50% of low- and moderate-income housing set-aside funds to cover the shift. Agencies have up to 10 years to repay the housing funds. The budget also includes these provisions related to land use and development: • Keeps for the general fund $856 million (about 75%) of the expected Proposition 42 transportation revenues from the sales tax on gasoline. Included in the resulting transportation cuts are $489 million from the governor's Traffic Congestion Relief Projects fund and $188 million for city and county streets and roads. • Shifts $18 million from Caltrans' planning, design and project oversight staff to the State Highway Account for construction. • Consolidates the High Speed Rail Authority, which is planning a 700-mile system, into Caltrans, saving about $2 million. • Cuts $4 million from the University of California, Merced, budget, forcing a one-year delay in the campus's opening to fall of 2005. • Eliminates the Technology, Trade and Commerce Agency. Lawmakers transferred some of the agency's programs to the Business, Transportation and Housing Agency, including the Infrastructure and Economic Development Bank, a manufacturing technology program and fee-supported tourism programs. Lawmakers provided no money for the Film Commission, foreign trade offices and the Main Street program. • Defers for one year the next round of regional housing needs assessments at the regional and local levels. • Eliminates general fund support for the Resources Agency ($1.3 million) and the California Environmental Protection Agency ($900,000). • Assumes approximately $70 million of new or increased fees for a wide variety of permits, including wastewater discharge, air pollution, water rights, timber harvesting and power plant siting permits. The budget additionally assumes imposition of new fees — possibly on rural property owners — to replace $52.5 million cut from the Department of Forestry and Fire Protection. • Assumes $680 million in new revenues from Indian casinos. • Relies on $39.8 million of Proposition 46 housing bond revenues to pay for ongoing housing programs. • Establishes 11% as the minimum county share of property tax revenues. Orange and Yolo counties currently receive less than 11%. This change costs the state money because the state will have to replace property tax revenues shifted from school districts to the two counties. Regarding transportation, the budget makes a number of shifts and loans from one account to another. The bottom line, according to the Legislative Analyst's Office, is a 4.6% cut for Caltrans to $6.5 billion in 2003-04. The accounting maneuvers and reductions make it difficult to determine what the state's transportation priorities are, said several Sacramento observers. The LAO makes clear that the budget relies heavily on bond funds for natural resources and environmental protection programs. Of the $518 million budgeted for the Cal-Fed Bay-Delta Program, for example, $349 million is from the $3.4 billion Proposition 50 water bond. Several proposals with land use implications did not survive in the final budget. Republican proposals to eliminate the Coastal Commission and slash general fund support for the Governor's Office of Planning and Research went nowhere. And the Davis administration gave up on a proposal to eliminate subventions to counties that provide Williamson Act tax breaks to agricultural landowners. Contacts: Dwight Stenbakken, League of California Cities, (916) 658-8200. John Shirey, California Redevelopment Association, (916) 448-8760. Sande George, California chapter of the American Planning Association, (916) 443-5301. Legislative Analyst's Office budget review: www.lao.ca.gov/