In a major victory for developers of Playa Vista, the Ninth Circuit Court of Appeal has reinstated an Army Corps of Engineers permit to fill 16 acres of wetlands. The unanimous three-judge appellate panel overturned a district court ruling that the Corps did not adequately consider environmental impacts of the overall project. The Ninth Circuit held that the Corps did not need to complete an environmental impact statement and that the Corps was correct to review only the wetlands portion of the first phase of the project, not the entire development. Playa Vista is a 1,087-acre proposed development just south of Marina del Rey that has been a source of controversy for nearly two decades. It is one of the last large open spaces in west Los Angeles, but much of its marsh area has been degraded by past development and industrial uses. In 1990, Maguire Thomas Partners (which has since sold the project to Playa Capital Co.) applied to the Army Corps for a permit to fill 16 acres of federally delineated wetlands. In exchange, the developer proposed creating a 26-acre freshwater marsh and 25-acre riparian corridor. The wetlands covered a portion of the area needed for the project's first phase, which was to involve 13,000 homes and 5 million square feet of commercial and office space on 600 acres. (Other, larger wetlands at Playa Vista were not part of this permit.) After a great deal of public outcry and extensive negotiation with various federal agencies, the Corps in 1992 issued the permit under §404 of the Clean Water Act, with special conditions. The Corps also approved an environmental assessment and a Finding of No Significant Impact (FONSI). In 1996, Wetlands Action Network sued the Corps for violating the National Environmental Policy Act and the Clean Water Act. Wetlands Action Network lost the Clean Water Act claim but U.S. District Judge Ronald Lew granted summary judgement for the environmentalists on the NEPA claims. Lew found that the Corps had violated NEPA by limiting the scope of its analysis to impacts of activities covered by the permit, rather than considering the whole project. He further ruled that and EIS was necessary because the efficacy of the freshwater wetlands system was in doubt. The Ninth Circuit said that Lew's findings were correct, but that his legal conclusions were erroneous. Wetlands Action Network argued that the Corps should have studied impacts to the entire 600 acres of Phase I because the wetlands fill was interdependent with the rest of Phase I development. The Ninth Circuit, however, demanded a stronger connection. "The linkage that the district court found between the permitted activity and the specific project planned is the type of ‘interdependence' that is found in any situation where a developer seeks to fill a wetland as part of a larger development project," Judge Melvin Brunetti wrote for the court. "If this type of connection alone were sufficient to require a finding that an entire project falls within the purview of the Corps' jurisdiction, the Corps would have jurisdiction over all such projects, including those which the Corps' regulations cite as examples of situations in which the Corps would not have jurisdiction over the whole project." The interdependence in this case was so weak that Phase I construction could begin, and, in fact has begun, without the §404 permit, the court noted. The Ninth Circuit also rejected Wetlands Action Network's argument that the Corps improperly segmented the project by considering Phase I alone and not reviewing the cumulative impacts of the three-phase development. Instead, the court, citing Morongo Band of Mission Indians v. FAA, 161 F3d 569 (9th Cir. 1998), imposed the "independent utility" test. The court then found that the utility of Phase I "does not depend upon the completion of later phases of the project." Therefore, the Corps need not review all three phases at once. As for the environmental assessment, the Ninth Circuit ruled that Judge Lew's decision "appeals to be largely based on a mischaracterization of the evidence found in the administrative record." Lew pointed to letters from the Environmental Protection Agency and the U.S. Fish & Wildlife Service that raised questions about the proposed freshwater marsh, especially its ability to handle runoff and treated wastewater. Other commentators also questioned the marsh's design. But, the Ninth Circuit held that the Corps considered these issues in the EA, so a more extensive EIS was unnecessary. Brunetti wrote: "The fact that the record also contains evidence supporting a different scientific opinion does not render the agency's decision arbitrary and capricious," as Lew had ruled. The Ninth Circuit also held that it was acceptable for the Corps to issue the §404 permit and the FONSI even though all details of the mitigation plan had not been finalized. Special conditions in the permit were extremely detailed, and filling of wetlands could not commence before the Corps finalized the mitigations, the court ruled. Finally, the court held that controversy in the form of opposition to a development is not adequate to force preparation of the EIS. The Cases: Wetlands Action Network v. U.S. Army Corps of Engineers, Nos. 98-56242, 98-56474, 98-56672, 00 C.D.O.S. 6965, 2000 Daily Journal D.A.R. 9287, filed August 21, 2000. The Lawyers: For Wetlands Action Network: David Williams, Public Interest Lawyers Group, (510) 841-0707 For the Corps: John M. Gleason, U.S. Army Corps of Engineers, (213) 452-3946. For Playa Capital Co.: Charles Treat, Latham & Watkins, (213) 485-1234.

Demand for industrial space in Los Angeles County remains high, but development is not keeping pace. Instead, large-scale industrial projects are going to the Inland Empire, where empty land is plentiful and most local governments have open arms. The trend is distressing to the Los Angeles Economic Development Corporation and some other business boosters, who note that Los Angeles County manufacturing employment has declined in recent years. The manufacturing segment now accounts for only about 13% of jobs in the Los Angeles County, down from 19.5% only 10 years ago, according to the state Employment Development Department. Those figures reflect the loss of about 200,000 manufacturing jobs, mostly in the electronics and aircraft industries. While worldwide economic forces helped alter the composition of L.A. County jobs, several local factors are influencing land development. First, the urbanized portion of Los Angeles County has few vacant sites remaining. Second, redevelopment or reuse of old industrial sites by new industry has proceeded slowly. And, third, local government has encouraged retail development on former industrial sites. Last year, the LAEDC issued a report that said the county as a whole needed to develop up to 21 million square feet a year of new space to accommodate manufacturing and technology jobs. Yet the county was seeing only about half that amount of space developed. Since then, the situation has not changed and vacancy rates have only gotten lower, said Jack Kyser, chief economist for the LAEDC. "The overall industrial vacancy rate in Los Angeles County is down to about 4.7%, which is extremely low," Kyser said. The vacancy rate is even lower in central Los Angeles, Long Beach and the San Gabriel Valley, he said. "There's just not much developable land," said Steve Bloom, a Los Angeles commercial real estate analyst. "That's why the Inland Empire is doing so well." This lack of greenfield sites has caused the LAEDC to focus on "recycling" of older industrial lands. The organization is working on a prototype because environmental cleanup regulations and permitting procedures related to reuse of industrial sites remain ponderous and because local opposition to these projects is common, Kyser said. The LAEDC is especially looking at the Alameda Corridor, a 20-mile-long strip of industry that runs north from the Los Angeles and Long Beach harbors. Extensive rail and truck routes are being constructed to streamline transportation, so heavy and light industry are perfect fits. A number of underused industrial properties lie along the Alameda Corridor, but there has been little talk of recycling them, Kyser said. Bloom said some older sites are difficult to reuse because of obsolete building or parcel configurations. Also, older builders oftentimes are too small for new industries, which want gigantic boxes, he said. And in some instances, transportation corridors have moved away from old industrial districts, he added. The LAEDC also blames cities' focus on sales tax revenue as a hindrance to industrial development. Kyser and other economists argue that a healthy local economy needs a broad range of jobs. Much of the retail development that cities chase results in low-wage jobs. Manufacturing jobs typically pay more, so they bring more money to town, Kyser explained. "This sort of fits into the ongoing debate about job quality in California," Kyser said. A closed General Motors plant in Van Nuys presents something of a case in point. While some of the site was redeveloped for light manufacturing, much of it was converted into "The Plant," a large retail center. Some analysts see a former NASA site in Downey as another lost opportunity. NASA built much of the Space Shuttle and the Apollo equipment in Downey. Now, the city is negotiating with a developer to build retail space, high-tech office space, film industry facilities, schools and a park. David Rodriguez, the city's project manager, said none of the six developers who made proposals mentioned heavy industry for the site, and the city did not pursue it. But he said Downey should get credit for not pursing warehouse and distribution centers, which would have been quickly absorbed but would not have offered the skilled jobs that the proposed project will provide. All of this is not to say that industrial development has ceased in Los Angeles County. A 3.1 million-square-foot project is moving forward in the Dominguez Technology Center in Carson, and the 265-acre Golden Springs Business Park is under construction in Sante Fe Springs. But a good portion of the action is in eastern L.A. County, which is linked to the Inland Empire. A recent report on the San Gabriel Valley by Colliers Seeley, a commercial real estate broker, found that industrial demand was greatest in the Chino submarket, which includes slices of eastern Los Angeles and western San Bernardino counties. That same vicinity contains one of the region's largest industrial projects, called Industry East. Majestic Realty plans to develop 31 buildings ranging from 3,500 to nearly 900,000 square feet apiece during the next 10 years. Still, Kyser, the guru of the Southern California economy, remains concerned. While Riverside and San Bernardino counties snap up industrial growth, the more volatile retail and service sectors expand in Los Angeles County. "He who lives by the retail development dies by the retail development," Kyser warned. Contacts: Jack Kyser, Los Angeles Economic Development Corporation, (213) 236-4820. Steve Bloom, Real Estate News Television, (310) 414-0404. David Rodriguez, consultant to the City of Downey, (626) 304-7891. California Employment Development Department website: www.calmis.cahwnet.gov

A major industrial project in the City of Los Angeles has received approval from the city's new Central Area Planning Commission. However, opponents of the "Cornfield" development next to Chinatown have vowed to continue fighting with a variety of legal and political tools. (See CP&DR Economic Development, January 2000) The commission voted 4-2 in late July to approve Majestic Reality's plans for a 950,000-square-foot industrial and warehouse development on 32 acres of the 47-acre Cornfield. The commission also said a mitigated negative declaration was adequate environmental review. Mayor Richard Riordan supported the project because of its potential to bring 1,000 jobs to an economically depressed district. The site is zoned for industrial uses and it lies within enterprise and empowerment zones. But a coalition of environmentalists, civic activists and environmental justice advocates have vowed to fight city and federal subsidies that would clean up the site, which is a former rail yard. And opponents have strongly suggested they will file lawsuits because the city approved the project based on a mitigated negative declaration, and did not consider the project's impact on people of color. The group would like to see a park, a school and mixed-used development on the Cornfield. The neighborhood currently has no park and no middle- or high school. They also note that an archeological dig on the site in April found remnants of the Zanja Madre (mother ditch), which first carried water to the city from the Los Angeles River in 1781.

A sharply divided three-judge panel of the Ninth Circuit Court of Appeals has upheld an environmental impact statement prepared for expansion of the Kahului Airport in Maui, Hawaii. The court majority ruled that the Federal Aviation Administration had taken the "hard look" at the project's impact on native habitat required by the National Environmental Policy Act, while a dissenting judge called the FAA's study inadequate and deceptive. The FAA and the Hawaii Department of Transportation proposed repaving, strengthening and lengthening the runway at Kahului. (The project has since been put on hold.) The current runway can accommodate any size arriving airplane, but it cannot handle departures of the largest fully loaded jets. Environmentalists worried that the expanded airport would increase the number of flights, especially international flights, thus raising the chances that exotic species would be introduced to Maui's delicate ecosystem. The FAA and HDOT prepared an environmental impact statement that included a biological assessment technical panel's report and a U.S. Fish & Wildlife Service report on impacts to endangered species on Maui. The EIS concluded the proposed project in and of itself would have an insignificant impact but would contribute to a significant cumulative impact. The EIS made, and the FAA accepted, a number of mitigations, including additional inspectors, visitor education and a future study of impacts. Two environmental groups, the National Parks & Conservation Association and Malama Pono, sued. They argued that the FAA's examination of exotic species issues was lacking. But the two-judge majority of the Ninth Circuit sided with the FAA. The court rejected arguments that the airport project would necessarily increase the number of international arrivals and that those flights would boost the risk of alien species introductions. The court dismissed the FAA's projections that international flights would increase from 50 per year to 1,200 per year as "little more than guesses," and pointed out that even 1,200 flights would amount to only 3% of annual air traffic at Kahului. The court further said that environmentalists "cannot identify a single species that will become established as a result of the project, nor can they pinpoint a particular resource that will be adversely impacted." Environmentalists "seek too much from the EIS," Judge Alex Kozinksi wrote. "While they may disagree with the FAA's substantive conclusions as to the alien species impact of the project, NEPA does not guarantee substantive results. So long as the agency has made an informed decision, we cannot intervene. … Because the EIS contains the requisite hard look at the alien species problem, it satisfies NEPA." In a dissent, Judge William Fletcher was sharply critical of the FAA and his colleagues. "The central flaw in the Final EIS is that the FAA failed to admit or analyze the likely environmental consequences of increases nonstop overseas arrivals resulting from the proposed runway extension," he wrote. Fletcher noted that the FAA projected 1,100 arriving airplanes from Asia, compared with none now. Yet the FAA couched its study of this in hypothetical terms, and the FAA's promise of a future assessment cannot be considered part of the EIS, he added. He called the majority's skepticism of the FAA's flight projections "convenient." "Rather than taking a hard look at the possible environmental consequences, the FAA has deliberately averted its eyes from a well known environmental problem and from the potential consequences of its proposed action. … Because the FAA has failed in its duty, and because the majority of this panel has acquiesced in that failure, we will never know what decision a properly informed political process would have produced," Fletcher concluded. The Case: National Parks & Conservation Association v. U.S. Department of Transportation, No. 98-71268, 00 C.D.O.S. 6196, filed July 26, 2000. The Lawyers: For NPCA: Deborah Sivas, Earthlaw, (650) 723-0325. For The U.S.: M. Alice Thurston, Department of Justice, Washington, D.C., (202) 514-2000.

Although Wisconsin may be home to the "cheeseheads," California is actually the nation's largest dairy state. In fact, with annual production at $3.6 billion and rising, the dairy industry is the largest agricultural sector in California. But these are not the best of times for the industry. The Chino dairy preserve in San Bernardino County, the center of Southern California's dairy industry for decades, is pegged for urban development (see CP&DR Local Watch, March 2000). And building new facilities in the dairy owners' top choice for relocation — the southern San Joaquin Valley — is not as easy as it was a few years ago. Several environmental organizations and Attorney General Bill Lockyer have filed suits intended to force more extensive environmental review of dairy projects. Also, local government officials are feeling both the legal and political heat that accompanies dairies these days. Tulare County (population 370,000) is the state's largest dairy county with about 300,000 cows at 300 dairies. But the permitting of new and expanded facilities has nearly ground to a halt during the last year. The county now has about 50 pending applications, roughly half of which are for new dairies, according to Mary Beatie, Tulare County Resource Management Agency assistant director in charge of current planning. A giant dairy complex proposed in Kings County has been dropped during a second round of litigation, and two large dairies proposed near Bakersfield have become a political hot potato in Kern County. Madera County approved two large dairies in July, but environmentalists and the attorney general's office were watching closely. "It's not just an issue with us, it's an issue on the national scope as well," said Caroline Farrell, directing attorney in the Delano office of the Center on Race, Poverty and the Environment (CRPE). "There is a growing awareness that dairies and large-scale agriculture can have an environmental impact." Debate centers on Tulare County A half dozen people recently urged the Tulare County Board of Supervisors to speed up the pace of permit processing. The testimony came during the board's public comment period, so supervisors took no action. But Board Chairman Bill Sanders indicated his position when he said the county was "being held hostage in issuing the permits because of environmental terrorism." John Labandeira, a representative of the Western United Dairymen's Association who addressed supervisors, said, "I think the county needs to move forward. … We don't know what the exact agenda is behind these environmental groups. But what they have done is basically stop the whole industry." Last year, the attorney general's office filed lawsuits claiming Tulare County did not comply with CEQA when it granted permits for two new dairies. The county settled the lawsuits, in part, by agreeing to prepare a program environmental impact report, a first for dairies in California. In April, the county adopted the program EIR and a plan for handling dairies, but CRPE quickly filed a lawsuit over both documents. Although no restraining order has been issued, using the documents as a basis for issuing new permits is a risk, Beatie said. Despite the slowdown at the planning counter, Tulare County continues to receive applications. "I think the dairymen feel compelled to get in line," Beatie said. "Time is really of the essence for a lot of these dairymen because they are tied up with long-term leases that are about to expire." Kings County, just north of Tulare County, has continued to issue permits. In April, the county approved a conditional use permit for a 6,000-acre, 47,700-cow dairy complex outside Corcoran for J.G. Boswell that could accommodate 47,700 cows. The county had approved the same project a year earlier, but CRPE filed a lawsuit to force an EIR on the project. The county completed the EIR and added conditions to the permit, but CRPE filed a new lawsuit in May that claims the EIR is inadequate and that air quality mitigations are lacking. In a move that appears to worry and anger both farmers and local officials, the Sierra Club has joined the CRPE lawsuit as part of its nationwide focus on large-scale livestock farms. All the controversy apparently affected Boswell, which announced in late July it was giving up the fight and would not pursue the project. In Kern County, a proposal from James and George Borba to build two 14,000-cow dairies a few miles southwest of Bakersfield, has drawn sharp protest from Bakersfield residents worried about dust and fumes. County supervisors have not decided on the application, but they have formed a technical advisory committee to make recommendations. The Borbas' difficulties are causing some dairy operators to look farther north for a more favorable political environment. They might find it in Madera County, which in July approved two dairies containing 9,000 and 5,000 cows apiece near Chowchilla. The county relied on mitigated negative declarations in approving both facilities, said Dave Merchen, Madera County senior planner. The county did impose requirements such as ordering one dairy to export all of its solid manure and reducing the herd size if certain concerns arise. Although it filed no comments, the attorney general's office did request the environmental documents for both projects, he said. "These are big in comparison to the dairies that were approved before '94 or '95, but they are consistent with the applications we've gotten in recent years," Merchen said. Saving the water and air The increasing size of dairies stirs much of the concern. Until recently, California's 2000 dairies managed herds that numbered in the hundreds of cows. Nowadays, dairy operators, whether they are moving north from San Bernardino County or simply expanding existing Central Valley farms, feed and milk many thousands of cows in one location. Creation of "factory farms" is the trend in most livestock farming. That worries environmentalists. They fear that the widespread pollution of Chino Basin groundwater attributable to dairies could be repeated in the Central Valley, where groundwater tables are often high. Beatie contended Tulare County has a more progressive approach to dairies than most jurisdictions. It has required conditional use permits since the 1970s and has worked with University of California experts for 20 years in implementing formal guidelines, she said. But CRPE's Farrell argued that Tulare County's program EIR lacks an adequate analysis of cumulative water impacts and does not properly address air pollution mitigation. Tulare and other counties need to get a better handle on air pollution in the form of dust, ammonia and reactive organic gasses, and on surface and groundwater pollution from manure, she said. "Our purpose is not to get the Central Valley clear of dairies and to stop them from coming in. It is to ensure that they are studied and monitored … and if they can be mitigated, to ensure that the mitigations are carried out. It comes down to management practices." Dairy management techniques receive a great deal of attention these days from regulatory agencies and UC, said Allen Dusault, senior project manager for the nonprofit group Sustainable Conservation, which helps dairy operators implement the best available practices. "None of these programs are simple. In most cases they cost money and require training. And farmers have a lot to do," Dusault said. Labandeira, of the dairymen's association, said his groups' members are "very concerned about the environment." Increasingly, they attend classes to learn about new management practices and legal requirements, he said. But the farmers are reluctant to plow large amounts of money into newfangled technology until it is proven and environmental standards are firm, he said. And further study of dairies' impacts is pointless, he said. "You're not going to do a more detailed report than the Boswells and the Borbas have done, so why spend the money?" he said. However, with such a large industry at stake, it is clear that all sides are going to spend quite a bit more money in the near future. Contacts: Mary Beatie, Tulare County Resource Management Agency, (559) 733-6291. Dave Merchen, Madera County Planning Department, (559) 675-7821. Caroline Farrell, Center on Race, Poverty and the Environment, (661) 720-9140. John Labandeira, Western United Dairymen's Association, (559) 285-9126. Allen Dusault, Sustainable Conservation, (415) 977-0380.

Long seen as something of a second-tier resort area, Mammoth Mountain appears headed for the big time. Intrawest, a Canadian company with extensive resort development and operation experience, intends to build 2,300, mostly upper-end housing units and create a new town center in the City of Mammoth Lakes. The idea is to make Mammoth Lakes and the nearby Mammoth Mountain Ski Area competitive with premier all-season resorts such as those in Vail and Aspen, Colorado, Park City, Utah, and Whistler, British Columbia. The massive, multi-faceted project will result in nothing less than the complete makeover of Mammoth Lakes, a tourist town just off Highway 395 in Mono County and about 120 miles south of Lake Tahoe. Besides the expensive new houses and condominiums, a pedestrian-oriented town center with direct gondola access to the ski area, and an overhauled airport with regular commercial flights to at least four cities are also planned. Plus, the Mammoth Mountain Ski Area, which locals refer to simply as "the mountain," has invested tens of millions of dollars in upgrades during the last four years. It all comes after the Ski Area has lost one-third of its business from its high point during the mid-80s, when Mammoth was the busiest ski resort in the country. "It's the town repositioning itself," said Mike Vance, Mammoth Lakes Community Development Director. "We've been losing market share. This is looking at the great physical assets we have and saying what do we need to do to put us in better position?" While Intrawest is committed to the project, the town's overall plans received a set back in late July when an appellate court invalidated a redevelopment plan (see Legal Digest, page 11). At the heart of the various projects is The Village at Mammoth, which will have at least 800 housing units and 130,000 square feet of retail space, said Steve Perkins, of Perkins & Associates, Intrawest's planning consultant. The current city center on Highway 203 is "quite a mess," Perkins said. The new plan is to create a pedestrian-friendly town center on Minaret Road just off the highway and route traffic around the area. This will change the atmosphere at Mammoth Lakes for the better, Perkins said. Mammoth Lakes developed under the suburban model, with wide streets and heavy reliance on the automobile. Visitors who stay in town must drive to the ski area and everywhere else. But the big-time resorts � and Intrawest has built a number of them, including Copper Mountain Resort in Colorado and Tremblant in Quebec � offer more of a seamless experience. Under the plan that is moving forward, people could find lodging in The Village, walk to shops and restaurants, catch the gondola to the slopes, and ski a trail right back to The Village. It will be similar to European alpine towns, said Dana Severy, Intrawest vice president who is overseeing what the company calls "Project Sierra." "We're literally trying to integrate what we build right into the ski mountain," Severy said. "It is really intended to be a departure from the traditional land uses at Mammoth. Mammoth is very much like Southern California � you don't do anything without getting in your car." Away from The Village, Intrawest plans to build 1,100 units in the Juniper Springs area, and about 400 more units in Sierra Star, a golf course development smack in the middle of town. The Sierra Star golf course opened last year, and city officials would like to see a conference center on the site, although nothing is final. While Intrawest has become the key player since acquiring about 250 acres in Mammoth Lakes four years ago, Severy noted that the company is only carrying out three master plans for the resort corridor that the City Council adopted in the early 1990s. It appears that Intrawest is having no trouble marketing its products. Townhouses and condominiums are reportedly selling in the high six figures before they are even complete. Most of them are being purchased as second homes are as part-time rentals, in which the owner rents the unit when he is not using it, said Craig Olson, an associate planner for Mammoth Lakes. Of course, direct and indirect costs accompany this transformation in a town with 5,500 full-time residents and 8,000 visitor beds. Real estate prices have doubled in the last 18 months, according to Vance, and everyone acknowledges fears about affordable housing shortages in the near future. Some full-time residents worry about losing their community's character. And the combined federal and local subsidies top $55 million. The biggest chunk of government money would be a $30 million grant from the Federal Aviation Administration to widen, lengthen and overlay the existing runway and taxiway. This would accommodate the 757s that American Airlines has agreed to fly from Dallas and Chicago, said Airport Manager Bill Manning. The airport also hopes to lure 737 service from San Jose and Los Angeles. Additionally, the city has agreed to build a $12 million terminal. The Ski Area, of which Intrawest owns 58%, will front the money for the terminal, and the city will pay back Intrawest with growth in transient occupancy tax. This deal has been finalized and was important to the FAA, which wanted to see all parties share the risk. The FAA is scheduled to decide on the grant this month. If everything goes smoothly, construction could be completed in fall of 2001, Manning said. "We created a public-private partnership and we all had common goals," Manning said. "There has been a lot of synergy, and we formed a very strong partnership." American Airlines has signed a five-year agreement to fly planes from Chicago and Dallas to Mammoth Lakes. The Ski Area will subsidize the commercial service, which is common in resort areas, Manning said. Up to 150,000 passengers could use the airport annually within seven years. Mammoth Lakes currently has no commercial air service. Additionally, Intrawest will receive a $14 million reimbursement from TOT growth for building parking garages and other infrastructure. According to independent economic analyses, TOT revenue, which now amounts to about $5 million annually, should approximately quadruple in 10 years. Under this scenario, which Vance described as very conservative, Intrawest and the Ski Area would get paid back within five years � even after the city gets the first 45% of TOT growth. "The town general fund is never at risk because the only funds directed to the mountain and to Intrawest are from the growth they generate," Vance said. "If they aren't successful, they don't get paid back." A development agreement, which has yet to be finalized, contains these details. Intrawest hopes to complete the contract as well as amendments to The Village master plan this fall so that development can move forward next year during Mammoth Lakes' abbreviated building season. Although a concern for some people, the loss of town character does not seem to be as hot an issue as the loss of affordable shelter. Other ritzy resort areas, especially those in the Colorado Rocky Mountains, have become so pricey that service workers either live in overcrowded conditions or commute long distances from less-expensive burgs. Mammoth Lakes, notably, contains only four square miles of real estate and is surrounded by the Inyo National Forest. Olson, a city planner, said officials are crafting an affordable housing policy. Furthermore, Intrawest agreed to build affordable units as development proceeds and could simply deed blocks of low-cost condominiums to a housing agency, Olson said. Intrawest's Severy said the company will build 250 affordable units faster than required by the city, including two 16-unit apartment buildings next year. Plus, the corporation is working with various entities to create a housing foundation. "We take it very seriously. We acknowledge it as an issue. We think we are part of the solution," he said. Severy noted that Intrawest not only develops resorts, it also operates them. Relying on service workers who must commute long distances in bad weather is a poor approach, he said. In fact, added Severy, Intrawest's dual role as developer and operator benefits the city. "I think that shapes your planning horizon and how you approach things. That tends to result in what I call a more capital-intensive approach to development," he said. The Mammoth Lakes Town Council has several key decisions to make in coming months, including reconsideration of redevelopment. Still, the town's path appears to be set. "It's the last great ski mountain that has not realized its potential," Severy said. Contacts: Mike Vance and Craig Olson, Mammoth Lakes community development director, (760) 934-8989, ext. 224. Bill Manning Mammoth Lakes airport manager, (760) 934-3813. Dana Severy, Intrawest vice president, (760) 924-8189. Steve Perkins, Perkins & Associates president, (510) 215-1600.

The two principal authors of the 1998 revisions to the California Environmental Quality Act Guidelines say a recent appellate court decision misinterpreted the Guidelines. The case, Friends of Sierra Madre v. City of Sierra Madre, (1999) 76 Cal.App.4th 1061, has since been accepted for review by the state Supreme Court. Last December, the Second District Court of Appeal overturned an election in which voters approved a city-sponsored ballot measure to remove 29 properties from the city's Register of Historic Landmarks. (See CP&DR Legal Digest, January 2000.) The court held that placing the measure on the ballot qualified as a project under CEQA and, therefore, was subject to environmental review. The court specifically pointed to the 1998 Guidelines as having embraced the narrow holding of Stein v. City of Santa Monica, (1980) 110 Cal.App. 3d. 458. In Stein, the court ruled that the ministerial act of placing a citizen initiative on the ballot was exempt from CEQA. The Second District said that drafters of the Guidelines chose not to codify other election-based CEQA exemptions found in subsequent court decisions, such as Lee v. City of Lompoc, (1993) 14 Cal.App.4th 1515. But Maureen Gorsen, an attorney with Weston, Benshoof, Rochefort, Rubalcava & MacCuish and the former general counsel of the California Resources Agency, and Antero Rivasplata, an environmental planner for Jones & Stokes and former director of the Office of Planning and Research, now say the court read too much into what they did not do. "In 1998," Gorsen and Rivasplata wrote in a letter to CP&DR, "over 120 revisions to sections and subsections of the CEQA Guidelines were proposed and adopted. During that time, there was no proposed revision to subdivision (b)(5) of §15378 pertaining to the applicability of CEQA to ballot box initiatives. That subsection was merely renumbered from (b)(4) to (b)(5) to straighten up §15378 for light housekeeping changes to that section. In 1998, it was not the style of the drafters of the Guidelines to add references to relevant cases in parenthesis. However, neither was it the drafters goal to ensure that the nearly 400 sections and countless other subdivisions were revised and updated. "We had our hands full with the 120 or so revisions we were actually proposing to make. In fact, once the winnowing down of the sections that were to be addressed, revised and updated was determined, we never looked back at the sections that we hadn't chosen to include. First, we didn't have the time. Second, and more importantly, the Administrative Procedure Act (APA), which sets out the process for making Guidelines revisions, prohibited it. The APA simply does not permit the revision of sections or subsections that are not described and explained in the original Notice of Proposed Rulemaking and Initial Statement of Reasons. (5 Gov't. Code §11346.8(c).) "Certainly, during the public comment period, there were many comments making suggestions to clarify or add to sections and subdivisions not included in the initial Notice. However, due to the APA's prohibition on introducing new topics to a rulemaking after the notice has been published, any such comments were treated as ‘outside the scope of the rulemaking.' That is a phrase we used over and over in responding to comments not directed at the 120 revisions proposed in the initial Notice. That is the phrase we used when commentors brought to our attention the ballot box decisions such as City of Albany and Lee v. Lompoc that we did not add to the §15378. So the court is right to ‘presume' that drafters at OPR and the state resources secretary knew about the cases. "However, for the reasons described above, the court was wrong to presume that ignoring them meant that our intent was to codify the more narrow holding of Stein. … The renumbering of §15378 is not the cause for the Second Appellate District to abandon precedents inconvenient to its desired policy outcome." The Supreme Court has not yet set a date for oral argument.

In three adult business cases decided in late June, the Ninth District Court of Appeals upheld one city's zoning ordinance, struck down another city's code and sent a third city's regulatory system back to district court for further proceedings. The court upheld the City of Taft's ordinance that restricts adult businesses to a select few parcels in town, but it struck down a similar ordinance in Simi Valley as unconstitutional because that city's process essentially permitted third parties to block adult businesses. Finally, the court said adult bookstore owners in Long Beach must have an opportunity to prove that the city's ordinance violates their First Amendment rights. Together, the decisions do little to clear up the muddy situation around adult business zoning. "It's all very discretionary and very vague," said Santa Monica Attorney Roger Jon Diamond, who represented adult business owners in all three cases. "The courts are kind of making it up as they go along here." In the Taft case, Steven Diamond (no relation to his attorney) applied to open an adult bookstore at a location where he previously operated a pawnshop. Although Diamond's store was in the correct commercial zoning district for an adult business, the city denied his application because the site was within 1,000 feet of parks, churches and residences, in violation of the city's ordinance. Diamond sued, claiming that the city's ordinance unconstitutionally limited his alternative means of communication because almost no site was available that could meet the limitations of the city's ordinance. Under the U.S. Supreme Court's decision in City of Renton v. Playtime Theaters, 475 U.S. 41, (1986), the city must provide a "reasonable opportunity to open and operate." Also, the Ninth Circuit has required that adult business sites must be part of the "actual business real estate market." (Topanga Press v. City of Los Angeles 989 F.2d 1524 (9th Cir. 1993); CP&DR Legal Digest, April 1993.) At trial, the city presented a list of 23 potential sites that could be locations for adult businesses. Eastern District of California Judge Anthony Ishii ruled for the city. Because adult businesses must be 1,000 feet apart under Taft's ordinance, Ishii determined that up to three adult businesses could operate simultaneously under the city's zoning ordinance. Because Diamond was the only person to ever seek permission to open an adult business in Taft, Ishii ruled that these three sites were constitutionally sufficient. In upholding Ishii, the Ninth Circuit took a slightly different tact. The unanimous three-judge appellate panel ruled that seven of the 23 sites were possible locations for adult businesses. "We conclude that the proper measure of sufficiency is not the three sites that could exist simultaneously, but the total seven sites that are available under the ordinance," Judge Michael Daly Hawkins wrote. "As the first person to seek to open an adult business in Taft, Diamond is not limited by the 1,000-foot restriction in choosing a site for his business. He can choose among all seven sites." Saying that there is no constitutional requirement that a city make available a certain number of sites for adult businesses, the court declined to pick a number. But it did rule, "Seven sites in a community the size of Taft is sufficient to allow Diamond an opportunity to open and operate." Although it analyzed only three of the seven sites, the court rejected Diamond's argument that the locations were not part of the "actual business real estate market" because they lacked sidewalks and street lighting and because two sites were occupied. The court held that the infrastructure "might be unnecessary" and that there was insufficient evidence the sites would not become available. John Gibson, Taft's lawyer, said the court's ruling is important for small cities with minimal infrastructure. Taft has little infrastructure to offer any new business, so it should not be required to designate prime locations for adult businesses, he said. "The court said we aren't going to operate in a vacuum, and we are going to be reasonable in what we require cities to do to protect the rights of the pornographers," Gibson said. "I hope this will give small towns around the country some hope." The Long Beach case was similar except that Long Beach had existing adult businesses. In 1994, Long Beach amended its zoning ordinance for adult businesses and gave existing operations 18 months to comply. The owners of five adult bookstores — all of which were within 300 feet of residential zoning districts, which was too close under the new ordinance — filed suit claiming that their First Amendment and equal protection rights were violated. The district court granted an injunction against the city before ruling that the ordinance was constitutional. However, the Central District of California Judge Richard Paez (who has since been appointed to the Ninth Circuit) stayed his ruling until the appellate court decided the case. The same three-judge appellate panel that ruled for the City of Taft said that Paez erroneously denied the adult business owners a chance to submit evidence that the alternative sites would not reasonably become available. "This holding was in error in light of our conclusion today that, under Topanga Press, property must have a genuine possibility of coming available for commercial use to be considered part of the relevant commercial real estate market." The court then remanded the case back to the district court. It rejected the equal protection claims. In newspaper stories, Long Beach officials claimed victory because the court did not strike down their ordinance. But Diamond, the business owners' attorney, said he can show that many of the sites are tied up in long-term leases. The court said, " roperty subject to a long-term lease might not meet the Topanga Press test." "The bottom line, of course," said Diamond, "is that all my clients are still operating." In the Simi Valley case, a different panel of Ninth Circuit judges struck down the city's ordinance. In 1993, Simi Valley adopted regulations that, like those in Taft and Long Beach, prescribed buffer zones between adult businesses and sensitive uses, such as residential zones, youth-oriented businesses, schools, parks, places of worship and other adult businesses. The city adopted the ordinance after developer Philip Young submitted an application to open a club with nude dancing at 999 Los Angeles Avenue. Blocked by the new ordinance, Young filed a lawsuit challenging the ordinance's constitutionality in 1994. Young then talked to the city about opening his club four blocks away. Because he initially received a positive response, he stayed his lawsuit. After months of requesting more information and saying his application was incomplete, city officials eventually denied Young's application for a special use permit because the site did not comply with the buffer requirement. It seems that the day before the city issued its ruling, a Baptist minister had applied — and received immediate approval — for permission to operate a bible study class one hour a week in a commercial building near Young's proposed club. Also, the city said there was a "youth-oriented" karate school within 500 feet. When the Planning Commission considered Young's appeal, it decided that a proposed site's compliance with the buffer zone should be determined based on the date of project approval, not the application date. The decision cost Simi Valley the case. Central District of California Judge William Rea ruled that Simi Valley was giving "de facto veto power" to a third party, making it "unreasonably difficult" for an adult business to open and operate. On a 2-1 decision, the appellate court agreed, declaring the ordinance facially invalid under the First Amendment. "The ability of private parties to obtain an over-the-counter zoning permit that effectively blocks an adult use, at any time during the lengthy permitting process for adult businesses, deprives a potential adult business owner of ‘reasonable alternative avenues of communication' as required by the Supreme Court's holding in Renton," Judge A. Wallace Tashima wrote. In a dissent, Judge Diarmuid O'Scannlain said that the likelihood of a sensitive use manipulating Simi Valley's system was "a factual question for a jury to decide." A jury trial had ended in a mistrial before District Judge Rea decided the case as a matter of law. Simi Valley has since changed its ordinance and assigned a special zone to adult businesses. The Cases: Steven A. Diamond v. City of Taft, No. 98-17253, 00 C.D.O.S. 5149, 2000 Daily Journal D.A.R. 6901, filed June 27, 2000; Seung Chun Lim v. City of Long Beach, No. 98-55915, 00 C.D.O.S. 5155, 2000 Daily Journal D.A.R. 6894, filed June 27, 2000; Philip Young v. City of Simi Valley, No. 97-56484, 00 C.D.O.S. 4931, 2000 Daily Journal D.A.R. 6581, filed June 20, 2000. The Lawyers: For Diamond, Lim and Young: Roger Jon Diamond, (310) 399-3259. For Taft: John D. Gibson, Gibson & Gordon, (661) 664-7200. For Long Beach: Daniel S. Murphy, city attorney's office, (562) 570-2242. For Simi Valley: Bert Deixler, McCambridge, Deixler & Marmaro, (310) 788-5800.

David Solaro is a first-term El Dorado County Supervisor representing the Lake Tahoe area. Solaro is a former police and fire chief for the City of South Lake Tahoe, and he holds a master's degree in organizational management from Cal Poly Pomona. In May, the Board of Supervisors unanimously endorsed Solaro's plan to begin a "stakeholder assessment" process, which includes creating an eight- to twelve-member steering committee and hiring a neutral facilitator. Solaro's goal is to work through the growth issues that have polarized El Dorado County for years, including the general plan, which a court has invalidated, and Measure Y, a 1998 initiative that requires development to fully fund new roads. He based his proposal on the Water Forum, a wide-reaching group that addresses issues related to the lower American River. CP&DR What sort of reception have you received? Solaro Excellent. The majority of the board has been very supportive. We've had somewhat of a dysfunctional county … There have been numerous initiatives on everything from rafting to traffic, lawsuits against specific projects in the county. To me, it was just kind of ridiculous that we're spending so much money on lawsuits. We're spending so much time on redirecting staff constantly, and that to me is a really unknown cost. Prior to introducing this resolution, I personally contacted a majority of the stakeholders such as the major developers, the traffic initiative coalition, the quality growth group, the taxpayers association, the builders' exchange. Conrad contacted a few too. Just a wide variety of people representing all the various interests. I basically asked them, are you ready to sit down and talk. Are you tired of fighting and spending money? If we get a process going, a consensus process similar to what they had for the Water Forum, would you be willing to participate? And every single one said yes. CP&DR Do you want this process to result in a new general plan? Solaro I think we need a general feeling from everybody in the county because our general plan has been thrown out of court right now, and I look to this process to resolve the general plan issue also. resolve the issues that the plan was thrown out on, which were basically environmental issues. … The development community even realizes that smart growth is important and you have to leave open space, trees habitat for your own credibility and for the enjoyment of those who buy the homes. I really see that people are realizing that it's not business as it used to be, where somebody just came in and clear cut property and moved on. What is going on in this county now is very similar to what went on in the '70s in Lake Tahoe when there were a lot of lawsuits, arguments regarding growth, no-growth, moratoriums. And we're all past that up there now. Everybody works collaboratively. Most organizations and boards up there have representatives from environmental groups, local government, state government. Tahoe Regional Planning Agency is certainly an example. CP&DR How did El Dorado County get so polarized? Solaro I think it happens over time. I think there's a lot of things that build up, and then pretty soon people quit talking, and then they accumulate a lot of baggage. And for this type of process to work, the most simple premise is people have to start talking again. And then they have to let go of old baggage of five or 10 years ago and forget who was on what side of an initiative or a lawsuit because that has to be done in order to move forward. CP&DR Is there common ground that can be found? Solaro Yes. I think most people agree on more things than they disagree on, and so I think it's important to identify first what we all agree on. Certainly quality of life, air, family-raising, open space, things like that I think you'll find most people do agree on. It's just to what degree, and there's where the work starts. … When you get everybody to list what they agree upon first, and then start comparing it, that really breaks down the barrier. CP&DR How much pressure does growth in the Sacramento area add, especially in a place like Folsom? Solaro Folsom is exploding. But once they're done exploding it's got to go further because you see major corporations coming to this county. … There is going to be growth. Growth is reality. It's just the type of growth. Maybe we'll grow in different ways than we have in the past. I don't know. I certainly don't want to predict it. That's the purpose of this whole process — for various segments of the county to come together and decide how we want to grow, which I think is really important. CP&DR Do you want to come up with some sort of compact or other written document? Solaro What I envision is some type of document that is formed through consensus of all the different stakeholders — ultimately for the general plan — that is then presented to the Board of Supervisors for adoption. … It would be almost impossible for any elected official to not support something that came from such a vast cross-section of the community. CP&DR Does this become a campaign issue? Solaro Well, I'm not running. I've only been in politics a year and five months. I'm new to this. When I ran, one of the things I did use a lot was bringing a consensus process of some type to the board because there had been over the years a lot of animosity among members of the board and different parts of the community. I think being somewhat of a neutral from the eastern part of the county — the other four districts are on the western part — and having not been part of any of the initiatives or the lawsuits on either side allowed me a little more freedom to be viewed as unbiased in the process. CP&DR How much of an affect does whatever happens here have at Tahoe? Solaro In reality, probably not too much because the general plan does not affect the Tahoe basin. The Tahoe Regional Planning Agency controls planning and development up there, and water quality and transportation. CP&DR Do you have a timeline for this? Solaro We look to start it as soon as possible. What we are doing now is trying to obtain an available, neutral facilitator. … It has to be somebody that's so neutral, that has no baggage, that's professional, that can hold the groups together and can make everybody play by the same ground rules. That is one of the real keys. David Solaro spoke with CP&DR Managing Editor Paul Shigley at Solaro's office in Placerville.

A recent appellate court opinion that cast doubt on the legal status of thousands of lots in 19th century subdivisions has been decertified. The California Supreme Court ordered the depublication of the Second District Court of Appeals' decision in Circle K Ranch Corp. v. Board of Supervisors of the County of Santa Barbara, B124996 (see CP&DR Legal Digest, May 2000). However, the state's high court did not accept the case for review. The Second District ruled that separate parcels do not exist today...

You can lead a horse to water, but you can't make it drink. Likewise, you can lead California's road builders to ISTEA/TEA-21Transportation Enhancements, but you apparently can't make them take advantage of the matching funds. That's a shame because this resistance ensures that the state has poorly landscaped roads, fewer bridge and railroad depot renovations, and minimal interpretive centers for historic and scenic area. The Transportation Enhancement (TE) program is a cornerstone of the revolutionized federal highway funding legislation, and it's designed to beautify utilitarian roadways. It also nicely complements other parts of the ISTEA/TEA-21 by providing funding for greenways and bike paths, bicycle and pedestrian safety programs, control and removal of outdoor advertising, and nine other eligible activities intended to balance transportation systems. Planners might think of the TE program as a New Urbanist approach to circulation. ISTEA — the Intermodel Surface Transportation Efficiency Act — has been the Federal funding legislation since 1991. In 1998, it was reauthorized as TEA-21. It replaced the old Federal Highway Act with a new approach to transportation planning and decision making. For the first time, federal transportation law called for (1) long-range, multi-modal planning, (2) active involvement of local governments, (3) extensive public involvement, (4) greater attention to maintenance of the existing system, fiscal accountability, social equity and environmental responsibility, and (5) inclusion of bicycling and walking. We now know that this bold step forward is enabling communities to make the best transportation decisions for their future. But a recent study summarizing nationwide spending patterns for transportation enhancements presents a disappointing picture. The report, published by the National Transportation Enhancement Clearinghouse, found that 100% of the National Highway system funds were "obligated" (in the transportation jargon), and 78% of the Congestion Mitigation and Air Quality Improvement (CMAQ) funds were obligated. However, only 65.5% of the available TE funds were claimed nationally. California was among the worst of the pack. In the 1999 program year, the state grabbed only 53.8% of the $320 million dollars available. In contrast, Puerto Rico, Alaska, and Wyoming all obligated at least 99% of the eligible funds. California ranks 43rd in a list of 52 states, districts, and territories eligible. It gets worse for people who would prefer beautified and bike-friendly movement corridors. Since 1995, the amount of obligated funds has steadily declined, even though TE funding has generally grown. National data for 1999 show that of $631 million, only $365 million (58%) is obligated. What is going on? Megan Betts, manager of the National Transportation Enhancement Clearinghouse, said that implementation of transportation enhancements needs to speed up. "We need to figure our why, nationwide, things are not moving faster," Betts said. Kate Bickert, director of the Rail to Trails Conservancy's California Field Office, said one problem is that planning money is not readily available for TE projects. Without documented planning support, there is no obligation of funds. There have been structural problems at the state level as well: until December 1998, all projects had to go to Caltrans' state office to compete for funds. That system did not bode well for projects that many engineers consider to be "frills." Thankfully, the California Transportation Commission appears to have cured this bureaucratic problem by redirecting TE project decision-making to local transportation commissions, which work with Caltrans' district office staff for clearance. But other regional issues remain: Are there local project advocates? Are the Caltrans district engineers willing to accept alternative transportation? Are they comfortable with designing trails? Are relations good between a transportation commission and Caltrans staff? Bickert contended that institutional bias runs deep at Caltrans, especially in Los Angeles, the Central Valley, the Inland Empire, and rural counties. "If an engineer has 20 projects, and five are multi-million dollar road projects, the one-million dollar bike trail quickly falls to the bottom of the list," she said. California's transportation enhancement projects that have come about are highly visible. Consider that the renovation and adaptive reuse funds for Los Angeles' Union Station and San Francisco's Ferry Building came from the TE pot. Then, there is the East Bay's Iron Horse Trail – a multi-purpose facility linking two counties, 11 cities, and three BART stations. Also, the Ventura County Transportation Commission bought a 32-mile railway corridor for a proposed rail-with-trail project in the rural Santa Clara River Valley with TE money. It is encouraging that the system works in some of the state's regions, and may get better statewide. "We have and will continue to obligate all of our TE money in our region" said Ginger Gherardi, director of the Ventura County Transportation Commission. Gherardi's agency maintains an active relationship with its constituency and the Caltrans district staff. Better leadership at the state level may also be forthcoming, added Bickert. "The fact that the TE coordinator in Sacramento, who had worked alone, now has two staff members is a good step. And though it remains to be seen, it appears that Jeff Morales has some good ideas." Still, while our planning institutions deal with the expanded universe of transportation as defined in ISTEA/TEA-21, we may need work harder to convince the horse that it is indeed thirsty. Stephen Svete, AICP, is president of Rincon Consultants, Inc., a Ventura-based consulting firm.

Linkage fees are back. But will they do any good — or any harm? A "linkage fee" is a fee imposed on one kind of development to help fund a different kind of development that otherwise might not get built. Most commonly, this means slapping a fee on commercial development (which presumably brings more jobs to a community) in order to fund affordable housing development (which presumably will house the workers who take the jobs). Linkage was all the rage back in the late '80s — when office development was so hot that every town seemed to be planning for a 5-million-square-foot office park. Having lost faith in the private market's ability to provide worker housing, "lefty" cities such as Santa Monica, Berkeley, and San Francisco began charging office developers a per-square-foot fee to fund affordable housing projects. The fee idea soon spread to a few high-end employment rich cities, such as Cupertino. But it pretty much stopped there. The boom of the '80s ended, developers complained that the fee was bad for business, and the housing market tanked anyway. The City of Los Angeles, for example, started the process of adopting a fee but never completed the task. Now, the economy is hot again. Housing production is off but non-residential construction is strong, and there is a growing jobs-housing imbalance in many parts of the state. So it's not surprising to see a resurgence in the linkage concept. Some cities that have had fees for a long time are considering increasing them. And several places that have not had fees before are talking about imposing them. A housing task force appointed by the Los Angeles City Council has proposed the linkage fee as part of an overall strategy to create a $50-million-a-year affordable housing trust fund. Calabasas, an affluent city adjacent to the San Fernando Valley, has imposed linkage fees for the first time, and has created a different fee schedule for retail and office development (90 cents per square foot for retail versus $1.50 for office). The charming small city of Sonoma — not exactly a center of commercial development — is currently doing a study to determine what level its fees should be. The resurgence of linkage fees raises two related questions about whether they are good public policy. First, are they really justified? And second, do they really make any difference? The whole concept of the "development impact fee," of course, is based on the assumption that new development makes certain demands on a community and therefore the developer must take responsibility for mitigating the impact. This process, in turn, assumes that it's possible to measure the impact. This quantification is probably far easier in examining whether a flower or bird gets wiped out than determining whether a new office building or store is driving up the price of housing. In order to justify the fees, a municipality must make a series of assumptions about how much money employees will make, what kind of housing they're likely to seek, and what percentage of those employees are likely to look for housing in the same political jurisdiction where they work. But, of course, commute sheds and housing markets are regional in nature. Very often, companies will seek to locate in a particular jurisdiction because it's within commuting distance of a good labor pool, which may or may not be located in the same jurisdiction. And vice versa. In some geographical areas, this argument sticks nicely. For example, the connection in the Silicon Valley could scarcely be more obvious. Since the beginning of the Internet boom five years ago, something like seven jobs have been created for every home constructed in Santa Clara County, and the average home price in the county now exceeds a half-million dollars. The Internet companies employ vast numbers of in-commuters, yet they are highly resistant to moving their operations closer to their employees' homes. So it's not surprising that the Silicon Valley cities of Palo Alto, Menlo Park, Sunnyvale, and Cupertino all have linkage fees. But one of the biggest linkage fee programs in the state is run by the Sacramento Housing and Redevelopment Agency, the joint agency that serves the city and county of Sacramento. Back in the '80s, homebuilders sued Sacramento. They argued that — far from driving housing costs up -— employers were locating in Sacramento because housing prices were low, at least in comparison to the Bay Area. The homebuilders lost the case — the judges were reluctant to overturn Sacramento's impact analysis — but their argument has a certain logic. Why impose housing fees on businesses that are chasing low housing prices to begin with? Then there's the question of whether all these linkage fees actually make any difference in providing housing affordable to the employees who work in the new facilities being built by the commercial developers who pay the fees. A recent statewide survey by The Wall Street Journal estimated that all the commercial linkage fees in the state had raised less than $100 million for housing over a 15-year period. That's not chicken-feed, but it's not much in the context of a multibillion-dollar housing need statewide. The money usually gets thrown together with other local housing money, such as block-grant funds or redevelopment funds, to help provide a pool of subsidies for affordable housing projects. In other words, like so many other fees, it's difficult to trace a direct connection between the employment center creating the problem and the employees who are supposed to benefit. This is a little like Mello-Roos taxes for school construction, which often create more "school construction capacity" for the school district but rarely provide new schools for the children who actually live in the Mello-Roos project. The basic question, of course, is whether housing is either (1) a profit-making activity or (2) a piece of "community infrastructure" that is likely to lose money if it is pursued in a manner appropriate to the community's needs. Over the past half-century, American public policy has assumed that the answer is #1. But in a high-cost location like California, the answer, increasingly, appears to be #2. The question is not WHETHER somebody other than actual home buyers ought to pay for housing, but WHOM. A century ago, the most common answer to the question was the employers themselves, many of whom built magnificent "company towns" such as Scotia, the hamlet built by Pacific Lumber. Today, the most common answer is that the government ought to serve as some sort of "middle man" extracting money from profitable community ventures to subsidize unprofitable ones. But given the low esteem in which most people hold their government, it remains to be seen whether linkage fees are the right technique.