Redevelopment is supposed to be out of fashion. The legislative reforms passed in 1993 made it more difficult for local governments to find "blight" — and cut down on the financial incentives for using redevelopment as well. Furthermore, California's appellate courts have made it increasingly clear that they have little patience for California's redevelopment games. In three recent rulings, appellate judges have hammed local agencies for playing fast and loose with the definition of both "blight" and "urbanization." Yet a few cities and counties around the state are moving forward with large redevelopment projects — sometimes as much as several thousand acres. In some cases, these local governments appear eager to tap into redevelopment tax-increment financing as one of the few available sources of funding for public infrastructure improvements. In other cases, both cities and counties appear to be simply placing all older urban neighborhoods into project areas. As is typical, these new project areas are being met with resistance from both angry residents and county governments fearful of losing revenue — though in at least two cases, the large project areas are being proposed by counties themselves. "It's not a trend," asserted William Carlson, executive director of the California Redevelopment Association. As evidence, Carlson pointed to figures from the state Controller's office showing that the creation of new redevelopment project areas has been dropping steadily since the 1980s. On average, 20 new project areas were created statewide in the three fiscal years from 1996-97 through 1998-99, compared with about 35 per year in the late 1980s. Even though the number of project areas may be small, the acreages involved are large. And so maybe there is a trend going on after all. Among the recently created or pending project areas are the following: o Stanton and Westminster, adjacent older cities in north Orange County, have both moved to place all property in their jurisdiction inside redevelopment areas. o Both Alameda County and Sonoma County have created large redevelopment areas in unincorporated, but apparently urbanized, communities — flood-prone Guerneville in Sonoma County, and Castro Valley (and a series of other communities) in Alameda County. Sonoma County has been sued by local residents. The Alameda County project consists of 3,300 acres in five non-contiguous communities; the Sonoma County project is 1,800 acres along the lower Russian River. o San Jose, which has one of the largest redevelopment agencies in the state, has greatly expanded its neighborhood-based effort, placing 18 different neighborhoods into a 9,400-acre project area that covers about one-sixth of the large city. o Upland, a small but generally affluent city in San Bernardino County, has placed some 1,600 acres of land in its older part of town in a redevelopment area — and has been sued by the county. In many cases, cities and counties are justifying these major redevelopment pushes in very different terms than we saw 10 to 15 years ago. Rather than promoting business growth, they claim older neighborhoods have housing problems that must be fixed. In other cases, the redevelopment agencies are pushing for simple public facilities improvements such as curbs and sidewalks. San Jose, for example, has committed $20 million over five years for this sort of thing in the neighborhoods. However, all this action comes in the context of three recent court cases that have taken redevelopment agencies to task for not adhering to the stricter definition of "blight" contained in the 1993 redevelopment revisions. In the most recent case, Friends of Mammoth v. Town of Mammoth Lakes, the Court of Appeal found that the city had failed to provide substantial evidence not only about blight but also about the question of whether the area was predominantly urbanized. All three recent cases criticized the boilerplate manner in which redevelopment agencies and their consultants typically approach findings of blight and urbanization. In the case of Mammoth Lakes, for example, the city argued that existing blight was harming economic viability. But the court concluded that the city "could not determine from the evidence that the flat rate of tax revenues was caused by defective design or construction, inadequate lot sizes or substandard site design" — in other words, by the physical conditions that must be present to find blight. CRA's Carlson acknowledged that redevelopment agencies "have to be more careful in their analysis" than they used to be. He also said he is not surprised by an increase in proposed large project areas by counties because the redevelopment system is likely to result in less oversight of counties. Traditionally, cities have had far more motivation to create redevelopment areas because they stand to capture a great deal of property tax revenue that otherwise would flowed to counties. Counties, on the other hand, have had little interest in redevelopment because they are simply stealing property tax revenue from themselves — and, indeed, counties have usually been the agencies that hold cities accountable by suing them. But Carlson pointed out that, if counties can reach a political consensus on redevelopment, there is usually nobody to look over their shoulder and enforce the law against them. No one, that is, except angry residents of the affected area, who often object to the blight finding and fear that the government will use redevelopment to impose large changes. That's what is happening in the Guerneville area, where two sets of local residents are suing. The redevelopment project area approved by the Sonoma County Board of Supervisors in July stretches for nine miles along the Russian River from Guerneville to Monte Rio. The redevelopment plan calls for $185 million of improvements such as affordable housing projects, home repairs, sidewalks, streetlights, parks, and public buildings. This area floods frequently, and both fires and landslides are common. The area is also characterized by low-density "rural sprawl" and a plethora of "paper subdivisions" which have never been built on. The area is a weekend tourist destination for San Franciscans, but some local residents want to retain the rural feel and object to the notion that their area is both "blighted" and "urbanized." Under redevelopment law, an area must be 80% urbanized to be legal. "They must have been counting vacant lots," said Susan Lea, a lawyer living in the area who is representing several residents challenging the project area. Redevelopment has always been a controversial tool in California. It is a tempting tool for almost any city or county that's strapped for cash — the financier of public improvements or public facilities of last resort. This will probably always be true, even if California's screwy state-local fiscal situation is improved someday. The latest round of new project areas simply shows that cities and counties are going to keep using redevelopment as a tool to intervene in older neighborhoods, whether or not they are, strictly speaking, blighted, urbanized, or even incorporated. This is why the redevelopment game — even if it slows down — probably will not stop until every older area in the state is inside a project area.

The U.S. Ninth Circuit Court of Appeals will not reconsider a takings case involving a building moratorium in the Tahoe Basin. However, five Ninth Circuit judges did vote to hear the case of Tahoe-Sierra Preservation Council, Inc., v. Tahoe Regional Planning Agency, 216, F3d., 764. (9th Cir. 2000), and Judge Alex Kozinski issued a blistering dissent in which he accused the three-judge panel that decided the case of ignoring takings precedent. "The panel does not like the Supreme Court's Takings Clause jurisprudence very much," Kozinski wrote. "Because we are not free to rewrite Supreme Court precedent, I urged the court to take this case en banc. By voting not to rehear, we have neglected our duty and passed the burden of correcting our mistake on to a higher authority." In June, a three-judge panel of the Ninth Circuit ruled that the Tahoe Regional Planning Agency (TRPA) was not liable for a takings when it imposed a 32-month building moratorium during the early 1980s while TRPA drafted a new regional plan (see CP&DR Legal Digest, July 2000). The panel ruled that property cannot be divided into separate pieces related to certain time frames, in this case the 32 months that the moratorium was in place. Writing for the unanimous panel, Judge Stephan Reinhardt called a temporary moratorium a "crucial planning mechanism." The decision was the fourth appellate court ruling in the long-running litigation, during which property owners have lost every claim at one point or another. Property owners asked for a hearing en banc. Only Kozinski and Judges Diarmuid O'Scannlain, Thomas Nelson, Stephen Trott and Andrew Kleinfeld voted to hear the case. All five signed the Kozinski's dissent. Kozinski accused the three-judge Tahoe-Sierra panel of reversing First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987), the landmark case that establish the concept on "temporary takings." Kozinski said the panel adopted Justice John Paul Stevens's dissent in First English, in which he rejected the concept that property can be "taken" by imposition of a temporary land-use regulation. To emphasize his point, Kozinski cited similarities in Stevens's dissent and the opinion in this case. "Although claiming its opinion is fully consistent with First English, the panel plagiarizes Justice Stevens's dissent," he wrote. Kozinski continued, "In this case, a series of consecutive development moratoria has prevented the landowners from building any homes on their lots for the two decades since the start of this litigation. If a local government can evade its constitutional obligations by describing a regulation as ‘temporary,' we create a sizeable loophole in the Takings Clause." Kozinski also said the latest Tahoe decision conflicted with Lucas v. South Carolina Coastal Council, 505, U.S. 1003 (1992), in which the Supreme Court held that government regulation which prevents all economically beneficial uses of a property is a takings. "The only difference between this case and Lucas is that the regulation here had a finite duration," Kozinski wrote. And, he wrote, First English made clear that a temporary building moratorium is no different than a permanent ban. The case is Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, Nos. 99-15641, 99-15771. Kozinski's dissent, filed October 20, 2000, can be found at 2000 Daily Journal D.A.R. 11307.

Federal housing officials violated the free speech rights of three Berkeley residents who protested plans for a homeless shelter in their neighborhood, the Ninth U.S. Circuit Court of Appeals has ruled. The court ruled that a Department of Housing and Urban Development officials' eight-month investigation into the activities of project opponents trampled on rights that were clearly protected by the First Amendment. The court held that the five HUD officials (one of whom is now deceased) are individually liable for their actions, clearing the way for a U.S. District Court trial to determine damages. In a detailed opinion, the Ninth Circuit made clear that HUD officials had gone way too far with an investigation that involved the threat of subpoenas, demands that project opponents stop publishing a newsletter, and directives for the opponents to turn over all documents related to the homeless shelter. In fact, the investigation, which officials in Washington eventually killed, led to permanent changes in HUD policy for dealing with housing project opponents. In 1992, the nonprofit group Resources for Community Development (RCD) applied for a use permit to convert the Bel Air Motel on University Avenue in Berkeley into a homeless shelter. The city's Zoning Adjustment Board granted the permit; an appeal by the Coalition of Neighborhood Groups Opposing the Bel Air Conversion failed on a 4-4 City Council vote in April 1993. Soon thereafter, the Coalition filed a lawsuit alleging that zoning board member Linda Maio had a conflict of interest because she was also on the RCD board. An Alameda County Superior Court in early 1994 ruled against the Coalition, saying that the "good faith" exemption to the state's conflict of interest law saved Maio. Meanwhile, the director of Housing Rights, Inc., a Berkeley advocacy group, complained to HUD about "discriminatory scare tactics used by the opponents," such as warnings that the shelter would bring mentally disabled people and drug addicts to the area. In November 1993, the Housing Rights director signed a federal housing law complaint prepared by San Francisco HUD staff members. The HUD officials then sent letters to the three Coalition leaders — Alexandra White, her husband, Joseph Deringer, and Richard Graham — notifying them of the investigation and warning that they could face $100,000 penalties if found guilty of discriminatory housing practices. The following month, HUD officials produced a "proposal for conciliation" that required the three to drop their state court litigation and stop publishing the newsletter and flyers about the Bel Air conversion. In January 1994, the HUD officials issued a broad request for all documents related to the project. HUD interviewed the three residents but received little other cooperation. In July, the San Francisco office forwarded the case file to HUD's Washington headquarters with a report concluding that the project opponents had violated the Fair Housing Act and there was reasonable cause to take further enforcement action. But the director of HUD's Office of Investigations in Washington quickly ended the case when she decided that the First Amendment protected opponents' actions. White, Deringer and Graham then sued five HUD officials in their official and individual capacities (and a sixth official only in her official capacity) claiming that they harassed the opponents solely for exercising their rights to free speech and to petition the government for redress of grievances. U.S. District Court Judge Marilyn Hall Patel granted partial summary judgment for White, Deringer and Graham. Patel ruled against the project opponents only on the issue of prospective relief, which they sought to prevent future harassment. On appeal, a unanimous three-judge panel of the Ninth Circuit upheld Patel. Centering on the residents' unsuccessful state court lawsuit, the HUD officials argued on appeal that opponents did not have First Amendment protection because they lost that case. The opponents used the lawsuit in an attempt to prevent people from exercising their right to move into a neighborhood. The HUD officials, citing Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983), argued that they only had to show that a lawsuit was filed with a discriminatory motive. Whether there was an objective basis for the suit was immaterial, they argued. But the Ninth Circuit said the HUD officials incorrectly extended the reach of a labor law case. Instead, the court said, the residents were protected by the Noerr-Pennington doctrine, which "ensures that those who petition the government for redress of grievances remain immune from liability for statutory violations, notwithstanding the fact that their activity might otherwise be proscribed by the statute involved." In fact, there was an objective basis for the state court lawsuit — even the Berkeley city manager conceded Maio's conflict of interest — that the HUD officials failed to investigate, the court ruled. Circuit Judge Stephen Reinhardt continued: "Regardless of whether Noerr-Pennington or Bill Johnson's applies, the investigation far exceeded what was reasonable for the purpose of ascertaining the plaintiff's motives for filing the state-court suit and thus intruded unnecessarily on their First Amendment rights. … The plaintiffs' reasons for opposing the Bel Air project were matters of public record and evident from the flyers in the San Francisco Office's possession before HRI even filed its complaint." The court ruled that the HUD officials should have known that the scope and manner of their investigation violated project opponents' First Amendment rights. Thus, the officials lost their qualified immunity as government officials. "In 1993 and 1994, reasonable government officials would have known that they could not conduct an eight-month investigation into the vocal but entirely peaceful opposition of residents to a housing project proposed for their neighborhood, or into their efforts to persuade the appropriate government agencies of their point of view," Reinhardt wrote. As for the prospective relief sought by the residents, the court said there was no need because HUD has permanently altered how it conducts such investigations — in response to this case. Despite the Ninth Circuit's ruling on liability, the U.S. Justice Department said it would continue to provide legal representation for the HUD officials. The Case: White v. Lee, Nos. 99-15098, 99-15109, 99-16033, 00 C.D.O.S. 7958, 2000 Daily Journal D.A.R. 10577, filed September 27, 2000. The Lawyers: For White: Kenneth Marcus, Cooper, Carvin & Rosenthal, (202) 638-3930. For Lee, Robert M. Loeb, U.S. Department of Justice, (202) 514-2000.

The U.S. Ninth Circuit Court of Appeals has reversed a lower court judgment giving an Indian tribe the right to regulate the use of fee-patented private property within a reservation boundary. The unanimous three-judge panel ruled that an Indian tribe has the authority to regulate land owned by nonmembers only when given specific Congressional approval or when then land use directly affects the tribe's political integrity, economic security, or health and welfare. The case involved a small timber harvest in the Hoopa Valley Indian Reservation in Humboldt County. In January 1995, the Hoopa Valley Tribal Council adopted a forest management/timber harvest plan. It prohibited all logging within a half a mile of the White Deerskin Dance Site, where the tribe conducts a 10-day dance dedicated to world renewal every two years. Only two months later, Roberta Bugenig purchased in fee simple 40 acres within the reservation — and within the new no-harvest buffer zone. In July 1995, Bugenig received a state permit to selectively harvest three acres of second-growth timber on her parcel. She sought a hauling permit from the Tribal Council so she could transport timber on a tribal road, but the council denied her application. Bugenig began cutting trees anyway. The Tribal Council ordered her to stop and soon filed a lawsuit at the Hoopa Valley Tribal Court, which issued an injunction to halt the logging. In October, the state revoked Bugenig's permit, citing the Indians' protests. In 1996, the Tribal Court ruled that the Tribal Council had jurisdiction over Bugenig's land and permanently enjoined her from harvesting timber. Bugenig appealed to the Northwest Regional Tribal Supreme Court, which upheld the lower Tribal Court in 1998. Bugenig then sued in federal court, seeking declaratory and injunctive relief against the Tribe's exercise of regulatory jurisdiction and the Tribal Court's exercise of adjudicatory jurisdiction. U.S. District Court Judge Claudia Wilken granted the Tribe's motion to dismiss the lawsuit. On appeal, however, the Ninth Circuit ruled that the two bases on which the Tribe asserted jurisdiction where not applicable in this case. The Tribe asserted jurisdiction based on the Hoopa-Yurok Settlement Act of 1988, 25 U.S.C. §§1300i-1300i-11. The Settlement Act ended a century-old dispute between the Hoopa Indians and the Yurok Tribe by dividing the reservation into two parts, and by ratifying the governing bodies of both Tribes. Judge Wilken ruled that the Settlement Act gave the Hoopa Valley Tribe jurisdiction over all land within the boundaries of the reservation, including Bugenig's. The Ninth Circuit disagreed. Only specific Congressional authority could give the Tribe jurisdiction over private lands. " he delegations of congressional authority to Indian tribes that have been recognized by the Supreme Court all employ the same standard language to achieve delegation, giving Indian tribes authority over all land within the geographical boundaries of the reservation, ‘notwithstanding the issuance of any patent.' This recognized delegation language is conspicuously absent from the Settlement Act section relied upon by the Tribe," Circuit Judge Diarmuid O'Scannlain wrote. The judge cited United States v. Mazurie, 419 U.S. 544 (1975), and Rice v. Rehner, 463 U.S. 713 (1983), as the only two Supreme Court cases directly on point. The second basis for the Tribe's jurisdiction was the "Montana exception," which gives Tribes jurisdiction when "nonmembers engage in conduct on fee lands within a tribal reservation that ‘threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.'" (Montana v. United States, 450 U.S. 544 (1981).) The Ninth Circuit called this exception "exceedingly narrowly." Bugenig's logging did not threaten the Tribe's ability to govern itself, nor would it harm the tribe's health and welfare, the court held. "Under the Tribe's view of the exception, a tribe could effectively acquire general regulatory jurisdiction over nonmember land simply through asserting an interest in protecting various sites of claimed historical or cultural importance," O'Scannlain wrote. The court rejected that far-reaching interpretation. The Case: Roberta Bugenig v. Hoopa Valley Tribe, No. 99-15654, 00 C.D.O.S. 8131, 2000 Daily Journal D.A.R. 10823, filed October 3, 2000. The Lawyers: For Bugenig: James Burling, Pacific Legal Foundation, (916) 362-2833. For Thomas Schlosser, Morriset, Schlosser, Ayer & Jozwiak, (206) 386-5200.

After years of meager funding at the hands of a congressional majority with little affection for environmental issues, land-conservation and habitat-protection programs nationwide are about to receive a huge financial boost from the federal government. California, in particular, stands to gain a great deal from what some observers characterize as a "landmark" conservation-funding measure in the $18.8 billion Interior Department appropriations bill sent to President Clinton in October. Federal funding will double immediately for everything from urban parks and soccer fields to marine and coastal habitat protection. Spending will increase even more in subsequent years. Yet at the same time that conservationists welcomed the increased federal commitment, they lamented the bigger fish that got away. A more substantial financial package — one that had achieved a remarkable level of bipartisan support and appeared headed for an easy victory after a 315-102 endorsement by the House in May — failed in the Senate because of opposition by a handful of Western senators. The demise of that initiative, the Conservation and Reinvestment Act (CARA), suggests that despite growing recognition in Congress of the economic importance and public popularity of habitat protection and recreational use of federal lands, the old Western attitudes favoring resource extraction and regarding Uncle Sam as an unwelcome meddler in regional issues predominate. The six-year spending program approved last month by Congress allocates $12 billion to conservation programs. Financed mainly by Outer Continental Shelf (OCS) oil and gas royalties, the plan authorizes $1.2 billion in 2001 (another $400 million for marine and coastal programs is included in a separate bill) and raises that to $2.4 billion by 2006. The huge spending increase will fund a variety of federal programs, such as Everglades restoration and national parks maintenance. Importantly, however, two-thirds of the money is earmarked for state and local programs. The bill directs first-year spending toward six major categories: federal and state land and water conservation ($229 million); state conservation programs ($229 million); urban and historic preservation ($39 million); federal lands maintenance ($150 million); coastal programs ($100 million); and compensation to states for taxes lost on federal land, a new category of federal conservation spending, ($50 million). In contrast, the failed CARA bill (HR 701) would have spent $3 billion a year for 15 years, for a total federal commitment of $45 billion. Among its primary components was full funding for the federal Land and Water Conservation Fund (LWCF), a remarkable program launched in 1965 that has established Cape Cod National Seashore and Voyageurs National Park, protected landscapes as diverse as Big Sur and Yosemite, and created more than 37,000 local and state recreation projects. Restoring full funding to the LWCF has been a top priority for conservationists for the past three years. The theory behind creation of the LWCF was straightforward: Money derived from depleting one natural resource should be used to protect another. Accordingly, the fund allocated royalties on the sale of oil and natural gas pumped from offshore leases to land conservation and recreation programs, with particular emphasis given to those coastal states — such as California — that bear the burden of OCS oil and gas development. Since 1980, when Congress established a ceiling for LWCF appropriations, $900 million a year has flowed into the fund. Half that historically was directed to state and local programs. But a few years later, money technically directed into the LWCF remained unallocated to conservation programs — the dollars shifted, in fact, to cover other government spending during a time of rising deficits. State and local programs were particularly hard-hit. That money typically provided matching funds and grants for urban park and recreation programs, as well as state park acquisitions and operations, but non-federal LWCF allocations dropped to zero in the mid-1990s. The CARA bill would have restored the state/local LWCF funding to $450 million annually, authorized in the form of 50-50 matching grants. It also would have devoted substantial funding to other programs with potential benefit to California communities, such as the Urban Park and Recreation Recovery Program ($75 million), State Wildlife Program ($350 million), Farm and Ranch Lands Protection Program ($50 million), Urban and Community Foresters Program ($50 million) and Historic Preservation Program ($150 million). In all, California stood to collect at least $171 million a year. The CARA bill was co-sponsored by Rep. Don Young — a conservative Alaskan not known for sympathy to environmental causes — and Rep. George Miller, a Bay Area liberal. This partnership between ideologically dissimilar lawmakers helped generate broad bipartisan support for the bill in the House, where it survived several attempts by Western Republicans to append restrictive amendments. In the Senate, CARA was championed by Sen. Frank Murkowski, another Alaska Republican not generally considered a friend of environmental legislation, who chairs the Energy and Natural Resources Committee. (Support from the Alaska delegation is not surprising in light of the state's economic reliance on crude-oil revenues — and the implicit assurance that LWCF spending would encourage popular support for the drilling that provides the money.) Murkowski pushed the bill through his committee on a 13-7 vote, and persuaded 62 his colleagues to sign on, including Senate Majority Leader Trent Lott. The Western Governors Association argued that the bill made "good economic, ecological and political sense." Despite this broad support, entrenched opposition by Rocky Mountain senators — who viewed the money as a way of invigorating the federal "land grab" in their states — promised a bruising floor battle. With time in the legislative session growing short, Lott was reluctant to embroil the chamber in such a dispute, which would delay passage of other key budget bills and interfere with fall election campaigns. Thus was born a compromise — a scaled-down appropriations bill that nevertheless commits substantial federal resources to conservation. Key environmental leaders mourned the death of CARA but praised the compromise. George Frampton, chairman of the White House Council on Environmental Quality, called it a "historic breakthrough." Rodger Schlickeisan, president of Defenders of Wildlife, declared it "the most important conservation funding legislation in our lifetime." Others were not so sanguine. "The Interior appropriations bill may mean more money in the short term for land protection and wildlife conservation programs," said Mark Van Putten, president and CEO of the National Wildlife Federation, "but it's not enough, it's not guaranteed, and it would likely come at the expense of a far superior proposal … Anything less than CARA effectively subverts the will of the American people and both houses of Congress." That may be the case. In an election year, however, it may also be the best deal conservationists can get. Contacts: White House Council on Environmental Quality: (202) 395-5750 House Committee on Resources' CARA Web page: www.house.gov/resources/ocs/ National Wildlife Federation: (202) 797-6840

The U.S. Supreme Court has accepted for review a takings case from Rhode Island. The case centers on the Rhode Island Coastal Resources Management Council's denial of permits to fill 18 acres of wetlands and a pond in the town of Westerly. The landowner, Anthony Palazzolo, first sought permission to dredge and fill the marsh and pond in 1962 so that he could build 74 houses. He filed several subsequent applications but did not receive the approval needed to proceed. The state agency found that the development would harm birds and animals that rely on the wetlands. Furthermore, state laws approved in 1965 and 1971 gave state officials more authority to deny such applications. The landowner filed a lawsuit in 1988 claiming that the state had "taken" his land without just compensation. The Rhode Island Supreme Court ruled that the takings claim was not ripe because Palazzolo never filed an application to develop the subdivision; he sought permits only to fill the wetlands. Moreover, the court ruled, Palazzolo never "sought permission for less ambitious development plans." The court also held that Palazzolo had no inherent development rights when he acquired the property, and could not have reasonably believed he would get permits to fill the wetlands when he acquired the land. The landowner's attorney, Eric Grant of the Pacific Legal Foundation in Sacramento, argued that the case involves three questions: whether a regulatory taking is categorically barred when a regulation predates a landowner's acquisition of the property; whether a landowner must file less ambitious development applications after the denial of the first application to ripen a takings claim; and whether a property value of greater than zero means that permissible uses remain "economically viable." Rhode Island state attorneys argued that the takings claim is not ripe and that the court has settled other issues raised by the suit. The case is Palazzolo v. Rhode Island, 99-1047. Oral arguments before the high court will probably be conducted in early 2001.

When a disaster destroys your home, there are basically two responses. You can choose to start afresh, and build an entirely new house. Or, you can rebuild the house you had before, brick by brick, because it was familiar and because you loved it. That was the dilemma facing Avila Beach, an unincorporated community San Luis Obispo County, which found itself with the rare opportunity of rebuilding after a near-total demolition. The community's decision says much about both planning and the human dimensions of urbanism. Avila Beach is a Steinbeck kind of place — at least, Steinbeck in the boozy, sentimental mode of Cannery Row or Tortilla Flats. Avila Beach is a funky, dusty beach town with a population of 350 residents at its height. No new buildings have gone up on the town's 50 acres during the past 23 years because of a water moratorium, and the existing buildings are not blue-ribbon examples of property management. There are a couple of small grocery stores, a diner, and several bars that can get loud late at night. That's the way Avila Beach has always been, and that's the way residents like it. Then came a shock: a local group, Communities for a Better Environment, won a $200 million lawsuit against Unocal Corporation in 1998. Unocal had leaked an estimated 400,000 gallons of crude oil into the sand and soil of this popular beachfront community. Unocal then decided that, in order to save the town, as we used to say, it was necessary to destroy it first. The oil company chose to clean up the mess by digging out all the contaminated soil and carting it away all 200,000 cubic yards of it. Unocal's plan was to excavate three enormous holes in the middle of town; the Associated Press likened the operation to a "dentist performing giant root canals." Unocal paid to evacuate local residents and compensated local businesses for lost earnings. Nearly 46 buildings — including nearly all of Front Street and an entire mobilehome park — were demolished. The demolition and reconstruction, which started in late 1998, is scheduled for completion in December. During the past year, county planners held public meetings with Avila Beach residents to build a consensus on the best way to reconstruct the beachfront settlement. For the most part, however, residents wanted the town rebuilt pretty much the way it was. The Avila Beach Specific Plan recommended preserving the character of the community, the use of traditional materials, bike paths and other alternative forms of transportation, and creation of a pedestrian zone between Front Street and the beach. Local residents were not particularly interested in design standards, according to John Hand, a San Luis Obispo County planner. "The most frequent comment we heard from residents is that they wanted the town to look funky," he said. At least four businesses that were demolished, including the Sea Barn boutique, the Custom House restaurant, Cafe Avila and Mr. Rick's, a bar, will be rebuilt where they originally stood. One "historic" building, the otherwise unremarkable Avila Market, returned to town on the back of a truck, and was reinstated on its former spot. "It's a link to the old Avila," said Hand. In fact, there is much in Avila Beach that will be for the better when the reconstruction is complete. (The rebuilding of Front Street, a one-sided street facing the ocean, is already finished.) The community has designated a new park on the northern edge of the beach and set aside a hillside on the south as open space. As mentioned above, the town has removed the cars from a one-block area of Front Street, creating a direct pedestrian route through a shopping area, across Front Street and to the Avila Beach Pier. Along the street is a new "water feature," a sort of artificial tide pool made out of sandstone paving that fills with sea water from the action of the tide. Another fine new touch is a set of wiggly walls located at the inland end of the beach, where visitors can take off their shoes to walk on the sand, or just sit and look at the ocean. The maximum height on Front Street has been raised from a single story to 25 feet, allowing the possibility of some larger, beachfront hotels. And there are no plans to replace a 46-unit mobilehome park, whose former residents have found new homes in town or elsewhere. Other details may rankle planners, such as the survival of a surface parking lot in the center of town. Even with the proposed landscape camouflage of the parking lot, this is a poor choice. Hand, the county planner, said local residents discussed and rejected the idea of a parking structure. Here, the tensions between Avila Beach's dual identity — regional beach destination and self-contained community — have caused a tear in the urban fabric. Structured parking with ground-level retail would have been a "better" solution, enhancing the pedestrian scale and probably providing more parking spaces. But residents wanted the parking lot to stay a parking lot. The residents of Avila Beach did not want to erase their city; they wanted to rebuild it. Cities contain our memories, and as such are part of our identity. I wish Avila Beach had been willing to go further in making a coherent urban design. But the presence of a parking lot was more important to them than a fine new street lined with shops. While that is strange, even perverse, to outsiders, this attachment to place is also the lifeblood of planning because it represents the human connection to places, even mediocre ones. The difference between planners and regular folks is that planners look at a city as a problem needing to be solved, while everyone else see a community filled with spaces that hold meaning. I hate that parking lot, but that does not mean keeping it was the wrong decision for Avila Beach.

The California Supreme Court has voted to review a business tax case from San Diego. However, the state's high court deferred action on Teyssier v. City of San Diego until the court decides a similar case from Los Angeles. In June, the Fourth District Court of Appeal ruled that San Diego's tax on rental residences was not subject to Proposition 218, the Right to Vote on Taxes Act of 1996 (see CP&DR Legal Digest, August 2000). The city assessed a rental unit business tax on all residential properties that are rented. The court held that Proposition 218 (Articles XIII C and XIII D of the state Constitution) only applies to taxes imposed as an incident of property ownership. The San Diego tax is a general tax based on use of the property, the court held. The property owners contended that Proposition 218, which was intended to close Proposition 13 loopholes, applied to any taxes relating to property ownership. The ruling appeared to conflict with Apartment Association of Los Angeles v. City of Los Angeles, 74 Cal.App.4th 681 (see CP&DR Legal Digest, October. 1999). In the Los Angeles case, the Second Appellate District struck down a tax levied on apartment owners to fund a slum-abatement program. The state Supreme Court accepted the Los Angeles case about one year ago and heard oral arguments in mid-October. The court will decide the Los Angeles Case before considering the San Diego case. The case is Edward Teyssier v. City of San Diego, No. S090271.

The City of Los Angeles's general plan framework and accompanying environmental impact report have survived most aspects of a legal challenge. The Second District Court of Appeal found the EIR acceptable but rejected the city's findings regarding traffic impacts, remanding the case to the trial court. The unanimous three-judge appellate panel upheld the EIR's discussion of alternatives, water resources analysis and housing policies. Assistant City Attorney Susan Pfann said city officials were happy not to have to readdress those issues and believed they could move forward quickly, depending on the remanded proceedings. Pfann said officials feel like they only narrowly lost the case. The attorney for the Federation of Hillside and Canyon Associations, which filed the lawsuit, declined to comment. In July 1994, Los Angeles officials notified the public that they were preparing a general plan framework (GPF) and a draft EIR. Six months later, the city completed the two documents and invited public comment. The general plan framework was intended to guide future amendments of the 35 (now 37) community plans that compose the city's general plan. It addressed land use, housing, infrastructure, transportation and other elements. Because anticipated growth would severely impair circulation, the framework recommended several programs, including a Transportation Improvement Mitigation Plan (TIMP) and a new circulation element. The draft EIR stated that the mitigation measures would reduce the cumulative significant effects on transportation "to the extent feasible." The city completed the TIMP in February 1995. The document contained proposals that would cost $12 billion over 20 years, such as building roads, adding rail and bus lines, encouraging greater use of public transit and telecommuting. The TIMP was available to the public, but there was no public notice and the draft EIR was not recirculated. After public hearings, the city produced a final EIR in June 1996 and an amended general plan framework in July of that year. Both documents relied heavily on the TIMP mitigation measures. The city also prepared a statement of overriding considerations that said transportation impacts would be significant and unavoidable. The City Council approved the final EIR, the statement of overriding considerations and the framework and in December 1996. The Federation, the city's most powerful homeowners' organization, sued, challenging the EIR and the city's failure to recirculate the draft EIR after the TIMP was completed. Los Angeles Superior Court Judge Daniel Yaffe ruled the city was required to circulate the TIMP for public comment but rejected other challenges to the EIR. On appeal, the Federation argued that there was insufficient evidence to support findings that the mitigation measures will reduce significant effects on transportation, and that there was insufficient evidence that water resources would be adequate. The Federation also contended the EIR did not adequately address feasible growth alternatives or the impact of population growth. The city, which also appealed, argued that it did not need to circulate the TIMP. As to transportation, the Federation latched onto statements in the TIMP that indicated the city did not have enough money to carry out mitigations. The city defended its plan and did not rely on the overriding considerations it adopted. On this point, the court agreed with the Federation. "Although the city adopted the mitigation measures, it did not require that they be implemented as a condition of the development allowed under the GPF and made no provision to ensure that they will actually be implemented or ‘fully enforceable,'" Justice Walter Croskey wrote. The court suggested the city may comply with the California Environmental Quality Act by amending the framework to ensure mitigations are carried out as a condition of development, by restricting development, or by making a finding of overriding consideration regarding significant traffic impacts. In all other aspects, the appellate court sided with the city. In addressing water, the EIR projected an increase in both demand and supply, the latter based on water reclamation programs and increased groundwater pumping. The Federation argued that certain figures were inconsistent but proved no city error, the court held. As for alternative, the Federation challenged the range of scenarios the city presented. There were five: a growth moratorium; continued development under existing plans; a transit-centered growth plan; continued development based on Southern California Association of Governments' projections; and building based on the general plan framework but without its land use management policies. The appellate court called the alternatives "a meaningful basis for comparison with the project." Croskey wrote, "Petitioners must show that the alternatives are manifestly unreasonable and that they do not contribute to a reasonable range of alternatives. Since they cite no evidence or meaningful legal authority and offer no reasoned argument to so demonstrate, we reject their challenges to these alternatives." The court also upheld the city's population growth analysis against challenges based on employment expansion. The question of recirculating the documents was moot because the city had since circulated the TIMP, the court ruled. Pfann, the city's attorney, said the lawsuit was only delaying transportation improvements. "We look upon this general plan as not something that is causing these impacts, but as something that is mitigating them. It's a growth-control plan," she said. The Case: Federation of Hillside and Canyon Associations v. City of Los Angeles, No. B126659, 00 C.D.O.S. 8054, 2000 Daily Journal D.A.R. 10651, filed September 28, 2000. The Lawyers: For the Federation: Lawrence Teeter, (213) 387-4512. For the city: Susan Pfann, assistant city attorney, (213) 485-5416.

The First District Court of Appeal has cleared the way for Oakland Mayor Jerry Brown to participate in redevelopment decisions in neighborhoods where he owns property. In overturning a Fair Political Practices Commission ruling, the court held that Oakland's City Charter provides a loophole in state conflict-of-interest laws by requiring the mayor's participation in redevelopment activities. Brown championed the state's conflict of interest law, the Political Reform Act of 1974 (Gov. Code §81000), when he was secretary of state. But as mayor, Brown argued that his participation was "legally required" in a redevelopment project area near his home and two investment properties. The controversy has roots in the November 1998 election, when Oakland voters approved Measure X. The Brown-backed initiative amended the city charter to establish the mayor as head of the executive branch of city government, removing him from the City Council. Measure X also made the mayor the chief executive officer of the Redevelopment Agency. Armed with new powers, Brown became the leader of the Lower Broadway Project, negotiating with the county, landowners, lawyers and developers. He directed the city manager and city staff to revise zoning standards, and he lobbied city councilmembers regarding development strategies. However, Brown owns three parcels, including his primary residence, in the Central District Redevelopment Project Area. His real estate is within 500 to 1,500 feet of the Lower Broadway Project. Brown acknowledged that his property's proximity to the Lower Broadway Project posed a conflict under the Political Reform Act. But, citing Affordable Housing Alliance v. Feinstein, (1986) 179 Cal.App.3d 484, Brown contended his participation in the Lower Broadway project was required by the revised city charter because there is no other source of decision making regarding economic development within the executive branch. The FPPC disagreed. Earlier this year, the commission determined that the "rule of legally required participation" did not apply because the city charter broadly authorized the city manager to administer affairs of the city. The FPPC held that Feinstein did not apply. In that case, then-San Francisco Mayor Dianne Feinstein was allowed to exercise her veto power over a San Francisco rent control ordinance even though she owned rental property. The FPPC said that San Francisco's city charter required the mayor — and no one else — to either sign or veto all legislation. But in Oakland, the city manager or even the vice-mayor can perform the mayor's functions, the FPPC held. In overturning the FPPC, the appellate court held that the Brown matter was a closer call than Feinstein, because Brown sought a far wider exemption to conflict of interest laws and because the Oakland city charter assigns authority to the city manager. The court even called the FPPC conclusion "an understandable one." Still, in reviewing the history of Measure X, which sought to improve government by overhauling the system, the court held that the FPPC's interpretation was flawed. Measure X gave the mayor specific powers to propose legislation, call special City Council meetings, break council deadlocks and effectively veto legislation, the court held. "These are substantial legislative functions and the mayor is the only elected official in Oakland who can perform them (except for proposing legislation, which any council member may do). Particularly in the area of economic redevelopment, which the charter encourages the mayor to undertake, the ability to propose plans for the council's approval is a crucial first step in a complicated and difficult process, and one for which the mayor is uniquely qualified since he is the official in charge of carrying out the plans," Justice Joanne Parrilli wrote. "For purposes of the Lower Broadway Project, the FPPC's opinion would prohibit the mayor from even attempting to act as the chief executive promised by Measure X," Parrilli continued. "City government would effectively resume the power structure that existed under the former charter, which vested the city manager with broad administrative authority and prevented the mayor or the city council from interfering with the city manager's exercise of that authority. Such a result is obviously inconsistent with the charter in its present form, and with the will of the voters." Attorneys for the FPPC warned that overturning the commission's decision would "open the floodgates to other exception claims." But the court noted that the "strong mayor" form of government is rare in California and concluded, " e are skeptical that any such flood is imminent." The Case: Jerry Brown v. Fair Political Practices Commission, No. A091305, 00 C.D.O.S. 8391, 2000 Daily Journal 11157, filed October 12, 2000. The Lawyers: For Brown: Lowell Finley, (415) 421-7151. For the FPPC, Kathleen Gnekow, general counsel, (916) 323-1937

With affordable housing ranking as a major issue in nearly all of California, the Davis administration and the Legislature responded this year with a gigantic increase in funding for housing programs. However, they did not adopt the significant policy changes supported by the building industry and some housing advocates, and the governor even vetoed one of the few important housing bills approved by lawmakers. Housing programs will receive about $570 million of this year's state budget — up from about $60 million the previous year, and from almost nothing during the Wilson and Deukmejian administrations. Most of the money is in the form of one-time allocations and much is targeted at affordable rentals for low-income families. Farmworkers in need of decent housing were a priority, as were first-time homebuyers with low and very-low incomes. (See accompanying chart on Page 15.) "I think this is a very important first step, and this is an immediate step because the money is available now," Housing and Community Development Director Julie Bornstein said. "We think it can have a pretty significant impact." Marc Brown, co-director of the California Housing Law Project, said the fact that professionals and businesses are now worried about the effects of high housing costs forced state leaders to act. "I think it's a culmination of the housing crisis reaching the middle class," said Brown, a longtime activist for low-income housing who cheered the spending increases. "It's a culmination of the business community seeing how the housing crisis can impede or slow business growth. … I've always said that until the business community starts taking this seriously, we're going to be in the wilderness as far as housing policy is concerned." However, many business leaders contend the state's housing policy remains in the wilderness. "You cannot subsidize your way out of this dilemma," said Allan Zaremberg, president of the California Chamber of Commerce. Zaremberg and other members of the Job-Center Housing Coalition (a rapidly growing collection of business and development interests, labor, housing advocates and poverty groups) urged three major policy changes during the recently completed legislative session: reform of construction defect liability, environmental regulatory relief, and changes to the way local government is financed. State lawmakers approved none of those policy changes, and approved few of the many "smart growth" proposals aimed at regional approaches to the housing crisis. The Numbers Get Bigger Detractors say the new and expanded housing programs will provide only 10,000 to 15,000 new and refurbished units. Noting that the state's money is intended to provide partial funding, Bornstein pegged the number of new and rehabilitated units at 50,000 to 75,000. Either way, the housing gap would still grow. Several recent reports have concluded that California needs to build about 100,000 more housing units than it currently builds every year simply to keep pace with population growth. From 1990 through 1999, residential building permits averaged 110,000 units annually — roughly half the number of units permitted during the 1970s and 1980s, according to the California Budget Project, an independent research and policy analysis organization. Moreover, permits for multi-family residences dropped by 70% during the 1990s, at least partly because of "NIMBYism," said Jean Ross, the Budget Project's executive director. Earlier this year, the Budget Project identified the immediate need for 500,000 affordable rentals in metropolitan areas of California. Indeed, a shortage of rentals combined with rapid job growth raised the average monthly rent for a two-bedroom apartment in the Bay Area to more than $2,000 in June, up 28% in one year, according to a recent UCLA Anderson Forecast. Ross called the state appropriations a good first step because they will help households left out of the private market, and because the spending is important symbolically after so many years of minimal funding. "Clearly, a problem that has been years in the making can't be solved with a single year's spending," Ross said. But Timothy Coyle, senior vice president of the California Building Industry Association and a former HCD director under Gov. Wilson, said no amount of government spending will remedy the problem. "The magnitude of the housing problem in California demands more than just funding," Coyle said. "Home builders think you've got to look at what is contributing to a huge supply shortfall." Coyle lamented the defeat of AB 2343 (Ducheny). The bill would have exempted from the California Environmental Quality Act certain infill housing developments of up to 200 units in urban areas. The bill never made it out of the Assembly Natural Resources Committee after some environmental groups and environmental justice advocates decried the proposed CEQA loophole for projects that could bring hundreds of people and cars to already crowded areas. But Coyle said, "The California Environmental Quality Act was never meant to be a legal tool for NIMBYs to block houses." Opposition to infill drives exurban development, he said. Bob Johnston, a professor in the UC Davis Department of Environmental Science and Policy, likened the state's housing allocations to "trying to drain the ocean with a spoon. … The fact of the matter is, we're way behind in California," he said Johnston said lawmakers should put teeth into the housing fair share law. Right now, there is neither a big enough hammer nor sweet enough carrot to get cities and counties to provide the housing specified by regional planning bodies such as the Southern California Association of Governments and the Association of Bay Area Governments. The Housing and Community Development department has always shied away from forcing apartments on communities. But the state could withhold funding, such as highway money, if a city or county refuses to approve necessary housing. Or the state could offer incentives, such as distributing sales tax on a per capita basis or letting cities and counties keep a larger portion of property tax from residential developments, he said. "We need structural change in California. The incentives are backwards," Johnston said. The Structure Remains There has been no shortage of reports describing a government financing system that favors retail development over all other land uses. A conference committee established to follow up on recommendations of the Assembly Speaker's Commission on State and Local Government Finance made little progress despite — or maybe because of — weekly meetings attended by dozens of interest groups. The conference committee failed to reach a consensus on what problems exist, and eventually settled on doling out $212 million in one-time funds to local governments. The Legislature did pass SB 1621 (Alarcon), which addressed some of the housing element issues Johnston addressed. The bill would have limited local governments' ability to declare moratoria on multi-family housing development. It also would have required cities and counties to zone enough land to meet the jurisdiction's fair-share housing needs in all income categories. Not surprisingly, the League of California Cities and California State Association of Counties opposed the bill, which they called an onerous mandate that would constrain local flexibility to deal with local land-use issues. In this case, Gov. Davis sided with local government. "Providing more housing is a critical need. I am reluctant, however, to use the coercive power of state government to further impinge on the rights of local communities to make their own best decisions on land use matters," Davis said in his veto message. He also pointed to the huge increase in housing allocations. Bornstein, however, said the budget augmentations do get at some of the very issues Coyle and Johnston identified. The $110 million Jobs-Housing Balance Program provides financial incentives for cities and counties that approve more housing, especially high-density housing, projects that use existing infrastructure and developments near transit stations, she said. The department's largest program, the $188 million Multifamily Housing Program, gives infill projects top priority, she said. Also, money is available for adaptive reuse of commercial structures and for mixed-use projects. And the department stands ready to provide research and presentations to support local officials confronted with opposition to multi-family housing projects. "This is certainly not the last step. It's not even a middle stop, but it is a first step. Our task now is to make sure the developers out there, profit and nonprofit, know about the resources that are available and see us as a business-friendly agency," Bornstein said. Get ‘Em Next Year No one expects the housing issue to go away. High housing prices continue to generate news coverage almost everywhere in the state. About 30 brand new state lawmakers will arrive in Sacramento, many of them fresh from making land use decisions at the local government level. Bornstein conceded that the way local government zones land and how local government is funded deserve a hard look. "Under our current revenue structure, there is an incentive against housing," she lamented. The chamber's Zaremberg and other members of the Job-Center Housing Coalition vow to continue advocating for local government finance changes, regulatory relief and construct defect reform. That last issue is critical, developers say, because liability concerns make it nearly impossible to get financing for condominiums and townhouses, which are important under just about everyone's definition of "smart growth." While complaining about the influence of trial lawyers and "entrenched environmental interests" in Sacramento, the CBIA's Coyle said he grows more optimistic that state leaders will tackle the issues. Brown, of the Housing Law Project, said recent successes and a receptive Capitol have generated momentum for meaningful changes. Senate President Pro Tem John Burton (D-San Francisco) and Assembly Speaker Robert Hertzberg (D-Van Nuys) have carried the flag for housing programs for years, Brown said. He expects some sort of CEQA exemption for infill housing will return for consideration next year. And Brown hopes the Legislature will make some of this year's one-time augmentations an annual part of the state budget. Contacts: Julie Bornstein, Housing and Community Development Director, (916) 445-4775. Marc Brown, California Housing Law Project, (916) 739-6293. Jean Ross, California Budget Project, (916) 444-0500. Allan Zaremberg, California Chamber of Commerce, (916) 444-6670. Timothy Coyle, California Building Industry Association, (916) 443-7933. Bob Johnston, UC Davis Department of Environmental Science and Policy, (530) 752-3015. HCD website: www.hcd.ca.gov

The State of California's 2000-01 budget and various pieces of legislation created several new programs and expanded some existing housing programs under the Department of Housing and Community Development. They new programs include: o Jobs-Housing Balance Improvement Program. $110 million. Covers three areas: — Economic development grants to local agencies in "housing rich" areas to attract new businesses and jobs. — Incentive grants to cities and counties that adopt HCD-approved housing elements by the end of 2001. Grants are based on a jurisdiction's increase in the issuance of residential building permits during 2001 compared to the average of the previous three years, and on approval of multi-family housing, transit-oriented development and infill projects. The money can fund capital projects such as roads, parks, schools, community centers, and police and fire stations. — Urban predevelopment loans to local governments and nonprofit corporations for financing initial costs of constructing, converting, preserving or rehabilitating housing developments near transit stations. o Inter-Regional Partnership (IRP) grants. $5 million. A pilot program that provides funding for certain cities, counties and councils of government in the East Bay and Central Valley to development plans, policies and incentives to improve the jobs-housing balance in a five-county region. (Santa Clara, Alameda, Contra Costa, San Joaquin and Stanislaus counties.) The money is available only for two or more agencies working together, or for a county working with the state. o CalHOME Program. $50 million. Provides grants to local public agencies and nonprofit corporations for first-time homebuyer downpayment assistance, property acquisition and rehabilitation, and self-help mortgage assistance. Loans can also serve as permanent financing for mutual housing and cooperative developments. o Downtown Rebound Program. $25 million. Provides low-cost loans to local public entities, for-profit and nonprofit corporations, and housing cooperatives. The money is available for conversion of vacant or underused commercial and industrial space into housing, with 20% to 40% of units reserved as affordable. Money is also available for residential infill projects, high-density housing near transit stations and other forms of downtown housing development. o Downtown Rebound Planning Grants program. $2.5 million. Provides grants to cities and counties for planning and technical assistance related to infill housing, mixed-use developments, and transit corridor developments. Cities and counties may use the money to update zoning ordinances and general plans. The expanded programs include: o Multi-family housing assistance program. $188 million. Provides low-cost, deferred-payment loans to local public entities, for-profit and nonprofit corporations, and housing cooperatives for construction, rehabilitation or acquisition of, or conversion to, multi-family rental housing. Costs of developing support facilities, such as child care centers, are also eligible. This is the program's second year. o Farmworker Housing Grant Program. $46.5 million. Provides grants to local governments and nonprofit organizations for any construction-related cost in the development of homeowner or rental housing for agricultural workers. The program also has a manufacturing housing component, offers assistance to people displaced by unsafe conditions, and funds developments that provide health services for residents. o Mobilehome Park Resident Ownership Program. $9 million. Provides loans to local public agencies, nonprofits and resident organizations to purchase mobilehome parks and for other efforts to preserve affordable mobilehome parks. o Emergency Housing Assistant Program. $39 million. Provides grants to local governments and nonprofits to construct rehabilitate and renovate homeless shelters. Also funds equipment purchases and voucher programs. o Child Care Facilities Finance Program. $16 million. Provides loans and loan guarantees for child care operators and local public agencies to develop, expand or improve child care facilities.