For the first time in 12 years, the Democrats are in charge of Congress. That ought to mean there is a long wish list somewhere regarding domestic policy issues, including issues associated with planning and development. So far, we haven't seen much publicity on domestic policy – the Democrats, as more than a few media outlets have observed, are more interested in investigation than legislation. But as the congressional session unfolds, it won't be long before the new majority begins to focus on the two major federal policy levers that affect land use – the Big Carrot of transportation funding and the Big Stick of environmental regulation. In each case, a crisis appears to be forcing Congress's hand. In the case of transportation, the federal Highway Trust Fund is going broke. In the case of the environment, there's tremendous political pressure on Congress to pass a bill that would reduce greenhouse gas emissions. In dealing with both the Big Carrot and the Big Stick, Congress is going to have to go after one of the most fundamental factors shaping land use in America: cars. No one in the nation's capital directly controls the way land is used or the way local development patterns unfold. Traditionally, however, the feds have indirectly influenced planning though transportation and environmental policy. On the transportation side, federal gas tax revenues have provided huge amounts of money for both highway and transit projects. On the environmental side, tough laws such as the Endangered Species Act and the wetlands permitting provisions under the Clean Water Act have affected land use patterns by forcing developers to steer clear of sensitive areas. Curiously enough, hardly anything in the federal government's policy approach toward these two issues changed while Democrats were out of power. Federal transportation policy shifted significantly in 1991, when the Intermodel Surface Transportation Efficiency Act (ISTEA) was passed by a Democratic Congress and signed by the first President Bush, who desperately needed a "jobs bill." ISTEA placed more emphasis on flexible funding, transit, and environmental enhancements – a pattern that remains today. Similarly, current practices in environmental policy, especially the Endangered Species Act (ESA), were set in the late '80s and early '90s, during the administrations of Bush 41 and Clinton. Not a single word of the ESA changed during the 12 years Republicans controlled the House — not even during the four years Republicans held both houses of Congress and the White House. Obviously, administrative practices have changed since the current President Bush took office in 2001, weakening the law, at least according to environmentalists. But the basic approach to endangered species protection – especially the focus on habitat conservation plans, which has shaped the landscape in Southern California, the Inland Empire, and the Central Valley – has not changed. What has changed, however, is the context. Over the last 12 years, gasoline has doubled in price and the issue of global warming has gained tremendous traction, both inside the Beltway and on the street. Even most skeptics now believe global warming is really occurring as a result of human activity, though many politicians disagree about how severe the effects will be and what should be done. As a result, the internal-combustion engine is under attack as never before. This has affected the political landscape for both the Big Carrot and the Big Stick, and it is likely to frame new policies in both arenas. There is no doubt that Democrats in Congress will push a bill to reduce greenhouse gas emissions. The only question is when. Some say the push will come quickly, while others suggest that the Dems may deliberately wait until next year in order to put political pressure on the Republicans during the presidential campaign. In any event, a federal law on greenhouse gases – like California's AB 32 (see CP&DR Insight , February 2007) – will almost certainly be constructed as, essentially, an air quality bill. It may even be an amendment to the Clean Air Act. The basic problem, after all, is the emission of pollutants into the air. As with other air pollution problems, some greenhouse gases are from stationary sources like smokestacks and some are from vehicles. Two-thirds of greenhouse gas emissions come either from burning fossil fuels to generate electricity or from burning fossil fuels to move vehicles. So, other than cars, the major target for a greenhouse gas bill is the electric utilities. And the utilities, somewhat surprisingly, are in favor of a federal greenhouse gas bill. That's largely because many states are moving forward with their own bills, and the utilities would rather have one national regulatory system. This in itself has implications. If the utilities promote a bill in Congress, they likely will try to shift most of the emissions reductions onto vehicles. And that has potential implications for land use. A lot of greenhouse gas reduction can emerge from use of higher-mileage vehicles such as hybrids and cleaner-burning internal-combustion engines. But nobody thinks that you can reduce emissions sufficiently just by turning over the fleet and employing new technology. You're also going to have to reduce driving overall. The California plan assumes 12% of emission reductions will come from land use changes. How does the federal government encourage people to drive less? Probably not with the Big Stick. Most people cringe at the thought of the feds extending their regulatory reach into this area. That leaves the Big Carrot – the idea of using transportation money to provide incentives to state and local governments to change their land use policies. Unfortunately, however, the Big Carrot is getting smaller every year – partly as a result of environmental consciousness on the part of drivers and consumers. The feds get transportation money from the federal excise tax on gasoline, which is a flat 18.3 cents per gallon – a figure that does not change no matter what the price of gas is. (There's tax on other fuels as well – 24.3 cents on diesel fuel, for example, and much less on natural gas.) These taxes currently generate close to $40 billion a year, of which more than 80% goes to the Highway Trust Fund. But growth in gas tax revenue is slowing. Growth in vehicle miles traveled overall is declining, and consumers are now buying more fuel-efficient vehicles, including hybrids. Highway Trust Fund revenues are expected to rise only 10% to 15% from 2006 to 2011 — from about $34 billion to between $37 billion and $39 billion. There is no reason to believe the revenue situation will get better. But the federal government is now spending more money from the Highway Trust Fund than it takes in, somewhere right around $40 billion a year. This is plausible for the moment because the trust fund has a surplus. But soon the trust fund will fall into deficit, possibly as early as next year, as the result of huge federal appropriations – including well-publicized "earmarks" for specific projects requested by Members of Congress – over the past few years. In other words, The Big Carrot has been eaten. So, if the feds truly want to reduce greenhouse gas emissions, they'll have to tackle land use. It's politically impossible to tackle land use with the Big Stick. So the feds will have to use the Big Carrot. Except there's no money in the Big Carrot – unless the feds increase fuel taxes, but even a fuel tax hike will probably only cover the deficit. It's a political box. In the short run, planning and development in California may well be affected more deeply by AB 32 than any federal law. But in the long run, the feds will have to make some tough decisions about how to use the Big Carrot and the Big Stick to deal with global warming.

Can the entire San Joaquin Valley embrace the idea of regional planning – or at least agree on a common vision for how to accommodate future growth? That's the question facing the architects of the San Joaquin Valley Blueprint Process, an ambitious effort to create some "big picture" strategies to deal with growth in the area. But the blueprint is only one of several regionwide efforts to grapple with growth of all kinds, including population growth, real estate development, and the Valley's economic base. Along with the state-sponsored California Partnership for the San Joaquin Valley, the Blueprint is really a test to see whether the disparate parts of this large and fragmented part of California can work together. The Valley is a huge area – eight counties stretching from Stockton to Bakersfield. It is growing rapidly, with a current population of almost 4 million people expected to double in the near future. Though the whole region has been traditionally known for farming, it is increasingly divided into subregions with different interests. The three northern counties – San Joaquin, Stanislaus, and Merced – increasingly tilt in their orientation toward the Bay Area. The four middle counties – Madera, Fresno, Tulare, and Kings – are still agricultural in nature but urban growth is rapid, often for no discernible reason. To the south, Kern County is still focused largely on oil but is also beginning to see suburbanization from Los Angeles. Regional cooperation has always been difficult to accomplish. Few organizations or officeholders share a regional view of public policy, and parochial interests have generally prevailed. There are some exceptions. The agricultural lobby has worked together effectively for decades – witness the Central Valley Project water system – and more recently the counties worked through their councils of governments to get $1 billion in last year's state transportation bond for Highway 99. It was the only earmark in the $20 billion bond. The air district has also provided a regional approach, at least on one issue. Generally, however, policymakers in the Valley have tended to think on a countywide, rather than regionwide, level. Over the past few years, "regional blueprint" efforts have been undertaken in California's four large metropolitan areas – the Bay Area, metropolitan Los Angeles, San Diego, and Sacramento. Typically sponsored by the area's council of governments (COG), the blueprint begins with a consensus among regional elected officials on the "big picture" for accommodating future growth. (In all four cases, a high-density, "smart growth" scenario has been agreed upon.) Then the COG works with the local governments and other agencies to find ways to implement the regional vision using local powers – often with the COG's financial assistance. In Sacramento, this idea has become so deeply embedded in the political culture of the region that just about any high-density or compact development project is now known as a "blueprint" project. In metropolitan Los Angeles, the much-maligned Southern California Association of Governments is throwing millions of dollars into assisting local governments implement smart growth strategies and projects that conform to the adopted SCAG "Compass" or "2%" vision (see CP&DR Insight , August 2006). Even when these blueprints have involved multiple counties, however, they have been sponsored by a council of governments that covers the entire region. In the case of the San Joaquin Valley, each of the eight counties has its own COG. So the success of the blueprint project depends in large part on the willingness of the single-county COGs to work together – and on the ability of the air district, as well as state agencies that deal with the San Joaquin Valley, to implement the vision that emerges. This is where the California Partnership for the San Joaquin Valley comes in. Created by Gov. Arnold Schwarzenegger by executive order in 2005, the Partnership is mostly an attempt to pull together the state's wide-ranging agencies – dealing with everything from transportation to wildlife to education to health – and coordinate their efforts in the Valley. The Partnership has provided most of the money required to do the blueprint (the air district has provided the rest), but the Partnership also has lots of other things going on besides the blueprint. (For example, the Partnership recently awarded $2.5 million in "seed grants" for a wide variety of projects in the Valley, ranging from $75,000 for tourism to $125,000 for "health enterprise zones.") Meanwhile, the blueprint itself has been organized in typically decentralized fashion. It is being administered by the Merced County Council of Governments, but much of its work is being facilitated by the Great Valley Center, a Modesto-based regional nonprofit. The work is overseen by the "Blueprint Regional Advisory Committee" – a group whose acronym, BRAC, is unfortunately the same as the federal government's base-closure committee. It is this decentralization that makes the San Joaquin Valley Blueprint effort such a challenge. One of blueprint's major efforts, for example, is sponsoring a "blueprint" visioning effort in each individual county. Blueprint workshops are currently taking place in various parts of the Valley, sponsored by the individual COGs. These workshops are asking participants to provide their view of Valleywide issues, but inevitably most of the participants are focused on local issues. So one of the challenges is to determine how to meld these countywide blueprint ideas into a regional vision for the whole Valley. Just as important, however, is the challenge of implementation. Because there is a separate COG for each county, it will be difficult for the region as a whole to adopt a consistent vision from north to south. In other places where blueprint efforts have been undertaken – not only in California but in Oregon, Utah, and elsewhere – the regional effort has been supported by elected officials who are board members of a regional COG and often by regional civic groups as well. Envision Utah in Salt Lake City has had implementation "legs" partly because the nonprofit civic group established to promote it has continued to raise money and seek out demonstration projects throughout the Wasatch Front. In most of the California examples, the regional COG has played this role. With a weaker regional structure, the San Joaquin Valley may have a harder time in the implementation phase. However, it is possible that state agencies will step in and fill that gap in the Valley, especially if the state-led Partnership effort can embrace whatever comes out of the blueprint process. For example, one pending bill – AB 1055 (Blakeslee) – would require the State Transportation Improvement Program (the STIP, or list of transportation projects of statewide importance) to coordinate with regional farmland and open space efforts. The clear goal here is to use Caltrans's environmental mitigation requirements to help implement a regional natural resources strategy, especially in the Central Valley. The Valley blueprint effort highlights one of the biggest problems in planning today – not just in California but everywhere. Problems and solutions are regional, but the political power to deal with those problems lies in the state Capitol and at the local level. The blueprint effort suggests that the San Joaquin Valley is getting more serious about using both state and local power to accomplish regional goals. It remains to be seen, however, whether the policymakers themselves will be able to overcome the parochial impulse in city halls and county administration buildings up and down the San Joaquin Valley.

A bill that is shaping up to be one of the most far-reaching pieces of planning legislation in years has won unanimous backing from the state Senate Transportation and Housing Committee. Senate Bill 303 by Sen. Denise Ducheny (D-San Diego) would: • Require general plan housing elements to cover a 10-year period and be updated every five years; • Require zoning needed to carry out the first five years of the housing element be in place at the time of element adoption; • Mandate that every element of the general plan be updated every 10 years; • Require cities and counties to make findings regarding each identified housing site's development capacity. • Prohibit a City Council or Board of Supervisors from rejecting or downsizing a project that is consistent with the housing element unless the council or board casts a 4/5ths vote and makes specific findings. Local government representatives and the California Chapter of the American Planning Association have expressed serious reservations about the bill, which they say is infeasible for many local governments to implement. One question raised in a committee bill analysis concerns funding for the extensive amount of planning and environmental review that local governments would have to perform. In a column for the San Diego Union-Tribune , Ducheny wrote, "We need to ensure that our local governments across the state are doing their part, as is already required under state law, to meet the housing demand for California, not just waiving a finger in the direction of parcels that will never realistically support the homes they're identified for." However, the bill met significant resistance in late April at the Senate Committee on Environmental Quality, where lawmakers argued over the bill's likely impact and who would pay for implementation. Numerous amendments to SB 303 have been proposed. The state attorney general's office has sued San Bernardino County because the county did not consider the global warming impacts of a newly adopted general plan. The state filed the lawsuit in mid-April, days after three environmental groups filed a similar lawsuit against the county. That suit argues that the county should limit development in remote areas. The county adopted the general plan in March after a four-year process. County officials noted that there are no state guidelines for addressing global warming in the planning process. Prospects f or a liquefied natural gas terminal off the coast of Malibu dimmed dramatically in April. First, the State Lands Commission voted 2-1 to reject an environmental impact report for the project and deny a lease of state waters for the project's pipelines. Three days later, the Coastal Commission voted unanimously to reject the EIR and project permits. The project proponent, Australian mining company BHP Billiton, still has some recourse in court and with the federal government. Company officials have not been forthcoming about their strategy in light of the rejections and, in fact, the company refused to participate in the Coastal Commission's hearing. Both the State Lands Commission — composed of Lt. Gov. John Garamendi, Controller John Chiang, and Deputy Finance Director Anne Sheehan, who supported the project — and the coastal panel concluded that ships and gas processing would have unacceptable impacts on air quality in Ventura and Los Angeles counties. Coastal commissioners also cited likely impacts to birds and marine species. BHP Billiton proposes a 970-foot-long, floating port 14 miles off the coast. It would process liquefied natural gas (LNG) brought in several times a week by ship (see CP&DR Environment Watch , September 2005). Supporters say there is great demand for what they call a clean-burning fossil fuel. Gov. Schwarzenegger has called LNG a "bridge" to renewable energy. Public opposition due to pollution, impacts to wildlife and potential security threats was overwhelming at two all-day hearings. About 2,000 people rallied in opposition during the State Lands Commission meeting in Oxnard, and more than 500 people packed the Coastal Commission hearing in Santa Barbara. The two rejections came only three months after the City of Long Beach said it would no longer consider plans from Mitsubishi and ConocoPhillips to build an LNG terminal. The city determined the proposed facility posed too much of a safety risk at the harbor. There are other LNG terminals proposed along the South Coast, but the Long Beach and BHP Billiton projects were widely seen as having the best chances of approval. The Los Angeles City Council has greatly increased the relocation fees that property owners must pay to tenants when the property owner converts apartments to condominiums. Property owners will now have to pay tenants who have lived in their units for less than five years $6,810, while tenants of more than five years are eligible for $9,040 — both up from $3,450. Renters who are at least 62 years old, disabled or who have minor children are eligible for roughly double those amounts, up from $8,550. Renters whose income is 80% or less of median are eligible for between $9,040 and $17,080. In a city where the majority of the 4 million residents are renters, about 12,000 apartments have been converted to condos or destroyed since 2001. Advocacy groups say that conversions are devastating to people who lose their rent-controlled apartments. The City Council also directed planning and building officials to draft an ordinance that would prohibit demolition of rental units if the vacancy rate is less than 5% or if the cumulative effect on the rental market were significant. The council also told staff to report back within 45 days on raising impact fees to fund replacement housing. The City of San Diego has settled a lawsuit over condominium conversions by agreeing to limit the number of conversions to 1,000 a year. Over the last several years, the city has approved the conversion of about 17,000 apartments to condominiums. Affordable housing advocates have decried the conversions' effect on low-income renters, while supporters say the newly constituted condominiums provide entry-level units for first-time buyers (see CP&DR , January 2006). Housing advocates sued, arguing that the city had to perform environmental review of the conversion projects. The city settled the suit in late March, and the City Council is scheduled to consider an ordinance limiting conversions this month. A f ederal judge in San Francisco has struck down a rule for managing national forests and grasslands that the U.S. Forest Service adopted in 2005. District Court Judge Phyllis Hamilton found the regulations invalid because the government adopted them without public review and without analyses required by the National Environmental Policy Act and the Endangered Species Act. The rule in question gave economic activity equal priority with maintaining ecological health in management plans for national forests and grasslands. The rule also sought to reduce public involvement in management plan preparation. Environmentalists charged that the rule would ease drilling and logging restrictions while slashing protections for flora and fauna. An appeal to the Ninth U.S. Circuit of Appeals is likely. The case is Citizens for Better Forestry v. U.S. Department of Agriculture , No. 05-1144. The Baldwin Hills Conservancy should remain in business for another five years, according to a Legislative Analyst's Office (LAO) recommendation. In 2000, state lawmakers created the conservancy for a two-square-mile area where the cities of Los Angeles, Inglewood and Culver City converge. The area has been, and portions remain, an oil field, so there is no urban development. Lawmakers charged the conservancy with facilitating the acquisition of open space and parkland, and enhancing wildlife habitat. The LAO found that the conservancy has funded or facilitated public acquisition of 155 acres, coordinated recreational and educational programs, and worked well with local government and interest groups. But there is more work to be done. About 655 acres of privately owned open space remain available for potential public acquisition, and most newly acquired lands have not been developed for public use or habitat, according to the LAO. The conservancy is scheduled to sunset on January 1, 2008. AB 3 (Bass) would extend the conservancy indefinitely, although the LAO recommended only a five-year extension. The LAO's report is available at: www.lao.ca.gov . Pasadena has approved a redevelopment proposal for a portion of the Ambassador College campus after years of planning and conflict. The proposed project by developer Dorn Platz on 20 acres of the former 49-acre campus calls for 248 senior and assisted living units in a six-story building, 70 condominiums, the reconfiguring of existing apartments and dormitories into 46 apartments, and retrofitting historic buildings for educational, institutional and office uses. Formerly the home of the Worldwide Church of God, the property was sold for development in 1999. Just west of thriving Old Pasadena, the site is considered extremely valuable by developers, city officials and historic preservation advocates. Two earlier proposals for 1,900 and 1,435 housing units met extreme hostility from residents, who argued in favor of preserving the site's extensive gardens and lawns, and its historic structures. Dorn Platz acquired 20 acres in 2004 and took a new run at development. The project approved in April preserves nearly three-fourths of the site as open space, including the 2.1-acre "great lawn" that the developer will donate for a city park. Gangi Development has broken ground on a 26-unit mixed-use project in Glendora's downtown village, the first project of its kind in at least 50 years in the San Gabriel Valley city. In addition to the condominiums, the project will contain about 6,000-square-feet of office and retail space, and 69 parking spaces. The city's redevelopment agency assembled the 48,000-square-foot parcel, which had been the site of four houses and vacant property, said Al Lavin, the city's redevelopment manager. The city then solicited proposals from developers before choosing Gangi, who purchased the property for $500,000. The project provides the first housing in Glendora's downtown village. "We have some substantial residential around it, but no residential encroaching into the downtown commercial area," Lavin said. A former councilman in the City of Colma pleaded guilty in April to two counts of mail fraud as part of a plea agreement that recommends an 18-month prison sentence. Philip Lum Jr. admitted that he accepted numerous airline tickets to the Philippines from the Lucky Chances Casino in 1999 and 2000. Lum did not report the tickets on disclosure forms and later voted for permits for the card room. Another former councilman, Ronald Maldonado, has admitted under oath that he also failed to report airline tickets provided by the casino. A hearing in his case is scheduled for June, while Lum's formal sentencing is set for July.

A divided appellate court panel has upheld a 2004 regulation that gives the director of the state Department of Conservation the final say over whether reclamation of a surface mine has fulfilled the mine’s reclamation plan. Mining and aggregate interests contested the regulation adopted by the State Mining and Geology Board. They argued that under the Surface Mining and Reclamation Act (SMARA), the local agency is the lead agency, and only it can determine when reclamation is complete. But in a 2-1 decision, the Third District Court of Appeal disagreed, ruling, “ e discern no clear legislative intent that lead agencies should have exclusive power to determine whether mined lands have been adequately reclaimed as would justify releasing the mine operator from further financial liability.” Under SMARA, every surfacing mining operation must have a reclamation plan and financial assurances. The financial assurances, which are often bonds, may be released only when the miner satisfies the reclamation plan’s terms. Counties and cities serve as lead agencies under SMARA unless the Mining and Geology Board finds that a local government’s SMARA enforcement is lacking. Two years ago, the Mining and Geology Board adopted regulation 3805.5(d) (in Title 14 of the California Code of Regulations), which states, “Prior to sending written notification and release of financial assurances as provided under , the lead agency shall obtain written concurrence of the director that the completion of reclamation of the mined land disturbed by the surfacing mining operation is in accordance with the requirements of the lead agency-approved reclamation plan.” The Mineral Associations Coalition, California Mining Association, Construction Materials Association of California, and Southern California Rock Products Association filed a lawsuit seeking to have the regulation declared invalid. They argued that the regulation was not permissible under SMARA because the statute provides the director only with an advisory role. Sacramento County Superior Court Judge Loren McMaster upheld the regulation. On appeal, the mining groups argued that the regulation gives the director a veto power not contemplated by SMARA. The organizations cited an analysis prepared in 2003 by the Legislative Counsel’s office of the regulation when it was only a proposal. The Legislative Counsel concluded the regulation was not allowed under SMARA. The majority of the three-judge Third District panel disagreed in an opinion that leaned heavily on the state Supreme Court’s decision in , (2005) 36 Cal.4th 971 (see , September 2005). In that case, the state Supreme Court ruled that the director of the Department of Conservation could sue a county over mining and reclamation plans the county had approved. The Third District noted that the state Supreme Court determined that SMARA gives the director “a substantial interest in reclamation plans and financial assurances being both legally consistent with SMARA and practically adequate to accomplish SMARA’s goals and state reclamation policy promulgated thereunder.” “The state Supreme Court’s pronouncements in ,” wrote Third District Justice Kathleen Butz, “refute the associations’ claim that the Legislature relegated the director to a advisory role in achieving SMARA compliance. Although, as a general principle, the director has a secondary role when compared to the lead agency’s, there is no doubt that the director has important statutorily rooted responsibilities to ensure that reclamation is completed satisfactorily and that financial assurances are adequate to cover the cost.” The court said the Legislative Counsel’s analysis had been “discredited” by the decision in . The court also rejected the argument that the regulation gives the director an unfettered veto power. “Rather, it is the last step in an integrated process by which the lead agency makes, and the director reviews, the final decision to release the mine operator’s financial assurance,” Butz wrote. In a dissenting opinion, Justice George Nicholson said that the case at hand was different from , a case that involved a county’s alleged failures under SMARA. “Unless the lead agency fails to fulfill its responsibilities, the director has no authority to countermand the decisions of the lead agency. The home rule nature of the statutory scheme is interrupted only when home rule breaks down,” Nicholson wrote. “ was not about home rule; it was about whether the director has standing to petition for judicial relief when the director believes home rule has failed,” Nicholson continued. “This case presents the very different question of who has primary responsibility.” The Case: , No.C049201, 06 C.D.O.S. 3021, 2006 DJDAR 4359. Filed April 12, 2006. The Lawyers: For Mineral Associations Coalition: Patrick Mitchell, Downey Brand, (916) 773-2100. For State Mining and Geology Board: Mary Hackenbracht, attorney general’s office, (510) 622-2100.

After sluggish construction for a number of years, condominiums are back. Although it is difficult to pin down exact numbers, 27% of housing starts during the first three months of the year have come in the form of multi-family units, many of which are for-sale condominiums. In portions of metropolitan Southern California and the Bay Area, multi-family development dominates the market. In the San Francisco, Marin and San Mateo counties market area, new multi-family units outnumber new single-family houses by about 10 to 1, according to the California Building Industry Association (CBIA). In Los Angeles County, there are about two new multi-family units for every new single-family house. As recently as six years ago, condos accounted for only 2% of new housing units. Several factors appear to be driving the trend. Builders point to SB 800, legislation approved in 2002 that sets performance standards for builders and gives builders a right to repair alleged defects before a homeowner may sue. The legislation encouraged developers and insurers to get back into the condo business. Many large cities and suburbs have little land available for new development, a shortage that discourages low-density, single-family projects. Planners also note that shared-wall homes — in the form of for-sale condominiums or for-rent apartments — are necessary to create lively downtowns and mixed-use districts. And economists point to the growing number of Baby Boomers who are becoming empty nesters as ideal candidates for the “lock-it-and-leave-it” condominium lifestyle. The largest uncertainty is the wave of high-rise condominium proposals that started washing over the state about three years ago. Some analysts say the wave has already crested, but others are not convinced. There is much less doubt about the future of townhouse-style condominiums, which appear to have wide acceptance among builders, lenders, buyers and government officials. Many cities are designating mixed-density areas, said Jennifer Gastelum, a senior planner for Pacific Municipal Consultants in Rancho Cordova. These areas have a range of housing types and mix of land uses. New development in these areas can create vibrancy and help cities provide their fair share of low- and moderate-income housing units, she said. There is little interest on the part of developers or cities in large apartment projects, Gastelum added. Thus, small-scale apartment projects and condominiums help meet a number of needs. In the East Bay city of Walnut Creek, city officials in April adopted a new general plan that designates mixed-use districts in which housing is permitted at 80 to 95 units per acre. With a 50-foot height limit, the city envisions up to three floors of residential units above ground-floor retail, explained Walnut Creek Planning Manager Sandra Meyer. “We have very little vacant single-family land left,” Meyer said. Thus, nearly all new housing is in the form of multi-family projects. Most of those are proposed with subdivision maps so that even if a project starts as rental apartments, it could be converted easily to for-sale condominiums, she added. Walnut Creek’s lack of large tracts for housing is a common trait among cities in California’s urban areas. “The development community” said CBIA Chief Economist Alan Nevin, “is fast running out of single-family land, and basically has been forced into condominiums even though it really didn’t want to be.” While most large building companies are uncomfortable with high-rise condominiums, they can accept townhouse style developments, Nevin said. Bay Area builder Taylor Woodrow, for example, expects that 70% of units it builds this year will be townhouses. Again, this is due mostly to the land that is available. Taylor Woodrow has a large presence in San Jose, a city that is planning for tens of thousands of apartments and condominiums near transit stations and in redevelopment project areas. In the last year, the newly formed urban division of John Laing Homes has pursued numerous condominium projects in Southern California. Among those are 180 residential units over 14,000-square-feet of retail space in Hollywood, a 95-unit mixed-use project on Ventura Boulevard in Sherman Oaks, 97 townhouse condos for seniors in Rancho Palos Verdes, and a 120-unit, four-story project in Culver City. “We’ve got all of these millions of people coming to California. They can’t all commute three hours to work,” said Phil Simmons, president of Laing’s urban division. Laing seeks out sites with “proximity to services,” he added. “We look either for a neighborhood that has never deteriorated or a neighborhood that has revitalized and the trend is toward more revitalization.” Although news accounts continue to predict a housing market slowdown, Paul Zeger, president of Pacific Marketing Associates, which markets condominium projects throughout the Bay Area, said that perspective is necessary. Compared with 2005’s remarkable pace, sales are down this year. Yet Zeger said his firm is selling 12 to 20 units a week in the 15 projects it is handling, rather than the 30 to 40 units a week it was selling last year. That has led to more buyer-seller negotiations and incentives worth $10,000 to $15,000 for buyers, which, Zeger noted, amount to only about 1% to 2% of sales prices. Condominiums in downtown Palo Alto, for example, are selling for $850 per square foot. Zeger said the market for condominiums is huge because Baby Boomers are becoming empty nesters, and because traffic congestion and high fuel prices make easy access to transit and services more appealing. “Cities have finally figured out that density is a good thing. It gets you an active urban core,” Zeger said. A number of cities in Orange County have embraced the concept of an active urban core, perhaps none more than Anaheim. That city’s ambitious Platinum Triangle project has designated room for more than 7,000 housing units — not a single one of which will be a single-family residence. The whole point of the 800-acre project is to place people in close proximity to transit, sports facilities, restaurants and shopping, said Anaheim Planning Director Sheri Vander Dussen. “If we were to do a typical single-family subdivision, the majority of residents would be way too far away to walk to the train station,” Vander Dussen said. When Platinum Triangle planning started, the city envisioned apartments filling the district. However, rentals do not pencil out anymore, and most new units are for-sale condominiums, Vander Dussen said. Anaheim has approved four condominium towers of more than 30 stories, and several more of 20-plus stories. Those projects are apparently going forward, as are high-rise projects in nearby Irvine. Elsewhere, however, the high-rise condo market appears to be sinking. The CBIA’s Nevin, who is based in San Diego, estimated that two-thirds of the proposed high-rise projects in that city will not break ground. This is partly because a bunch of projects that broke ground in 2004 are about to come on line, and partly because both builders and lenders have gotten nervous, he said. “Now that things are cooling off, builders are pulling out,” said Nevin, noting that Lennar is closing a downtown San Diego office after only one year. “There are very few companies on the West Coast that understand vertical construction.” San Francisco has about 15 mid- to high-rise residential projects, and those appear to be doing well, Nevin said. Los Angeles, though, is a different story. The Los Angeles Community Redevelopment Agency lists about 60 planned residential projects in downtown. “If more than a few of them get built, it’s going to be a bloodbath because there’s not a market there,” Nevin predicted. In downtown Sacramento, a number of high-rise condo towers have been proposed and several were approved. Thus far, none have broken ground, although BNC Development announced in April that it had pre-sold 75% of the 265 units in a planned 38-story tower on Sixth Street. Construction on that project could begin this summer. Contacts: Alan Nevin, California Building Industry Association, (619) 233-3781. Paul Zeger, Pacific Marketing Associates, (415) 346-7888. Sandra Meyer, City of Walnut Creek, (925) 943-5836. Jennifer Gastelum, Pacific Municipal Consultants, (916) 361-8384. Sheri Vander Dussen, City of Anaheim, (714) 765-4300.

As business at the state’s shipping ports continues to grow rapidly, the movement of freight across urban areas has become a priority for the Schwarzenegger administration and local transportation planners. The situation is becoming acute in Southern California because of ever-increasing business at the port complex in Long Beach and Los Angeles, already the nation’s busiest port complex by far. Administration officials and members of an appointed working group are refining a “Goods Movement Action Plan” to identify priority projects. The Southern California Association of Governments (SCAG) adopted its own freight movement plan last year. Leaders of both efforts say that passage of the $20 billion transportation bond in November could provide some of the funds needed for highway and rail improvements. But even the $2 billion designated in the bonds would appear to be a small percentage of what is needed statewide. The SCAG plan identified $26.2 billion worth of highway and rail project needs over 25 years in metropolitan Los Angeles. The SCAG report summarizes the situation: “Southern California faces an extraordinary economic opportunity and a frustrating policy dilemma. The rise of Asian trade through Los Angeles and Long Beach harbor to the nation has given the area its first clear-cut competitive advantage for the creation of good-paying blue collar jobs since the rise of aerospace after World War II. A 1,381,000-job economic strategy aimed at providing entry into the middle class for some of the 44.2% of local adults with no college experience is now possible. But with the San Pedro Bay ports handling 43% of containers entering the U.S., our region is starting to drown in a sea of trucks and trains plus the fumes and noise they produce.” The numbers are startling. The Long Beach and Los Angeles ports handled more than 13 million TEUs (20-foot equivalent container units) in 2005, which is more than analysts had projected only a few years ago for 2010. The ports could see as much as 44.7 TEUs in 2030. The growth at the Long Beach port in 2005 alone equaled all of the freight handled in a year at Seattle’s port. The Schwarzenegger administration began examining the issues in early 2005 via a working group headed by California Environmental Protection Agency Secretary Alan Lloyd and Business, Transportation and Housing (BTH) Secretary Sunne Wright McPeak. The idea is to improve the flow of freight across California without sacrificing the environment or public health. The administration has identified the needs and the types of improvements necessary to meet those needs, and has considered sample projects named by regional planners, said BTH Undersecretary Barry Sedlick. “Now it’s a matter of how we prioritize,” he said. The first step is to determine how money from the state Legislature’s bond package may be integrated into the goods movement strategy. The governor had originally proposed $4 billion worth of bonds for freight movement with the intent of leveraging $11 billion more, Sedlick explained. The bonds on the ballot provide $2 billion but require no matching funds from other entities, he said. The administration could reveal this month how much would be available for goods movement, and what the project priorities should be. The state plan and the SCAG plans are not identical, but they have the similar goal of accommodating the import/export and logistics businesses while trying to more than offset environmental degradation. Probably the one project that nearly everyone can agree on is the Alameda Corridor East. That project involves rail grade separations for the Union Pacific tracks from East Los Angeles through the San Gabriel Valley and into San Bernardino County, and for the Burlington Northern Santa Fe tracks through northern Orange County and into Riverside County. Without those grade separations, some cities could face nearly complete gridlock within 10 years, said Jeff Lustgarten, a SCAG spokesman. Other consensus projects include construction of an expressway from the ports to the 110 freeway to get trucks off Wilmington surface streets and the 710 freeway, and extension of rail lines directly to the docks. “The biggest hurdle to getting any of this done is money. The bond money is not going to be a cure-all, but it starts getting money for some of the high priority projects,” Lustgarten said. Environmental and public health concerns are also a hurdle, especially considering the Long Beach-L.A. port complex’s ranking as the top generator of air pollution in the region. Poor communities near the port complex and along transportation corridors suffer most because of air pollution from diesel burning ships, trucks and trains, environmental justice advocates say. They argue that businesses in the goods movement industry should pay fees to improve environmental conditions and protect public health. However, there is not much agreement on what those environmental improvements should be, or who should pay for them. The state Air Resources Board in December 2005 and earlier this year passed a regulatory package aimed at reducing diesel air emissions at the port complex by two-thirds, even while business triples. The air board plan counts on ships, trains and trucks using cleaner-burning diesel, and new engines for port loading equipment. “The plan is a combination of regulation by this agency, and local and federal agencies where they apply, and agreements between us and various entities at the ports,” air board spokesman Jerry Martin said. “It’s designed to ensure Californians get to enjoy the benefits of that expansion without the public health cost.” Port of Los Angeles officials, though, insist that they need environmental programs to implement immediately. Environmentalists argue that the air board’s package did not go far enough, and that the state should insist the industry pay fees into an environmental program. Shipping industry representatives say businesses are willing to pay some fees, but they insist on voluntary and market-based programs rather than government mandates. Officials behind the goods movement plan acknowledge that planning only for infrastructure improvements is pointless. “All of these goods movement projects are nonstarters unless they go hand-in-hand with environmental relief projects,” Lustgarten said. “We need to do a much better job of land use planning and considering how that relates to transportation,” added Undersecretary Sedlick. “The cities need to recognize and appreciate that they can’t just be bystanders in this process.” Contacts: Barry Sedlick, Business Transportation and Housing Agency, (916) 323-5416. California “Goods Movement and Ports” website: www.arb.ca.gov/gmp.htm Southern California Association of Governments goods movement website: scag.ca.gov/goodsmove

A San Luis Obispo County businessman who did not attend a California Coastal Commission hearing regarding his proposed project has lost a lawsuit contending that he was not provided adequate notice of the hearing. John Benson, owner of the Baywood Inn in the unincorporated town of Los Osos, argued that his due process rights were violated because the written notice he received from the commission was inadequate and because commission staff members told him that he did not need to attend the hearing. However, the Second District Court of Appeal concluded, “The written notice was adequate and the developer could not reasonably rely on staff recommendations and comments.” In 2001, Benson applied to the county for permission to expand his hotel and restaurant, which is located across the street from Morro Bay. He proposed adding 18 hotel rooms in a first phase and 22 rooms in a second phase. The San Luis Obispo County Planning Commission approved the project and, on appeal, the Board of Supervisors upheld the decision. On March 28, 2003, Concerned Citizens of Los Osos appealed to the Coastal Commission. The group argued that the project was inconsistent with the county’s local coastal program policies regarding visual impacts, the coastal watershed and public service capacity. Under Public Resources Code § 30621(a) (a section of the Coastal Act), the Commission has 49 days to conduct a hearing on an appeal. The Commission scheduled the appeal of the Baywood Inn project for a meeting May 8, 2003, in Monterey. For years, the Commission’s practice was to open a hearing on an appeal within 49 days, and then continue the hearing to a later date to provide more time for review. However, on the morning of May 8, 2003, the Fourth District Court of Appeal struck down this practice. In , 108 Cal.App.4th 575 (see , July 2003), the court ruled that the Commission, at a minimum, must determine within 49 days whether a “substantial issue” exists. Upon receiving that opinion, staff members changed their recommendation on the Baywood Inn project from “open and continue” to a finding that the appeal raised substantial issues regarding wastewater treatment, public access and water quality. The Commission agreed and set a hearing for seven months later. Neither Benson nor Concerned Citizens was represented at the May 8 meeting. At the December 2003 hearing, the Commission approved the first phase of the project but withheld approval of the second phase until the project could connect with a long-proposed and extremely controversial sewer system (see , November 2005). Benson sued the Commission, arguing that it violated his right to due process and unconstitutionally took his property. San Luis Obispo County Superior Court Judge Roger Picquet ruled for the Commission, and a three-judge panel of the Second District, Division Six, upheld the ruling. The hotel owner argued that the Commission’s notice of the May 8 meeting was inadequate because it did not apprise him of the issues the Commission would consider that day. But the Second District pointed out that the Commission sent Benson a copy of the Concerned Citizens appeal. “The appeal stated the issues on which it was based,” Presiding Justice Arthur Gilbert wrote for the court. “Moreover, there was no need for the notice to specify what issues would be considered at the hearing. Benson had participated in the proceedings at the county level. He was well aware of what issues were in contention.” Benson argued that the court should also consider the original staff report — which recommended opening and continuing the appeal — along with telephone conversations he had with Commission staff members. He contended that staff members told him he need not attend the May 8 hearing. Staff members said that they told Benson he “probably” did not need to attend. None of it mattered to the Second District. The staff report contained only recommendations, and “nothing guaranteed the Commission would not proceed,” Gilbert wrote. “As the trial court pointed out, any one commissioner could have convinced the Commission to proceed.” As for the phone conversions, the court found the details unimportant because Benson ought not have relied on the conversions. “The Legislature has reposed in the Commission, not its staff, the power to decide whether a substantial issue exists to support an appeal,” the court ruled. “Under these circumstances, he could not reasonably rely on staff comments predicting what action the Commission would take.” Additionally, the court pointed out, Benson attended the December 2003 hearing at which the Commission decided the appeal, and he did not challenge in court the conditions imposed on the project. The Case: , No. B186125, 06 C.D.O.S. 3812, 2006 DJDAR 5614. Filed May 9, 2006. The Lawyers: For Benson, J. David Breemer, Pacific Legal Foundation, (916) 419-7111. For the Commission: Terry T. Fujimoto, attorney general’s office, (213) 897-2000.

Real estate reporters and doctors share a certain sang froid. Just as doctors are not excited by seeing undressed people all day, real estate reporters are generally inured to the charms of vacation properties. Imagine, then, my discomposure when the pangs of property envy set in while viewing images of Grizzly Ranch. A golf community in the northern Sierra Nevada, the ranch is cradled in blue mountains and hedged with tall trees, where timid deer nibble on supernaturally green fairways. When I saw this scene, I lost all moral scruple. (Just slip the cash into this shoulder bag I got for free at the Urban Land Institute fall meeting, and nobody will get hurt.) All that to say that resorts offering the possibility of home ownership have an obvious appeal to the growing number of high-end folks who do not need to rob banks to buy such places. Homebuilding, in fact, is profitable enough and the demand for vacation homes sufficiently strong that the traditional resort is looking increasingly like suburbia — crowded with housing and spaghetti streets. True, resort cities have always teemed with vacation homes. The difference now is that the resort itself — traditionally a large hotel with spacious grounds for tennis and golf — is getting filled up with housing because developers see unrealized value in vacant land. The question is whether the proliferation of housing will compromise the natural settings that are the chief selling-points of resorts. Two projects currently under construction—the aforementioned Grizzly Ranch in Plumas County and Terranea Resort at the southernmost tip of Los Angeles County, both projects of Lowe Destination Development of Los Angeles—may provide some insight into what the capital markets think is the best way to optimize the value of high-end resorts. Terranea Resort is slated for a coastal bluff on the Palos Verdes Peninsula, perhaps the wealthiest enclave of Los Angeles County. True to tradition, a 400-room hotel and various outlying buildings are positioned close to the bluff. Terranea will also have a golf course and an “executive golf academy” among other resort amenities. The site also has room for 80 single-family homes. The biggest and fanciest ones are called “villas” and the smaller ones are called “casitas.” In spite of my avowed preference for the urban grid, I find the site plan of Terranea appealing in several ways. First, the entire site looks small enough to walk or bicycle through comfortably. Secondly, the residential housing is split into several small clusters, and grassy open space appears to dominate the plan. In one sense, it is easy to design Terranea because the site had already been graded and stripped of its natural contours and chaparral by the now-defunct Marineland theme park. Soon, Terranea will be carpeted in green turf, which is ecologically meaningless but does have the esthetic advantage of unifying the site with a single plant material. Terranea’s land planners have conscientiously preserved views of the bluffs and the ocean from nearly every angle, and here the clustering of housing in different areas was a wise choice. The worst move is the wall-like façade of the resort hotel itself, which could have been broken up into several buildings without sacrificing functionality. Happily, at least to my way of thinking, Terranea still looks like an old-fashioned resort, even if housing has made an encroachment. Perhaps it is a stretch to call Grizzly Ranch a resort, because it is not hotel-centered. Located at the northern edge of the Sierra Valley in Plumas County, the ranch is more accurately described as a golf community in a resort setting—that is, the spectacular Sierra landscape that upset my equilibrium. The housing component dominates here, with 400 home sites ranging in size from one-half acre to four acres. The center of the site plan, somewhat poorly defined, is the clubhouse and related buildings. Even a resort needs a social center, and one much more developed than this. Other than broad fairways cradled in mountains, the most attractive thing about the site planning at Grizzly Ranch is the margins of forest that apparently serve as buffers between different housing clusters. Much of the forest has been eaten away, however, by the fairways. Such is the nature of golf. It makes about as much sense complaining about denuding the forest in a golf community as it does to grouse about substance abuse in an opium den. Still, the presence of forest is a large part of the appeal of Grizzly Ranch. Yet the developers have shaved down the forest to a thin, cosmetic veneer to be wrapped around an essentially suburban housing project. Maybe the veneer is enough. My awareness that the forest had been reduced to icing on an expensive cake did not deter me from contemplating bank robbery, and it will not stop Grizzly Ranch from selling out quickly. There are more rich people now than formerly, and there are ever-fewer resort sites in an increasingly crowded and regulated state. Still, I wonder if the informality of suburban planning is the best approach to resort development. At Grizzly Ranch, the forest that is part of the appeal of the place survives only as a facade around the housing clusters. Is there a way of laying out streets that could preserve more forest for recreation and wildlife? It would be weird to impose a four-square grid on a wilderness setting. On the other hand, the arbitrary peregrinations of suburban streets eat up open space like Pac Man. If you compare the ratio of golf space to forested buffer on the map of Grizzly Ranch, you will see that natural landscape was the loser. This happens when developers deny the value of any open space that is not explicitly reserved for golf. After a certain point, developers may find that they are destroying the very amenity that brings buyers to the table.

The City of Long Beach must pay a mortgage holder $273,500 in damages plus attorney fees for demolishing an apartment building without providing adequate notice to the lender. Although the city went through an extensive process before demolishing the dilapidated building, the city sent all but the final notice only to the property owner. New Jersey-based D&M Financial Corporation, which held a trust deed on the property, did not learn the city planned to tear down the building until the day before demolition began. In upholding a trial court ruling, the Second District Court of Appeal determined that the city failed to follow its own ordinance and failed to provide D&M Financial due process. “ he city’s own ordinance requires express notice to mortgagees of orders and notices which affect buildings or structures found to be unsafe, dangerous or substandard. The city failed to comply with those requirements even after it had actual notice of change of ownership and actual notice that D&M Financial held a security interest,” the Second District ruled. In May 2000, a building inspector for Long Beach inspected the vacant, four-unit apartment building on Henderson Avenue. Two months later, he sent a “notice of substandard building” to the then-owner and then-trust deed holder. Shortly thereafter, the city recorded a “declaration of substandard property” with the county recorder. In November 2000, the city’s Board of Examiners, Appeals and Condemnation (BEAC) ordered the owner to demolish or rehabilitate the structure within 30 days. Copies of the BEAC order were sent to the owner and trust deed holder, but the order was not recorded. Before the deadline passed, a new entity acquired the property through foreclosure and got permits for repair work. The BEAC granted two extensions, until March 8, 2001, to complete the work. However, in February 2001, Rahim Pashmaki purchased the property with a loan from Daaz Financial Services that was secured with a trust deed. Daaz assigned the trust deed to D&M Financial. Ten days before the March 8 deadline, the city sent a 10-day notice of intent to demolish the building to the previous landowner. The city apparently took no further action, and a city building inspector learned in early April 2001 that Pashmaki was the new owner and D&M the new trust deed holder. Over the next several months, the city sent Pashmaki a “Notice of Intent to Demolish,” a “Notice to Clean Premises,” and a “Notice to Pay Public Nuisance Abatement Levy,” and the city recorded a lien for costs to abate a nuisance. However, the city provided none of these documents to D&M. On August 7 and 10, 2001, the city obtained warrants to inspect the property to prepare for demolition. The city mailed a copy of the August 7 warrant to D&M. The company received the warrant on August 13 — the same day it got the city’s “48-Hour Notice of Intent to Demolish.” Although D&M Financial immediately contacted the city, demolition commenced on August 14. D&M Financial later acquired the property for $70,500 cash. D&M sued the city. Los Angeles County Superior Court Judge Gregory Alarcon found the city liable for damages totaling $273,500 based on the stipulated value of the building and the city’s refusal to remove a lien for the cost of demolition. The court also awarded D&M attorney fees and costs. On appeal, the Second District ruled that D&M had sufficient ownership interest to bring an inverse condemnation action against the city, that the city violated its own ordinances and that the city failed to satisfy due process requirements. First, the court established that the trust deed provided sufficient ownership interest for D&M to be entitled to compensation for inverse condemnation. The court then turned to the adequacy of the city’s notice to the mortgage holder. The city contended that the July 2000 recordation of substandard property put D&M on notice and satisfied due process requirements. The court disagreed, finding that demolition was only one possible outcome of the recorded notice. Repair, rehabilitation and vacation were also possibilities. Plus, the notice was recorded before the BEAC ordered the building demolished. When D&M acquired its interest in the property, there was no recorded notice of intention to demolish, the court noted. The city’s own ordinance requires the city to provide mortgagees with notices of intent to demolish, the court pointed out. Additionally, the city learned four months before tearing down the building that D&M had an interest in the property. Yet the city sent D&M nothing until the last minute. “Thus the city failed to comply with its own statutory notice requirements and its own procedures, even after it had actual knowledge of the interest of D&M Financial in the Henderson Avenue property,” Justice Patti Kitching wrote for the court. This lack of notice affected D&M’s due process right. “Health and Safety Code § 17980, subdivision (b) codifies a property owner’s constitutional right to choose to repair or to demolish a building that is substandard or a nuisance,” Kitching wrote. “The city’s failure to provide notice to D&M Financial precluded D&M Financial from exercising its repair option, and thereby violated its due process rights.” In an unpublished portion of the option, the court quickly dismissed the city’s argument that the BEAC’s determination the property was substandard precluded an award for inverse condemnation. The Case: , No. B173977, 06 C.D.O.S. 935, 2006 DJDAR 1284. Filed January 30, 2006. The Lawyers: For D&M: William Litvak, Dapeer, Rosenblit & Litvak, (310) 477-5575. For the city: Randall Fudge, city attorney’s office, (562) 570-2200.

How much infill can we build in California? This is the big question everybody is trying to answer these days. Now, in typical fashion, UC Berkeley planning professor John Landis has taken a crack at answering the question in a comprehensive – and somewhat controversial – manner. In a major study conducted for Business, Transportation and Housing Secretary Sunne McPeak, Landis has concluded that about 25% of California’s future housing needs – about 1 million units -- can be met with infill development. (A summary of the report can be found at http://infill.gisc.berkeley.edu/report_vol-1.pdf .) There are many caveats in Landis’s study, but that’s the bottom line: Statewide, 75% of all new housing will have to be built on greenfield sites. And that’s using a pretty generous definition of infill sites that includes, basically, all undeveloped land inside current city limits statewide. Given all the talk about infill these days, 25% doesn’t sound like much. In fact, the total size of all the infill sites Landis identified statewide would fit inside the San Diego city limits. Can this really be the upper limit? The answer is yes and no. Yes in the sense that Landis has identified most of the obvious infill sites in the state. But no in the sense that he calculated the potential number of units based on his definition of current economic feasibility. The economics of infill may change in the future – and so might allowable densities under zoning, which is something Landis did not take into account in the study. The Landis method isn’t perfect, of course. The list undoubtedly includes thousands of parcels that local governments would not consider to have infill potential. The lot I live on is on the Landis list, even though the house was expanded from a ’20s bungalow to a large duplex in 2002. The building where our offices are located is also on the list, largely because it is an historic structure that has been owned by the same family for a long time, and, therefore, the building is worth much less than the land, according to our county assessor. The Landis report is unlikely to prove useful for the other goal that Secretary McPeak had for it – as a resource for developers and local governments seeking to identify infill sites. Anybody can use the “infill parcel locator” that Landis developed, which can be found at http://infill.gisc.berkeley.edu . But because it uses a standard statewide definition of infill and does not include zoning, it probably won’t screen out the political problems. Nevertheless, the big picture that emerges from the Landis report is worth discussing in more detail – largely because Landis has definitely confirmed some of the most important assumptions about California’s infill potential and why developing infill projects is so different. Here are four issues worth contemplating – along with one big surprise. Most infill experts have long suspected the great infill potential lies in Southern California – especially Los Angeles and Orange counties, with their vast store of postwar commercial strips. For the first time, Landis has confirmed this. According to his estimates, 70% of the infill potential is located in metropolitan Los Angeles (not including San Diego). This compares with only 20% in the Bay Area. The homebuilding industry often seeks to define infill broadly to include a supposedly vast array of passed-over urban land that has never been built on – rather than just reusing land that has already been urbanized. But Landis shows that the vacant passed-over parcels account for less than 30% of all land with infill potential. And it’s a fair bet that most of the vacant land has already been picked over by large developers seeking to apply their greenfield models to infill sites. Landis found about a half-million parcels of land in California with infill potential. But the average size of the half-million parcels is only about 15,000 square feet – meaning that all the parcels combined add up to 340 square miles, or about the size of the City of San Diego. Furthermore, the more infill is defined in the classic “reusing existing land” sense, the smaller the parcels become. The average infill site that already has development on it – what Landis calls a “refill site” – is only about 15,000 square feet. The average vacant infill site, by contrast, is more than an acre in size. Interestingly, commercial properties with infill potential are not much bigger than residential properties – half an acre on average. By contrast, industrial infill sites average 1.3 acres in size, confirming a widespread belief that industrial properties will be the next big “play” for infill housing developers. Recent research here at Solimar Research Group ( ’s parent company) has confirmed that industrial properties are undervalued as infill housing sites, and anecdotal evidence suggests that this is where infill developers are headed next. Landis also came up with another finding that squares with what almost any infill developer will tell you – rents are so low compared with real estate prices, and building costs are so high, that it does not make economic sense to do infill rental projects. There’s a pro and a con to this. The con is that, by any measure, rental housing is the most important housing need in the state, given the modest incomes and increasingly working-class nature of the economy. The pro is that economic infeasibility will save the state’s current renters from a lot of disruption. Landis found that about 30% of the state’s infill parcels already have rental apartments on them. Redeveloping those parcels would replace high-density housing with higher-density housing – affordability might be reduced – and it’s probable that California would see an endless number of knock-down-drag-out fights over evicting current tenants and replacing them with new tenants. 5. In addition to measuring infill potential, Landis also tried to examine where infill demand is coming from. He did so by identifying the “cohorts” that were moving into infill-type neighborhoods. In the L.A. area, most of these cohorts were young Latino families of modest incomes. This contrasted dramatically with San Diego and the Bay Area, where the cohorts are mostly affluent white folks without kids. This is no surprise to anybody who has talked to an infill developer in L.A. during the last five years, but it does suggest a bifurcation of the state’s infill market: Latinos in L.A., classic yuppies elsewhere. Given the limitations of Landis’s database, it’s hard to know exactly what the state should do with the wealth of information his report has produced. At the end of the report, he makes a bunch of pretty standard policy recommendations – gather better data, streamline the California Environmental Quality Act – to overcome barriers to infill. But maybe the state should be more bold. Landis acknowledges that his study is an examination of what “could” happen, not what “should” happen. This is partly a sop to the local governments, who were a bit scared by the idea that HCD was compiling a statewide database of infill sites. Maybe, however, the state ought to move from “could” to “should” by adopting Landis’s assessment as a target. What if the state passed a law declaring that, as a matter of policy, 25% of all housing in the state should occur in infill locations? Then all the other recommendations would have to fall into place.

While there is no star for “blight” on the Hollywood Walk of Fame, blight is prominent in the neighborhood. The Second District Court of Appeal has upheld an amendment to a two-decade-old redevelopment plan for Hollywood. The court accepted the City of Los Angeles’s findings that physical and economic blight still exist in the project area. The court also rejected other challenges to the plan amendment and the city’s administrative process. The decision marks the second time that the Second District has ruled in favor of the city in a Hollywood redevelopment plan validation lawsuit. Fifteen years ago, in , 231 Cal.App.3d 243, the court upheld the original redevelopment plan (see , July 1991; , November 1990). Some of the same litigants were involved in the most recent lawsuit, and they used some of the same arguments. In 1986, the Los Angeles City Council approved the 1,100-acre Hollywood redevelopment project. In 2003, the council approved a plan amendment that extended eminent domain power for 12 years, extended a time limit on incurring debt, and updated the land use map and redevelopment plans to conform with the city’s general plan. Robert and Betty Blue, who own businesses in the project area, and resident John Walsh sued. They argued that the city’s process was faulty, that the city should have formed a new project area committee (PAC), and that the amendment violated the purpose of the Community Redevelopment Law. The opponents also contended that there was not substantial evidence regarding the presence of blight, whether private enterprise alone could redevelop the area, and redevelopment’s economic feasibility. Los Angeles County Superior Court Judge Andria Richey ruled for the city. On appeal, a unanimous three-judge panel of the Second District upheld the trial court decision. The court first dealt with the process. The opponents argued that the L.A. Community Redevelopment Agency (CRA) did not make available raw data from a field survey, a move that precluded the public from commenting on the physical condition of the project area. Opponents also argued that they did not have sufficient time to review a report to the City Council. The court ruled that no statute, regulation or case law required the agency to release raw data to the public. The opponents could have sought such information under the Public Records Act, but they did not, the court noted. The reports and information that were made available satisfied the statutory requirements in Health & Safety Code §§ 33457.1 and 33352, and were adequate to permit public testimony, the court ruled. The report to the City Council was released about 14 days prior to the public hearing, even though the CRA had said it would provide 30 days for review. Still, “there is no specification as to how long before the hearing the materials must be made available to the public,” Justice Joan Klein wrote for the court. Except for David Morgan (a litigant in the first lawsuit and this one), who asked for an “outlandish” three-year continuance, no one at the public hearing requested more time, the court noted. “Further, as the trial court noted, plaintiffs and other members of the public submitted extensive comments, which ‘belies their contention that they had insufficient time to review and respond to the materials at issue,’” Klein wrote. Besides oral testimony, more than 2,000 pages of comments were submitted, the court noted in upholding the city’s process. The court next dealt with the formation of the PAC. State law requires formation of a PAC if a redevelopment plan provides authority for the agency to take by eminent domain “property on which any persons reside,” or if a redevelopment plan will displace a substantial number of low- or moderate-income persons. The CRA argued it did not have to form a PAC because its eminent domain power in Hollywood could not be used to acquire property on which any person lawfully resides. The opponents argued that use of the term “lawfully resides” was a rewriting of state law. The court sided with the city. The court then reached the issue of blight. The city first argued that it did not have to provide new blight findings (even though it did provide findings) because the original findings from the 1986 project area adoption were final and conclusive. But the court, citing , (2005) 127 Cal.App.4th 116 (see , April 2005), said that original blight findings are conclusive only until a timely validation lawsuit is brought pursuant to a redevelopment plan amendment. The court then considered whether substantial evidence supported the city’s new blight findings. Opponents contended the evidence was inadequate because there was no proof buildings in the project area are unsafe or unhealthy for people to live or work in. The court called the argument “unpersuasive.” “ he record reflects 50% of the buildings in the project area are deemed to be in need of at least moderate rehabilitation, and 13% require either extensive rehabilitation or are dilapidated. The report included maps showing the condition of each building and parcel in the project area,” Klein wrote. Based on this information “the City Council reasonably could conclude that physical blight exists.” The city proved economic blight, the court ruled, by showing that there was little building activity from 1987 to 2001 other than CRA-assisted projects, real estate sales prices were about half that of competing areas, and vacancy rates were high. Similar evidence supported the city’s finding that blight could not be eliminated without redevelopment, the court ruled. The court further ruled that the city’s finding of economic feasibility was sound, and found no merit in the argument that the plan amendment violated the purpose of state redevelopment law because it tried to capitalize on Hollywood’s entertainment history. Finally, the court ruled that Walsh and Morgan were liable for about $4,200 apiece in trial court costs. The Blues were not liable because they are property owners, and property owners are exempt from liability for costs in redevelopment validation actions. In March, Robert Blue, who owns a luggage store at Hollywood and Vine, sued the city over the environmental study for a mixed-use redevelopment project. The CRA is attempting to take his property through eminent domain to accommodate the project. Blue contends the 80-year-old building is historic and the city should restore it. The Case: , No. B180319, 06 C.D.O.S. 2490, 2006 DJDAR 3573. Filed March 1, 2006. Change in judgment issued and publication ordered March 24, 2006. The Lawyers: For Blue: C. Robert Ferguson, (909) 482-0782. For the city: Susan Pfann, city attorney’s office (213) 485-5416.

At a Cupertino City Council meeting in April, Apple Computer guru Steve Jobs announced that the technology giant plans to build a 50-acre campus to complement its existing headquarters across town. As many as 3,500 people would work at the campus at Wolfe Road and the 280 freeway. Less than 24 hours later, a group called Concerned Citizens of Cupertino submitted petitions on two referendums intending to halt two recently approved housing projects. Although the two events were unrelated, they exemplify the current state of affairs in the jobs-rich Silicon Valley city of 54,000 residents. High-paying technology jobs are plentiful, but nearly all attempts to build housing for those tech workers are met with strong political opposition. Growth-control advocates have started using the term “Condo-tino” to express their dissatisfaction with recent and proposed housing developments. “It doesn’t seem to be about all growth, it seems to be about residential growth,” Community Development Director Steve Piasecki said of the growth control movement. Indeed, after submitting what appeared to be plenty of signed petitions to force an election, Concerned Citizens announced on its website: “The referendum, coming on the heels of an announcement by Steve Jobs that Apple will build a new campus on approximately 50 acres in Cupertino, validates the need to keep commercial/industrial land for business and retail expansion. The City Council’s continued policy of rezoning commercial land to high-density housing lowers our potential for business expansion and the important tax base it brings to Cupertino to support city services and distinguished schools.” The referendums concern a plan to build 134 condominiums in a parking lot at Vallco Fashion Park, and a 380-unit residential development proposed by developer Toll Brothers on a mostly vacant 26-acre site that had been zoned for industrial use. The City Council voted 3-2 to approve the projects in March. The referendums mark a second round of ballot-box planning in Cupertino. Last November, voters rejected three initiatives backed by Concerned Citizens. Those three initiatives (all of which provided exceptions for the area around Vallco Fashion Park) would have limited mixed-use and residential development to 15 units per acre, prohibited buildings of more than 36 feet in height, and required most new buildings to have 35-foot setbacks. A coalition of environmental groups, business organizations, Hewlett Packard and the Home Builders Association of Northern California campaigned against the initiatives, arguing that they would hinder the type of infill and high-density development that Cupertino and other Silicon Valley cities need. Although the initiatives failed, each received 42% to 46% of the vote. The close election “sent a message that a lot of people support” such growth controls, said Shishir Mathur, an assistant professor of urban and regional planning at San Jose State University. “Existing residents have this fear of high-density housing,” Mathur said. The Sierra Club was among the initiative opponents, and the club’s Loma Prieta Chapter, which is one of the largest in the United States, recently endorsed the Toll Brothers proposal that is likely headed to the ballot. Silicon Valley and the San Francisco Peninsula need additional housing, said Melissa Hippard, the chapter’s executive director. “We don’t want to see the urban footprint expand,” said Hippard. “Everybody can’t just live in the Central Valley and drive an hour and a half to be our firemen and teachers.” “Cupertino is struggling like many communities on the Peninsula with housing and affordable housing and jobs-housing balance,” Hippard said. At least some of the opposition to additional housing stems from concerns about schools. Cupertino Union School District and Fremont Union High School District provide some of the top performing schools in the state. Fremont Union reports that its five campuses (in Cupertino, Sunnyvale and San Jose) are already beyond capacity, and the district has aggressively sought to kick out students who are not district residents. The school districts have asked developers to provide additional school impact fees. Taylor Woodrow Homes recently agreed to pay quadruple the ordinary school impact fee. Taylor Woodrow would have paid about $2 million in school fees for a 94-unit housing development that was expected to generate about 70 students. In the face of strong public opposition, the City Council rejected the project. Housing prices are the reason developers keep battling in Cupertino, where the median home price is about $750,000 — more than $200,000 above the Santa Clara County median. The median sales price for a condominium in Cupertino is approaching $700,000. The referendums list a variety of reasons for opposing the Vallco and Toll Brothers housing projects: traffic, school overcrowding, conflicts with existing land uses, loss of tax base. Piasecki, the city’s chief planner, said there is a perception that developers are building new housing units, especially condominiums, at a rapid pace, and that the city’s highly desirable schools are getting overwhelmed. However, Piasecki said the city expects to see only about 900 new housing units built over a six- to eight-year period. “Really, it’s not a very fast pace of development,” he said. Supporters see the proposed Vallco condominiums as key to the mall’s ongoing redevelopment. The locally owned mall has had a development agreement with the city since the early 1990s, and the mall is the heart of the city’s lone redevelopment project area. The 1.1-million-square-foot mall has struggled for years, and both mall owners and city officials have worked toward reinvigorating the shopping center. Mall owners Emily Chen and Alan Wong are building a 16-screen movie theater, a state-of-the-art bowling alley, an ice rink and other retail and restaurant space. Those projects are entitled under the development agreement, according to Piasecki. The condominiums, proposed atop retail space, were not entitled until the City Council approved them in March, but the condos may be the economic engine driving the rest of the mall project. Opponents contend the Vallco condominiums would be incompatible with single-family homes on the other side of a wall surrounding Vallco. Piasecki said the city insisted on a fire lane and a triple row of trees to provide a buffer. “It seems to make sense as a way to provide housing and reinvigorate the mall,” Piasecki said. Opponents of the Toll Brothers project say the site, owned by Hewlett Packard, should be preserved for industrial growth. Piasecki said that offices would create more traffic than homes, and that the city needs the units to help with its jobs-housing balance. Contacts: Steve Piasecki, Cupertino Community Development Department, (408) 777-3308. Melissa Hippard, Sierra Club Loma Prieta Chapter, (650) 390-8414. Shishir Mathur, San Jose State University Department of Urban and Regional Planning, (408) 924-5875. Concerned Citizens of Cupertino: www.cupertino.cc