The City of Murrieta's was wrong to declare 3,500 acres of land blighted in order to create a redevelopment project area, the Fourth District Court of Appeal has ruled. In a lawsuit brought by the Riverside County government, the Fourth District found that the property is not "predominantly urban" nor is "blighted," both of which are required in order to create a redevelopment area. With the exception of 200 acres of vacant county land that was withdrawn, the area in question "has been depicted as a rural and formerly rural area beginning to be developed in spite of some minor deficiencies in the infrastructure. No problems with crime and no significant other problems have been demonstrated," the court said. The appellate court upheld Riverside County Superior Court Judge Stephen Cunnison's ruling that the property was not blighted. The original proposed redevelopment area included some 3,700 acres, 81% of which Murrieta claimed was "urban", Only agricultural and vacant lands were classified as non-urban. However, Judge Cunnison noted that about 600 acres of the land were defined in the city's general plan as rural-residential (2.5-acre minimum lots) and equestrian-residential (0.5-acre minimum lots). Both categories allow livestock and agriculture. Judge Cunnison concluded that this property should not be viewed as urban -thus decreasing the total percentage of land used for urban purposes to about 66%. Even if the 200 acres of vacant land is eliminated, the urban land total is only about 70% of the entire project area. Cunnison ruled that this does not fit the definition of "a predominantly urbanized area" and the appellate court agreed. In affirming Cunnison's interpretation, the appellate court relied heavily on Honey Springs Homeowners Assn. v. Board of Supervisors, 157 Cal.App.3d 1122 (1984). In Honey Springs, the Court of Appeal recognized that the term urban "has no fixed, objective, and easily ascertainable meaning". However, the case laid out a lengthy list of factors to take into consideration, including existing public facilities, on-sight sewage capacity, proximity of employment centers, the size of signs, and other factors. The Honey Springs court also cautioned that urban may not have the same meaning in the different locations. Without laying down a fixed definition of "urban", the court in the Murrieta case said: "Even if we defer to the definitions employed by the City's land use categories, there is a paucity of evidence in the administrative record to support a determination that the project area is predominantly urbanized." The appellate court also affirmed the trial court's ruling that blighted conditions did not exist in the project area. The city's blight report found that 41 of the existing 1,100 structures were identified as unsafe or unhealthy. A smattering of other deficiencies were also found, such as incompatible, nonstandard, and nonconforming uses. The city report also noted that traffic and flooding problems had been exacerbated by the construction of the junction of Interstate 15 and Interstate 215. " fter sifting through the general commentary that describes much of the redevelopment report, we discover there is little substantive material to be gleaned," the court wrote. "Although the report speaks in the statutory language used to define blight, the report offers little concrete evidence of actual conditions of blight." The court also took the city to task for employing the jargon of redevelopment and blight without identifying anything unusual or unique to the project area. For example, the report talked about "functional obsolescence" of buildings - meaning that older buildings tend to be less valuable. But, the court concluded, "the foregoing does not show the existence of blight in the City of Murrieta. The report makes little attempt to describe specific problems caused by older buildings or estimate the cost of repairing those problems." The court also chastised the city for not quantifying the loss of property value due to blight - but, rather, emphasized low retail sales rates and claimed they were a condition of blight. In addition, "The bald claim of inadequate parking is also not supported." The Case: County of Riverside v. City of Murrieta, No. E020294, 98 Daily Journal D.A.R. 7759 (filed Juily 15, 1998). The Lawyers: For Riverside County: George L. Hampton IV, McDermott Will & Emery, (xxx) xxx-xxxx. For City of Murrieta: John R. Harper, Harper & Burns, (xxx) xxx-xxxx.

Reversing a trial judge's ruling, the Second District Court of Appeal has ruled that a development company's lawsuit against its own engineering firm is not a Strategic Lawsuit Against Public Participation - a so-called SLAPP suit - within the meaning of the state anti-SLAPP law. It is one of the few instances in which an attempt to use the state anti-SLAPP law has failed in the appellate courts. SLAPP suits are often filed by developers against citizen groups or others who speak out against their projects. The anti-SLAPP law, Code of Civil Procedure §425.16, permits defendants to file a motion to strike and argue that the alleged SLAPP suit should be dismissed. Since the passage of the anti-SLAPP law some eight years ago, the overwhelming majority of published appellate rulings have upheld the motion to strike. In this case, however, the Second District, Division Six, did not do so. The case involved Penfield & Smith Engineers Inc., and its involvement with two different developers seeking to construct a "big box" retail project in Goleta. Los Carneros Community Associates hired Penfield in the mid-1980s to assist with land-use approvals for a 50-acre project. Penfield employee Michael Caccese managed the project for Los Carneros until January of 1996. Among other duties, he was charged with advocating the project. In 1994, Camino Real LLC hired Penfield to assist in obtaining land-use approvals for another property in Goleta. Beginning in 1995, however, both Camino and Los Carneros sought to obtain approval for construction of a big-box retail project. During that time, Camino's project manager, Mark Linehan, came to the conclusion that Caccese, working for Los Carneros, was criticizing the Camino project publicly. Asked by Linehan to choose between the two developers, Penfield chose to terminate its relationship with Camino and continue working for Los Carneros. Late in 1995, Penfield sought to re-established its relationship with Camino and reassured Camino that it would limit its activities on the Los Carneros project to "those which are appropriate for an engineering company and those that do not involve active opposition to your project." Subsequently, Camino hired Penfield to work on unrelated projects. However, Los Carneros regarded the relationship as a violation of its contract with Penfield and terminated Penfield. Caccese resigned from Penfield but continued to work for Los Carneros through another engineering firm. Los Carneros then sued Penfield, Camino, Linehan and others alleging interference with prospective business advantage, declaratory and injunctive relief and breach of contract. Penfield and Camino filed a motion to strike under the anti-SLAPP law, which was granted by Santa Barbara County Superior Court Judge Bruce Dodds because of the "expansive" nature of the previous court rulings. However, the Second District reversed. "The common thread among the cases is that the statements or acts which formed the gravamen of the plaintiffs' complaints were directly related to a matter of some public interest, and the litigation was designed to stifle a citizen's right to free speech or to extinguish the public's participation in the public process," wrote Justice Arthur Gilbert for a unanimous court. "The alleged acts Los Carneros complains of were not made in furtherance of such rights, but instead may constitute a breach of contract. The legal action here does not take on public significance simply because it bears some relation to proceedings before a government or administrative agency. We do not construe the statute so broadly as to abrogate the law of contracts." Gilbert added: "It is true that SLAPP suits are often pleaded in terms of breach of contract or other valid actions. When presented with a motion to strike a complaint pursuant to section 425.16, a court must consider the active objective of the suit and grant the motion if the true goal is to interfere with and burden the defendant's exercise of his free speech and petition rights. "By the same token, not every lawsuit between parties who appear before legislative or executive bodies on some common issue is a SLAPP suit. To apply the statute here would give immunity to parties contracting to perform services concerning matters before government agencies." The Case: Los Carneros Community Associates Inc. v. Penfield & Smith Engineers, No. B105545, 98 Daily Journal D.A.R. 7232 (filed June 29, 1998). The Lawyers: For Los Carneros: Richard M. Coleman, Coleman & Richards, (xxx) xxx-xxxx. For Penfield & Smith: Samuel J. Muir, Collins, Collins, Muir & Traver, (xxx) xxx-xxxx.

A California appellate court has affirmed that the Sierra Club and other environmentalists did not exhaust their administrative remedies before filing a lawsuit to challenge the San Joaquin County Local Agency Formation Commission's annexation of the Gold Rush City property to Lathrop. However, the appellate court justices said that they consider the rule on which they based their decision "outmoded" and urged the California Legislature or the California Supreme Court to overturn it. Gold Rush City is a large development project proposed on an island in the Sacramento-San Joaquin Delta. In 1996, the San Joaquin County LAFCO approved annexation of the Gold Rush City property to Lathrop and adopted a statement of overriding considerations in certifying the environmental impact report. After the LAFCO action, Eric Parfrey, an environmental consultant who has been critical of the Gold Rush City project, notified the LAFCO that requesting reconsideration and indicating that he would soon submit the required $700 fee. The following day he withdrew the request and then joined with the Sierra Club, the San Joaquin County Farm Bureau, and others in filing a lawsuit challenging the statement of overriding consideration. San Joaquin County Superior Court Judge Bob McNatt dismissed the case, claiming that Parfrey and the other plaintiffs failed to exhaust their administrative remedies because they did not follow through on their motion for reconsideration. The Third District Court of Appeal affirmed McNatt's ruling, relying on a rule first laid down in Alexander v. State Personnel Board, 22 Cal.2d 198 (1943) - even though, the court said, the rule is outmoded. The Alexander rule emerged from a personnel case, in which two fired state employees sought a court hearing, rather than a re-hearing before the State Personnel Board, because they believed the Personnel Board hearing was "irregular". But the California Supreme Court ruled that where a rehearing is permitted under law it is a necessary step in exhausting administrative remedies. Even while following the Alexander rule, the Third District called it "wooden" and pointed to dissents from California Supreme Court justices - including the eminent Roger Traynor - that a permissive rehearing option, rather than a mandatory rehearing requirement, should not trigger a requirement for a rehearing to exhaust administrative remedies. "Justice Traynor notes that in he long run such a rule would avoid unnecessary litigation and impel the Legislature to make the policy decision concerning the requirement of seeking rehearing for each statutory scheme," the Third District wrote, "Not surprisingly, the majority opinion in Alexander has been criticized by commentators." The appellate court rejected, however, the plaintiff's argument that Alexander has already been rendered not binding because it is in conflict with Code of Civil Procedure §1094.6, which has an apparent inconsistency over when the time period for reconsideration ends. The court also rejected the environmentalists' argument that they should be excused from the exhaustion requirement under the futility exception. "An exception that swallows the rule is no exception," the court wrote. In a short concurring opinion, Justice Puglia disagreed with the majority's call for a review of the Alexander rule, which he called "readily understood" and "easy to comply with". Noting that the environmentalists' lawyers were apparently not aware of the Alexander rule, Puglia wrote: "The Supreme Court must have better things to do than to reconsider long established rules simply to accommodate inattentive or parsimonious counsel". The Case: Sierra Club v. San Joaquin LAFCO, No. C027361, 98 Daily Journal D.A.R. 6712 (issued June 19, 1998). The Lawyers: For Sierra Club: Susan Brandt-Hawley, Brandt-Hawley & Zoia, (707) xxx-xxxx. Forf Califia Development Group (real party in interest): Steven A. Herum, Herum, Crabtree, Dyer, Zolezzi & Terpstra, (209) xxx-xxxx.

With the election-year session coming to a close, the California Legislature has not moved aggressively on most issues associated with planning and development. A deal to place a multibillion-dollar school bond on the November ballot may still materialize - and if it does it could repeal or reform the state's long-standing Mira doctrine on school impact fees. A constitutional amendment to permit sales-tax sharing is still moving forward, as it a minor revision of the housing element law and a few other bills. By and large, however, the 1998 legislature has chosen not to tackle major planning and development issues. No major revision of the California Environmental Quality Act or related environmental laws appears to be under way. And several high-profile attempts to change planning and development laws have gone down to defeat, including an effort to bolster the connection between water supplies and land-use planning and an attempt to restrict neighboring cities from raiding each other's "big box" retailers. Meanwhile, cities and counties may still reach agreement on a "revenue neutrality" bill, but the substance of such an agreement has not yet been publicly released. Probably the most interesting battle in Sacramento this year was the attempt by the East Bay Municipal Utilities District and the California Farm Bureau Federation to expand the influence of water agencies over land-use permitting decisions - this time through the actions of local agency formation commissions. In an effort led by East Bay MUD, the legislature passed a bill in 1995 requiring local governments to consult with water purveyors when large residential development projects are proposed. The bill arose out of East Bay MUD's struggle with Contra Costa County over the approval of the 11,000-home Dougherty Valley project, which the East Bay MUD board at the time opposed. The bill was supported by the Farm Bureau because of concerns in the Central Valley that urban developers would provide water to their projects by purchasing farms and/or water rights from farmers. This year, East Bay MUD attempted to broaden the water/land-use connection by sponsoring a bill to place water issues in the middle of the sphere of influence and annexation processes controlled by each county's LAFCO. Assemblyman Mike Sweeney, D-Hayward, who is chair of the Assembly Local Government Committee amended his bill AB 1476 so that it would have required LAFCOs, when acting on all sphere and boundary changes, to determine that sufficient water supplies are available to accommodate the proposed development within those areas. East Bay MUD lobbyist Randy Kanousee said the proposed bill was strongly supported by his board - even though many of the board members were elected with strong building industry sponsorship after the passage of the earlier water/land-use bill. In June, Kanouse aggressively lobbied to move the bill forward at the Senate Local Government Committee, and his efforts even generated editorials in the Sacramento Bee and San Jose Mercury News. However, Sweeney pulled the bill after the building industry weighed in on the issue. Kanouse said he received a telephone call from Secretary of State Bill Jones asking that he lay off. According to Kanouse, the building industry threatened to withdraw support from a potential November water bond if Sweeney's bill moved forward. However, Rex Hime, executive director of the California Business Properties Association, told a somewhat different story about what happened to the Sweeney bill. Hime called the bill East Bay MUD's attempt to get "a second bite of the apple" on the Dougherty Valley project. Him confirmed Kanouse's amendments came in late in the session and violated an agreement made among all the parties to the 1995 law that they would negotiate any future changes. Hime confirmed that the building industry indicated that there would be "serious implications in the water bond negotiations" if the bill moved forward. Richard Lyon of the California Building Industry Association did not go so far as to say the water bond negotiations would have been stalled as a result, but he agreed that it was a "late hit" that represented a breach of lobbying etiquette on Kanouse's part. Here is a rundown of other pending bills of interest: Sales Tax Competition Assemblyman Tom Torlakson, R-Contra Costa County, attempted to make a serious run at reducing competition among neighboring jurisdictions for sales-tax competition with AB 1835, which would have prohibited cities and counties from offering financial inducements to an auto dealer or a "big box" retailer that relocates from one jurisdiction to another within the same market area. Though motivated by an apparent attempt to subsidize a big-box move within his district, Torlakson struggled to find a meaningful approach. He finally limited the bill to auto dealers and retailers of 75,000 square feet or more, and his bill would have required a city or county to identify such businesses when they are subsidizing them and make a finding that the business is not relocating within the same market area. The bill also sought to define a subsidy as an appropriation, a tax incentive, or a "nontax" incentive. The bill passed the Assembly but died on a 4-4 tie in the Senate Local Government Committee. Hime, who was active in opposing the bill, said he was concerned that it might prevent large retailers with several types of retail stores from closing one store (for example, Dayton-Hudson-owned Mervyn's) in one city and opening a different store (for example, Dayton-Hudson-owned Target) in another city with financial incentives. Meanwhile, however, Assemblyman George Runner's constitutional amendment on tax-sharing is still alive. ACA 10 would permit local governments to share tax revenues if voters in the affected cities approved the idea. The bill passed the Assembly on July 10 and is now in the Senate. Housing Elements While Assemblyman Torlakson has not gotten very far on big-box retailers, he is moving forward a little more successfully on housing elements. Torlakson's AB 438 appears likely to pass. It makes only minor revisions in the housing element law, however, leaving more substantive changes for another time. As currently written, the bill makes several minor changes in housing element law, including the following: o 25% of a city's "fair share" of affordable housing can take the form of existing, rehabilitated units, so long as those units meet certain criteria. They must be "substantively" rehabilitated and they must remain affordable for a 20-year period. o Existing market-rate units and federally subsidized units threatened with a loss of federal subsidy can be counted toward "fair share" if certain conditions are met. o At the request of the state's councils of government, which must devise the "fair share" housing numbers, the mathematical formulas calculating "fair share" will be altered to include transportation data - a change that will supposedly make the figures more accurate. Other Bills of Interest o Yet another bill by Torlakson, AB 270, would give LAFCOs more financial and political independence by requiring cities and special districts to bear some of their costs, rather than just counties. LAFCOs are administratively run by counties, which sometimes leads to allegations of bias. The bill has passed the Assembly and is still under consideration by the Senate. o A bill that would have greatly affected local governments' ability to impose exactions has been shelved for the year. AB 2621 (Cardoza), which was sponsored by the California Chamber of Commerce, would have required that exactions be "feasible" and that there be a "reasonable relationship" between exactions and projects. The Senate Local Government Committee staff analysis suggested that the bill might have reversed a long series of exactions cases, including Arnel, Hart/Mira/Murrieta, and perhaps even Associated Homebuilders, a 1970s court case that established the original nexus rules for exactions. o A bill by Assemblyman Kevin Murray, D-Los Angeles, would amend the pedestrian mall law - but it appears to be tied to a roiling development controversy in Westwood. AB 1768 would update the 1960 law to allow cities and counties to take possession of property to be used as a pedestrian mall, if the property is being taken by eminent domain and there is a dispute over the property's value. The bill would make the law conform with other, similar laws, but it is opposed by Westwood activists who oppose a developer who would be able to take advantage of the law if it passed.

Reports on the need for farmlands preservation in the urbanizing Central Valley have become nearly as commonplace as tract homes in Fresno. But when a high-powered group of valley farmers released their own report last month, the reactions indicated that this one might carry more weight than the rest. The California Building Industry Association, sensing the potential loss of a sometime ally in the valley's land-use wars, condemned the report as "alarmist rhetoric". And the head of a environmental coalition seeking to get land-use issues on the next governor's agenda said the report indicated an opportunity 'to get ag support on our side. The significance of the report from the Central Valley Agricultural Task Force was not only what was in it -- calls for farmer-friendly water policies, taxes to pay for the purchase of agricultural easements, coordinated planning policies among valley counties, and the like -- but who issued it: a coalition of farm groups that represent most of the valley's 40,000 farmers. The report marked the first time the industry formally acknowledged the spread of urban development as a serious economic threat. It did so with the kind of strong rhetoric heretofore embraced mainly by environmentalists. "We find that the country's most productive food factory is jeopardy, said Jack Pandol, a Bakersfield grape-grower and former undersecretary at the California Environmental Protection Agency, who chaired the task force. "Acre by acre, it is being paved over by sprawling, poor, wasteful patterns of urban growth and development ....We need to recognize that as a nation and as a state that we have a problem we can no longer afford to overlook." The task force was formed in response to growth rates in the Central Valley that in many places are outpacing coastal counties in Southern California and the Bay Area. Pandol and co-chair Mike Chrisman, a Tulare County rancher and former deputy secretary of the state Resources Agency, secured the endorsement of nearly every major trade group in the state, including the California Farm Bureau Federation. Pandol called the 10-point plan a starting point for the development of more ag-sensitive planning policies in the valley and said task force members plan to meet with Republican Dan Lungren and Democrat Gray Davis in an attempt to make the issue part of the debate in the fall campaign for governor. "It bodes well for what we on the environmental side are hoping -- that next year, with a new governor, we are going to turn some attention to growth-related problems," said Gary Patton, general counsel for the Planning and Conservation League. "It is a very encouraging sign that Central Valley ag interests are now understanding that they need to cooperate with others to save farmland." Patton chairs the California Futures Network, a coalition of environmental and other groups that hopes to present a set of farmland-protection policies early next year to the new governor and legislature. For all its rhetoric about the need for policies that promote concentrated urban development, the report falls well short of calling for mandates such as rigid urban-limit lines or the creation of regional planning authorities to implement those goals. The task force's reliance on voluntary implementation measures, said Patton, shows that the agriculture industry is not yet willing to let go of its historic distrust of government regulation.' From the other side, the report was criticized by Robert Rivinius, chief executive of the California Building Industry Association, as a self-interested plan to protect an industry whose statewide production grew 60% in volume and 369% in value since 1967. Rivinius was particularly critical of the report's suggestion that fees be levied on new development to pay for the purchase of agricultural easements. He called it a tax designed to protect big agriculture that would lead to economic devastation in the valley, where unemployment rates are the highest in the state. The report acknowledges that the farming industry remains divided on land-use policy. Indeed, it notes in its introduction, The agricultural community often plays both sides of the issue, wanting protection from the problems associated with farming next to urban areas while also encouraging growth into productive agricultural areas by making land readily available for development (i.e., selling ... when the price is right). Whatever its shortcomings -- criticisms from both sides tend to characterize the report's prescriptions as all-take, but no-give from farmers -- the mere acknowledgment that policies to preserve farmland are in farmers' best interests represents a historic breakthrough, said Eric Vink, California field director for the American Farmland Trust.' "When I think back to where the agriculture industry was three years ago," said Vink, "this is a whole new universe." The task force's recommendations included the following: o Habitat: When requiring developers to mitigate the loss of habitat to development, cities should direct the mitigation to areas other than farmlands. o Buffers: When urban development occurs at the outskirts of a city, the party responsible for making the change in land use should be required to provide a buffer between the new urban edge and adjacent farmland. o Williamson Act: A companion program should be established with contracts of 20 to 30 years, rather than 10; the report also recommends unspecified "greater incentives" for farmlands conservation. o Taxes: The state should provide income tax credits equal to the value of the easement when a farmer donates an agricultural conservation easement; land under agricultural easements should be exempt from federal estate taxes and subject to reduced capital gains taxes when sold. o Fees: When farmland is converted to urban uses, a land conversion assessment should be levied on developers, with the revenue to be placed in a fund for the purchase of agricultural conservation easements. o Local government financing: ERAF property tax funds should be returned to local government; revenue-sharing agreements should be entered into among cities and counties to reduce competition for sales-tax generators. o CEQA: EIRs should be required to address "the long-term cumulative social impact" of taking farmland out of production. o Density: The Cortese-Knox Act should be amended to require LAFCOs to allow annexations only if cities have attained a specificied average residential density within city limits. Copies of the report can be ordered from the California Farm Bureau Federation at (916) 561-5677. Contacts: Jack Pandol, (805) 397-2150. Mike Chrisman, (209) 685-3213.

A proposal to build a high school on farmland under Williamson Act protection has set off fireworks between local farmers and the school district in San Luis Obispo County. "This is the first time that we have seen such a controversy" over a public benefit acquisition of Williamson Act land, said Will Dale, staff attorney for the state Department of Conservation. Notwithstanding, the furor may presage similar conflicts as the agendas of farmland preservation and school construction crash head on in the rapidly developing Central Coastal area, according to Robert Corley, a Ventura-based school facilities consultant. The 1965 Williamson Act allows public agencies to acquire protected farmland to build public-benefit projects. (The act allows cancellations for three reasons: non-renewal of the contract, public acquisition and cancellation.) Parties that acquire land for public acquisition must demonstrate that no other land was suitable for the intended purpose, whether that land would be used as a nature preserve or as a recycling center, to cite two recent examples of public acquisition in San Luis Obispo County. Driving the controversy is the need for a new high school in the Nipomo area. Currently, the area is served by the 20-year-old Arroyo Grande High School in the neighboring City of Arroyo Grande; current enrollment at the high school is nearly double the building's capacity of 1,500 students. In March 1997, district voters approved a $24 million school bond, most of which was earmarked for a new high school. Shortly after, a public committee spent eight months evaluating sites in the Nipomo area for a new high school. In October of the same year, the committee chose 77 acres amid farmland owned by the Dana family, which has owned the land since the 19th century. Non-farmland sites were also considered by the committee, but were rejected because they were located in a flood plain or lacked infrastructure, or were habitat for oak trees and native plants, according to Sandy Davis, assistant superintendent of Lucia Mar Unified. In contrast, the proposed school site was flat and easily built upon, above the flood plain, and served by water and sewage lines. Early on, the site seemed uncontested. "We were so excited because the community had really been in support of the site," Davis said. In November, county planners told the school district that state officials would approve the public-benefit acquisition because the land was not prime farmland, the most zealously protected classification. County planners determined the land was not prime, because the Williamson Act follows federal guidelines for classifying farmland, and one guideline is irrigation. The Dana site is not irrigated. Despite that inconsistency, the site has been classified as prime farmland since 1972, and has been receiving subventions of $5 per acre annually from the state. (Non-prime land receives only $1 per acre.) The determination of prime vs. non-prime might be a purely bureaucratic one, except for the strong emotions that the proposed school has provoked among neighboring farmers and agri-businesses, including the C&M Nursery, which leases land from the Danas. That owners of that nursery, Mark Moore and Michael Cavaletto, have drawn a line in the loam by hiring the director of a private engineering and planning firm, John L. Wallace & Associates, to argue their case. On May 11, the nursery owners appeared to win an important policy battle, when the county's Agricultural Preserve Review Committee, which voted unanimously to oppose the site. County officials then concluded that the deciding factor in school construction is whether or not the land is truly prime farmland, and asked the state Department of Conservation for an opinion. In a July letter, staff attorney Dale Will surprised some observers by saying that the land was indeed prime, despite the lack of irrigation, because the soil quality suggested that the land could potentially be high-yielding farmland. In the same letter, Will also said the final decision lay with the county. "For years, the county has been taking the position that the soil qualifies as prime," said Dale in a July interview. "Then comes in the school district to build a high school on the same land, and now it's not prime after all. Our perspective is that we rely on the county to be the lead agency on their subventions." Would that mean that the county is not enforcing the Williamson Act? Non necessarily, said Dale. The state act, he argued, "is not intended to protect existing operations so much as to protect the land source from conversion to other (non-agricultural) uses." Another possible argument, then, is that "whether the land is irrigated or not irrigated is not dispositive, if the land itself qualifies for this Class 1 or 2 rating, assuming irrigation." In other words, there seems to be a gray area between land that is prime, because it is being irrigated, or potentially prime but requiring irrigation. Lucia Mar Unified's Davis said she is surprised and disappointed by the controversy, and noted that Arroyo Grande high school was built in a similar way, and remains surrounded amicably by farming on three sides. "We had hoped we could have that same relationship with Nipomo. We were sorry about that," she said. Dale said he had received a letter from the San Luis Obispo County Board of Supervisors saying that the board does not view the site as a good one for the high school, but requested further information on the issue of prime vs. non-prime land. "I guess we will be responding to that letter," Dale said. Davis acknowledged that the school district knows it does not have the support of the county supervisors, but continues to complete the draft EIR. If built, the new school would open in 2003 with 800 students. Contacts: Robert Corley, school-facilities consultant, (805) 658-2995. Sandy Davis, business administrator, Lucia Mar United School District, (805) xxx-xxxx. Will Dale, staff attorney, Department of Conservation,

The U.S. Forest Service's supplemental environmental impact statement for a timber sale in the State of Washington was adequate, the Ninth U.S. Circuit Court of Appeals has ruled. The case involved the Forest Service's decision to add to the sale more than 1,000 trees that were damaged by a fire. Several environmental groups sued, claiming the supplemental EIS did not adequately cover the environmental issues associated with this additional sale. But the Ninth Circuit ruled in favor of the Forest Service - comparing the circumstances to the Ninth Circuit's ruling in the San Joaquin Hills toll road case, which upheld the Department of Transportation's EIS in light of similar fire issues. The case began in 1993, when the decided to move forward with two timber sales totaling 8 million board-feet from about 1,500 acres within a 30,000-acre area in Colville National Forest. After the original EIS was prepared, a major fire occurred in the area, burning some 10,000 acres, including 133 acres in the proposed timber harvest area. Subsequently, the Forest Service proposed a timber salvage harvest of about 1,000 acres, including acreage overlapping with the original timber harvest. The Forest Service prepared a supplemental EIS on this are. As a result of the supplemental EIS, the Forest Service excluded some areas from the harvest - especially "unburned green timber located within the burn area ... for watershed protection." The Forest Service also modified some previously designated harvest units to protect streams. The Kettle Range Conservation Group, an advocacy organization, requested to meet with the Forest Service to "revisit and discuss" additional harvest areas, but the Forest Service rejected this request, saying the areas of concern specified by Kettle Range were outside the scope of the project. The Forest Service claimed that the fire did not change the situation in the areas Kettle Range was concerned with. Kettle Range and other environmental advocacy groups lost at the administrative level and then lost a summary judgment decision in federal district court. Kettle Range then appealed to the Ninth Circuit, claiming that the Forest Service's analysis in the supplement was inadequate. But the Ninth Circuit, in a brief decision, ruled in favor of the Forest Service. "The entire supplemental document is an evaluation of how the fire should affect the proposed sale, even though most of the sale area was unburned. Several changes ... are made within the sale area because of the fire that burned mostly outside the sale units. At best," the court continued, "the attack is an overly aggressive interference from the language the Forest Service used in rejecting their request." But, the court said, the Forest Service's rejection of the advocacy groups' position "cannot fairly be characterized as a failure to analyze it." The advocacy groups argued that the Forest Service should have considered whether the fire's impact outside the proposed area changed the desirability of harvesting trees inside the proposed harvest area. However, the Ninth Circuit ruled that "it is plain" that the Forest Service did so. The court relied somewhat on the San Joaquin Hills toll road case, Laguna Greenbelt Inc v. U.S. Department of Transportation, 42 F.3d 517 (1994), in making its decision. In that case, the Ninth Circuit ruled that the Department of Transportation's environmental analysis after the Laguna Beach fire was adequate even though no supplement EIS was prepared because the agency "had relied on 'substantive technical expertise'" and because the initial EIS had taken potential fire impacts into account. Since, in this case, the Forest Service actually did prepare a supplemental EIS, the Ninth Circuit noted that the facts weaken the advocacy groups' case. The Case: Kettle Range Conservation Group v. U.S. Forest Service, No. 96-36100, 98 Daily Journal D.A.R. 7452 (filed July 6, 1998). The Lawyers: For Kettle Range Conservation Group: Todd True & Yuki Ishizuka, Sierra Club Legal Defense Fund, (206) xxx-xxxx. For U.S. Forest Service: Lisa Jones, Department of Justice, Washington, D.C., (202) xxx-xxxx.

Development continues to be a contentious issue in El Dorado County in the Sierra foothills east of Sacramento. In the June primary, development interests were able to beat back a ballot initiative that would have reduced housing densities. However, a second candidate critical of the county's growth policies was elected to its Board of Supervisors, and a new ballot initiative to control growth may be headed for the November ballot. Voters turned down Measure A, which would have required public referendums on three major subdivisions and restricted housing densities for all new subdivisions. Opponents of the measure were able to defeat it with 54.4% no votes. But supporters say that they put little money or effort into the Measure A campaign, since they have another ballot initiative they are trying to get on the November ballot. The long-running disputes over development in the county center on its general plan, which was adopted in 1996 after more than six years of debate. The plan calls for a population of 260,000 in 2015, up from the current 120,000, and 347,000 at buildout in the year 2040, according to Conrad Montgomery, the county's planning director. Montgomery said that Measure A attempted to reproduce the low-growth alternative that was considered when the county's general plan was adopted. Opponents of the general plan - which includes such environmental groups as the Sierra Club, the California Native Plant Society, and the El Dorado Taxpayers for Quality Growth - immediately filed suit to stop the plan. But no injunctive relief was granted, and the Board of Supervisors has approved a number of projects under the new plan. That case has moved slowly, and is now scheduled to go to trial in October. Most of the development in the county is proposed on its western flank, which is close to Sacramento. Newer residents tend to favor less growth, while support for development is often found in the inland mountainous regions, hard hit by cutbacks in logging and other extractive industries. "As we have been implementing the general plan, all major projects except one have been litigated by local environmental groups," Montgomery said. The board of Supervisors has approved two major residential developments, Carson Creek, a 2,434-unit development on 710 acres; and Promontory, a 1,387-unit development on 999 acres. Both developments are proposed for the west county area. A third development, Pilot Hill Ranch, has been proposed for the northern end of the county, and would have 983 units on 1,798 acres. Opposition to Pilot Hill Ranch helped Penny Humphreys defeat incumbent Walt Shultz in the June supervisor's race. Shultz, a free marketer, had been elected to the board in 1994, when he defeated an advocate of managed growth. Humphreys, who received 56.7 percent of the vote, opposed the rapid pace of development in the county. Measure A, which failed in the June election, was the second ballot measure in two years that attempted to limit growth. In November 1996, Measure K, was narrowly defeated by the county's voters. It would have required developers to have a water supply for their projects, set aside 25% of the county's water for non-residential uses, and prevent approval of tract maps if traffic fell below a specified level of service. Measure K received 51.3% no votes, while measure A failed by a larger margin, with 54.5% no votes. Measure A had originally been readied to be on the same ballot as Measure K in 1996, but the board of supervisors delayed putting it on the ballot, according to Kris Anderson-Moore of Georgetown, a supporter of Measure A. Anderson-Moore explained that the supervisors ordered a 30-day study that effectively kept Measure A off the 1996 ballot. The new ballot initiative, which was recently submitted to the county, is running into similar opposition. The Board of Supervisors defeated four options to place the ballot measure on the November ballot offered by Supervisor Bradley at their June 16 meeting. The new initiative, which supporters call the Control Traffic Congestion initiative, has traffic control features that are similar to Measure K. But the new measure dropped Measure K's water supply elements, Anderson-Moore said. Environmentalism is a loaded word in the county. Anderson-Moore said supporters of the ballot initiatives are "not an environmental movement. It's a movement of good government." Newly elected Supervisor Humphreys will join Supervisor Sam Bradley on the board. Bradley was the lone vote against adoption of the county's general plan. Another newly elected supervisor, Dave Solaro, the police and fire chief of South Lake Tahoe, said he would strike "a balance between the environment and the economy," according to the Sacramento Bee. But campaign finance disclosures showed he had received contributions from those tied to the development community. One environmentalist expressed optimism about the new board. "I think the board will take a broader look at the issues instead of just being a rubber stamp for the developers," said Steve Proe, who lives in Greenwood. Another large proposed master-planned development, Cinnabar, was recently ruled inconsistent with the county's general plan by the Third District Court of Appeal. (See CP&DR, May 1998). Cinnabar, as proposed, would be an equestrian-themed development with 566 houses on very large lots and 2,900 acres of open space. It had been adopted under the general plan that was in effect in 1994. Developers of the project are now considering whether to appeal the matter or redo their EIR, Montgomery said. For years, El Dorado County was among the state's fastest growing counties. But the population apparently slightly decreased between 1996 when it was 121,450 to 119,800 in 1997, Montgomery said. In the last six months, though, it appears that growth has begun again. Montgomery said that the county's population in 1998 is lower by between 10,000 and 20,000 people than was projected under the general plan. This may mean that the population figures projected by the general plan will not be met. Contacts: Conrad Montgomery, El Dorado County Planning Director, (530) 621-5355.

The notion of the "background building" is one of those profound concepts that was startling when first introduced in the 1960s (by Robert Venturi, I think) and now seems so commonsensical that we might assume the idea had always existed. The basic idea is simple: Some buildings are "stars" and should stand out, while other buildings are merely supporting players. The distinction between foreground and background buildings is not value-laden; foreground buildings are not necessarily better or more desirable than background buildings. Both are crucial for an attractive and functional urban district. Foreground buildings are the landmarks, while the background buildings provide the scale, the style, the rhythm, and the continuity of an urban district. Without background buildings, one runs the danger of creating streets like Fifth Avenue in New York, or the Las Vegas strip, where nearly every building is a scene-stealer, and the street lacks coherence and walkability as a result. The distinction between foreground and background buildings is not such a clear-cut matter, however, in the case of the Hollywood and Highland project in Hollywood. The project is a retail-and-entertainment center that will be the future home of the annual Academy Awards ceremony. In addition, the northwest corner of Hollywood and Highland will be a future stop for the Metro Rail subway, a promising source of pedestrian movement. The most remarkable aspect of the site, however, is the context: the eight-acre site directly east of the famous Mann's Chinese Theater, which means Hollywood and Highland must stand shoulder-to-shoulder with the icon of historic Hollywood. And that's the delicacy of the design problem: Like Jane Russell playing opposite Marilyn Monroe in "Gentlemen Prefer Blondes," Hollywood-Highland must have star quality to be a good foil for the Chinese Theater. The complex must be strong enough not to disappear next to the fantasy pagodas of the Chinese, nor so strong that the new building appears predatory and insensitive. Far from being a merely aesthetic issue, the design for Hollywood-Highland has huge implications for the future of Hollywood, at least in restoring the tourist trade to historic Hollywood. After all, the only part of Hollywood that has worked well for tourists has been the Chinese Theater, with its generous courtyard, the well-judged scale of its fantasy architecture, and the concrete handprints of Humphrey Bogart et al. Much of the rest of old Hollywood has been destroyed, rendered inaccessible, or altered beyond recognition. Hollywood Boulevard, far from being the river of flashing neon that it was in the 1930s, has become the Bad Boy of Los Angeles streets, the downtown of prostitutes, bikers, pushers and teen runaways. The sidewalks and buildings of the new building will, hopefully, serve as extensions of the courtyard in front of the Chinese Theater. Visitors will have someplace to go, to look at, to eat, to watch movies and to spend money. And when the crowds turn out on Oscar night to watch stars step gingerly out of their limousines, the urban design had better work: it needs to be big enough to hold thousands of people on that once-a-year event, as well as maintain the "street wall" of Hollywood Boulevard for the rest of the year. The site plan by Ehrenkrantz shows how much activity has gone on in the immediate area of the Egyptian and Hollywood-Highland. The front of the project is tourist-oriented retail, including a "Media Mega Store," a broadcast center, and new movie screens for the Chinese. One difficult part about the design is that the most important building - the Premiere Theater, where the Academy Awards will take place - is tucked in back and largely hidden from view. The solution, which so far looks convincing, is a gate on Hollywood Boulevard that leads directly down the Orchid Walk into the Theater courtyard. A more dramatic route to the theater, if a little more roundabout, is a grand staircase that provides a framed view of the Hollywood sign at the upper landing. The staircase leads to an overlook of the happiest inspiration of the scheme, a monumental Babylon Court that borrows imagery from the Babylon scenes, elephant idols and all, from D.W. Griffiths' Intolerance. I hope this courtyard, which is obviously intended as the great "collector space" of Oscar Night, receives the flamboyance that it deserves. Hollywood and Highland is rich in context. The ongoing efforts of the Los Angeles Community Redevelopment Agency have spearheaded a number of worthwhile projects in the past 16 years, including the rehab of the Hollywood Roosevelt Hotel, El Capitan Theater, and the Egyptian Theater currently under restoration, Hollywood is acquiring a critical mass of interesting and historic projects. Architects nowadays get a little bit precious with context. Contextualism that follows the appearance, the imagery, the style and the height of surrounding buildings too slavishly ends up creating second-rate buildings, and also - which not enough people have observed - slavishly contextual buildings also blunt the impact of the historic buildings. I am deeply concerned that overly conventional architects will prepare a design that is fatally cautious and marred with good taste. But Hollywood is not a particularly subtle industry, nor is Hollywood, the place, a particularly refined urban district. With the architectural facades still under design, maybe it is not too late to lobby. My advice is to err on the side of boldness, and do not be too tasteful, too namby-pamby or too reverent. Designing for Hollywood should put conventional "good taste" aside, just as one puts aside conventional taste when designing for Las Vegas. (If that idea sets your teeth on edge, you are not right for the job.) Whatever you do, for God's sake, don't be boring. The design program here is to create a supporting actor who neither fades into the background, nor outshines the leading lady. If your imagination flags, just think of Lauren Bacall in TO HAVE AND HAVE NOT: "You know how to design, don't you? Just put your fingers around a pencil - and draw."

In a case involving municipal zoning, the U.S. Ninth Circuit Court of Appeals has ruled that a city cannot enforce zoning regulations for signs if they require the alteration of a registered service mark. The court did rule, however, that a city can prevent a company from erecting an awning containing a service mark. The case arose in Tempe, Arizona, where Blockbuster Video and Video Update, two national chains, rented space in two separate shopping centers. All exterior signs in Tempe's shopping centers must conform to the center's sign package, which specifies such things as the color, size and location of the signs. The package is created by the owner of the center, and is reviewed and approved by the Tempe Design Review Board, which can grant variances. Video Update was not allowed to use its signature color pattern on its sign, while Blockbuster was not allowed to construct its blue awning service mark. Both corporations sued the city, and the district court granted a preliminary injunction requiring Tempe to allow Blockbuster and Video Update to displace their registered service marks. The three-judge panel of the appellate court ruled in Video Update's favor and against Blockbuster. The case hinged on the interpretation of the federal Lanham Act 15 U.S.C. Section 1121 (b), which states "No state...or any political subdivision or agency thereof may require alteration of a registered mark ..." In an opinion by Circuit Judge David R. Thompson, the judge wrote, "The color red is a characteristic of Video Update's mark. By requiring Video Update to change the red color of the lettering on one of its signs to white letters on a turquoise background, Tempe required Video Update to 'alter' its service mark. This alteration violates Section 1121(b) of the Lanham Act." But the judge distinguished the Lanham Act in Blockbuster's case, noting that Section 1121(b) speaks only to the alteration of a mark, and does not require cities to allow businesses to display their registered mark. "A municipality retains the power to prohibit the use of a registered mark altogether," he wrote. "Thus, Tempe could prevent Blockbuster from installing its awning service mark on the outside of the building it leased in the shopping center." The court noted that Congress limited section 1121(b) to prohibiting any alteration of the mark itself. " state, political subdivision or agency remains free to regulate where and whether signs may be placed and how large they may be," Thompson said. Looking at the legislative history of the Lanham Act's adoption, the court said it was unlikely that "Congress intended the broad zoning exception that Tempe seeks." The court noted that a trademark is recognized by having a uniform appearance in design and color, so that customers will recognize it. Two federal cases, the judge said, show that color is so important that "the color itself can be registered as a trademark because customers identify a particular brand by its color." Qualitex Co. v. Jacobson Prods. Co., 115 S. Ct. 1300, 1303 (1995), and In re Owens-Corning Fiberglas Corp., 774 F. 2d 1116, 1127 (Fed. Cir. 1985). Circuit Judge James R. Browning dissented in part and concurred in part of the opinion. "There is no reasoned basis for drawing a distinction for purposes of Section 1121 (b) preemption between local regulation of color and or architectural features. Color and architectural features are analogous aesthetic components of registered trademarks. If Congress intended to leave localities free to prohibit the use of architectural features, surely localities can also control the use of color." Browning contended that the majority adopted "an extreme interpretation of the Lanham Act that will give trademark holders the absolute right to display their marks, free or regulation, no matter how garish and inappropriate they may be..." The Case: Blockbuster Videos, Inc. v. City of Tempe, No. 97-15535, 98 Daily Journal D.A.R. 3811 (April 16, 1998). The Lawyers: For Tempe: Clifford Mattice, City Attorney, (602) 350-8227 For Blockbuster/Video Update: Marcia B. Paul, Kaye, Collyer & Boose, (212) 940-8200. For Video Update: David K. Jones, (602) 340-0900.

Ask any local government veteran in California what has most hurt their cause and the answer will very likely be Prop 13. Since 1978, the infamous taxpayer revolt and its aftermath has been blamed for every public service woe in the book: closed libraries, lack of police protection, dying street trees, indeed faith in government itself. Yet a growing body of research suggests that per-capita spending by cities in California has not changed from that of pre-Prop 13 years. And nearly all observers of municipal finance agree that spending for police and fire services far surpasses that of the early 1970s. How can this be possible, since cities' primary source of general fund expenditures - property taxes - was severely limited in the complete restructuring that the initiative implemented? For answers, we checked in with Michael Coleman, A policy analyst for the League of California Cities. His data confirms that property tax dropped precipitously. Indeed, inflation-adjusted per capita revenues from property taxes have dropped from $150 in 1978 to about $75 in 1995. But the drop was mostly an instant free-fall: the worst year was actually 1979, right after the revenue pie was re-sliced. In that year, property taxes dropped to only $50 of per capita revenue. Since then, the numbers have ebbed and flowed along with assessed valuations, actually growing to about $105 in 1992. In planning lore, Prop 13 has forced cities to grovel for sales tax revenues, accounting for much hand-ringing about the zero-sum gain of fiscally-based land use decisions. But truth be told, revenues from sales tax are actually lower than in pre-Prop 13 years. In 1978, about $125 of cities' revenue per capita came from sales tax, on average. But in 1995, this figure had declined to only $100. Taxes aside, the total revenue picture hasn't really changed in all of this time. While 1978 was a peak year for per capita revenue for the state's cities ($750 dollars), overall revenues have essentially remained stable. For example, 1975 totals were approximately $630 per capita, as were they in 1994. Special taxes, utility user taxes, and transportation sales taxes pumped the revenue pie back up. So how come libraries are closed and tree wells are paved over? In part, because new police cars and rapidly growing administrative salaries consume a much greater portion of the municipal expenditures, to the detriment of not so fortunate services. According to the Coleman's research, police and fire spending are up an inflation-adjusted 50% since 1976. Meanwhile, parks, libraries, and long-range planning are down. Parks is the most dramatic victim - down 24% since 1976. It's a fair bet that a larger proportion of overall expenditures go to white collar salaries at city hall. In an annual review of public employee salaries conducted by the Vacaville Reporter, Karen Nolan noted that Vacaville's public works director collects a base salary that is 47% higher than 20 years ago - after adjustments for inflation. The city's police chief is an adjusted 24% higher than in 1997. And this is a pattern that is mirrored throughout California. When faced with such data, why is it that Prop 13 stirs such acrimony amongst dedicated public servants? Fred Silva, research director for the San Francisco-based non-profit Public Policy Institute has theory. "There is no city-wideness to fiscal policy anymore," he surmises. The post-Prop. 13 fiscal system offends the public servant's sense of propriety, and complicates the mission to provide for the broader public interest. It's a loss of city wide-ness. But whose public and whose interest? Silva points out that "Prop 13, along with the Coastal Act, were exactly the types of policies that reformist governor Hiram Johnson had in mind when he invented the initiative process in 1910." Prop 13 would have happened with or without Howard Jarvis, because it was a fundamental reaction to a legislative/statehouse impasse in resolving a widely understood problems in the annual property assessment system. So when it comes to local government financing, maybe the question should not so much be "how much?" but "how?" In this 20th anniversary of the passage of Prop 13, let us take comfort in the fact that the blood is still in the turnip. But at the same time, let us pay greater attention to how we slice it.

The City of Wasco in Kern County is trying to stave off municipal bankruptcy as a result of a series of problems with Marks-Roos and other bonds. The possibility of bankruptcy compounds the legal and financial problems facing the city, including a "cease-and-desist" order in May from the U.S. Securities & Exchange Commission which bans the agencies from issuing further bonds. Wasco was one of three California municipalities, including the City of Ione and Nevada County, to consent to the cease-and-desist orders. Both Wasco's financial straits and the SEC order are evidence of the mounting problems stemming from the poor performance of certain Mello-Roos and Marks-Roos bonds, particularly when used to finance speculative real estate projects. The city owes nearly $12 million in both bond payments and legal judgments, although the city's annual budget is only about $8 million, according to the California Debt and Investment Advisory Commission. Many of Wasco's current difficulties center on defaults on bond payments on a golf course in the city. In 1989, Wasco Public Finance Authority spent $8.86 million of bond proceeds to finance the construction of the Valley Rose Golf Course. Under the repayment structure, the bonds were to be repaid by golf course revenues, and the city would make up any shortfall in payments out of the city's general fund. In addition, the city itself leased the golf course from the developer, and attempted to run it as a business. The golf course, however, has never been profitable, and the city is at least $2.75 million in arrears on lease payments. Last November, a Kern County Superior Court judge issued a statement of intended decision that required the city to make the late lease payments, plus interest of 12% annually after November 1997. In the same statement of intended decision, the judge authorized the bond trustee, State Street Bank and Trust Co., to pursue deficiency judgments against the city directly. The judge also approved foreclosure proceedings against the golf course. To date, however, the city has been unable to make any further lease payments on the golf course, according to the Debt and Investment Advisory Commission. A court-appointed receiver is in charge of all golf course revenues. The city, which has gained notoriety in financial circles for both its high debt level and its troubled land-based bonds, is hoping to find a negotiated solution with bond trustees, to avoid filing Chapter 9 bankruptcy. "We have decided not to take that drastic step without evaluating every possible means to avoid it," said contract city attorney Tom McCartney. The city may face a challenge, however, in convincing the bond trustee to renegotiate the level of the bond payments, according to McCartney. He reported that the bond trustee of a golf course in Wasco financed by a Marks-Roos bond, State Street Bank & Trust Company of Boston has indicated ominously that "legally, it cannot compromise the rights of the bond holders. Therefore, as a corollary to that, it cannot compromise the lease obligation," that is, the lease payments that the city is making on the golf course. As a result, he said, "the trustee has taken the position that he will force us into bankruptcy, unless we can compensate the bondholders." The city is currently consulting with financial experts to review its options, according to McCartney. One state official, who asked not to be named, said one possibility for Wasco is an "asset transfer" sale, in which the city sells off a major asset, such as a utility or water company, leases back the services, and uses the sales proceeds to pay off the bond debt. Wasco has both water and sewer districts that could possibly be sold. Wasco has other obligations and judgments, as well. The city has also defaulted on $4 million of industrial development bonds, and may be facing a lawsuit from an attorney the city had hired to sue Richardson and First Capital, who has now sued the city for non-payment. Troubles with Wasco's golf course are part of a larger set of difficulties stemming from land-based bonds underwritten by First California. In February, the U.S. Securities & Exchange Commission charged three California bond issuers with securities fraud. Significantly, all of the securities at issue were Mello-Roos and Marks-Roos bonds underwritten by the San Diego-based firm of First California Capital Markets Group. The federal agency charged the Wasco Public Finance Authority, the City of Ione, and Nevada County with a variety of offenses, centering on failure to make disclosures in official statements about the true nature of the risks entailed in development projects that were to provide the revenue to pay off the bonds. Among the charges: o For a $35 million Marks-Roos bond issued in 1989 by the Wasco Public Finance Authority, the official statement for the offering to investors failed to warn investors that the projects were "highly contingent, if not speculative." o For a $9.07 million bond issued in 1991 by Nevada County to finance the Wildwood Estates residential project, the official statement misrepresented the value of the property, the developer's experience and financial qualifications, and the plan by which the developer intended to finance the project. The developer of the 286-acre project reportedly abandoned the development shortly after receiving the bond proceeds. o For a $14 million Mello-Roos bond issued in 1991 by City of Ione for the Castle Oaks Residential project, which includes a golf course, the official statement misrepresented the developer's ability to complete the project with the bond proceeds alone, the value of the underlying land, and the adequacy of other funding sources to enable the developer to complete the project. Specifically, the statement failed to mention that the project needed $3 million more than the $7.5 million being provided out of the bond proceeds. The securities-fraud charges and the subsequent cease-and-desist order in May were the outgrowths of a two-year investigation by the federal agency into municipal bond fraud. In May, all three municipalities consented to a "cease-and-desist" order from the SEC, which essentially banned those agencies from issuing further securities for the time being. Two other defendants, including Virginia Horler, a Dain Rauscher securities broker who was a financial consultant to Nevada County and William McKay, A real estate appraiser who worked for both Ione and Nevada County, have not settled with the SEC and are scheduled to appear before an administrative law judge in July. Contacts: Tom McCartney, contract city attorney, City of Wasco, (805) 327-4147. Riley Walter, bankruptcy attorney for the City of Wasco, (209) 438-2390.