The regional housing wars have begun again in Southern California. And how they come out will go a long way toward determining how much influence the state’s four major “blueprint” regional planning efforts will have over local development patterns – especially infill housing – during the next few years. In July, the Regional Council of the Southern California Association of Governments, SCAG’s governing body, spent several hours debating the agency’s proposed pilot Regional Housing Needs Assessment program. The guts of SCAG’s proposal would involve a controversial merger of regional housing and transportation plans and a new set of regional incentives encouraging the locals to follow SCAG’s “2% Strategy” – the infill-oriented growth vision that resulted from the regional “Compass” project. In the end, the Regional Council agreed to back the pilot program, sending it on to Sacramento for further consideration. But many local governments in the SCAG region still appear to be wary of the idea, fearing it will lead in the direction of mandating implementation of the 2% approach. (Full disclosure: My firm, Solimar, has worked under several SCAG contracts oriented toward implementing the 2% Strategy.) How the SCAG pilot program works out is an important bellwether for regional planning in the state. All four major metropolitan regions – the Bay Area, Sacramento, San Diego, and SCAG – have conducted regional “blueprint” projects that have resulted in a regional consensus to pursue an infill-oriented, high-density, “smart growth” approach. Now it is crunch time. Local governments must decide whether to follow through and implement the blueprints, which are especially controversial in the area of housing. The SCAG region is the state’s “big kahuna” for infill – and for controversy over the state-mandated Regional Housing Needs Assessment program, or RHNA. The implementation phase at SCAG, as elsewhere, emphasizes the tension between “smart growth” philosophy – which generally emphasizes the quality of places and projects – and both state and federal housing and transportation planning practices, which focus on the numbers. SCAG has long been known for bruising RHNA battles, partly because – with six counties and 180 cities – it is by far the largest regional planning agency in the nation. The last RHNA period was supposed to cover 1998-2005, though, because of internal disputes and lawsuits, SCAG did not complete the process until a settlement agreement was signed in 2004. Frankly, it has always amazed me how seriously local governments within SCAG and elsewhere take the RHNA and housing element process, considering the long odds of something bad happening if they ignore it. If a city does not have a housing element certified by the state Department of Housing and Community Development, the city can’t qualify for affordable housing grants and loans. That is hardly punishment for a community that does not want affordable housing to begin with. The city also is theoretically vulnerable to a judge’s decision to strip the jurisdiction’s ability to issue permits – but this happens very rarely in real life. But for many local governments, there’s just something offensive about the idea that the state – or a regional planning agency such as SCAG – can tell them how much housing they must plan for and how they must zone their land. It pushes their buttons. The proposed pilot RHNA program from SCAG pushed all kinds of local government buttons. For one thing – in keeping with the agenda of outgoing Business, Transportation, and Housing Secretary Sunne Wright McPeak’s approach – the pilot project calls for every jurisdiction to identify a 20-year supply of land and rezone enough land for 10 years of needed housing. But what appears to make the locals most nervous is the ways in which the pilot program would link the RHNA to implementation of the 2% Strategy. To see what is going on here, it’s important to understand that SCAG is trying to mesh three different “moving targets”: • The RHNA, which is a top-down, state-driven process requiring local governments to plan for housing based on state demographic forecasts. • The Regional Transportation Plan, or RTP – SCAG’s main responsibility under federal law – which is supposed to map out the solution to traffic problems created by current and future development patterns. • The 2% Strategy, an infill-oriented approach that will form part of the basis for the RTP but is strictly voluntary for local governments, according to SCAG. Combining all three is elegant in theory. Not only do the RTP and the RHNA operate under different philosophical approaches to growth forecasts, they also operate under different timelines (2007-2010 and 2008-2014, respectively). By merging these two processes – and bumping the RHNA for two years in the process – SCAG and its member local governments could operate off of only one growth forecast, not two. (The way the system is supposed to work, SCAG’s growth forecast would be created for transportation purposes, then amended based on a variety of local constraints – sewer and water capacity, open space, agricultural preservation – that are currently contained in state law.) To the extent that this doesn’t line up with the 2% Strategy, SCAG could encourage locals to do more infill – and maybe even encourage some locales to take more than their RHNA numbers – by providing infrastructure funds and regulatory relief that wouldn’t otherwise be available. Elegant in theory. Even though the Regional Council approved the pilot program, it is clear from the formal comments made by cities and counties that many locals are wary because they fear the pilot program will be a way to impose 2%-style higher densities on them. In its responses, SCAG stuck consistently to the line that the RHNA is a consensus process and 2% implementation is voluntary. As a result, SCAG has had to finesse the question of whether the 2% Strategy is designed to deliver numerical results. As the SCAG staff wrote in response to one comment from a city: “The Compass program will always be voluntary, however, the Compass is not about the ‘number,’ rather it is a series of policy instruments built upon incentives tie (sic) to performance (i.e., beyond and above local inputs) and tie (sic) to well-delineated 2% opportunity areas.” SCAG’s further comments suggest that the agency simply hopes that by adopting such policy instruments “the distribution could be realized by the end of the planning period.” And therein lies the rub. It’s not about numbers to use so much as it’s about to use numbers at all. In the pursuit of smart growth, all of us – not just SCAG — are straddling. Smart growth advocates – myself included – often argue that focusing on numbers is a divisive enterprise, and instead we should focus on the quality and pattern of urban development. But we’re still stuck with the numbers-oriented state housing law, as well as the numbers-oriented federal law requiring the RTP. To some extent, the smart growthers are operating on faith, hoping that people will like the on-the-ground results enough that, in the end, they will accept higher numbers. Almost inevitably, the jurisdictions in question here are the older suburbs in the San Gabriel Valley, the South Bay, and southern Los Angeles and northern Orange Counties. Yet many of these same cities are the ones most resistant to growth and to SCAG, whereas most new development still occurs in the Inland Empire and the Antelope Valley. It remains to be seen whether faith is any match for hard numbers.

An environmental impact report for one of the first Wal-Mart supercenters approved in California has been upheld by the Sixth District Court of Appeal. The court ruled that the City of Gilroy did not have to prepare a new economic analysis in the supercenter’s environmental impact report because previous studies were adequate. The court upheld the city’s reliance on a 1992 economic study and a 1993 EIR prepared for a 174-acre annexation and general plan amendment that included Wal-Mart’s eventual supercenter location. Those reports said that the annexation and proposed retail complex would have only a minor impact on Gilroy’s central business district. “ espite the city’s refusal to commission further studies, the City Council had a fully developed picture of the economic impacts of the supercenter project,” the court ruled. “The whole record provides substantial evidence that urban decay was adequately considered in connection with the supercenter.” Amitabh Barthakur, a senior associate with Economic Research Associates who works on studies to determine projects’ potential to cause urban decay, said, “The court didn’t really care about the means by which the urban decay impact potential was substantiated. The EIR built on previous economic studies and EIRs that had looked into similar issues.” Barthakur, who was not involved in the Gilroy project, pointed to the court’s conclusion that “additional formal studies would not add information not already available to the City Council.” The fight over the Wal-Mart Supercenter in Gilroy was a familiar one. Union grocery clerks and small business owners complained about Wal-Mart’s business practices and contended that the 220,000-square-foot store would cost the town better-paying jobs and locally owned business. Wal-Mart has had a store in Gilroy since the early 1990s, but the proposed supercenter was an issue in the 2003 City Council campaign. Wal-Mart supporters won and, in 2004, the City Council approved the project on a 5-2 vote. The supercenter, which has been in operation for nearly a year, replaced a 120,000-square-foot Wal-Mart that did not carry groceries. After the council approved the project, a group composed primarily of unionized grocery store workers called Gilroy Citizens for Responsible Planning sued, alleging a number of deficiencies in the EIR. A trial court judge upheld the EIR, as did a three-judge panel of the Sixth District. How local governments should address the potential for big-box stores to cause urban decay has become an issue during the last few years while Wal-Mart opponents have fought to prevent the company from building supercenters. In , 124 Cal.App.4th 1184 (2004), the court rejected two environmental impact reports for two planned supercenters because the city failed to address the potential for the projects to cause urban decay or consider the combined impacts of the two closely situated stores (see , January 2005). But in , 130 Cal.App.4th 1173 (2005), the court upheld a supercenter EIR because there was an economic study prepared for the project and there was substantial evidence to support the city’s conclusion the project would have no negative economic consequences (see , September 2005). In Gilroy, the project opponents argued that the city should have completed an initial study before relying on a 12-year-old economic analysis; that the city’s tiering off previous documents was improper; and that evidence in the record indicated negative economic impacts could occur. Regarding the initial study, the opponents noted that supercenters did not even exist when the 12-year-old analysis was completed. But the court ruled that no initial study was required because the city had already determined an EIR was required, the project was consist with existing zoning, and the project “did not require major revisions in a previously prepared EIR.” As for tiering, the opponents said the city used a negative declaration as a first-tier document — and not an EIR — in violation of the California Environmental Quality Act (CEQA). The court disagreed, finding that the first-tier documents were the 1992 economic study, and the 1993 EIR for the area annexation and general plan amendment, which included the 1992 economic study. The court noted that the EIR also incorporated by reference the EIR for a revised general plan, with which the supercenter was consistent. “The Wal-Mart EIR clearly notified interested persons of its genealogy,” Justice Eugene Premo wrote for the court. As for the contention that the city should have commissioned a new study of potential economic impacts, the court found instead that the City Council was fully aware of the supercenter project’s potential economic impacts. The 1992 economic study of the retail project planned for the annexation area predicted that the retail project would modestly increase the shifting of the central business district (CBD) toward specialized retail, professional services and restaurants. The EIR for the annexation and general plan amendment was even more detailed and “concluded the CBD would not be protected by disapproving additional retail development in Gilroy.” This annexation and general plan amendment EIR, Premo wrote, “found the adverse economic impacts on the CBD resulting from the proposed project to be ‘small in comparison to the effects from competing suburban mall and retail services areas which have been constructed in the surrounding region in the recent past.’” Additionally, the court noted, project opponents submitted two reports on economic impacts, and Wal-Mart submitted one, as well. The City Council was justified in finding that further study was not warranted, the court concluded. The court also rejected arguments that the city violated CEQA in numerous other ways. The Case: , No. H028539, 06 C.D.O.S. 5639, 2006 DJDAR 7982. Filed June 22, 2006. The Lawyers: For Gilroy Citizens: William Kopper, (530) 758-0757. For the city: Andrew Faber, Berliner Cohen, (408) 286-5800. For Wal-Mart: Arthur Friedman, Steefel, Levitt & Weiss, (415) 788-0900,

In the ongoing controversy regarding local government authority over wireless telecommunication antennas, the Fourth District Court of Appeal has upheld San Diego County’s zoning ordinance that establishes a detailed permitting process for such antennas. The court ruled that state law allowing antennas in the public right of way allows the county’s permitting scheme — even though a federal appeals court threw out a similar scheme adopted by the City of La Cañada Flintridge because it was superceded by state law. The state court in the San Diego County case said that the Ninth U.S. Circuit Court of Appeals’ decision in , (2006) 435 F.3d 993, “is wrong and should not be followed.” The Fourth District did not rule on the San Diego County zoning ordinance’s legitimacy under the Federal Telecommunications Act, although the court did assert that its ruling was consistent with federal law. Rather, Sprint is litigating the applicability of the federal Telecommunications Act in federal court, where a district court judge threw out the ordinance. That decision has been stayed pending the Ninth Circuit’s ruling on the county’s appeal. San Diego County adopted its wireless technology ordinance as part of the zoning ordinance during 2003. The ordinance establishes four different processes, depending on the location and visual impact of the proposed antenna. Facilities that would have very low visual impacts and facilities proposed for commercial, industrial or special purpose zones are decided administratively by the planning and land use director. More conspicuous towers and those proposed for residential and rural zones require use permits, are subject to public hearings and may be decided by the county Planning Commission. The ordinance lays out a number of general and design regulations and setback requirements, and all applications must be accompanied by detailed information regarding the proposed facilities and services. In its state court lawsuit, Sprint argued that Public Utilities Code § 7901 prevents local governments from regulating the installation of telecommunications equipment in the public right of way (ROW) except to accommodate the public use of the ROW. San Diego County Superior Court Judge Charles Hayes ruled the county’s ordinance is legal, a decision upheld on the appeal. The Fourth District decided two questions: Do wireless telecommunications companies have the same privileges as traditional “telephone corporations” under § 7901? If so, does the statute prevent local governments from imposing design and siting restrictions on equipment in the ROW? The court ruled that wireless companies and telephone companies are the same thing these days, so § 7901 applies. However, in answering the second question, the court ruled, “The rights conferred by § 7901, although broad, are not unlimited.” The court noted that not only does § 7901 preclude installation of equipment in a location or manner that “incommodes” the public use of the ROW, § 7901.1 declares that a telephone company’s privileges are subject to a local government’s “right to exercise reasonable control as to the time, place and manner in which roads, highways and waterways are accessed.” The court cited extensively from California Public Utility Commission regulations and decisions that give municipalities the authority to adopt reasonable regulations on the location of telecommunications equipment in the ROW. “The approach adopted by the PUC — ceding to local authorities the primary authority to issue discretionary permits for ROW installations while retaining the ability to pre-empt local decisions where a superceding state interest is undermined by local obstructionism — is an appropriate resolution that balances the interests of local governments in managing and preserving the local ROWs against indiscriminate use while ensuring the statewide interest in the deploying of ubiquitous communications systems is protected,” Justice Alex McDonald wrote for the court. Sprint argued that the county’s ordinance is inconsistent with the limited local discretion contained § 7901, and Sprint and appeared to have the La Cañada Flintridge decision on its side. In that case, the Ninth Circuit ruled that cities’ “regulatory power is functional, and does not extend to aesthetics.” The Ninth Circuit ruled that state law pre-empted local authority (see , March 2006). But the Fourth District ruled that local authority is not pre-empted. “Although state law fully and completely covers the exclusive right of the state to empower telephone companies to use ROWs and to disable local governments from extracting franchise fees from telephone companies for the right to operate therein, there is no general state law regulating the siting or appearance of the equipment so authorized,” Justice McDonald wrote. Sprint further argued that the county ordinance demanded irrelevant information, imposed subjective design criteria, and let the county deny an application for any reason. “However,” the court ruled, “zoning ordinances with even fewer guidelines and granting even broader discretion have been upheld in the face of similar attacks.” The Case: , No. D045957, 06 C.D.O.S. 5537, 2006 DJDAR 7742. Filed June 20, 2006. The Lawyers: For Sprint: Daniel Pascucci, Buchanan Ingersoll, (619) 578-5000. For the county: Thomas Bunton, county counsel’s office, (619) 531-4860.

A Superior Court’s award of damages to a billboard company that sued over the City of Arcata’s building and sign ordinances has been thrown out. Humboldt County Superior Court Judge J. Michael Brown had ruled that state law pre-empted the city’s sign ordinance, and he awarded Viacom Outdoor, Inc., $39,000 in attorney fees and nearly $39,000 in damages for lost rent. In overturning Brown, the First District Court of Appeal found that the city’s ordinances were the type that the state law “positively anticipates if not encourages.” The court further ruled that because Viacom never even applied for the permits the city contended the company needed, Viacom’s claim for damages was premature. During the fall of 2001, windstorms destroyed four Viacom billboards originally built during the 1950s and 1960s next to Highway 101 in Arcata. The company had permits from Caltrans for all four signs. When Viacom began rebuilding the billboards, the city posted “stop work” orders directing the company to halt rebuilding until it applied for permits required by the city’s Building Code and Sign Code. Viacom stopped rebuilding. But instead of apply for permits, the company sued the city. The company argued that the Outdoor Advertising Act (Business & Professions Code § 5200 et seq.) was the only applicable law and preempted the city’s regulations. Viacom also contended the city violated the company’s rights of equal protection and due process, and took the company’s property without compensation. Judge Brown ruled for Viacom and ordered the city to pay damages and fees. The city appealed and a unanimous three-judge panel of the First District, Division Two, overturned the lower court. The city’s Sign Code requires a permit “to erect, construct, enlarge, alter, repair, move, improve, remove, convert, demolish, equip, use or maintain a sign or sign structure.” Viacom argued, and Brown agreed, that the state Outdoor Advertising Act pre-empted such an ordinance, and that California Code of Regulations 2270-2271 gives Caltrans complete authority in this instance. Viacom maintained that municipal regulations could apply “only at the time of placement of billboards.” The First District read the statute and regulations differently. “ he state act makes considerable allowance for past and future county and city ordinances on the subject of advertising displays,” the court ruled. “As shown by the plain language of §§ 5228, 5230, 5231 and 5408.3, the Legislature clearly contemplated that local regulation would augment the state act, and might in some instances go beyond it.” As for the Code of Regulations, the court determined that re-erection of a billboard is the same thing as “placement,” and, “Placement of an advertising display is an area where local power is expressly recognized by the state act.” “Moreover,” wrote San Francisco Superior Court Judge Peter Busch, sitting by assignment to the First District, “the language of Regulation 2271 speaks exclusively to the power of Caltrans. It does not address whether any other jurisdiction’s permit might be needed before a billboard is re-erected. Nothing in it suggests a restriction of the traditional power of cities and counties to require construction permits.” Viacom pointed to , (1993) 6 Ca.4th 1152, in which the state Supreme Court ruled that Caltrans had the authority under Business & Professions Code § 5463 to prohibit the rebuilding of a billboard that had been blown down. But the First District found Traverso of no use here because that case concerned the constitutionality of § 5463, and the Supreme Court did not address the scope of local regulations or whether billboard re-erection was the same thing as placement. The court also rejected Viacom’s contention that a standard in § 5401 requiring a sign to be built to withstand “20 pounds of pressure per square foot of exposed surface” was evidence the state intended to occupy the entire field of regulating billboard construction and, therefore, bar local regulation. “The city’s Sign Code provisions,” Judge Busch wrote, “do not conflict with the state act. All of these provisions either address subjects not addressed in the state act or appear fully compatible with the state act’s declared intent to establish only minimum standards, with the clear implication that additional input could come from cities and counties.” The Case: , No. A110628, 06 C.D.O.S. 4910, 2006 DJDAR 7145. Filed June 9, 2006. The Lawyers: For Viacom: William Barnum, Barnum & Herman, (707) 442-6405. For the city: Nancy Diamond, (707) 826-8540.

A plan to build housing for faculty and staff members at Sonoma State University appears to have widespread community support except for one detail: The university’s chosen location is a greenbelt outside of the City of Rohnert Park’s politically popular urban growth boundary. The university purchased the 88-acre site one year ago and has been in negotiations with the city ever since about the provision of water and sewer services to the proposed development. City officials, however, say the city cannot legally provide the services to a site outside the urban growth boundary (UGB) that voters approved in 2000. “We’re no closer to resolving our differences now that we were a year ago,” Rohnert Park City Councilman Jake Mackenzie said. Saying the negotiations are ongoing, Sonoma State officials put forward a more positive face. “Out timeline is as soon as possible. People continue to talk all the time,” said Susan Kashack, SSU associate vice president for communications and marketing. “We hope to have things really ironed out within the next six months.” Housing has been an issue for Sonoma State— located in Rohnert Park, just south of Santa Rosa — for years, and the problem has compounded during recent years with the rise in housing prices. University leaders say that affordable housing is crucial to attract and retain faculty and staff members who would have their choice of housing options in university towns elsewhere in the United States at a fraction of Sonoma County’s $630,000 median price. So in 2005, a university auxiliary acquired 88 acres northeast of town for $4.2 million. The university has plans to develop 400 single-family houses and 32 units of attached housing, according to Neil Markley, SSU senior director for entrepreneurial activities. The university is also considering developing a community building, parks, gardens and other assets on the site. The university chose the property because it is fairly close to campus and was reasonably priced, Kashack explained. The university would like to sell houses to faculty and staff members for prices in the $300,000s, she said. City officials and community leaders do not quarrel with the university’s goal of providing housing that SSU employees can afford. But the chosen site is agricultural land a mile beyond the Measure E urban growth boundary. Since 1996, voters in Sonoma County and its cities have approved 10 different urban growth boundary ballot measures, noted Daisy Pistey-Lyhne, the Sonoma-Marin field representative for Greenbelt Alliance. “I think it’s a really clear mandate from the voters. The university as a neighbor and as a member of the community should respect this mandate,” Pistey-Lyhne said. Mackenzie, a Greenbelt board member and three-term councilman, agreed. “We don’t wish to have to have 400 housing units on the northeast side of Rohnert Park outside our UGB,” Mackenzie said. “Very clearly, the reason they bought that property was they could get it cheaply. They figured they were above the city’s rules.” Indeed, the university is not legally obliged to follow local land use regulations, even those approved by voters. University officials acknowledge that, if the city refuses to provide services, they are considering other options, such as groundwater wells and a large septic system. However, those options are not without drawbacks. Area landowners already have in place an active campaign to limit groundwater pumping because of concerns about aquifer depletion. A septic system would need a permit from a potentially reluctant North Coast Regional Water Quality Control Board. Ron Bendorff, the city’s planning and community development director, said the city has no choice but to deny the services SSU is requesting. “We’d have to go back to the voters. They set the urban growth boundary,” he said. Bendorff and other city officials point to two growth areas within the UGB as more appropriate sites for university housing. One location is within the university district specific plan area, nearly 300 acres of agricultural and open space just across the street from the SSU campus. In May, the city approved the specific plan calling for 1,645 units of various types of housing and a large commercial village. The city still needs to annex the university district site, but it does lie within the voter-approved growth boundary. However, the specific plan is in limbo because a week after the city approved it Sonoma County Superior Court Judge Knoel Owen, in a lawsuit filed by a citizens group called the Owl Foundation, rejected a city water supply assessment that was used in the university district project’s environmental impact report. The city is appealing that ruling; in the meantime, the annexation is on hold, according to Bendorff. Sonoma State officials did talk with developer University District, LLC, about acquiring land within the district, but the two parties reached no agreement and have gone their separate ways. A second option favored by city officials is known as the “Agilent site” — about 170 acres one mile south of campus. Agilent Technologies pulled out of Rohnert Park, leaving behind 750,000 square feet of light industrial buildings. Local developer Codding Enterprises is now working to fill those buildings with new tenants and to develop about 1,800 units of housing and a large commercial center. Roughly half the site is undeveloped. Bendorff said that the Agilent site project faces at least two years of planning and environmental review, but that it is a “logical” location for university housing. Representatives of Codding and SSU have talked but have reached no agreement, the university’s Markley confirmed. The site does fit within the school’s parameters in that it is a short bike ride from campus, he noted. “We’ve said from the outset of this process that we don’t want to be in the housing business,” Markley emphasized. “If any developer is willing to come in and provide the product we’re looking for at the price we’re looking for, we’d walk away from our project tomorrow.” Councilman Mackenzie said he is encouraging the university and Codding to work together, but, he conceded, the city does not get the final say. Said Bendorff, “I think a lot of cities that are adjacent to major universities have these problems.” Contacts: Neil Markley, Sonoma State University Entrepreneurial Services, (707) 664-4068. Jake Mackenzie, Rohnert Park councilman, (707) 584-1195. Ron Bendorff, Rohnert Park Planning and Community Development Department, (707) 588-2236. Daisy Pistey-Lyhne, Greenbelt Alliance Sonoma-Marin Field Office, (707) 575-3661.

The latest round to be decided in the ongoing fight over building inspection and plan check fees has gone to the City of Corona, which successfully defended a lawsuit originally brought by developer Barratt American and its chief fee consultant. A trial court judge refused to let Barratt American and the consultant, The Paladin Group, participate because they had no direct interest in the litigation. The suit went forward with a resident as plaintiff, but the Fourth District Court of Appeal upheld the city’s methodology for setting the fees. Barratt American and Paladin have been involved in numerous fee lawsuits, forcing some jurisdictions to change their fee methodologies while losing other cases. The company won a minor victory at the state Supreme Court in late 2005 when the court ruled that the company could contest the validity of a fee ordinance that the Rancho Cucamonga City Council re-adopted — unchanged from an earlier ordinance — in 2002 ( , 37 Cal.4th 685, see , January 2006, November 2005). The Supreme Court overturned an appellate court, which had ruled that because there were no changes in the ordinance, the time to challenge the fees had passed. Barratt American has a long, adversarial history with the City of Corona. In 1997, Barratt American sued the city for a refund of building permit and plan check fees. A trial court and the Fourth District ruled the lawsuit was filed too late. Two years later, Barratt American, Paladin and Corona resident George Jenkins sued, alleging that the city’s fees exceeded the cost of providing service. The city revised its fees and the lawsuit was dismissed. The latest round of litigation involved the same players and similar fees. After a consultant completed a study that determined building inspection and plan check costs, and allocated the costs among tasks, the Corona City Council in May 2001 adopted revised fees. The new fees were actually about one-third lower than the previous rates. Still, Barratt American, Paladin and Jenkins sued, arguing that the fees violated the Mitigation Fee Act, Proposition 13, Proposition 62, the Fifth and Fourteenth Amendments and the federal Civil Rights Act. Riverside County Superior Court Judge Erik Michael Kaiser removed Barratt American and Paladin from the lawsuit, finding that they had no direct interest. The litigation went forward with Jenkins as the plaintiff. On the merits, Judge Kaiser found that the city’s methodology was not precise enough, and he ordered the city to establish new fees. The city appealed to the Fourth District and won a unanimous decision of the three-judge panel. The Fourth District first addressed the city’s contention that the Mitigation Fee Act (Government Code § 66000 et seq.) bars challenges to fee reductions. Citing the state Supreme Court’s decision in the Rancho Cucamonga case, the Fourth District disagreed. Re-enactment of a fee constitutes a modification or amendment of the fee, whether or not the fee increases, and a new 120-day period to challenge the fees commences, the court ruled. The court then undertook an extensive discussion of the city’s fee methodology. Essentially, the city’s consultant, Revenue Cost Specialists (RCS), determined the 10-year average for building and plan check fee revenue, and estimated the cost of providing the service for the 2000-01 fiscal year. The consultant found that fee revenue averaged $808,000 a year, while the estimated cost of providing the service during 2000-01 was $565,000. So RCS recommended setting fees at 69.9% of the then-current level. Judge Kaiser ruled that the 10-year revenue averaging was too imprecise to comply with the Mitigation Fee Act. But the Fourth District found that Kaiser’s review went too far, and that the city did comply with the act. “ he act requires only that fees ‘may not exceed the reasonable cost of providing the service for which the fee is charged,’ absent voter approval,” Justice Thomas Hollenhorst wrote for the appellate court, citing Government Code § 66014. “The trial court’s implicit finding that the act requires a dollar-for-dollar correspondence between the city’s fee revenue and costs is not supported by the act. … The act does not require a precise calculation.” Hollenhorst cited , (1993) 14 Cal.App.4th 264, in which the court ruled, “ he record need only demonstrate a reasonable relationship between the fees to be charged and the cost of the service or program to be provided.” The City of Corona met that test, the court ruled. “Nothing in the act,” Hollenhorst continued, “mandates a city should perform its duties. Here, the city properly exercised its discretion in deciding how to proceed with the mandates of the act.” Jenkins had appealed different portions of the trial court’s ruling, but the Fourth District rejected those contentions and even ordered Jenkins to pay the city’s appeal costs. The Case: , No. E036270, 06 C.D.O.S. 5013, 2006 DJDAR 7250. Filed May 10, 2006. Ordered published June 14, 2006. The Lawyers: For Jenkins: Jason Brent, Brent & Klein, (661) 823-1103. For the city: Jeffrey Dunn, Best, Best & Krieger, (949) 263-2600.

A housing development proposed for North San Diego County may give county decision-makers the opportunity to apply some of the “smart growth” principles contained in a proposed general plan update before the plan is even adopted. A landowner has proposed a 2,700-unit housing development in a fashion that concentrates the housing on less than 20% of the 2,320-acre site along Interstate 15. About 1,300 acres of the Merriam Mountains project would be dedicated as open space for a habitat conservation effort. The county’s proposed general plan, which has been in the works for eight years, designates a number of georgraphic nodes for fairly dense growth while making large areas essentially off-limits to any significant development. The Merriam Mountains project site is not one of the growth nodes in the proposed version of the general plan, which designates the area for 40-acre parcels. However, a general plan alternative put forth by county supervisors does call for development on the site. An additional complicating factor is local reception. Two county advisory groups (known as community sponsor groups) that represent the area have made clear that they oppose the project. “A lot of us moved here because of the way it was, not because of how developers want to make it,” said Charles Davis, vice chairman of the Bonsall Community Sponsor Group. A decision on the Merriam Mountains project could come next year; the landowner already is six years into the planning process. Although it is mostly rural, North San Diego County along I-15 definitely is within the path of growth. The area lies just north of the rapidly growing cities of San Marcos and Escondido, and just south of the exploding suburbs in western Riverside County. Interstate 15 frequently is jammed with people commuting to and from jobs closer to San Diego. Officials in San Diego and Riverside counties have formed a joint policy committee to address growth and transportation issues along the I-15 corridor. Stonegate Development — a privately held entitlement company based in Orange County — has acquired nearly 60 parcels comprising 2,320 acres in a 2 1/2-mile stretch along the west side of I-15, between the communities of Twin Oaks Valley and Bonsall. The site’s proximity to the freeway makes it ideal for development, said Joseph Perring, project manager for Stonegate. “We have been working on this project since the year 2000. The plan has always been to create a state-of-the-art, conservation-oriented master planned community,” Perring said. That plan has evolved over time. Originally, Stonegate proposed about 2,400 units, primarily single-family houses and condominiums, spread across the majority of the site. County planners and wildlife agencies gave that concept a thumbs down. Stonegate responded by adding some acreage and clustering the proposed development into five neighborhoods totaling approximately 420 acres. Stonegate would contribute at least 1,300 acres for the north county multiple species habitat conservation plan (MSHCP). Other open space would be provided as parkland or integrated into the development as open space. There also would be a 10-acre commercial site. The plan calls for nearly 1,000 single-family houses, primarily on lots of 4,000 to 7,000 square feet, about 1,400 condominiums in various forms, and 270 affordable apartment units. Stonegate has applied for a general plan amendment, rezoning and vesting tentative tract maps. A portion of the site is now zoned light industrial and commercial, but that type of development is not feasible, Perring contended. He said that, although the area is considered rural, the Merriam Mountains planned community is not out of character. The Hidden Meadows planned development lies across the freeway, and the Lawrence Welk resort with hundreds of mobile homes plus timeshares and condominiums is nearby. “We’re right in the middle of some existing developments that, in their day, were very similar to what we are planning,” Perring said. But Davis, of the Bonsall advisory group, said Stonegate’s property should either remain undeveloped open space, or should be developed only with estate homes on very large lots. Davis condemned Stonegate’s plan revisions that cluster development and add units. “It’s Orange County-style development that most of us don’t like in North County,” Davis said. “You don’t improve something by increasing the density.” Members of the Twin Oaks Valley Sponsor Group have expressed similar sentiments. Earlier this year, Twin Oaks Valley Equestrian Association President Carol Shuttleworth told that the project would “destroy everything that we’re about.” Perring said Stonegate has reached out to locals, but he conceded there is no common ground. “The local planning group will never support a project like this. Their idea for our property in the general plan update was one unit per 40 acres,” Perring said. The company did consider an estate-lot approach — and nearly 60 parcels already exist — but very low-density development could not support the needed infrastructure, he said. Additionally, environmentalists and regulatory agencies generally oppose large-lot projects, Perring noted. Dan Silver, executive director of the Endangered Habitats League, confirmed the latter point. Local residents may say they favor large-lot housing, but such development consumes valuable habitat and is unsustainable in the long-run, Silver said. Silver called the Merriam Mountains project “complicated” because it would provide a large chunk of habitat reserve, yet it conflicts with the proposed general plan update that the group likes. Endangered Habitats League neither supports nor opposes the housing project. “It’s a very large, intact block of chaparral,” Silver said of the site. “There are very few of these large blocks left in the North County at all, especially west of Interstate 15. It’s at least reassuring to us that there is a viable MSHCP piece if the project is approved.” Currently, Stonegate representatives are answering county planners’ questions about the project’s environmental impact report. A draft EIR is expected to be released this fall. The project would then move to the Planning Commission for hearings that are sure to be contentious. Contacts: Joe Perring, Stonegate Development, (949) 367-9400. Charles Davis, Bonsall Community Sponsor Group, (760) 726-7472. Dan Silver, Endangered Habitats League, (213) 804-2750.

A controversial housing development proposed for the shores of Big Bear Lake appears to have died a final — and costly — death when U.S. District Court Judge Manuel Real fined developer Irving Okovita $1.3 million for violating the Clean Water Act and the Endangered Species Act. Okovita grabbed headlines two years ago when he filed a racketeering lawsuit against an environmentalist and three U.S. Forest Service employees, contending they conspired to stop him from developing 133 condominiums, a marina and tennis courts in the unincorporated community of Fawnskin. Last year, Judge Real threw out that lawsuit and fined Okovita's attorneys $267,000 (see CP&DR In Brief , September 2005). Okovita filed the lawsuit after a federal judge halted building when environmentalists and the Forest Service complained that work at the construction site was damaging bald eagle habitat. In Judge Real's most recent ruling, that damage — resulting from the dredging and filling of wetlands and grading that caused erosion — cost Okovita $1.3 million. The developer vowed to appeal the decision. The long-delayed development of a new town in Madera County will have to wait even longer. Stanislaus County Superior Court Judge Roger Beauchesne ruled that Madera County did not have sufficient evidence of an adequate water supply for the 1,800-acre River Ranch Estates, which would be the first project built in Rio Mesa. Madera County designated Rio Mesa, 20 miles north of Fresno, as a growth area during the mid-1990s. Up to 30,000 housing units in three villages are envisioned (see CP&DR Local Watch , May 2004). A collection of local government agencies, farming and environmental interests sued over the River Ranch Estates environmental impact report. They argued that developer Central Green does not have rights to the San Joaquin River, which would be the primary water supply, and that the river is already overburdened. Judge Beauchesne appeared to agree with the Madera County Planning Commission, which had unanimously rejected the River Ranch Estates EIR. The Board of Supervisors overturned the Planning Commission's decision. The City of San Diego has salvaged its inclusionary housing ordinance. In late July, the city agreed to settle a lawsuit filed by the San Diego County Building Industry Association regarding the ordinance. First approved three years ago, the ordinance requires developers to provide a certain percentage of affordable units in their projects or pay in-lieu fees. In May, a San Diego County Superior Court judge ruled the ordinance is unconstitutional because it contains no exception for developers who could prove their projects would not exacerbate the city's affordable housing shortage. To settle the lawsuit, the city agreed to add the exception to the ordinance. The city also agreed to calculate in-lieu fees based on the time a development application is submitted and determined to be complete — and not at the time building permits are issued. Because the city recently raised in-lieu fees, that change could cost the city more than $10 million from the approximately 4,000 housing units that have been approved or are in the planning process. The settlement does let the city keep about $9 million of already collected in-lieu fees. Housing advocates, who for years lobbied for an inclusionary ordinance in California's second largest city, appeared resigned to the settlement because it does keep the ordinance in place. The state controller's office reported that eight redevelopment agencies did not submit annual reports for the 2004-05 fiscal years. Additionally, the controller noted 86 "major violations," the most common being the lack of a five-year implementation plan, which has been required since 1994. There were 51 instances of agencies not filing implementation plans. Failing to file annual reports at all were Chowchilla, Compton, Cudahy, Imperial, Oakdale, Richmond, San Diego and Sierra Madre. It was the third time in four years that Chowchilla, Compton and San Diego have not submitted the mandatory reports. Additionally, the California State University Channel Islands Site Authority failed to file a compliance report. The state controller's massive annual report, which compiles redevelopment agency fiscal information, is available on the controller's website, www.sco.ca.gov . The U.S. Environmental Protection Agency's smart growth project has presented 20 case studies illustrating smart growth developments and policies. Five of the 20 case studies are from California: • Hismen Hin-Nu Terrance, a 92-unit redevelopment project in Oakland, for creating a range of housing opportunities and choices; • Downtown Brea, for fostering a distinctive, attractive community with a strong sense of place (see CP&DR Places , January 1998); • The 14-acre mixed use project that replaced a closed department store and parking lot in San Diego's Uptown District, for strengthening an existing community; • Greenbelt Alliance's compact development endorsement program, for helping make smart growth decisions fairer; • Various redevelopment projects in San Diego's Barrio Logan, for encouraging community and stakeholder collaboration. The EPA report, "Smart Growth Illustrated," is available at www.epa.gov/smartgrowth/case.htm . Butte County has banned new private roads. The county will now require that roads in new unincorporated subdivisions be covered by a "permanent road division," under which the county will levy annual fees on property owners to pay for road maintenance. County officials said many private roads serving rural area subdivisions have not been adequately maintained. Correction . A Legal Digest item in the June edition regarding Allegretti & Co. v. County of Imperial , a case concerning the regulation of groundwater pumping, listed the incorrect attorney for the county. Antonio Rossmann and Dave Owen of Rossmann & Moore represented the county.

A statewide initiative that could completely change how government agencies regulate land use, carry out infrastructure projects and redevelop cities has qualified for the November ballot. The authors of Proposition 90 have dubbed it “The Protect Our Homes Act,” and have focused their fledgling campaign on the initiative’s provisions to prohibit the use of eminent domain for private development projects. However, Proposition 90 also contains a regulatory takings provision that requires the government to compensate a property owner for “government actions that result in substantial economic loss to private property.” The measure is not written the same as Oregon’s Measure 37, the 2004 initiative that reworked Oregon’s land use planning regimen. But the point of Proposition 90 is the same: The government must compensate property owners affected by land use regulations. Money to fund the successful signature-gathering effort in California came primarily from Howard Rich, a New York City real estate investor who has been active for years in libertarian causes and term limit campaigns. Rich’s Fund for Democracy provided $1.5 million in seed money, and Rich was in California during July to raise more funds. A group called Montanans in Action, which has political ties to Rich, has provided $600,000 to the Proposition 90 campaign. Local government organizations, land use planners, environmentalists, affordable housing advocates and providers of emergency services are lining up in opposition and trying to entice business and anti-tax groups into a coalition. Vivian Kahn, an Oakland-based planning consultant and member of the American Planning Association’s legislative and policy committee, said property rights proponents are trying to capitalize on popular sentiment against eminent domain. “It (Proposition 90) is masquerading as an anti-eminent domain measure. In fact, it has sweeping implications,” Kahn said. “Were it to pass, the cost of litigation would be astronomical.” Ed Thompson, California state director of the American Farmland Trust, called Proposition 90 “the most deceitful and treacherous public initiative that I’ve ever seen.” The measure would essentially end regulatory efforts to steer urban growth away from the Central Valley’s 6 million acres of irrigated cropland, said Thompson, who signed the ballot argument against Proposition 90. “It is an outright and direct assault on the powers of city councils to build strong cities,” added Chris McKenzie, executive director of the League of California Cities. “It would drastically reduce the ability of city councils to make land use decisions for their cities.” Proposition 90 advocates, however, discount the sky-is-falling arguments and say the measure only ensures that property owners receive fair treatment. The measure requires compensation only if a government regulation decreases property by a “substantial” amount, and the initiative provides exceptions for regulations to protect public health and safety, noted Tim Sandefur, an attorney with the Pacific Legal Foundation (PLF). Sandefur said that, for example, the government could still pass laws limiting pollution because they protect public health, but regulations such as view shed or tree ordinances would not be excepted. The eminent domain provisions would provide property owners with “a much fairer shake than under the current law,” Sandefur contended. The measure requires the government to pay a property owner based on the value of “the use to which the government intends to put the property.” Currently, the government must pay fair market value, which does not consider the government’s proposed use of the property. The measure also requires the government to pay all of the property owner’s costs, including attorney fees. “A lot of times the government gets away with these eminent domain actions because they low-ball the property owners,” Sandefur contended. “This would discourage the eminent domain abuse.” Kevin Spillane, a Republican campaign consultant and lead spokesman for the Proposition 90 campaign, said the initiative would put “the little guy” on the same footing as the government and well-connected property owners. Opponents, however, question how the measure’s “just compensation” provisions would be implemented in eminent domain cases. What if a property were condemned to permit development of an electricity generating plant, asked Cathy Christian, an attorney who prepared a Proposition 90 analysis for opponents. Would the property owner, she questioned, get paid based on electricity revenues? The Post-Kelo World Proposition 90 appears to combine an outpouring of public sentiment against the use of eminent domain for economic development with property rights advocates’ long-held contention that the government should compensate people who are prevented from using their property as they wish. The eminent domain issue came to the forefront in 2005, when the U.S. Supreme Court ruled in , 125 S. Ct. 2655, that a local government-run development corporation could acquire 15 parcels of land and then turn over the property to the developer of a mixed-use project on the New London waterfront. The ruling sparked a public backlash, and bills and ballot initiatives aimed at limiting eminent domain were introduced in many states, including California (see , March 2006; , January 2006; , August 2005; , July 2006). The decision appeared to have minimal legal impact in California because state redevelopment law governs the use of eminent domain for economic development projects. However, to the delight of property rights champions, packed a huge political wallop. Four initiatives were proposed for the ballot, and state lawmakers authored numerous bills — all aimed at prohibiting the use of eminent domain for economic development. But while about 25 states have approved some new limitations on eminent domain, the California legislative majority showed little interest in a significant overhaul, and the only bills that appear likely to pass this year are modest changes to redevelopment law. The Legislature’s tame response to appears to be providing indirect support to Proposition 90. “This ( ) decision has opened the floodgates for other cities seeking to increase their tax base at the expense of homeowners,” Assemblywoman Mimi Walters (R-Laguna Niguel) charged after an Assembly committee killed her AB 1990, which would have prevented use of eminent domain for economic development. “This is not what the framers of the constitution intended when they wrote the Fifth Amendment, nor is this what they intended when they reluctantly granted local governments the power of eminent domain.” Walters — who, as a Laguna Niguel councilwoman, helped lead the fight against a proposed civilian airport at the El Toro Marine Corps base — has signed on as the honorary chairperson of the Proposition 90 campaign. State Sen. Tom McClintock (R-Thousand Oaks), who is running for lieutenant governor, also has endorsed Proposition 90. “The Supreme Court decision galvanized public opinion on eminent domain,” said Spillane. “You had local governments over-reaching, and it backfired on them.” However popular the eminent domain policies in Proposition 90 may be, they could be secondary to the regulatory takings provision. The measure redefines property “damage” to include any regulation that results in “substantial economic loss to private property.” The initiative names downzoning, elimination of access and limits on the use of private air space as examples of damage. The government would have to compensate the owner for such damage, with jury trials apparently deciding disputes. Attorneys and land use experts have started sounding alarms. The initiative would “vastly expand landowner remedies for downzoning or other currently non-actionable government planning activities,” wrote John Murphy and Lisa Holmes, of Nossaman, Guthner, Knox and Elliott in Orange County. Christian, of Nielsen, Merksamer, Parrinello, Mueller & Naylor in Sacramento, said the “very badly drafted measure” raises many questions. The new definition of damage, Christian wrote in her analysis for opponents, “could commit California to a radical departure from basic principles regarding regulatory takings, resulting in greatly increased costs of governmental regulations affecting the value of property — costs that will be borne by all taxpayers.” The measure makes an exception for regulations to protect “public health and safety.” The word that’s missing from this phrase is . That’s important, said Christian, because many environmental and land use regulations are implemented for the benefit of the public welfare. “This initiative is no longer about eminent domain,” said John Shirey, executive director of the California Redevelopment Association. “This initiative is about limiting the ability of the government to do sound land use planning.” “It would raise property rights over every other right in California,” said Christine Minnehan, a housing lobbyist for the Western Center on Law and Poverty. “Do we want to be Texas? Do we want no zoning? I just wonder if people are contemplating what this could mean for how we grow.” Spillane, the Proposition 90 campaign spokesman, contended that the regulatory takings provisions are directly related to the eminent domain restrictions. “It really is about protecting your property from government abuse,” he said. But the Farmland Alliance’s Thompson and others said the initiative is one-sided. The provisions requiring compensation to property owners “are not only destructive of good public policy, but they fail to take into consideration all of the good things that government regulation does,” Thompson said. “A lot of property gets its value from actions government takes.” “I’m all for it,” added planning consultant and University of California, Berkeley, professor Gary Binger, “as long as they put in a provision that says whenever the government puts in any infrastructure improvements or does anything to increase property value, the property owner compensates the government in return.” Higher Costs For All? Housing advocates are calling Proposition 90 “extremely dangerous.” Minnehan said “every single policy” that she works on — zoning that requires developers to provide affordable units, relocation benefits for evicted tenants, ordinances that limit the conversion of apartments to for-sale condominiums, rent control — would be impacted by the initiative. Any new regulation or even amendment to an existing regulation would be threatened with litigation and a demand for payment of attorney fees, she said. Proposition 90’s eminent domain limitations would also affect housing programs, Minnehan added. Redevelopment agencies and housing authorities often assemble parcels to provide sites for affordable housing projects, and the agencies sometimes threaten and even carry out eminent domain to deal with a holdout property owner or two. Without eminent domain, the agencies would have to either pay a premium to holdout property owners or drop the project, she said. The initiative does permit the use of eminent domain for “projects of public use,” but the initiative’s replacement of “fair market value” with the “just compensation” standard could change the economics of some public projects. “Clearly,” said the redevelopment association’s Shirey, “with the redefinitions of just compensation that are in this initiative, all property acquisitions will be more expensive.” The just compensation requirement could have serious implications for the infrastructure bonds that are also on the November ballot, added the APA’s Kahn, because bond money would not go as far as envisioned. But none of these arguments go far with the initiative’s supporters, who say government has only itself to blame. “California has been severely abusive of its eminent domain law,” charged the PLF’s Sandefur, who recently authored a book, , about government intrusion on property rights. He pointed to an Institute for Justice report that found California government agencies from 1998 to 2003 took 223 properties and provided them to private developers. He also cited a 1998 Public Policy Institute of California study that concluded many redevelopment activities are intended primarily to boost local government revenues. Redevelopment advocates say Institute for Justice numbers are skewed and note that redevelopment agencies have taken virtually no owner-occupied homes for private development in recent years. All of these punches and counter-punches are likely to be thrown repeatedly during the campaign. Whether Proposition 90 will become a factor in the governor’s campaign is an open question. People on either side say it could be that neither Arnold Schwarzenegger nor Phil Angelides will want to touch the initiative. “Governor Schwarzenegger has not uttered a single word about eminent domain since ,” a frustrated Sandefur said. The Sacramento-based Pacific Legal Foundation, one of the country’s foremost property rights advocacy groups, was not involved in writing Proposition 90, according to Sandefur, who declined to endorse the measure. The PLF had been working with Sen. McClintock on a competing eminent domain initiative that has failed to qualify for the ballot. McClintock is expected to make Proposition 90 a part of his campaign. Privately, some opponents concede that they have a very difficult job ahead of them. Public anger stirred by remains strong, and “protect our homes” is an easy campaign slogan to pitch. The opposition is calling Proposition 90 a “taxpayer trap,” but the intricacies of land use regulation do not lend themselves well to campaign sound-bites. Contacts: Tim Sandefur, Pacific Legal Foundation, (916) 419-7111. Kevin Spillane, Proposition 90 campaign, (916) 924-7501. Cathy Christian, Nielsen, Merksamer, Parrinello, Mueller & Naylor, (916) 446-6752. Vivian Kahn, Kahn Mortimer Associates, (510) 482-1031. Chris McKenzie, League of California Cities, (916) 658-8200. Christine Minnehan, Western Center on Law and Poverty, (916) 442-0753. John Shirey, California Redevelopment Association, (916) 448-8760. Ed Thompson, American Farmland Trust, (530) 753-1073. Similar State Initiatives California is not the only state where property rights advocates have placed an initiative on the statewide ballot. All of the measures seek either to limit use of eminent domain, force the government to pay landowners affected by land use regulations, or both. • Arizona. The “Private Property Rights Protection Act” will appear as Measure 207 on the November ballot. The initiative would require just compensation for diminution of property value. It also would limit use of eminent domain to public use projects, and “slum clearance and redevelopment.” • Idaho: Proposition 2 in November would prohibit use of eminent domain for economic development. The measure also states: “If an owner’s ability to use, possess, sell or divide private real property is limited or prohibited by the enactment or enforcement of any land use law after the date of acquisition by the owner of the property in a manner that reduces the fair market value of the property, the owner shall be entitled to just compensation, and shall not be required to first submit a land use application to remove, modify, vary or otherwise alter the application of the land use law as a prerequisite to demanding or receiving just compensation.” • Montana: Measure 152 on the November ballot would require state or local governments to compensate property owners for diminished value resulting from regulations. The initiative also would prohibit the use of eminent domain if the property were to be transferred to a private entity. • Nevada: The “Nevada Property Owners’ Bill of Rights” initiative is circulating but has not yet qualified for the ballot. The measure’s limitations on eminent domain and requirement of compensation for “actions which result in substantial economic loss to private property” are very similar to California’s Proposition 90. • Washington: Measure 933 has qualified for the November ballot. The initiative would require compensation when regulation “damages the use or value of private property,” and would “forbid regulations that prohibit existing legal uses of private property.” Section 1. Statement of Findings … (c) Neither the federal nor the California courts have protected the full scope of private property rights found in the state constitution. The courts have allowed local governments to exercise eminent domain powers to advance private economic interests in the face of protests from affected homeowners and neighborhood groups. The courts have not required government to pay compensation to property owners when enacting statutes, charter provisions, ordinances, resolutions, laws, rules or regulations not related to public health and safety that reduce the value of private property. … Section 2. Statement of Purpose (a),/b> The power of eminent domain available to government in California shall be limited to projects of public use. Examples of public use projects include, but are not limited to, road construction, the creation of public parks, the creation of public facilities, land-use planning, property zoning, and actions to preserve the public health and safety. (b) Public use projects that the government assigns, contracts or otherwise arranges for private entities to perform shall retain the power of eminent domain. Examples of public use projects that private entities perform include, but are not limited to, the construction and operation of private toll roads and privately-owned prison facilities. (c) Whenever government takes or damages private property for a public use, the owner of any affected property shall receive just compensation for the property taken or damaged. Just compensation shall be set at fair market value for property taken and diminution of fair market value for property damaged. Whenever a property owner and the government can not agree on fair compensation, the California courts shall provide through a jury trial a fair and timely process for the settlement of disputes. … Section 3. Amendment to the California Constitution Section 19 of Article 1 of the state constitution is amended to read: Sec. 19 (a) (1) Private property may be taken or damaged only for a stated public use and only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner. Private property may not be taken or damaged for private use. (2) Property taken by eminent domain shall be owned and occupied by the condemnor, or another governmental agency utilizing the property for the stated public use by agreement with the condemnor, or may be leased to entities that are regulated by the Public Utilities Commission or any other entity that the government assigns, contracts or arranges with to perform a public use project. ... (3) If any property taken through eminent domain after the effective date of this subdivision ceases to be used for the stated public use, the former owner of the property or a beneficiary or an heir, if a beneficiary or heir has been designated for this purpose, shall have the right to reacquire the property for the fair market value of the property before the property may be sold or transferred. … (b) For purposes of applying this section: (1) “Public use” shall have a distinct and more narrow meaning than the term “public purpose;” its limiting effect prohibits takings expected to result in transfers to non-governmental owners on economic development or tax revenue enhancement grounds, or for any other actual uses that are not public in fact, even though these uses may serve otherwise legitimate public purposes. (2) Public use shall not include the direct or indirect transfer of any possessory interest in property taken in an eminent domain proceeding from one private party to another private party unless that transfer proceeds pursuant to a government assignment, contract or arrangement with a private entity whereby the private entity performs a public use project. … (3) Unpublished eminent domain judicial opinions or orders shall be null and void. (4) In all eminent domain actions, prior to the government’s occupancy, a property owner shall be given copies of all appraisals by the government and shall be entitled, at the property owner’s election, to a separate and distinct determination by a superior court jury, as to whether the taking is actually for a public use. (5) If a public use is determined, the taken or damaged property shall be valued at its highest and best use without considering any future dedication requirements imposed by the government. If private property is taken for any proprietary governmental purpose, then the property shall be valued at the use to which the government intends to put the property, if such use results in a higher value for the land taken. (6) In all eminent domain actions, just compensation shall be defined as that sum of money necessary to place the property owner in the same position monetarily, without any governmental offsets, as if the property had never been taken. Just compensation shall include, but is not limited to, compounded interest and all reasonable costs and expenses actually incurred. … (8) Except when taken to protect public health and safety, “damage” to private property includes government actions that result in substantial economic loss to private property. Examples of substantial economic loss include, but are not limited to, the down zoning of private property, the elimination of any access to private property, and limitations on the use of private air space. “Government action” shall mean any statute, charter provision, ordinance, resolution, law, rule or regulation. … (e) Nothing in this section shall prohibit the use of condemnation powers to abate nuisances such as blight, obscenity, pornography, hazardous substances or environmental conditions provided those condemnations are limited to abatement of specific conditions on specific parcels.

Auburn Dam is the public works equivalent of a Hollywood zombie, rivaling any Tinseltown creation in its ability to withstand repeated attempts to kill it. First proposed nearly a half-century ago for a site in the American River canyon near the Gold Rush town of Auburn, the dam has withstood attacks by U.S. presidents, member of Congress, state and federal agencies, environmentalists, tax watchdogs, scientists, engineers and even nature itself — the political equivalent of being shot, stabbed, drowned, poisoned, electrocuted and set on fire. But thanks to the dogged efforts of the area's congressman, Granite Bay Republican John Doolittle, the corpse is twitching again. Last summer and fall, after Hurricane Katrina walloped the Gulf Coast, lawmakers raced to capitalize on the attention-grabbing disaster, pointing to eerie parallels between sodden New Orleans and the flood-menaced region at the heart of California: the low-lying bowl occupied by Sacramento, its expanding ring of suburbs, and the Sacramento-San Joaquin River Delta. The strategy was effective. California received long-sought appropriations to bolster its levee system and increase capacity at Folsom Dam, Sacramento's primary bulwark against inundation. But local lawmakers wanted more than money for widely supported improvements to existing flood-protection systems. Doolittle, a senior member of the House Appropriation Committee's water and energy subcommittee, also stuck $4 million for Auburn Dam studies into the $30 billion budget bill intended to fund the Army Corps of Engineers (COE) and U.S. Bureau of Reclamation (USBR) for the fiscal year beginning October 1. Most of the earmarked money — $3 million — would be used to update a 1996 feasibility study of the dam. The other $1 million would pay for a study of the relocation of Highway 49, which would be inundated by the Auburn Dam reservoir. The money won House approval, and it also was included in the version of the COE/USBR budget bill approved June 29 by the Senate Appropriations Committee, although Sen. Dianne Feinstein inserted a provision preventing that money from being spent until completion of an updated cost-benefit analysis of the dam that Doolittle requested last year. That update expected by the end of this month. The news that Auburn Dam is showing new signs of life drew a melodramatic reaction from Jonas Minton, water policy adviser for the Planning and Conservation League, who responded with a curse and a scream of mock horror when a reporter called. His reaction was typical of dam opponents who have been battling what one group, Protect American River Canyons, refers to as "Doolittle's tiresome obsession" for a generation. The saga began during the 1950s with construction of Folsom Dam, which was designed to protect Sacramento from the magnitude of storm that statistically could be expected to occur only once every 250 years. Floods in 1955, 1963 and 1965, however, demonstrated that the hydrologists' estimates of potential runoff had been far too low. Folsom Dam, the flood experts decided, provided protection only from a 120-year storm. Subsequent flooding prompted them to lower that estimate still further, to a 78-year storm. To many Sacramento-area politicians, business owners and community leaders, the solution to the city's watery woes was not to prohibit floodplain development but to build another dam just upstream from Folsom. At the behest of local representatives, Congress authorized Auburn Dam in 1965 on the Middle Fork of the American River. Work began in 1967, but nature interfered before construction had proceeded beyond preliminary site preparation. In 1975, an earthquake struck about 45 miles away near Oroville Dam. At magnitude 5.7, the quake was far more powerful than Auburn Dam had been designed to withstand, and it occurred on a fault system geologists suspected might be related to one that ran directly beneath the Auburn Dam site. Work halted and never resumed, although Doolittle has repeatedly tried to have Congress reauthorize it. Opponents have battled the dam tenaciously since the 1970s, seizing on its dubious economics — studies have demonstrated that the water and flood protection it would offer can be provided far more cheaply through other means — the environmental damage from drowning wildlife habitat, and the recreational opportunities eliminated by inundating 40 miles of river canyon popular with rafters, kayakers, equestrians and runners. Opponents have also argued that the seismic risk is too great. "It is just plain irresponsible to propose building the sixth-highest dam in the United States in an active fault zone right above a major population center," hydrologist Tony Finnerty and UC Davis professor Jimmy Sparrow wrote in a recent essay for the Sacramento News & Review . They warned that the seismic failure of Auburn Dam would unleash a torrent that would also collapse Folsom Dam and send a wall of water 100 feet high washing over Sacramento. Four years ago, apparently surrendering to political reality, the USBR began working to restore the river through the Auburn Dam site, construct a permanent pumping plant to replace water that local agencies had been promised from the never-completed reservoir, and to block a diversion tunnel carrying the river around the dam site. But neither criticism nor the apparent lack of interest by the USBR has daunted Doolittle, who's been championing the dam for more than two decades. He says it offers the best chance to protect Sacramento and its suburbs from flooding, secure adequate water for the region, and help meet the state's growing demand for electricity. "Without an Auburn Dam we could soon be in the unenviable position of suffering from both severe drought and severe flooding in the very same year," Doolittle wrote in an op-ed for the Sacramento Bee . Ultimately, money may prove the deciding factor. With construction estimates running as high as $5 billion and USBR able to pick up only 65% of the tab, the local share required before construction could start would be substantial. The American River Authority, an obscure joint-powers agency, has discussed becoming a local sponsor of the project, although it has a minuscule budget and no apparent source of additional financing. A booster organization known as the Auburn Dam Council has proposed creating a regional Auburn Dam Authority encompassing Placer, El Dorado, Sacramento, San Joaquin and Yolo counties, and issuing revenue bonds financed by the sale of water and power. But with the cost of such water estimated at more than $1,000 an acre-foot — twice the going rate — it is unclear who would buy. Still, as they say in the horror movies, "It is alive." Sources: Rep. John Doolittle, (202) 225-2511. Auburn Dam Council, (916) 967-6197. Protect American River Canyons: www.parc-auburn.org

In a case closely watched by cities and counties, a sharply divided California Supreme Court has ruled that counties have the authority to prohibit logging on private land. In a 4-3 decision, the state's high court upheld two Santa Cruz County logging ordinances and stood behind a 1995 appellate court ruling that said the state Forest Practice Act is not the sole authority on commercial timber operations. The decision was a relief to local governments, which feared a reverse ruling would impinge on local land use authority. Instead, the court ruled against logging and property rights advocates that sought to minimize local regulation. Timber interests and property rights advocates argued that the Forest Practice Act pre-empted local authority. But Fran Layton, an attorney who argued the county's case at the state Supreme Court, said the court recognized that the state law did not override local zoning authority. "What's important is the court's recognition of the pre-emption principles. When, as here, you have an area that has historically been regulated by local government, there is a presumption against pre-emption," Layton said. "It goes beyond logging. It goes right to the heart of the zoning power of local government. It is the responsibility of local government to prevent land use conflicts through zoning." In the majority opinion, Justice Kathryn Werdegar wrote, " n many places where it addresses timberland zoning, general state forestry law expressly preserves and plainly contemplates the exercise of local authority. The actual designation of TPZ's , for example, is left to local action." Chief Justice Ronald George and Justices Ming Chin and Carol Corrigan joined Werdegar. In a dissenting opinion, Justice Carlos Moreno asserted, "The majority pulls an interpretive rabbit out of a statutory hat." Moreno, who was joined by Justices Marvin Baxter and Joyce Kennard, wrote that the Forest Practice Act's "pre-emption provision speaks in terms that are expansive enough to leave no doubt that the Legislature intended to displace all local rules, ordinances and resolutions specifically regulating timber operations." Environmentalists and timber companies have fought about logging in the Santa Cruz Mountains of Santa Cruz, Santa Clara and San Mateo counties since at least the 1960s. In fact, local brakes on logging in the Santa Cruz Mountains were partly responsible for adoption of the Forest Practice Act (FPA) in 1973 — and major amendments in 1982, when the Legislature strengthened the FPA to forbid counties from regulating "the conduct of timber operations." At the same time, the state adopted the Timberland Productivity Act (TPA), which seeks to place all qualifying timberland in TPZ's — zones that restrict land use to the growing and harvesting of trees in return for reduced property taxes. The FPA, however, addresses the conduct of logging, not the location , and in 1995, the First District Court of Appeal upheld a San Mateo County ordinance mandating a 1,000-foot buffer between timber operations and residences (see CP&DR Legal Digest , February 1995). That case, Big Creek Lumber Co. v. County of San Mateo , 31 Cal.App.4th 418, bolstered local governments, including Santa Cruz County, which in 1999 adopted several ordinances affecting timber harvesting. So Davenport-based Big Creek Lumber returned to court. In 2004, the company won when the Sixth District Court of Appeal ruled that the First District was wrong in Big Creek v. San Mateo and that there was no difference between the how and the where of timber operations (see CP&DR Legal Digest , April 2004). But the timber company's victory was short-lived, as the state Supreme Court held that the 1995 ruling was correct. The state Supreme Court decided the validity of two Santa Cruz County ordinances. One is a zoning ordinance that prohibits commercial logging except on land zoned for timber production, mineral extraction, or parks, recreation and open space. The second ordinance requires helicopter staging, loading and servicing facilities associated with logging to be located on land zoned for timber harvesting or on an adjacent parcel, and within the boundaries of a timber harvest plan. The appellate court ruled that the county was regulating the conduct of timber harvesting in the most extreme way — by prohibiting logging outright. But in a decision that cites Big Creek v. San Mateo at length, the state Supreme Court disagreed. (Interestingly, Justices Chin and Corrigan, who were in the majority, were on the First District panel that decided Big Creek v. San Mateo . The lumber company asked the judges to recuse themselves, but they declined to do so.) The state Supreme Court determined that there is a difference between the how and the where of logging, and that the FPA and TPA contemplate that local officials may determine where timber harvesting occurs. "Certainly, neither the TPA nor the FPA suggests localities are restricted in what uses they may prohibit outside TPZ zones," Justice Werdegar wrote, citing Big Creek v. San Mateo . "‘Nowhere in the statutory scheme,' in fact, ‘has the Legislature expressly prohibited the use of zoning ordinances.'" Werdegar noted that the Legislature added Public Resources Code § 4516.5(d) to the FPA during the same session that it enacted the TPA. "That the legislature would, in the same session, include in one general forestry statute numerous provisions that rely upon local zoning authority and when amending another general forestry statute forbid localities' exercise of such authority seems unlikely," Werdegar wrote. "Plaintiffs' overriding concern appears to be that localities may by locational zoning prohibit timber harvesting altogether," Werdegar continued. "The ordinance before us does not have that effect, nor does it appear that any county has attempted such a result. … To require that commercial timber harvesting occur on land in a ‘timberland production' or other specified zone is no more a ban on timber harvesting that a regulation requiring that industrial land uses occur on land zoned "industrial" is a ban on factories." Justice Moreno took exception to this point in the dissenting opinion, writing that the court's distinction between how and where "provides a roadmap for those who would use technical artifices to evade the letter and spirit of the FPA." "I doubt," Moreno continued, "that it intended to create a cottage industry in the drafting of local ordinances that appear to regulate only where timber operations may occur, while in actual practice directing how these operations may take place." Layton, the county's attorney, said Moreno arrived at his conclusion by assuming that the county prohibited logging. But the lawsuit was a facial challenge of ordinances, not a challenge to the county's denial of a particular timber harvest, she noted. "If you want to log, rezone to the appropriate zone, which is timberland production," she said. State law requires the county to rezone land that qualifies, and the county has done so since it adopted the ordinances in question, she said. Big Creek owner Bud McCrary told the San Jose Mercury News that the decision puts 60,000 acres off limits to loggers, a figure that county officials disputed. The Case: Big Creek Lumber Co. v. County of Santa Cruz , No. S123659, 06 C.D.O.S. 5802, 2006 DJDAR 8572. Filed June 29, 2006. The Lawyers: For Big Creek: Craig Stewart, Jones Day, (415) 626-3939. For the county: Fran Layton, Shute, Mihaly & Weinberger, (415) 552-7272.

The California Supreme Court in July accepted four cases with direct and indirect land use implications. The case that is likely of most interest to planners involves a City of Hanford ordinance regulating who may sell furniture. The ordinance prohibits furniture sales outside of downtown with the exception that stores of at least 50,000 square feet may devote up to 2,500 square feet to furniture displays. The Fifth District Court of Appeal ruled the ordinance was unconstitutional because it divided retailers into two classes and treated them separately. The separate treatment did not "bear a rational relationship" to the city's goal of preserving downtown (see CP&DR Legal Digest , May 2006). The decision came down only one week after the same court upheld a City of Turlock ordinance banning stores of more than 100,000 square feet from selling groceries. "Despite the court's attempt to distinguish the two decisions, it is difficult to reconcile the disparate holdings," Bingham McCutchen land use attorneys Dan Curtin, Cecily Talbert and Allison Krumbein wrote in an analysis for the Los Angeles Daily Journal . The case is Hernandez v. City of Hanford , No. S143287. The court rejected Wal-Mart's request to hear the Turlock case. A second case concerns three timber harvest plans in Tuolumne County that the state Department of Forestry and Fire Protection (CDF) approved for Sierra Pacific Industries. The Fifth District ruled that CDF's biological assessment was inadequate because the agency used the same "assessment area" when determining the planned logging's cumulative impact on the California spotted owl and the Pacific fisher. Assessment areas should be chosen separately based on the characteristics and needs of each species, the appellate court concluded. The court also ruled that CDF's study of the impacts of post-harvest herbicide use was inadequate. The state Supreme Court agreed to decide whether CDF did in fact correctly interpret and apply the Forest Practice Act and the Forest Practice Rules. The case is Ebbetts Pass Forest Watch v. Department of Forestry and Fire Protection, No. S143689. A third case concerns the formation of the Downtown Pomona Property and Business Improvement District. A property owner contended that a required public hearing was conducted at the wrong time and that the assessments are not proportional to the benefits received. The Second District Court of Appeal ruled against the property owner. The Supreme Court accepted the Pomona case but deferred action until the court decides a different case ( Silicon Valley Taxpayers' Assn., Inc. v. Santa Clara County Open Space Authority , No. S136468) that also concerns the justification for special assessments. The case is Dahms v. Downtown Pomona Property and Business Improvement District , No. S143165. Finally, the state's high court accepted a case involving a dispute between the City of Dinuba and Tulare County. The county had incorrectly coded for tax purposes certain parcels within Dinuba's redevelopment project area. The error shortchanged the city tax increment for four years. Instead, the money went to the county and nine other local government agencies. The county agreed to correct the error prospectively, but the Fifth District ordered the county to pay the city all of the underpaid tax increment (see CP&DR Legal Digest , May 2006). The question for the Supreme Court is whether state law provides the county immunity for its mistake. The case is City of Dinuba v. County of Tulare , No. S143326.