The story of Pinocchio is a variation on the Pygmalian myth: Fashioning a fantasy companion with one's own hands, and then bringing the inanimate object to life. In the case of Pygmalian, the sculptor was able to bring to life the statue of a beautiful woman. In the case of Pinocchio — a theme that gets obscured in the popular Disney version by cinematic details like telescoping noses and boys turning into donkeys — is the poignant wish of Geppetto, the lonely wood carver, who wishes that a wooden marionette can become "a real boy." While retail development may seem less poignant than making fantasy children out of wood, the notion of the town center is another manifestation of the Pygmalian myth: The idea that developers can create instant shopping streets that will be accepted as the genuine urban article. So-called town centers are essentially outdoor shopping mall, with more or less the same mix of tenants as the interior variety, but look and feel very much like city streets. The town center concept has spread far beyond California to become a national phenomenon. Cities that had lacked downtowns — including Santa Clarita, Thousand Oaks and Emeryville — awoke one day to find that a little bit of San Francisco's Maiden Lane, or Palo Alto's University Avenue, or Los Angeles' Montana Avenue had seemingly sprung up like giant, stucco mushrooms in their pedestrian-bereft cities during the night. Sometimes town centers fit into existing urban grids. At other times, these developments stand alone in suburban isolation. Predictably, such streets have their critics, who cavil about "inauthenticity" and "Disney-fication." Admittedly, just as kosher-style hot dogs are not genuinely kosher, many town centers are more urban in style than substance. With their manufactured cheerfulness, non-specific nostalgia and vaguely "traditional" architecture, town centers are easy marks for the authenticity police. In fairness, some genuine historic districts, like San Diego's Gaslamp District and Old Pasadena, are so covered in town center-style signage, neon and other types of marketing bric-a-brac that they are indistinguishable from the cheap imitations. But what if the authenticity police were wrong, or at least not entirely right? They are correct insofar that many town centers are phony, saccharine and "timeless" in a retro kind of way. But those who are sticklers for realism may be missing the larger point that instant downtowns like Santana Row in San Jose or Bay Street Emeryville have the potential to mature gracefully and merge into larger urban patterns. As we wrote a few years back about another town center, The Grove at Farmers Market in Los Angeles (see , January 1999), the most important criterion is not whether artificial streets are garish or in questionable taste. The proper question, instead, is whether a particular set of buildings has the right "bones" to evolve from a private retail center into a for-real public street, just as Pinocchio eventually became a real boy. Even if the town centers are really monolithic malls in disguise, they look like rows of individual buildings, each with a distinct façade, and this artifice has an urban rhythm that can adapt itself to a larger context. For these reasons, I suggest we hold off judgment on the town centers, because some of them may serve as the seedlings from which entire pedestrian-oriented districts will grow, and, as such, may turn out to be defensible. With this criterion in mind — call it long-term urban viability for the lack of a better phrase — the comparison of Santana Row with Bay Street Emeryville becomes more focused. Bay Street — developed by Madison Marquette and designed by The Charles Group of Los Angeles, in association with David R. Hoffman — may be the more typical of the two town centers under discussion here. Bay Street is a single, elongated, inward-looking street that stretches down one long block. In another words, it is an inverted strip center. The front entrances are mostly on Bay Street, the official "walk street" of the project, while the center turns its back to Shellmound Street, a major thoroughfare. The retail portion is complete, while a residential portion, to be built atop the retail buildings, is currently under construction and will not be ready for occupancy until next year. A 300,000-square-foot IKEA outlet is on the south, while Powell Street Plaza, a smaller retail center, lies to the west across Shellmound. The stores within the Bay Street complex do not address Shellmound, and the Bay Street "urban village" offers the paradoxical image of turning its back on the largest local arterial, although architect Pigg has provided plentiful glass on the Shellmound side of the building so motorists see merchants and wares, not just blind walls. With the IKEA, Bay Street and Powell Street Plaza all in place and the enormous Chiron campus to the east, Shellmound looks like a major shopping street in the making, even if Bay Street has few, if any, storefronts on the corridor. The big barrier is the large scale of the retail projects, which may make it difficult to redevelop these big parcels on the store-by-store, fine-grained level that seems most desirable to add interest and variety to monolithic malls and big-box retailers. It would not be easy for an individual developer to come in and create, say, a restaurant with outdoor seating or a nightclub or a coffee shop or used bookstore, or other small "specialty" retail businesses that would give Bay Street some individual character. Worse, Bay Street is landlocked between Shellmound to the west and the Union Pacific tracks to the east, preventing developers from creating a district; Shellmound will always be a retail strip, dominated by cars pulling into garages, cars coming out of garages and still other cars zipping by quickly on the road — not the most pleasant experiences for people on foot. On the other hand, Bay Street has the potential to convert its blind backside into storefronts along Shellmound at some future time, creating a two-sided shopping street on this important corridor. Despite some challenging odds, this Pinocchio may yet become a real boy. Although the site plan of Santana Row probably preceded Bay Street in time, the San Jose project seems like an improvement over the Emeryville shopping street. Located within an existing, if under-used, intersection, Santana Row does not suffer from the obvious limitation of Bay Street of being a single street without the ability to expand. A "demalling" project built on the site of an earlier shopping center, Santana Row was developed by Federal Realty Investment Trust, and master planned by Street Works with architecture by Sandy & Babcock and Backen Arrigoni & Ross. Like Bay Street, Santana Row will be a sandwich of retail below and residential on upper floors. The advantage of the San Jose project is that it has taken root on an existing urban grid, and has the grace and ingenuity to address that grid in all four directions. This outward-looking design promises than Santana Row may age gracefully and merge with the surrounding urban fabric. On the other hand, there are some self-imposed limitations to Santana Row: The project pretends to be a continuation of a regular street grid while, in reality, drivers tend to find themselves dead-ending against parking structures or buildings. As in a Roach Motel, the target audience may find it easier to enter than to leave. Even with this problem, it is not impossible to imagine that some roads could be cut through the blind-siding streets, and that Santana Row could be reconfigured as a set of regular blocks. This is one urban marionette that has an excellent chance of becoming "a real boy."

The U.S. Court of Appeals for the District of Columbia has turned back a San Diego developer's broad attack on the Endangered Species Act as an unconstitutional exercise of federal power. Rancho Viejo LLC argued that the federal government had exceeded the authority granted to it by the constitution's Commerce Clause, and the developer pointed to two recent Supreme Court decisions striking down laws because they exceeded Congress's authority under the clause. A federal district court dismissed the suit, and the appellate panel in Washington D.C. affirmed that decision. "To survive Commerce Clause review, all the government must establish is that a ‘rational basis exists for concluding that a regulated activity sufficiently affects interstate commerce,'" Judge Merrick Garland wrote for the three-judge panel, citing , 514 U.S. 549 (1995). "And there can be no doubt that such a relationship exists for costly commercial developments like Rancho Viejo's." Rancho Viejo sought to build a 280-home project on 202 acres near the junction of Interstate 15 and Highway 76 in unincorporated San Diego County. The company proposed building houses on 52 acres upland of Keys Creek, which bordered the property. Rancho Viejo planned to use 77 acres, including portions of the streambed, as borrow areas for fill on the 52-acre housing site. To get the fill, Rancho Viejo had to get a Clean Water Act § 404 permit from the U.S. Corps of Engineers. The Corps determined that the project "may affect" arroyo toads, an endangered species present in the creek and adjacent to the project site, so the Corps sought a formal consultation with the U.S. Fish and Wildlife Service. In May 2000, Rancho Viejo dug a trench and built a fence parallel to the creek. The Fish and Wildlife Service quickly notified the developer that the fence resulted in the illegal "take" of an endangered species and would cause the future illegal take of toads. In August 2000, the Fish and Wildlife Service issued a biological opinion stating that Rancho Viejo's proposal to borrow material from the 77 acres was likely to jeopardize the toad's existence. The agency recommended that Rancho Viejo get its fill material from an off-site location. Rancho Viejo then sued, alleging that both the listing of the toad under the ESA and the application of the ESA to the project exceeded the federal government's authority under the Commerce Clause. The district court held that the case was the same as , 130 F.3d 1041 (D.C. Cir. 1997) (see , February 1998). In , the court rejected a Commerce Clause-based challenge to the application of the ESA to a hospital construction project in San Bernardino. The appellate panel agreed that was indistinguishable from the current controversy. In its appeal, Rancho Viejo cited two recent Supreme Court decisions as evidence that was no longer the controlling case. Those Supreme Court cases were , 529, U.S. 598 (2000) and , (" ") 531 U.S. 159 (2001) (see , February 2001). In , the high court threw out a section of the Violence Against Women Act because its adoption exceeded congressional authority under the Commerce Clause. Rancho Viejo argued that stood for the proposition that noneconomic activity, no matter its effect on interstate commerce, could not be regulated under the Commerce Clause. In , the Supreme Court limited the authority of the Corps of Engineers under the Clean Water Act. But the appellate court rejected the argument. " instructs that ‘the proper inquiry' is whether the challenge is to ‘a regulation of activity that substantially affects interstate commerce.'" Justice Garland wrote. "Similarly, declares that what is required is an evaluation of ‘the precise object or activity' that, in the aggregate, substantially affects interstate commerce. When, as directed, we turn our attention to the precise activity that is regulated in this case, there is no question but that it is economic in nature." Nothing in either case invalidated the holding in , the court ruled. Rancho Viejo countered that because the regulation had a noneconomic purpose — the protection of toads — it violated the Commerce Clause. But the court said no to that argument as well. "The Supreme Court has long held that Congress may act under the Commerce Clause to achieve noneconomic ends through the regulation of commercial activity," Garland wrote. Rancho Viejo's position would invalidate numerous laws regarding discrimination, health and welfare and other things, the court held. "Congress' primary object in passing product safety legislation, for example, was not to improve the productivity of industry but rather to protect the well-being of the public. Much the same can be said of federal environmental legislation. And plaintiff's position would make federal criminal law an area of particular vulnerability," Garland wrote. The court then dealt with Rancho Viejo's arguments that the ESA was overboard and that it represented an unlawful federal intrusion into local land use decisions. The overbreadth argument was essentially a facial challenge of the ESA, the court held, and such a challenge could stand up only if there were no set of circumstances in which the law would be valid. But Congress has the authority to regulate development projects, so the facial challenge failed, the court held. Finally, the court held that the ESA "represent a national response to a specific problem of ‘truly national' concern," as required by . "Moreover, while ‘states and localities posses broad regulatory and zoning authority over land within their jurisdictions, … it is well established … that Congress can regulate even private land use for environmental and wildlife conservation,'" Garland wrote, citing , 214 F3d 483 (4th Cir. 2000). "Tracing a 100-year history of congressional involvement in natural resource conservation, Chief Judge Wilkinson concluded gibbs> gibbs> that ‘it is clear from our laws and precedent that federal regulation of endangered wildlife does not trench impermissibly upon state powers.'" The Case: , No. 01-5373. Filed April 1, 2003. The Lawyers: For Ranch Viejo: John C. Eastman, (714) 628-2587. For Norton: Katherine Barton, Department of Justice, (202) 514-2000.

THE LOS ANGELES COUNTY Board of Supervisors has approved a revised environmental impact report for the proposed Newhall Ranch development in the hills just west of Santa Clarita. The revised EIR was required because a Kern County judge in 2000 found the original study lacking. Among other things, the judge found that the study did not adequately address where the project would get its water. The court will now review the revised environmental analysis. The revised EIR points to two primary sources of water: 7,038 acre-feet per year from landowner Newhall Ranch and Farming Company's agricultural supply, and 1,607 acre-feet annually transferred from a Kern County farmer. Those two sources are adequate to meet the needs of the project, according to a report by county Planning Director James Hartl. Additionally, Newhall secured an additional entitlement to 7,648 acre-feet per year from the oversubscribed State Water Project, purchased 55,000 acre-feet of groundwater banking storage capacity and determined that the local aquifer can be used for banking. The revised EIR and a settlement among Newhall, the Department of Fish and Game, and the Los Angeles County District Attorney spell out how to handle the San Fernando Valley spineflower. The endangered flower that was found on the site since the county originally approved the development in 1999, and Newhall was accused of hiding the species' presence. (see , March 2003). Under the settlement, Newhall will set aside 64 acres for a spineflower preserve and provide DFG with better access to the site and to biological reports. The Board of Supervisors also voted 4-1 to approved various general plan and specific plan amendments and a zoning change to allow the project to proceed. Supervisor Zev Yaroslavsky, who voted for the project in 1999, was the dissenter. "We are on a course that is demonstrably wrong," Yaroslavsky said during the board meeting. He called an analysis that found that less than 10% of Newhall Ranch residents would commute outside the Santa Clarita Valley for work "laughable." As approved, Newhall Ranch calls for 20,885 housing units on 11,963 acres. There would also be millions of square feet of commercial and industrial development to provide about 19,000 jobs. Roughly half the site would remain undeveloped. Environmentalists and, possibly, Ventura County, are expected to renew their legal challenges to the project. ******** TEJON RANCH COMPANY and the Trust for Public Land (TPL) jointly announced they are working on a deal in which the TPL would acquire up to 100,000 acres of the 270,000-acre Tejon Ranch north of Los Angeles. No price or timeline for signing a contract were announced. The land would provide habitat for rare species and oaks, and serve as a wildlife corridor that connects open space near the coast to the southern Sierra Nevada mountains. "To help us in planning the future of this historic ranch, we have created a long-term vision that calls for permanent conservation of about 100,000 acres of the most highly prized and environmentally sensitive lands in our nation," Tejon Ranch CEO Bob Stine said in a prepared statement. Tejon Ranch is developing a 20 million-square-foot industrial project in Kern County and is seeking Los Angeles County approved for a 23,000-home new town at Interstate 5 and Highway 138 (see , April 2003). Some environmentalists worried that the TPL purchase would only encourage development of the rest of the ranch. ******** A NEW U.S. INTERIOR DEPARTMENT proposal for solving water conflicts in western states during the next two decades concentrates on getting more out of existing resources. The report, "Water 2025: Preventing Crises and Conflict in the West," does not call for building additional reservoirs or relaxing environmental regulations — two notions that past Republican administrations have advocated. Instead, the report calls for additional research and development for things such as conservation and desalination. The report also calls for modernizing the water infrastructure to stretch existing supplies. "Crisis management is not an effective solution for addressing long-term systematic water supply problems," Interior Secretary Gail Norton said upon the release of the report in May. The report lists six principles: • Respect state, tribal and federal water rights, contracts and decrees of the U.S. Supreme Court. • Maintain and modernize existing water facilities so they continue to provide water and power. • Enhance water conservation and resource monitoring. • Use collaborative approaches and market-based transfers to minimize conflicts. • Improve water treatment technology, including desalination. • Derive additional benefits from existing water supply infrastructure. The report lists 10 hot spots where water conflict is most likely during coming years. Three of the hot spots are in California — the Colorado River, the Lake Tahoe region, and a region stretching from the San Francisco Bay delta to the northern San Joaquin Valley. The report is available at www.doi.gov/water2025. ******** RANCHERS AND PROPERTY RIGHTS ACTIVISTS in San Benito County have presented the Board of Supervisors with about 5,300 signatures on a referendum that seeks to overturn a recent board decision to adopt a slow-growth initiative. That initiative encompassed some existing growth-control policies and downzoned tens of thousands of acres of farmland and pasture. When presented with about 5,600 signatures on the initiative in April, supervisors chose to adopt it rather than put it on the ballot. The downzoning especially upset landowners, who responded with the referendum. As of early June, the board had not taken action on the referendum because of legal uncertainties regarding the measure's language. ******** A STUDY OF TRANSIT-ORIENTED DEVELOPMENTS by Caltrans reports that there are significant barriers to development near public transit stations, and recommends that the state modify policies and provide financial incentives to encourage this type of development. The study, "Statewide Transit-Oriented Development Study: Factors for Success in California," lists five major obstacles: Transit system design, local opposition, local zoning, high development risk and cost, and difficulties with financing. The report recommends that the state sell land it owns near major transit stations for transit-oriented development, encourage better coordination of land use and transportation planning, review state environmental requirements, provide funding to local government for transit-oriented development planning, allow greater flexibility in spending state transportation funds, and offer financial incentives. The report is available at www.dot.ca.gov/hg/MassTrans/tod.htm ******** A CONTROVERSIAL PROPOSAL to widen Highway 101 through the San Fernando Valley and eastern Ventura County has been suspended by Caltrans. The May decision came shortly after local representatives Sen. Sheila Kuehl (D-Santa Monica) and Assemblywoman Fran Pavley (D-Agoura Hills) announced their opposition. The freeway has become one of the most clogged in a heavily congested region, but public outcry against the proposal was overwhelming. Caltrans had estimated it would have to acquire about 700 homes and 250 business locations to accommodate the widening.

At last, a property rights ballot initiative is making the rounds in California. But the initiative begs the question: Is there still a property rights movement in this state? Maybe. It is unlikely that any sweeping pro-property rights action will come out of the Legislature or out of most California courts, least of all the left-leaning Ninth U.S. Circuit Court of Appeals. So, if California property rights advocates have much hope at all, they are likely to pin it on a ballot initiative. In mid-May, the attorney general and the secretary of state gave the green light to San Luis Obispo land-use lawyer William Walter to gather signatures to place "the California Property Rights Initiative," a constitutional amendment, on the ballot in November 2004. Placing any statewide initiative on the ballot is a daunting task requiring the collection of about 600,000 valid signatures. The effort usually requires paid signature-gatherers. Walter is an experienced land-use lawyer; he recently has represented several landowners in "magic subdivision" cases, which seek to validate the existence of parcels created prior to the passage of the first Subdivision Map Act in 1893 (see , August 2001 and , March 2000). But Walter is not a big name in the field along the lines of Ronald Zumbrun, Michael Berger, or the Pacific Legal Foundation. He indicates that the current wording of the initiative is a kind of trial balloon. He says he may revise and resubmit, but "no one will take you seriously" unless you have an actual proposal in circulation. Walter's initiative is fairly simple on its face. In all of his public communications, including an interview with , Walter contends that he is simply seeking to "level the playing field," rather than create more lawsuits. Having worked as a land-use lawyer for almost 30 years, he has concluded that California has by far the most oppressive property regulations — and the least sympathetic environment for property rights — of any state in the union. In a letter to the attorney general, Walter wrote: "The goal is not to foster litigation but to reform the conduct of California's government entities." He asserted that "legislative solutions have been conspicuously lacking to provide mechanisms to modify the behavior of government agencies" and concluded that "it is anticipated that through pro-active training (e.g. continuing education) of government entities about the standards of reasonable, fair, and proportionate conduct in the exercise of their duties, few such lawsuits would arise." Walter's initiative would not, however, change the constitution to require better continuing education. Rather, it would amend the definitions contained in Article 1, Section 19, of the California Constitution — the "declaration of rights" dealing with property rights — to more explicitly include onerous regulation as the basis of a claim that property has been damaged by, or taken for, public use. Definitions are not precise. Walter acknowledged that, at least at this point, his goal is to gauge political and financial support for an initiative. He may well revise the initiative and resubmit it later. If passed, the initiative may or may not create a flood of litigation. But it would certainly make the takings standard even murkier. During the past 25 years, property rights advocates have succeeded in swinging the legal pendulum back in their direction, but they have failed to secure a hard and fast standard for when a taking occurs and when it does not. In a recent commentary in the , pro-regulation advocates John Echeverria and Bill Higgins claimed that the takings test now has 13 factors that are so complicated and contradictory that they "do not supply a meaningful rule of law." Walter's initiative requires compensation in certain situations but is not specific. The bigger question politically is whether a property rights movement can ever gain much traction in California, no matter how well funded or zealous its "true believers" might be. In one sense, you would think so. There is still a cowboy mentality in many parts of the state, and the Libertarian Party is stronger here than in most other states. On the other hand, recent political and judicial trends suggest that the cowboys will be eating the regulators' dust for the foreseeable future. For years, legislation boosting property rights has regularly stalled in committee, and that roadblock is unlikely to fall soon with the Democrats firmly in control of Sacramento. Recent court rulings involving California property rights have not gone well for the landowners. Despite nearly two decades of litigation, property owners from Lake Tahoe — one of the most highly regulated parts of the country — have never won a solid legal victory. Most recently, in , the U.S. Supreme Court rejected yet another property rights claim from Lake Tahoe, this one involving a 1980s moratorium (see , March 2002). Also, prominent Sacramento developer Angelo Tsakapoulos suffered a narrow loss before the high court. A divided court upheld a lower court's ruling in , a case involving a large fine for Tsakapoulos for "deep ripping" a wetlands, apparently in violation of the federal Clean Water Act (see , January 2003). Perhaps most surprisingly, a local, pro-property rights ballot initiative in a seemingly sympathetic county went down to defeat last year. Voters in rural Nevada County defeated Measure D by 57% to 43% last November, even though Measure D's supporters outspent the opponents 10 to 1 in a county that has a long history of defending property rights. It could be argued that all of these pro-regulation victories have been narrow and could easily have gone the other way. Tsakapoulos lost his case before the Supreme Court on a 4-4 tie, with Justice Anthony Kennedy, a Sacramento native and friend of Tsakapoulos, absent. Even as Measure D was defeated in Nevada County, its supporters defeated its opponents in individual races for the county Board of Supervisors. And the California attorney general's office has narrowly escaped defeat in Lake Tahoe on any number of occasions. But the overall trend is that the pro-regulation forces almost always find a way to win in California, even if that victory is close. The only current exception to the rule is the Marine Forests Society case, currently pending before the California Supreme Court, in which property rights advocates have challenged the constitutionality of the appointments system for Coastal Commissioners. The big victory there is not just that a lower court found the system unconstitutional, but that the Supreme Court is examining whether to apply the ruling retroactively (see , May 2003). That move threatens to overturn the entire history of Coastal Commission rulings. But the Coastal Commission is always an anomaly in California land-use regulation — unusually aggressive and polarizing. In that sense, the commission is an easier target than most other regulatory agencies. On balance, California remains a highly regulated state that is politically hostile to property rights. That makes William Walter's initiative all the more important legally to property rights advocates, and all the more difficult as a political objective.

The California Coastal Commission does not have authority to consider environmental impacts to areas inside the coastal zone caused by development outside the coast zone, the First District Court of Appeal has ruled. The decision is the most definitive to date on the Commission's authority when a project straddles the coastal zone boundary. "Consideration of environmental impacts originating outside the coastal zone is the responsibility of the local agency with authority over their point of origin — here, the city. It is not the responsibility of the Commission," the appellate court ruled. The decision came in an environmentalists' lawsuit over the commission's approval of a 114-house subdivision on 44 acres in the Playa del Rey area of the City of Los Angeles. Catellus Residential Group initially proposed a 119-home development. The city adopted an environmental impact report for the project and approved the subdivision. The Sierra Club appealed that decision to the Coastal Commission. In August 1999, the Commission overturned the city's decision, citing concerns about excessive grading, landform alteration and the impact on coastal views. Catellus revised the project, cutting the number of houses to 114 and changing its plans for grading and slope stability measures. Catellus also agreed to purchase 15 nearby undeveloped lots and retire the development rights. The city prepared a supplemental EIR and, in January 2000, issued new permits. The Sierra Club again appealed, but this time the Commission voted 9-2 in August 2000 to uphold the city's approval. The revised project called for all houses to be built outside the coastal zone; however, a road serving most of the houses would run through the coastal zone. There would also be other grading and buried retaining walls in the coastal zone. The Sierra Club, the Spirit of the Sage Council, and Ballona Ecosystem Education Project sued the Commission, the city and Catellus, alleging a number of misdeeds. (A separate lawsuit filed by the Spirit of the Sage Council against the city is pending in the Second District Court of Appeal after the city won at the trial court.) The environmental groups sought an injunction to prevent Catellus from grading. The San Francisco Superior Court rejected the request, but the First District, in an unpublished ruling, approved the injunction. The case then returned to the trial court for a decision on the merits. In July 2002, San Francisco Superior Court Judge James Robertson ruled against the environmental groups on all grounds. The environmentalists appealed, and a unanimous three-judge panel of the First District upheld the lower court. The environmentalists' most important argument from a legal standpoint concerned the Commission's ability to review impacts originating outside the coastal zone. The environmental groups argued that the Commission failed to consider the impact that development of the houses outside the coastal zone would have on the nearby Ballona wetlands, an environmentally sensitive habitat area (ESHA) within the coastal zone. The project opponents argued that because development within the coastal zone (the road and grading) would support development outside the zone (the houses) — and because the development outside the coastal zone would impact an ESHA inside the zone — the Commission was obliged to consider those impacts and reject the development within the zone. Previous court rulings had not resolved this issue, but the First District concluded that the environmental groups were attempting to extend the jurisdiction of the Coastal Commission beyond that allowed in the Coastal Act. The court's decision hinged on its interpretation of two sections of the act — Public Resources Code §§ 30200 and 30604, subdivision (d). Section 30200 requires public agencies carrying out or supporting activities outside the coastal zone to consider the activities' direct impacts within the coastal zone. The environmental groups argued that this statute required the Commission to consider the inside-the-zone impacts from outside-the-zone development. But the court said the Sierra Club's interpretation did not jibe with § 30604, subdivision (d). In 1978, the Legislature amended that statute to address the Commission's authority when a project straddled the coastal zone boundary. "The legislative history … confirms that the Legislature intended to reject the notion that Commission jurisdiction over part of a project could be leveraged into jurisdiction over the entire project," Justice Linda Gemello wrote for the court. "If the Commission has no jurisdiction over the portion of a project outside the coastal zone, it follows that the Commission has no jurisdiction to evaluate that portion of the project to determine whether its effects are consistent with Coastal Act policies." The Sierra Club countered that the court's interpretation of § 30604, subdivision (d), amounted to an improper repeal of § 30200. But the court rejected that argument, ruling that § 30200 still controlled the responsibilities of other agencies, such as the city in this case. The court also shot down a slew of other arguments from the environmental groups. One of the more novel arguments concerned an ESHA that Catellus proposed to create. Under the Coastal Act, an ESHA is "any area in which plant or animal life or their habitats are either rare or especially valuable because of their special nature or role in an ecosystem and which could be easily disturbed or degraded by human activities and developments." Catellus proposed to revegetate the eroded and disturbed face of a bluff within the coastal zone, thereby creating an ESHA. Project opponents argued that ESHA protections would therefore apply, and the project would be inconsistent with the Coastal Act. "We conclude that both the language and intent of the Coastal Act dictate the opposite conclusion," Justice Gemello wrote. "ESHA protections do not apply unless an area is currently an ESHA. … If we were to adopt the Sierra Club's interpretation, we would create disincentives for any future developer to engage in habitat restoration as part of a development." The court also rejected opponents' argument that the Commission's procedure for adopting findings was improper. The Commission adopted findings five months after voting for the project because the findings that staff had prepared at the time of the vote were inconsistent with how the Commission actually voted. Opponents argued this was a "post-hoc rationalization," which the California Environmental Quality Act prohibited. The court found that the Commission adequately explained its reasoning at the meeting where the vote was conducted. "An agency must reason first, and reach its decision second. Written findings may come before or after, so long as they reflect the reasoning actually engaged in before the decision has been reached," Gemello wrote. In unpublished portions of the opinion, the court held that substantial evidence supported the Commission's decision that the project was consistent with the Coastal Act's policies for protecting views. And the court held that the Commission's decision not to consider feasible project alternatives complied with CEQA because the proposed project did not have any unmitigated impacts. The Case: , No. A100194, 03 C.D.O.S. 3143, 2003 DJDAR 3975. Filed April 11, 2003. The Lawyers: For Sierra Club: Frank Angel, (310) 314-6433. For the Coastal Commission: Hayley Peterson, deputy attorney general, (619) 645-2540. For Catellus: Robert Crockett, Latham & Watkins, (213) 485-1234.

A specific plan for a slice of northern Monterey County that has long been seen as a potential growth area could be released this summer. However, the second version of a Rancho San Juan specific plan is unlikely to settle long-running disputes over how the area between the City of Salinas and the unincorporated community of Prunedale should develop. At issue are not only how much of the roughly 2,500 acres should be developed and in what manner, but whether development should occur under control of the county, the City of Salinas or even a new city. Adding to the tension are the different desires of the numerous landowners in the area, and a Monterey County Superior Court decision ordering the county to complete the planning process. The court order is part of the project's lengthy history. During adoption of a general plan in the early 1980s, the county designated Rancho San Juan as an area for future development. In 1986, as part of the Greater Salinas Area Plan, the county designated Rancho San Juan as an "area of development concentration" and drew the first boundaries. A mixture of planning, politics and litigation consumed the next 12 years leading up to the release in 1998 of a specific plan and accompanying environmental impact report. Those documents generated a huge response from the public and agencies. "It was pretty clear what the community expected," said Celia Perez Martinez the county's current Rancho San Juan project manager. "They expected a community, not just houses. They expected no sprawl. They expected preservation of historic and cultural resources." But the plan did not meet those expectations, she said. The overwhelming response and the arrival of Sally Reed (late of Los Angeles County and the Department of Motor Vehicles) as county administrative officer led the Board of Supervisors to halt the specific planning process and begin an overhaul of the general plan in 1999. That move angered HYH Corporation, which owns or controls 671 acres in Rancho San Juan and which had helped fund the specific plan process. The company sued the county and won. The Superior Court said the county could not stop in the middle of the planning process, and the court ordered the county to complete the task. Planning resumed about two years ago but has remained mostly behind the scenes - to the frustration of property owners, city officials and environmentalists. Martinez said the county has conducted meetings with property owners, and she has made two presentations to the Salinas City Council. Plus, the Board of Supervisors has received two updates. But planners are working mostly with the first round of documents and the extensive comments, she said. The plan also will be based on the 12 "guiding objectives" that county supervisors established for the ongoing general plan update, she said. Those objectives include concepts such as compact development, balancing residential and commercial growth, and preserving farmland and rural areas. Two options presented thus far call for 4,000 housing units, roughly 2.5 million square feet of "employment center" development, a town center, and additional commercial, office and live-work development. Development would be held to city standards, Martinez added. The HYH lawsuit and the county's desire to satisfy that developer appear to be driving the county's approach, said both attorney Brian Finegan, who represents the owner of about 220 acres at the southern end of Rancho San Juan, and Gary Patton, executive director of LandWatch Monterey County. HYH has submitted an application, which the county is processing concurrently with the specific plan, for about 1,000 houses, a 40,000-square-foot shopping center and a golf course. The HYH property, though, is in the middle of the site, so developing that portion of Rancho San Juan first has been questioned by Salinas officials and others. The City of Salinas opposed the development proposed in the 1998 specific plan, and the city has not changed its position. The city has raised issues such as the provision of public services - especially water - traffic, loss of farmland and erosion of Salinas's urban edge. In a letter to the county earlier this year, the city indicated that the county's approach conflicted with the Boronda memorandum of understanding, a city-county pact that calls for city-centered growth. "The development of Rancho San Juan, essentially a ‘new town' with a potential population rivaling that of Gonzales, Soledad, Greenfield and King City, is in direct conflict with city center growth and many of the references to city center growth embodied in the Monterey County general plan," Salinas Planning Manager Robert Richelieu wrote. Rancho San Juan lies within 1,000 feet of the Salinas city limits, yet the city did not include Rancho San Juan in a general plan update completed during 2002. Salinas officials envision their city growing to the east and northeast, not directly north into Rancho San Juan, said Senior Planner Jenny Mahoney. "When you look at our land use map and you plug in Rancho San Juan, it looks like this weird appendage that doesn't fit with the rest of the city," Mahoney said. Still, some landowners want the city to annex their property. Finegan said his clients, the Ferrasci family, which owns a 220-acre strawberry farm that abuts the city limits, wants no part of the county process. "What I've consistently said to the county planners is, ‘Let my people go.' Let the Ferrasci family go make their deal with the city," Finegan said. "It's the logical place for the City of Salinas to expand. It's very developable property. It has minimal constraints." The county wants to keep Rancho San Juan for itself so that it can meet its state housing mandate, charged Finegan, who is skeptical of county talk of jobs-housing balance in the area. "There has never been any interest in the industrial part of that project," he said. Cathy West, executive director of the Monterey County Local Agency Formation Commission (LAFCO), said there currently is no answer to the ultimate question of who will govern Rancho San Juan. The LAFCO has begun studying what entities will provide services if Rancho San Juan development does proceed. There are two fire protection districts in the area, a park district has shown interest in providing services, and the Pajaro/Sunny Mesa Community Services District has proposed expanding its boundaries to consolidate water services to Rancho San Juan. "In any case, we're looking at some sort of temporary service arrangements out there," West said. The LAFCO studies could help answer the ultimate question, and they could affect both the city's and the county's approach to Rancho San Juan, West said. If an adequate commercial and industrial tax base were proposed at Rancho San Juan, LAFCO would look favorably on annexation, she said. If Rancho San Juan evolves as an urban yet unincorporated area, annexation would became more difficult because of the number of people involved, she said. And then there is the question of whether to develop Rancho San Juan at all. Patton, a former Monterey County supervisor and former general counsel for the Planning and Conservation League, said he has never supported growth in that area. Salinas has about 3,000 acres for growth, and the county has no business allowing large-scale development of unincorporated territory. The court order in the HYH lawsuit, Patton noted, only requires the county to complete the planning process; the court did not order the county to approve development. The area is home to the "Red Pony Barn" made famous by John Steinbeck. Historic preservation advocates want the barn protected. Farmland and open space advocates decry the potential loss of productive fields and scenic oak woodlands. And just about everyone is concerned about traffic on rural roads, narrow highways and the already busy streets of Salinas. If the county does approve large-scale development, many interest groups are likely to file a lawsuit or pursue a referendum. The City of Salinas has also hinted at legal action. An additional complication is the need to improve Highway 101, which splits Rancho San Juan. The highway currently is a four-lane road with cross traffic and driveways. Caltrans is constructing extensive safety improvements, but both Caltrans and the Transportation Agency for Monterey County view a proposed Prunedale bypass as the long-term answer to safety and capacity concerns. However, a bypass through the hills would cost hundreds of millions of dollars and require extensive property acquisition and, likely, environmental mitigation, said Colin Jones, a Caltrans spokesman. "The bypass is in the preliminary planning stages, but it's years if not decades away," Jones said. Because of this, Caltrans has asked Monterey County to plan Rancho San Juan both with and without the bypass. Contacts: Celia Perez Martinez, Monterey County Planning and Building Inspection Department, (831) 796-3087. Jenny Mahoney, City of Salinas Community Development Department, (831) 758-7206. Cathy West, Monterey County Local Agency Formation Commission, (831) 754-5838. Brian Finegan, landowner's attorney, (831) 757-3641. Gary Patton, LandWatch Monterey County, (831) 375-3752. County Planning and Building Inspection Department website: www.co.monterey.ca.us/pbi/

The Los Angeles Community Redevelopment Agency was correct to require a supplemental environmental impact report (SEIR) for a billboard proposed within a redevelopment project area, the Second District Court of Appeal has ruled. In 1999, Eller Media Company filed an application to build two billboards within the Hollywood redevelopment project area. Staff members at the CRA conducted an initial study under the California Environmental Quality Act (CEQA) and determined that a proposed sign on Sunset Boulevard might have significant adverse impacts on historic resources and community aesthetics. The staff also determined that the billboard was a change to the 1986 project area plan. Additionally, the staff found that a billboard proposed on North Cahuenga Boulevard might have adverse impacts that could be mitigated. Eller appealed these determinations to the CRA Board of Commissioners, which upheld the staff's conclusions. Eller then filed a lawsuit. Los Angeles County Superior Court Judge David Yaffe ruled for the city. On appeal, Eller presented four arguments: Substantial evidence did not support CRA's determination that the signs did not conform to the redevelopment plan; the CRA abused it discretion in requiring Eller to prepare a SEIR for the Sunset sign; the initial study did not conform to CEQA Guidelines and required Eller to comply with nonexistent standards; and CRA was not the lead agency under CEQA. A unanimous three-judge panel of the Second District rejected all four contentions. Eller argued that the CRA could not determine that the proposed signs failed to conform to the redevelopment plan because the CRA had never adopted sign and billboard standards that the plan called for. This failure allowed the agency to apply subjective criteria, Eller contended. The court, however, found that "CRA was duty bound to determine of Eller's proposed billboards conformed with the plan. The performance of this duty was not dependent on CRA's exercise of its permissive power to adopt specific standards relating to signs and billboards in the project area. In the absence of such standards, CRA nevertheless was required to consult with the existing provisions of the plan to determine if Eller's proposed billboards did or did not conform to the plan. Eller has made no showing that CRA's factual determinations in this case were the product of unbridled discretion and ad hoc standards. … CRA correctly evaluated Eller's proposal in light of the entire plan." (The CRA later adopted standards that prohibited all billboards and pole signs in the Hollywood project area.) As for the abuse of discretion contention, the court found that CRA followed CEQA and the CEQA Guidelines. "An EIR for a redevelopment project is known as a program EIR," Presiding Justice Vaino Spencer explained. "A program EIR is designed to analyze environmental impacts of a series of related actions that can be characterized as one large project. That CEQA contains provisions for subsequent and supplemental EIRs reflects the Legislature's recognition that the need for environmental review may arise after the certification of a final EIR and the adoption of the redevelopment plan to which it relates." "Eller's proposal to construct a billboard at the Sunset site, which was submitted 13 years after the final EIR was certified and the plan was adopted, is an individual, site-specific development project within the project area whose specific impacts could not possibly have been identified at the time the final EIR was certified. Accordingly, CRA correctly determined that this proposed construction was ‘new information' that was not known and could not have been known at the time the final EIR was certified as complete," Spencer continued. The court found that Eller's argument regarding the nonexistent standards "has appeal." However, Eller suggested no remedy, and the plan did contain general provisions against which CRA could measure the proposed signs, the court ruled. Finally, the court held that CRA, which has ultimate authority over building permits in the project area, clearly was the lead agency — not the City of Los Angeles, as Eller contended. The Case: , No. B156300, 03 C.D.O.S. 3467, 2003 DJDAR 4343. Filed March 28, 2003. Ordered published April 23, 2003. The Lawyers: For Eller: Richard Hamlin, (310) 216-2165. For CRA: Kathryn Reimann, (831) 647-1430.

Whoever said that art imitates life has not visited one of Southern California's neighborhood cybercafes, where, according to some planners and police, the reverse is true. It is in these mainly blue collar, immigrant enclaves where video games and youth culture have combined into a lively and sometimes violent activity, thereby creating the state's latest LULU (locally undesirable land use). In predictable fashion, cities are responding with ordinances, and businesses are fighting back through the courtroom. And another chapter of land use regulation is being written. Central to the controversy is the tension between property rights and public safety – a legal quandary for land use regulators since the Supreme Court affirmed the zoning police powers during the 1920s. But this being California and the year 2003, there are fascinating new variables surrounding cybercafes: Cultural preferences of immigrant youth; the effect of violent, interactive digital imagery on group behavior; and the social ramifications of militarizing a post-9/11 America that is learning to live with fear. Cybercafes are establishments that primarily provide computers for access to the Internet. They are also known as PC cafes, Internet cafes, and cyber centers. They are hugely popular in Asia, so California is the natural American launching pad for the business trend. But, already, cybercafes have been stereotyped as hotbeds of gang violence. In December, the Los Angeles Police Department (LAPD) responded to an incident at a cybercafe in which teens were using chairs and steel pipes as weapons. The LAPD reported that fight as one of more than 300 disturbances, including a homicide, to which the department responded at cybercafes during the past year. Much of the blame for cybercafe-related violence is attributed to violent, interactive on-line games, such as Counter-Strike, which allows participants to pretend to be terrorists or special security forces. Participants battle in urban settings with guns, grenades and bombs, and hold hostages while plotting assassinations. A host of cities — including a number of Orange County communities with sizeable Asian populations — have stepped in to regulate cybercafes. The epicenter of this particular land use battle is Garden Grove, an Orange County city of 180,000 abutting Anaheim that has about 22 cybercafes. The City's population is 31% Asian. In January 2002 the City Council approved an interim ordinance "prohibiting the establishment of new cybercafes and creating time, place, and manner restrictions for existing cybercafes." Business owners criticized the ordinance as unworkable, and the Orange County Superior Court agreed, saddling the City with an injunction in August 2002 cp&dr in brief, september 2002> cp&dr in brief, september 2002>. Many city attorneys are closely watching Garden Grove's appeal. Staff at city hall in Los Angeles is also paying close attention. The proposed Los Angeles regulations are spearheaded by Councilman Dennis Zine, who represents the southwest San Fernando Valley. Even though his district has only one cybercafe for which only a parking complaint has been lodged, ex-cop Zine is the go-to guy for the LAPD, which is eager to get a law on the books. "We are using a two-pronged approach, treating this as a police matter and a planning matter," said Tom Henry, Zine's chief planning deputy. This spring, the city's Zoning Administrator ruled that cybercafes require conditional use permits (CUPs) under an old rule requiring CUPs for penny arcades. Henry said it is reasonable to look at cybercafes as the 21st Century version of penny arcades, which apparently generated nuisance problems for Los Angeles decades ago. Problems go beyond violence and include the typical nuisances of parking violations, gambling and noise, according to Henry. Many of the cybercafes have gone "underground." He acknowledged the difficulties inherent in crafting a regulation, and he is well aware of the troubles Garden Grove encountered in making its regulations stick. "One of the problems we face is: How do we differentiate between a cybercafe and Kinko's? They rent out computers on which you can play games too," Henry said. Alas, Henry had hit it on the head. Zoning has always been a blunt instrument. That is why the neotraditionalists have attempted to throw the zoning ordinance books out the window. But a more interesting dilemma is how to control popular culture. When video games played between teams in Northridge and Hong Kong over cyberspace are so exciting that they incite violence, are cybercafe owners the proper target of regulation? How about video game producers? What about gun manufacturers? There is no shortage of constitutional issues here. Ariel S. Pagtakhan, the owner of Cyber HQ in the Los Angeles district of Eagle Rock, west of Pasadena, thinks it is wrong to adopt a blanket ordinance and believes that fear of youth is driving the official response. His clients are young people from the local community. He contended that tournaments, which invite people in from throughout the region, are the problem. He would agree to hire a security guard for tournaments, but said an ordinance that required full-time security is unnecessary and would put him out of business. "Some are dismayed by the violence of the games. But these are the same games kids played 50 years ago with plastic army men. The difference is better resolution," Pagtakhan said. The League of California Cities sees cybercafes as a classic nuisance. The right of business owners is tempered by the harm they may promulgate on neighboring land uses, said Bill Higgins, senior staff attorney with the League. Regulations have to be crafted that balance both parties' interests. The game may already be over, though. It's not a question of whether cybercafe ordinances are adopted, it's a matter of how they are framed. And the final outcome will say much about how scared California's elected officials, police and planners are of our increasingly youthful and immigrant society.

A city clerk did not have authority to throw out a zoning initiative petition based on evidence she received that the petition had been improperly circulated, the First District Court of Appeal has ruled. The city clerk's role was ministerial, and she did not have the authority to consider extrinsic evidence about how the initiative's backers circulated the measure, the court held. Only the courts can weigh such evidence and make discretionary decisions, the court ruled. The case involved the Downtown Zoning Initiative in the City of Millbrae, about 10 miles south of San Francisco. The initiative sought to amend the city's zoning ordinance by restricting the density of restaurants, adult businesses and certain other establishments in a specific part of downtown Millbrae. In June 2001, initiative supporters submitted about 1,500 petition signatures to City Clerk Cheryl Wade. However, Wade refused to certify the petition and she returned it to the proponents. She said that the petition violated state law because it did not include the initiative title and summary on every page, and because she believed the "notice of intention to circulate" the petition and the full text had not been included with every petition signature sheet. The Alliance for a Better Downtown Millbrae sued. San Mateo County Superior Court Judge Robert Foiles ruled that the group had substantially complied with state election law and ordered Wade to process the petition. Wade complied and the San Mateo County clerk later certified that the petitions contained enough signatures to qualify the initiative for the ballot. But Wade also appealed Judge Foiles's ruling. The downtown alliance argued that Wade's willingness to comply with the lower court mooted the case. But the First District rejected that contention, in part because the initiative has never been presented to the City Council or placed on the ballot. "This case presents a live, actual controversy," Justice Linda Gemello wrote for the unanimous three-judge panel. The First District then went on to upheld the lower court. Two separate interpretations were at issue. The first concerned Elections Code § 9203, subdivision (b), which governs the placement of the title and impartial summary on an initiative petition. The statute requires the title and summary to appear "across the top of each page of the petition." The Millbrae group placed the title and summary on the front of each petition page, but not on the back. Wade said the title and summary needed to be on every page — front and back. The appellate court disagreed, noting that a summary can be up to 500 words long and even in fine print could fill nearly an entire letter-sized page by itself. Having the title and summary on only the front of a page still protects voters from being misled and prevents signatures from being collected in support of a measure different than the initiative for which they were procured, the court held. The second issue was the interpretation of Elections Code §§ 9201 and 9207. The former section requires that each section of a petition be circulated with the full text of the measure attached. The latter section requires that each petition include a copy of the notice of intention to circulate. Wade concluded that the initiative proponents violated those sections of the elections code based on four pieces of evidence: some signature pages showed greater wear than the full text page; unidentified third parties tipped her off; a folder containing signature pages without the notice of intention or full text attached was found in the council chambers; the clerk believed the proponents had violated the Election Code in the past regarding unrelated matters. The appellate court did not rule on whether the proponents violated §§ 9201 and 9207. Instead, the court held that Wade did not have authority to make her determination. Past cases interpreting the Election Code "only authorize local elections officials to review a petition as submitted for compliance with procedural requirements, absent an express grant of broader powers," Justice Gemello wrote. "They foreclose elections officials decisions that are discretionary or go beyond a straightforward comparison of the submitted petition with the statutory requirements for petitions. Here, the petition as to the city clerk complied with §§ 9201 and 9207. … The city clerk went beyond the face of the petition and concluded that the full text and notice of intention had been added only after , and that the sections had not been circulated in compliance with the requirements of §§ 9201 and 9207." "The city clerk's decision involves the sort of discretionary, adjudicatory decisionmaking reserved for judges and juries," Gemello continued. "Nothing in §§ 9201 or 9207 authorizes elections officials to engage in discretionary factfinding or to consider extrinsic evidence. … In the absence of explicit legislative authorization, we conclude that such powers are not granted to elections officials." The court rejected Wade's argument that she was authorized — even required — to engage in factfinding before certifying an initiative petition. Such inquiries and enforcement of the Election Code belong in the courts, the First District ruled. The Case: , No. A099453, 2003 DJDAR 4511. Filed April 25, 2003. The Lawyers: For the Alliance: Dennis Scott Zell, Fogarty & Watson, (650) 652-5912. For Wade: Michael Duncheon, Hanson, Bridgett, Marcus, Vlahos & Rudy, (415) 777-3200.

With negotiations over the 2003-04 state budget ongoing, it appears that redevelopment agencies will avoid the major financial hit proposed in January by the Davis administration. Adjustments to the current 2002-03 budget did move $75 million from redevelopment agencies to school districts. However, a Davis administration proposal for the state to take all unencumbered housing funds from redevelopment agencies went nowhere in the Legislature. The Senate version of the 2003-04 budget approved in late May contained another one-time shift of $250 million from redevelopment agencies to school districts. The Assembly version of the budget contained no shift after Assembly Budget Subcommittee 4 Chairman Rudy Bermudez (D-Norwalk) ordered a proposed $100 million shift removed from consideration. The question of the tax shift away from redevelopment agencies was headed to a two-house conference committee, and could even make it to the table during anticipated Big 5 budget negotiations involving the governor and party leaders from each house. Neither house showed support for the administration's proposal to make redevelopment agencies subject to the Educational Revenue Augmentation Fund (ERAF) property tax shifts permanently. The administration had proposed phasing in the ERAF property tax shift so that about half of redevelopment revenues eventually would be sent to school districts (see , February 2003). Local government lobbyists in Sacramento, however, were quick to point out that a budget had not been adopted, so they were not about to slow their efforts to protect local revenues. "We remain on edge because it's never over until it's over," said California Redevelopment Association (CRA) Executive Director John Shirey. "What gives us pause is the bigger issue, and that is the $35 billion to $38 billion budget deficit." Until there is agreement on the budget, state officials could still come looking to local governments for money, Shirey said. Jean Korinke, a lobbyist for the League of California Cities, agreed. "Until the bill is actually signed by the governor, anything can happen," she warned. When the budget will hit the governor's desk is anyone's guess. No one expects the Legislature to complete its work by the June 15 constitutional deadline. But lobbyists and Capitol insiders said they believe a budget stalemate would not extend past July, in part because of a recent state Supreme Court ruling that limits pay for nearly all state employees if the state does not have a budget when the fiscal year starts on July 1. Another factor is pressure from Wall Street financiers, who want as much certainty as possible. Their opinions matter a great deal these days because the budget will likely rely on some form of debt. As the budget debate continued, the state was attempting to peddle $11 billion in short-term notes to cover cash-flow needs, the largest such debt issuance in American history. The concept of shifting property tax increment from redevelopment agencies to schools is not one that Republicans support, said Sen. Dick Ackerman (R-Tustin), vice chairman of the Senate Budget Committee. "When people set up redevelopment agencies, they set up the agencies for a particular purpose, and it's not fair for the state to change the rules on them," Ackerman said. Additionally, new redevelopment agencies are obliged to negotiate with other taxing entities — including school districts — about the allocation of tax increment, so the state need not get involved, Ackerman said. Redevelopment funding is especially important to cities and counties because establishment of a redevelopment project area allows the local government to keep increases in property tax revenues. This is one of the few ways that cities and counties can boost property tax receipts. Lobbyists said they have found a fairly receptive audience in the Capitol this year. The CRA has emphasized the economic development aspects of redevelopment. "We have a number of legislators who look beyond the critics of redevelopment who see that it creates a lot of jobs, and that it provides housing," Shirey said. Of course, the proposed tax shift away from redevelopment agencies is not the only budget proposal that could impact local governments, although the idea might have the most immediate impact on land use planning and development. The administration's proposed "realignment" from the state to county of many social service responsibilities — worth about $8 billion annually — has been watered down a great deal. Vehicle license fees (VLF), which go entirely to cities and counties, appear likely to return to their pre-1998 level. The state cut the fees twice starting in 1998 but has "backfilled" the reduced amount to cities and counties. A Davis administration proposal to eliminate the backfill met stiff resistance; however, state lawmakers might attempt to add conditions to the VLF revenues that impact local land use planning. Requiring cities and counties to meet certain housing goals is one possible condition. While the VLF debate involves about $3 billion annually, a proposal to eliminate the state's Williamson Act subventions would have saved the state only $39 million in 2003-04. The governor's May revision reversed course and contained the subvention. Elimination of the subvention — in which the state replaces property tax dollars lost by counties because of tax breaks given to owners of farmland and timber land — would have most affected poor, rural counties. Shirey and other representatives of local government said they might be willing to accept a one-time financial hit in exchange for future constitutional protection of revenues. Local governments would most like to see that protection come in the form of a constitutional amendment — possibly like Proposition 98, which ensures schools get a certain percentage of state spending. During the League of California Cities' first-ever extraordinary session of the general assembly in May, delegates approved a resolution in which the organization promised to support increased local "contributions" to the state budget only if the Legislature placed on the ballot a constitutional amendment protecting local sales and property taxes and VLF revenues. Last year, the League and the California State Association of Counties considered an initiative that would provide this protection. However, it appears that lawmakers on either side of the aisle might be willing to carrying a constitutional amendment. Both Senate Minority Leader Jim Brulte (R-Rancho Cucamonga) and Assemblyman Darrell Steinberg (D-Sacramento) have talked to local government representatives about the idea. How the budget division between Republicans and Democrats will impact local government revenues is unknown. A Republican-prepared budget proposal cut only $500 million from local government revenues, and that was done by eliminating some state mandates, Sen. Ackerman said. Democrats, especially Davis, have been cool to the GOP proposal. Contacts: State Sen. Dick Ackerman, (916) 445-4264. John Shirey, California Redevelopment Association, (916) 448-8760. Jean Korinke, League of California Cities, (916) 658-8245. Assembly Budget Committee website: http://www.assembly.ca.gov/acs/newcomframeset.asp?committee=4

An environmental impact report for a dairy in Madera County has survived a challenge from an organization that fights dairy expansion in the Central Valley. The Fifth District Court of Appeal rejected arguments that the EIR's handling of endangered species issues, project alternatives and cumulative groundwater impacts was inadequate. Thomas Terpstra, the attorney for Diamond H Dairy and the county, said the ruling is important because the Fifth District undertook an independent analysis of some agency comments on the draft EIR. In some past California Environmental Quality Act (CEQA) cases, the Fifth District has given "undue deference to third party comments," Terpstra said. In this case, the U.S. Fish & Wildlife Service (USFWS) had found that the dairy would cause the loss of habitat for the endangered kit fox, so the agency made recommendations for mitigations. The final EIR, however, relied on a biologists' report that found no evidence of kit fox habitat; the EIR did not mandate the USFWS mitigations. Instead, the document said the developer would be required to meet the requirements of the Endangered Species Act (ESA). Terpstra said there was nothing that triggered the ESA, so proposed mitigations were unnecessary. Project opponents have asked the state Supreme Court to review decision. That appeal focuses on the Fifth District's ruling that an analysis of a smaller alternative project did not have to appear in the EIR. The court ruled that the alternatives analysis could be presented as evidence during a public hearing. In 1999, Greg Hooker and Diamond H Dairy applied for a conditional use permit to construct a dairy on 158 acres of an existing 1,925-acre cotton and grain farm southeast of Chowchilla. The applicant sought permission to develop a dairy with 4,480 milk cows, 700 dry cows and 4,000 replacement heifers, along with the associated barns. Processing was proposed to take place off-site. The county initially approved a mitigated negative declaration for the project. When the Center on Race, Poverty and the Environment (CRPE) appealed, the Board of Supervisors ordered preparation of an EIR. The county issued the draft EIR in February 2001 and it concluded the dairy would cause significant, unavoidable impacts on groundwater quality, air quality and odors. Four months later, the Board of Supervisors adopted the EIR, including findings of overriding consideration, and approved the project. An organization called Association of Irritated Residents and CRPE sued. Madera County Superior Court Judge Charles Wieland ruled for the county, so the project opponents appealed. A unanimous three-judge panel of the Fifth District upheld Judge Wieland. During the litigation, the dairy was built and began operating. The kit fox, an endangered species, was a key part of the appeal. Project opponents argued that the field study of kit fox habitat in the EIR did not constitute "substantial evidence" because it was not completed within survey guidelines issued by the state Department of Fish and Game (DFG). The survey concluded that the dairy site did not provide habitat for any listed species. Opponents also contended the project developer must obtain an "incidental take" permit because of impacts to kit fox habitat. The court rejected both arguments. Neither DFG nor the USFWS commented on the methodology of the field survey in the EIR, the court noted. "CEQA does not require a lead agency to conduct every recommended test and perform all recommended research to evaluate the impacts of a proposed project. The fact that additional studies might be helpful does not mean that they are required," Justice Timothy Buckley wrote for the court. "The response to CRPE's comment adequately explains why a protocol level study in conformity with the survey guidelines was not conducted; no quality natural habitat was present on the site, no sensitive species or their sign was detected during the field survey and the NDDB query showed only one kit fox sighting a decade ago and it was over eight miles south of the dairy site," Buckley continued. As for the take permit, the court found that the EIR "did not limit the federal government's jurisdiction under the Endangered Species Act or impair its ability to enforce the provisions of this statute." Regarding the alternatives analysis, the project opponents challenged the Board of Supervisors' finding that a smaller dairy was infeasible. The opponents said evidence supporting the board's decision — such as an analysis by a dairy consulting firm — should have appeared in the EIR so the public could comment. This argument is also the basis for the appeal to the state Supreme Court. "We disagree," Buckley wrote. "First, CEQA Guidelines § 15131 provides that economic data is not required to be included in an EIR. Second § 21081.5 states that a finding of infeasibility shall be based ‘on substantial evidence in the record.'" The analysis and a letter from a lender saying it would not finance the smaller dairy "constitute substantial evidence," the court ruled. The court also rejected opponents' arguments regarding cumulative effects on groundwater quality. Opponents said the EIR's discussion of cumulative impacts amounted to conclusory statements unsupported by evidence. But the EIR satisfied the court. "The conclusions concerning salinity and nitrogen loading are supported by adequate analysis and factual detail," Buckley wrote. "The DEIR explained why nitrogen loading is not likely to be a cumulative problem. The agency was not required to provide evidence supporting every fact contained in this section. … Appellants' argument to the contrary is premised on the mistaken position that the cumulative impacts section of an EIR must be as detailed as the consideration of the proposed project itself. This is incorrect." Brent Newell, an attorney for CRPE, said the court ignored two studies the organization submitted regarding groundwater in San Joaquin and Stanislaus counties. "The court seemed to be pretty generous to the agency's interpretation of the applicability of evidence," he said. But Terpstra said the EIR's handling of cumulative impacts was solid. A comprehensive geology/hydrology report and an analysis of the regional dairy industry were included, he said. The court simply applied the "rule of reason" to the cumulative impacts section, he said. The Case: , No. F041012, 03 C.D.O.S. 3392, 2003 DJDAR 4305. Filed April 1, 2003. Ordered published April 17, 2003. The Lawyers: For AIR: Brent Newell, Center on Race, Poverty and the Environment, (415) 346-4179. For the county and Diamond H Dairy: Thomas Terpstra, Herum, Crabtree & Brown, (209) 472-7700.

What began as an effort to prevent desecration of Native American sacred sites morphed this spring into a profound change in California's mining regulations, a change potentially so costly to mine operators that industry representatives predicted it would bring an end to one of the state's signature commercial activities: Gold mining. But a closer examination of industry projections suggests that gold mining is already on its way out as a large-scale commercial activity in California, a development with great symbolic importance but few practical implications for the state's economy. The regulatory changes put into place in April may hasten that trend, but they did not set it in motion. California has long had a conflicted relationship with the precious metal responsible for its abrupt vault into statehood more than 150 years ago. Gold's lure and luster transformed this sleepy provincial outpost almost overnight into an urban power, fueling a tide of immigration and creating vast wealth. Almost as quickly, the quest for California gold began to visit ruin upon the state's other great assets: water, forests and farmland. In the early days of the gold rush, the destructive environmental effects of mining were localized and on a small scale. But when miners had taken all of the easily found gold, they turned to large-scale industrial operations to get at gold buried in vast deposits of sand and gravel laid down by ancient rivers. In particular, they began using high-pressure blasts of water from giant brass nozzles to wash away entire hillsides. Nearly unimaginable quantities of debris washed downstream from the Sierra Nevada hydraulic mines, choking rivers and burying farmland. The Sacramento River rose seven feet in elevation as its bed was inundated with sand and silt. More than a billion cubic yards of tailings washed into San Francisco Bay, impeding navigation and turning the ocean brown at the Golden Gate. Altogether, Gold Rush-era miners picked up and moved about 5.6 billion cubic yards of California, according to the U.S. Geological Survey. Gold miners are still picking up and moving vast amounts of California, but the technology has changed considerably. Since the 1950s, the state's gold production has been derived primarily from giant open-pit operations in the Mojave Desert, where vast amounts of rock containing minuscule amounts of the precious metal are excavated, pulverized and bathed in cyanide. As the cyanide leaches through heaps of gold-bearing ore, the cyanide collects the precious metal, which is later extracted from the liquid solution. Because it takes 20 tons or more of this low-grade ore to produce an ounce of gold, the holes produced by open-pit mining are substantial. A project proposed by Glamis Gold Ltd. in southeastern Imperial County would, for example, be 800 feet deep and a mile wide, and spread over more than 1,500 acres. The Glamis project is the main reason for the new regulations. The mine on the federally owned Fort Yuma reservation would occupy a site sacred to the Quechan Indian Nation. Former Interior Secretary Bruce Babbitt denied the company's permit application in January 2001 because of effects on the tribe's cultural resources, but the decision was reversed by his successor, Gale Norton, nine months later. Outraged tribal representatives persuaded lawmakers earlier this year to approve SB22 by Sen. Byron Sher, (D-Palo Alto). Signed April 7 by Gov. Gray Davis, the law requires that open-pit mines on Native American sacred lands be filled back in after they close and the landscape restored to its natural contours. The added expense rendered the proposed Glamis project unprofitable, according to the company. On April 10, Davis' appointees to the State Mining and Geology Board (SMGB) adopted regulations extending the SB22 reclamation requirements to all new open-pit metallic mines in California. Although state law long has required mine operators to submit post-closure reclamation plans with their permit applications, that reclamation generally consisted of revegetation and steps to prevent the mine from harming air and water quality. Filling up the holes, although an option, was not usually required, said John Parrish, the SMGB's executive officer. Mining companies externalized that cost, he said, leaving such restoration up to the public, if it was performed at all. In the May issue of its newsletter, the California Mining Association (CMA) quoted industry representatives who were furious with the new regulations. "We will not dig another hole," said Richard De Voto, president of Canyon Resources, which operates a mining operation in the Panamint Valley. With millions of dollars and 14 years already invested in that project, he said, the company is considering a lawsuit on the grounds that its property has been devalued. "In the end the losers are not just the miners but the people of California," said CMA Manager Adam Harper. "Mining in California is practiced under the strictest of environmental rules and procedures in the world. Effectively banning the activity will only mean that the resources will get produced outside the state and possibly the country, continuing the process of exporting the high-paying jobs that are needed in America." Mining opponents had a different take. "The passage of the regulations indicates that California is serious about protecting the people of California from the environmental harm that can be caused by inadequately reclaimed open pit mines, protecting the irreplaceable sacred places of California Indians," Mike Jackson, president of the Quechan Indian Nation, said in a tribal press release. Parrish said the new regulations may, indeed, make new open pit mines unprofitable "at today's prices and today's technology." But if the price of gold rises from its current level of around $350 an ounce, or if the cost of production falls, the equation will change and mining companies again will be willing to dig, Parrish said. Even before the new regulations, however, California gold mining was a dying industry. According to the California Geological Survey's most recent report on nonfuel mineral production in the state, gold production declined 19% from 2000 to 2001, and is expected to drop by about 70% over the next two to three years. Gold accounts for only $122 million of the state's $3.3 billion in annual nonfuel mineral production, dwarfed by unglamorous products such as construction sand and gravel (($953 million) and Portland cement ($768 million). California may never be known as the Concrete State, but its future appears less golden than its past. Contacts: John Parrish, State Mining and Geology Board, (916) 322-1982. Adam Harper, California Mining Association, (916) 447-1977. Mike Jackson, Quechan Nation, (760) 572-0213. California Geological Survey: www.consrv.ca.gov/CGS/index.htm