A thorough study of the San Diego Association of Governments by the Legislative Analyst’s Office (LAO) suggests that the organization has taken regional planning as far as possible, and more regionalism will require a change in governance and economics. The LAO’s report does not recommend changes. Instead, it offers three options for the future: no changes; incremental steps such as making the organization more publicly accountable and altering government fiscal policies; or a broad governance restructuring in which the regional body would share land use authority with cities and San Diego County. “There are no easy answers,” said LAO fiscal and policy analyst Marianne O’Malley, who coordinated the report. “All of the next steps have significant tradeoffs in economics or governance, and they are tricky.” Gary Gallegos, SANDAG’s executive director, conceded the organization was not excited about having the LAO scrutinize SANDAG, as was required by 2003 state legislation. But, said Gallegos, the LAO was fair, and SANDAG staff and the executive committee will study the report. “In a fair way, they highlighted the challenge that COGs have in that we don’t have land use authority,” Gallegos said. Originally created in 1966 as the Comprehensive Planning Organization, SANDAG is the regional planning organization for San Diego County. Its 20-member board is composed of representatives of all 18 cities (San Diego has two appointees) and a county supervisor. It has authority over regional transportation planning, resource allocation and project delivery (except for the airport and port), prepares the regional housing needs assessment, and has responsibility for developing a regional comprehensive plan. The agency’s lack of land use authority is at the heart of the 76-page study — and of nearly all discussions regarding councils of government (COGs). During the last 10 years or so, the Legislature and other public officials have tried to solve regional issues through planning, O’Malley said. Entities have adopted regional housing and transportation plans and prepared comprehensive “blueprints.” “It’s a question of who will follow the plans,” O’Malley said. The report suggests the answer may be no one. “SANDAG’s plan may call for certain actions to reduce transportation demand, protect habitat, or promote housing affordability,” the report says, “but SANDAG has no direct means to influence local land use decisions to support these goals. SANDAG also has no authority to require its constituent agencies or other regional agencies to use their respective regulatory powers to promote regional objectives, such as improving water quality.” For example, the report points to the agency’s “smart growth” efforts: “For at least the last 15 years, SANDAG has advocated smart growth. In virtually every major report or public presentation regarding regional growth, SANDAG has urged local agencies to use their land use powers to promote ‘compact, efficient and environmentally sensitive’ development that focuses ‘future growth away from rural areas and closer to existing and planned job centers and public facilities.’” Despite these efforts, the percentage of the region’s households living in multifamily residential units has remained about the same since 1975. “If local agencies were following SANDAG’s suggestions, we would expect to see a comparatively high rate of multifamily permit issuance in the San Diego region — especially relative to California regions with fewer constraints on the amount of developable land such as Sacramento and Riverside-San Bernardino,” the report says. Yet the San Diego and Sacramento regions issue about the same number of multifamily permits per 1,000 persons. While the cities of San Diego and Chula Vista “generally have aligned their land use policies with SANDAG’s recommendations,” other jurisdictions have not, the report continues. “For example, three cities plan to use at least one-half of their remaining vacant land for low-density, single-family residences (Poway 82%, Escondido 52% and Del Mar 50%). While these cities do plan for some intensive development on their vacant land, virtually all of this development is for purposes other than multifamily residences. The cities of Poway and Escondido, for example, plan to use over 20 times more land for nonresidential purposes (commercial, industrial and office) than for multifamily housing.” This dichotomy results partly from the state’s system of local government finance, which makes regional retail development and high-end, low-density residential projects economically favorable for cities, the report notes. This issue of local government finance is an old one, O’Malley said, but it persists because any remedy creates new winners and losers. Because, unlike some other regional planning agencies, SANDAG has authority over transportation resources, it can spend money in a way that encourages more efficient growth. However, SANDAG devotes only about 2% of transportation sales tax revenue to a smart growth incentive program. The LAO pointed out that even that modest amount “evoked some controversy” on the part of member cities. O’Malley said a series of reports since the 1990s reached the same conclusion the LAO did: There might be benefit to shifting land use decision making to a regional entity, but people oppose losing local control. “There is a reason why these hard decisions and changes have not been made,” she said. “Would people want to give significantly more land use authority or economic power to an agency led by an appointed body? That was never the intent of COGs.” Gallegos said that SANDAG, like the region itself, has evolved over time, and he expects to continue seeing incremental changes at the organization. Contacts: Marianne O’Malley, Legislative Analyst’s Office, (916) 319-8315. Gary Gallegos, SANDAG, (619) 699-1900. LAO report: http://www.lao.ca.gov/

The June election will see the usual collection of local land use ballot measures, including proposals in three counties to hike the sales tax for transportation projects. However, the election may be even more significant because of three measures that are not on the ballot — and the reason voters will not see those measures. The items not on the ballot are a general plan initiative and a project referendum in Monterey County, and a general plan amendment initiative in the City of Loma Linda. The two initiatives were knocked off the ballot by federal district court judges who ruled that the initiatives violated the Voting Rights Act because petitions were not provided in Spanish. After the ruling regarding the Monterey County general plan initiative, the Board of Supervisors voted to remove from the ballot a referendum of an 1,100-unit housing project for the same reason. While the short-term implications are clear — voters will not decide on the three measures in June — the long-term impacts are exceedingly muddy. Latino and voting rights advocates argue that requiring Spanish versions of proposed ballot measures is not overly burdensome of petitioners. But the petitioners worry about problems with translation accuracy and expense, and they argue that their voting rights were violated when judges blocked ballot measures that had adequate signatures to qualify for an election. Complicating the situation is the firmness of a Ninth U.S. Circuit Court of Appeals decision on which the judges based their ballot measure decisions. That Ninth Circuit decision — which held that recall petitions in the Santa Ana Unified School District had to be in both English and Spanish — is now under an review by the Ninth Circuit. Among the ballot measures that voters will actually get to decide in June is a far-reaching property rights measure in Napa County that would require the county to compensate property owners for the loss of value caused by new regulations. The measure is receiving enormous opposition in a county that is famous for land use regulations that protect agricultural land and watersheds. In addition: • Napa County voters will join those in Solano County and Santa Clara County to decide on half-cent sales tax measures. • In Orange County, voters have the chance to limit the county’s use of eminent domain. • Voters in Santa Barbara County may create the state’s 59th county. The Monterey County ballot measures are two chapters in two long-running and increasingly contentious debates, one concerning the county’s ongoing general plan update and one concerning development of the 2,500-acre Rancho San Juan, just north of Salinas (see , December 2005 and October 2005; , July 2004 and June 2003). Monterey County began working on a general plan update six years ago and recently released its fourth draft plan. The first three went nowhere. The third draft died when county supervisors objected to growth-control elements in the proposal. The group LandWatch Monterey County and environmental organizations then wrote a general plan initiative that sought to impose growth restrictions, primarily by limiting subdivisions to a handful of designated growth areas. Subsequent changes to the plan would be permitted only with voter approval. Early this year, initiative advocates submitted enough valid signatures to qualify the initiative for the ballot. However, based on a report prepared for the county by Nossaman, Guthner, Knox & Elliott, the Board of Supervisors voted 3-2 not to place the initiative on the ballot because of legal conflicts with state law. Only a week before the supervisors’ decision, a group of Latino voters sued the county in federal court, arguing that the petition violated the Voting Rights Act. The day after supervisors’ decision, initiative proponents sued the county in Superior Court. The two lawsuits were consolidated in federal court, and on March 23, District Court Judge James Ware ordered the county not to place the initiative on the ballot because petitions were not circulated in both Spanish and English, in violation of the Voting Rights Act. (The case is , Nos. C06-01407 JW and C06-01730 JW.) After Ware’s decision, the Board of Supervisors voted 4-1 to rescind a January decision to place on the ballot a referendum on Rancho San Juan development. Supervisors said the referendum should have been translated into Spanish. Referendum proponents then sued the county for pulling the measure off the ballot. The referendum would have been the second on Rancho San Juan, as voters last fall overwhelmingly rejected a specific plan for the site. The day after Ware issued his ruling, U.S. District Court Judge Audrey Collins issued an injunction against a slow-growth initiative and two housing project referendums in the San Bernardino County city of Loma Linda. In April, Collins reversed herself regarding the referendums but maintained the injunction against the initiative because it was not circulated in Spanish. However, the referendums still will not appear on the June ballot because San Bernardino County Superior Court Judge Martin Mildreth ruled the referendums were invalid because they did not contain accurate descriptions of the two housing projects, which jointly contain about 2,400 units. The group behind the ballot measure, Save Loma Linda, has appealed the Superior Court’s ruling, and it has already started circulating a new slow-growth initiative with a Spanish translation. The Voting Rights Act issue “is novel to a lot of people, but should not have been,” said Monterey County Counsel Charles McKee, who urged supervisors to yank the Rancho San Juan referendum after Ware’s initiative ruling. “It’s not like this is new law. This is the court telling us how to apply it.” In fact, the Ninth Circuit ruled 20 years ago in , 780 F2d 823, 833 (1986), that the Voting Rights Act “does not exempt information or material, compelled by statute, which is preliminary to voting, but essential if an election is to occur.” The decision, which was overruled on other grounds in 1990, appears to have laid dormant until the Ninth Circuit panel resurrected it in the Santa Ana school district recall. In a 2-1 decision issued last November in , 429 F.3d 910 (2005), a Ninth Circuit panel cited extensively in ruling that recall materials had to be printed in both Spanish and English in the school district. District Court judges then cited while blocking the Monterey County and Loma Linda initiatives. On April 20, however, the Ninth Circuit voted to rehear , meaning the November 2005 decision is no longer precedent. John Ramirez of Rutan & Tucker, who represents Latino plaintiffs in the Monterey County initiative litigation, said the Voting Rights Act requirement “is a re-emerged issue,” and he expects it to surface elsewhere. Ideally, he said, ballot measure proponents would substantially comply with the federal law rather than fight it. He noted that initiatives have circulated in multiple languages, and that election officials regularly hire companies to translate ballot materials. The multiple language requirement is a matter of ballot measures continuing to evolve, Ramirez said. The requirement at issue is not universal. The multiple-language mandate only applies in counties where both 5% of the voting population speaks another language and English illiteracy is greater than the national average. Chris Fitz, executive director of LandWatch Monterey County, said the court and Judge Ware got it wrong and that petitions — although regulated by the government — are not “ballot materials” prepared by the government, which are clearly subject to the Voting Rights Act. “You can’t have ballot materials until you’ve got something on the ballot. Petitions are not on the ballot,” Fitz said. “The whole point of petitioning your government is that it is something private citizens do.” Fitz and his predecessor at LandWatch, Gary Patton, now head of the Planning & Conservation League, argue that translation of an initiative would be tricky because languages do not correspond word-for-word. “Thus,” Patton wrote for the LandWatch website, “if two or more versions of what purports to be the same ‘law’ are circulated in an initiative petition (and in some jurisdictions there would need to be five or more translations, to carry out the effect of Judge Ware’s decision) … there would then be a fundamental question, if the initiative were adopted, of which ‘version’ of the ‘law’ prevails.” Loma Linda growth-control advocates were no less miffed. They noted that less than 1% of the voters in the largely Seventh-Day Adventist city are Spanish speaking. “The judge conceded that she was essentially making it impossible for citizens to petition,” said Save Loma Linda spokeswoman Kathy Glendrange. “The decision ensures that only wealthy citizens can participate in the petition process because of the expense involved in translating all of the documents into Spanish.” Nevertheless, the group has begun circulating in both English and Spanish an initiative very similar to the rejected one. It would designate 800 acres of city-owned land as open space, set minimum lot sizes, establish traffic thresholds and limit hillside development (see , December 2005). As for initiatives that will actually appear on the June ballot, Napa County’s Measure A may have the largest impact statewide. The Fair Pay for Public Benefit Act would require the county to compensate a property owner “who suffers an established decrease in value of that property due to the impact of a new Napa County land use restriction.” If the property owner and Board of Supervisors cannot agree on suitable compensation within 100 days, the property owner may go to court. A group called Napa Valley Land Stewards Alliance is behind the initiative. Two years ago, the group led a successful referendum campaign to overturn a county stream setback ordinance (see , March 2004). The group has continued to advocate for property rights ever since, arguing that heavy-handed county regulation has “taken” private property. The group had little trouble gathering enough signatures to qualify the initiative for the ballot. However, nearly the entire Napa Valley power structure is opposed to the measure. Even politicians such as Supervisor Mark Luce, a Republican who worked with Land Stewards to overturn the stream setback regulations, oppose the Fair Pay initiative. “It doesn’t say what’s fair or unfair. It says the county will no longer regulate,” Luce said. “There wouldn’t be much land use planning left.” Luce said he understands the frustration behind the initiative. A better approach, he offered, would be for the county to prepare an economic analysis of new regulations, and then have voters decide on the regulations with significant impacts. A study of the measure prepared for the county by Seifel Consulting and Kronick, Moskovitz, Tiedemann & Girard identified a number of problems. The attorneys said the initiative is illegal because counties may legally pay only claims that are required by statute — and the Fair Pay act would not be a statute. The economists estimated the initiative could cost the county tens of millions of dollars but warned that forecasting was difficult. Initiative proponents countered that the measure would cost the county nothing as long as supervisors do not enact regulations that harm property values. Other local measures scheduled for the June ballot: • Half-cent sales tax measures in Solano, Napa and Santa Clara counties. The Solano and Napa county measures are traditional taxes to fund transportation and require two-thirds approval to pass. In Santa Clara County, which already has a half-cent tax for transportation, the measure is a general half-cent tax, so only a majority vote is required. Some of the money would go to social service programs, but the bulk would likely pay for transit, primarily the extension of BART from Fremont to San Jose. There currently is not enough money for the $4.7 billion BART project. • A measure backed by the Orange County Board of Supervisors that would prohibit the county from taking property via eminent domain so that the property may be used for private development. • A measure in Santa Barbara County that would carve a new county out of the existing county (see , July 2003). The proposed Mission County would encompass Santa Maria, Lompoc, Buellton and the Santa Ynez Valley. • A referendum of a 2,155-unit housing project in Santa Paula, where voters rejected a much smaller housing project in April. • An initiative in Barstow to encourage development of an Indian casino. • A measure in Apple Valley that seeks to clarify the City Council’s authority under a 1999 ballot measure that limits housing development to two units per acre. • Repeal of a 1987 voter-approved zoning limitation in Morgan Hill that currently prohibits grocery stores at the Cochrane Plaza Shopping Center. • A measure in Saratoga regarding the former Grace Methodist Church, which the city purchased four years ago for use as a senior center. The senior center never relocated to the site, and now the city proposes selling the 2.6-acre property. Opponents insist the church sold the property to the city at a discount and the property should remain in public hands. • A Kern County initiative that would ban the application of sewage sludge on farm fields. About one-third of all sewage sludge — a byproduct of sewage treatment — in the state is now hauled to Kern County and spread on agricultural land. The county has tried for years to halt the practice (see , May 2005; , July 2000). • A San Francisco initiative aimed primarily at Laguna Honda Hospital admissions and care policies that also would permit development of nursing homes as conditional uses on land zoned for public use. At least that is the analysis of the city attorney and city planners. Initiative proponents deny that the initiative’s new use district would apply anywhere other than at Laguna Honda. Results of land use measures on local ballots during April. Los Angeles County . An $8 million bond to help fund an overpass above Santa Anita Avenue for the planned Gold Line train won approval. The bond is expected to cost property owners about $7 per $100,000 of assessed value per year. The city has already set aside about $5 million for the $13 million grade separation project. San Mateo County . Voters in this city of 1,500 people overwhelmingly backed an advisory measure that urges the state to permit no-limits gambling at the Lucky Chances Casino. From the time it opened in 1998 until late in 2005, Lucky Chances permitted high-stakes poker and Asian games. However, the attorney general’s office ordered Lucky Chances to cap bets at $200 because the high-stakes gambling violated a 1996 state law against card room expansion. Lucky Chances provides about one-third of the city’s annual revenue. Ventura County . A proposal to expand the city’s voter-approved growth boundary narrowly failed, as voters rejected a plan to develop Adams Canyon for the third time in six years. The latest proposal called for 495 upper-end houses, a 200-room hotel and a country club on 6,500 acres.

The California Supreme Court has accepted two more land use cases, one involving a habitat conservation plan for North Coast redwood forests and one involving the red-hot issue of eminent domain. Additionally, the court has dismissed a fee case from the City of Encinitas and, in April, it heard oral arguments in a case involving the level of regulation a county may impose on logging operations. The environmental case headed to the state’s high court involves the 10-year-old Headwaters Forest deal, in which the state and federal governments paid Pacific Lumber Company (PALCO) $480 million for about 7,000 acres of old growth redwood forest. The complex deal also called for PALCO to adopt a habitat conservation plan (HCP) for its remaining 200,000 acres in Humboldt County, which the company is logging. Environmentalists sued over the HCP and related “incidental take” permits, arguing that the habitat plan failed to include sufficient steps to offset harm to rare species. They also argued that the HCP’s “no-surprises” assurance violated endangered species laws because it prohibits the Department of Fish & Game from imposing additional species mitigation measures for 50 years. Environmentalists also challenged the California Department of Forestry and Fire Protection’s approval of a sustained yield timber production plan for PALCO, and various state agency findings issued under the California Environmental Quality Act (see , March 2006). A trial court judge ruled for environmentalists, but the First District Court of Appeal in December 2005 overturned the lower court and upheld virtually all PALCO permits and plans. The 84-page decision was one of the first published opinions upholding the no-surprises rule. The case is , No. S140547. The eminent domain case actually concerns damages to which a property owner is entitled because of a public water project. In 1997, Metropolitan Water District of Southern California filed an eminent domain action against Campus Crusade for Christ to accommodate a 12-foot diameter pipeline carrying water to Diamond Valley Lake, near Hemet. The Met filed suit to place 18.7 acres of permanent easement and 27.4 acres of temporary construction easements for seven years across the historic Arrowhead Springs property just north of San Bernardino. Campus Crusade owns the 1,800-acre property and has been planning major development on the mostly undeveloped land. After extensive negotiations, the Met ultimately offered to pay $3.5 million. Campus Crusade insisted the Met pay $12.5 million for the property interests and damages. Campus Crusade argued that the Met should provide compensation for delays in Campus Crusade’s development plans, the loss of mature trees and the possibility of an earthquake-caused pipeline rupture. San Bernardino County Superior Court Judge John Wade refused to let Campus Crusade present much of its evidence and ultimately awarded the group only $479,000 in damages. The Fourth District Court of Appeal found that Wade made numerous errors and sent the case back for a new trial. Instead, the case is headed to the state Supreme Court. The case is , No. S141148. The case recently dismissed by the state high court is , No. S123510, which concerns building fees. In December 2005, the state Supreme Court ruled in , 37 Cal.4th 685, that the developer could challenge building fees contained in a readopted fee schedule (see , January 2005). The decision overturned a lower court ruling that the statute of limitations had passed. In the Encinitas case, an appellate court had ruled that could contest building fees that had been adopted years earlier because the city had made no provision for public review of automatic fee increases (see , April 2004). The litigation now heads back to Superior Court for a decision on the merits of Barratt American’s claims. The recently argued case is , No. S123659, which concerns how far counties may go in regulating the conduct and location of timber harvest operations. Two years ago, an appeals court essentially overturned a landmark 1995 decision that limited a county’s regulatory authority. A state Supreme Court decision is due by early July.

Tulare County owes the Dinuba Redevelopment Agency property tax-increment dollars that the county erroneously distributed to itself and nine other local government agencies, the Fifth District Court of Appeal has ruled. Tulare County officials had miscoded certain parcels within the City of Dinuba’s redevelopment project area. The county agreed to correct the errors prospectively but not retroactively. The city sued for all underpaid tax increment from the 1997-98 through 2003-04 fiscal years, and the Fifth District ruled for the city. A 2002 audit conducted for the Dinuba Redevelopment Agency discovered that some parcels had been miscoded and that the agency had not received tax increment from those parcels for the 2002-03 fiscal year and the previous four fiscal years. Tulare County agreed to correct the errors for the 2002-03 assessment roll, but refused to make retroactive changes or pay the wrongly collected tax revenue. Dinuba sued for the underpaid taxes beginning with the 1997-98 fiscal year. The county filed a demurrer, saying that the disputed tax revenue had already been distributed to other agencies and the county could not be required to make payments to Dinuba from the county general fund, and that the county was immune from liability under the Government Code. Tulare County Superior Court Judge Patrick O’Hara ruled for the county but allowed the city to amend its lawsuit. The city did so, but in July 2004, O’Hara sustained a second demurrer filed by the county. O’Hara ruled the county was immune under Government Code § 860.2. The city appealed, and a unanimous three-judge panel of the Fifth District overturned the lower court. On appeal, Tulare County continued to maintain that it was immune based on the Tort Claims Act (Government Code § 810 et seq.), under which public entities are not liable for injuries “except as otherwise provided by statute.” The specific section on which O’Hara based his ruling provides immunity for an “act or omission in the interpretation or application of any law relating to a tax.” “However,” Fifth District Justice Herbert Levy wrote, “to make this ruling, the court must have first concluded that appellants were suing in tort, not contract. Government Code immunities only extend to tort actions that seek money damages.” Levy then cited several cases in which courts ruled that money wrongfully withheld by a public agency was a matter of contract, including , (1974) 11 Cal.3d 113, and , (2003) 112 Cal.App.4th 950. Dinuba is “entitled to the tax increment revenue by statute,” Levy wrote for the Fifth District. “Thus, appellants are essentially seeking the release of property that is rightfully theirs but that was wrongfully detained. This is not an action for damages against the sovereign. Rather, the complaint is based on breach of a contractual duty. Accordingly, Tulare is not immune under Government Code § 860.2.” The exact amount of money the county owes the redevelopment agency is unclear. The county may ask the state Supreme Court to accept the case. The Case: , No. F046252, 06 C.D.O.S. 2640, 2006 DJDAR 3721. Filed March 28, 2006 The Lawyers: For Dinuba: Andrea Saltzman, Meyers, Nave, Riback, Silver & Wilson, (510) 808-2000. For the county: Michael Wallenstein, Brown, Winfield & Canzoneri, (213) 687-2100.

In a major victory for opponents of big-box retail development, the Fifth District Court of Appeal has upheld a City of Turlock ordinance that prohibits a store of more than 100,000 square feet from selling groceries. Although dozens of jurisdictions have similar ordinances, and retail giant Wal-Mart has fought back fiercely, the court’s ruling is the first published decision in California on such a regulation. The decision could encourage other cities to approve similar ordinances. “I think it’s very useful to other cities,” Rick Jarvis, Turlock’s attorney in the case, said of the Fifth District decision. “There will be clear authority for other cities to adopt these ordinances without having to face legal challenges. The bottom line test is whether there is a rational basis for the regulation.” Jarvis said Turlock planning staff’s thoughtful drafting of the ordinance and detailed justification helped win the case. “They were very careful in the adoption of the findings, and they did an excellent job with the analysis of how the ordinance flows from the general plan,” Jarvis said. The city’s general plan policy since the 1990s has been to locate grocery stores in neighborhood-serving centers spread across town, explained Community Development Director Charlie Woods. Big-box stores, meanwhile, are limited to regional-serving commercial areas near Highway 99. Woods pointed out that more than 10 years ago the city denied a Target store proposed for a neighborhood-serving center. City officials feared that a big-box store with groceries would force the closure of neighborhood grocery stores, which would cause neighborhood centers to deteriorate and cause residents to drive farther to buy groceries in the regional retail center. Of course, the big-box retailer in question is Wal-Mart, which had proposed a 225,000-square-foot supercenter— a store that would have sold groceries. Wal-Mart argued that Turlock officials singled out the company, a contention the city denied and the court rejected. “ he simple fact that Wal-Mart was the first company to feel the effect of the ordinance is not sufficient to establish that Wal-Mart was targeted in any unconstitutional manner,” Justice Betty Dawson wrote for the unanimous three-judge appellate panel. The issue, said Woods, is the scale and format of stores, not Wal-Mart per se. In fact, Turlock already has a Wal-Mart store. “The council did what they did for the right reasons,” Woods said. “You have to articulate what your goals are.” Wal-Mart officials indicated the company would likely ask the state Supreme Court to review the decision. Three years ago, Wal-Mart began discussing development of a supercenter at Countryside Drive and West Tuolumne Road, near Highway 99. Representatives of labor unions (Wal-Mart employees are nonunion) and local grocery stores asked the city to block the project. In September 2003, the City Council directed the Planning Commission to prepare an ordinance that would limit the ability of big-box retailers to sell nontaxable items such as groceries. In January 2004, over the strenuous objections of Wal-Mart, the City Council adopted an ordinance that prohibits stores exceeding 100,000 square feet from devoting 5% of sales floor area to nontaxable merchandise (see , January 2004). Wal-Mart responded with a lawsuit alleging that the city violated the California Environmental Quality Act (CEQA) and other state laws, and that the ordinance was arbitrary and capricious. Stanislaus County Superior Court Judge Roger Beauchesne ruled for the city, finding that the ordinance was not a “project” under CEQA and also was entitled to other exemptions, and that the ordinance was a proper exercise of the city’s police power. Wal-Mart appealed, and the Fifth District upheld the lower court. The most-watched portion of the case concerned the city’s use of its police power. Wal-Mart argued that the city’s ordinance was designed to suppress economic activity, was not reasonably related to the public welfare, would have effects outside the city, and was not a reasonable accommodation of competing interests. The city countered that the ordinance was a valid attempt to prevent urban/suburban decay that would result from existing grocery stores closing, and to reduce traffic and air quality impacts associated with people having to drive farther to one large store. In siding with the city, the court cited extensively from a December 2003 staff report by then-Planning Manager Michael Cooke, and from the ordinance’s preamble. “ hile the ordinance likely will have an anticompetitive effect on the grocery businesses in city, that incidental effect does not render arbitrary an ordinance that was enacted for a valid purpose,” Dawson wrote. “While zoning ordinances may not legitimately be used to control economic competition, they may be used to address the urban/suburban decay that can be its effect.” “ ocal governments,” Dawson continued, “need the flexibility to react to specific proposals for a new kind of development not previously contemplated where such a development will or may have harmful consequences to the locality’s legitimate planning objectives. “In summary, the police power empowers cities to control and organize development within their boundaries as a means of serving the general welfare,” Dawson wrote. “ legitimately chose to organize the development within its boundaries using neighborhood shopping centers dispersed throughout the city. The ordinance is reasonably related to protecting that development choice.” In a footnote, the court distinguished its decision here from a decision issued one week earlier in a different case in which the court struck down a City of Hanford zoning ordinance regulating which stores may sell furniture (see , page 8). In the Hanford case, the regulation was “not rationally related” to the public purpose. In Turlock, “the ordinance is reasonably related to furthering a legitimate policy choice for organizing development,” Dawson wrote in the footnote. The Fifth District dealt at length with Wal-Mart’s CEQA arguments. The city had declared the ordinance exempt from CEQA because the ordinance was not a public project, it was consistent with a program environmental impact report for the general plan, it was consistent with the general plan, and it was eligible for a categorical exemption as a minor alternation of land use. The city relied on CEQA Guidelines § 15183, which streamlines review of projects that are consistent with general plans for which an EIR was certified. The court upheld the city’s approach. Wal-Mart’s primary contention was that its proposed store was environmentally superior to other likely development. Wal-Mart argued that if the city rejected its proposal, the company would build outside the city limits, forcing people to drive farther and creating more air pollution. Additionally, the originally chosen site would get developed with many smaller stores, including a grocery store, and these multiple stores would create more traffic than a single supercenter, Wal-Mart contended. The court, however, said the proper environmental analysis would be a comparison between the current conditions (known as the baseline) and foreseeable future conditions. Wal-Mart was comparing two sets of future conditions and made too many assumptions about the effect of Turlock’s ordinance, the court ruled. Wal-Mart has also sued Turlock in federal court, arguing that the city’s ordinance violates the equal protection and commerce clauses. That case was argued in U.S. District Court in Fresno on February 6, and a ruling is expected soon. The Case: , No. F047372, 06 C.D.O.S. 2827, 2006 DJDAR 4019. Filed April 5, 2006 The Lawyers; For Wal-Mart: Theodore Boutrous, Jr., Gibson, Dunn & Crutcher, (213) 229-7000. For the city: Rick Jarvis, Jarvis, Fay & Doporto, (510) 238-1400.

The City of Davis, a college town located only 15 miles west of Sacramento, is surrounded by farm fields, orchards and open space. Despite its proximity to the Central Valley’s second largest city, Davis has virtually none of the “rural sprawl” that surrounds so many other valley towns. One of the reasons for Davis’s sharp urban edges is a nearly 20-year-old redevelopment agreement between the city and Yolo County. The pact gives the city veto power over nearly all proposed development in unincorporated areas near the city. In exchange, the county gets a chunk of the property tax-increment revenue generated by Davis’s redevelopment agency. “For all intents and purposes, it’s a growth management tool,” said Mitch Sears, an open space planner for the city. Yolo County has pass-through agreements with redevelopment agencies in all four of the county’s incorporated cities — Davis, Woodland, West Sacramento and Winters. All of the agreements acknowledge that the county wants to see development occur in the cities, said David Morrison, assist director of Yolo County’s Planning, Resources and Public Works Department. However, only the Davis-Yolo contract gives the city land use control over unincorporated areas. The agreement, which bolsters a “smart growth” approach to development, could be a model for broader reform of the state-local fiscal system. The story behind the Davis-Yolo agreement is a classic tale of California growth politics. During the mid-1980s, developer Frank Ramos approached the city with a proposal for an 800-unit housing project just beyond the city’s eastern boundary, as well as a new interchange on Interstate 80. The Davis City Council, which considered itself advocates of very slow growth at the time, opposed Ramos’s project. So the developer began talking with county officials. Although Ramos never filed an application with the county, word spread that the county was interested in the project and would approve it if given the chance. After lining up support at the county level, Ramos returned to the city, where it became clear that the City Council would do almost anything to prevent such a project from going forward under the county’s authority. With this leverage in hand, the developer roughly doubled the size of his Mace Ranch project to 1,500 units and dropped the interchange. Finding itself backed into a corner, the City Council had little choice but to approve a project that was nearly twice as big as the rejected original plan — and a project with greater traffic impacts. At about the same time the Mace Ranch politics were playing out, the city formed a redevelopment agency. The city was determined not to repeat the Mace Ranch saga, while the county was concerned about losing revenue to a new redevelopment agency. So the sides met and in 1987 signed the pass-through agreement. The agreement, which was most recently renegotiated in 2001, essentially ensures the county does not lose out on the growth of property tax revenue in the city’s redevelopment project area. In exchange, the Davis City Council, which runs the redevelopment agency, has authority within the city’s sphere of influence to reject any development other than uses allowed by the county’s agricultural zoning. (The agreement does permit development in about half a dozen small areas that were subdivided prior to 1987.) The city’s sphere of influence extends out three to four miles beyond the city limits. The agricultural zoning permits one house per 20 acres and construction of various farm-related facilities — but no urban development. If a landowner or developer does want to build in the sphere of influence, the application comes to the city, Sears explained. The City Council has the ultimate say and it has vetoed projects, but most proposals are sorted out at the staff level, he said. Generally, the city insists that development sites get annexed into the city. However, the city has approved only about three small annexations since the pass-through agreement went into effect, Sears said. Thus, the city has been able to pursue redevelopment while simultaneously preventing sprawl. And it’s not as if there is no interest in development. “There is strong growth pressure in the Davis area,” Sears said. “Every other month I’m talking to another developer about making their way through our process to get annexed.” Typically, those talks do not even reach the application stage, though, because of Davis’s insistence on an urban edge. Jeff Loux, a former Davis planning director who now runs the University of California, Davis, Extension land use and natural resources program, said the pass-through agreement changed the local political equation. “It took out of play dozens and dozens of subdivisions that developers would have come forward with,” said Loux, who became planning director shortly after the agreement was finalized. “We considered it, from a planning point of view, as part of our basic planning policy of a dense urban area surrounded by farmland.” The county’s Morrison said the agreement preserves “very clear, distinct urban edges, unlike most of the rest of the state.” Morrison, however, sees the pass-through agreement as only one tool that reflects the “operating philosophy” of the county. “The county has been very clear: We are not interested in becoming Elk Grove or Folsom,” he said. If the county wanted to get into the development business, it could cancel the pass-through agreement and start approving projects that would bring in more revenue. That has not happened, but, Morrison warned, the local economy has changed dramatically during the last five years. Real estate speculation has become intense at the same time the farm economy has suffered. Two large tomato processing plants have closed. One plant reopened, but it is smaller and struggling, he said. The value of the county’s total farm production has been flat for a decade. The county, which is shifting into high gear on a general plan update, needs alternatives for dealing with market forces that threaten longstanding land use policies, Morrison said. The situation is further compounded by the fact that Yolo receives only nine cents of every property tax dollar. Only Orange County receives a smaller cut of property taxes. State legislation to give those two counties more property tax revenue has been vetoed several times. “If the state’s really interested in smart growth, they need to put their money where their mouth is,” Morrison said. Loux agrees and suggested that the Davis-Yolo County agreement could be a model for fiscal reform. Until the “haves” start paying the “have nots,” there is no incentive to halt development in inappropriate locations, he said. Contacts: Mitch Sears, City of Davis, (530) 757-5626. David Morrison, Yolo County, (530) 666-8041. Jeff Loux, UC Davis Extension, (530) 757-8577.

It's easy to overlook the San Diego River, especially as it reaches the final stretch of its 52-mile journey from the inland mountains to San Diego's Mission Bay. The river is not a focal point of Mission Valley, as it winds past the parking lots of hotels, shopping centers and Qualcomm Stadium. Much of its water has been diverted into aquifers farther upstream. Its water quality is considered impaired under federal pollution standards. Homeless encampments are found at the river's estuary near the bay. But as dammed, narrowed and channeled as the river is in places, it also provides a home to many endangered or threatened species, and a sanctuary from urban life. The state-financed San Diego River Conservancy, which recently adopted a five-year plan for preserving the river, hopes to turn the river into a showplace for the city and the region, while preserving a key part of the environment. The five-year plan calls for spending $164.5 million to acquire land, restore habitat, improve water quality and study the river's hydrology. Money to implement the plan, however, is short. "When you look at the environmental challenges (facing the river), they really are quite different depending on where you are," said Jack Minan, vice chair of the San Diego River Conservancy. In its first 15 miles, the river is more pristine, and its water quality is good. At its source in the Cleveland National Forest near Julian, the river and its tributaries include magnificent waterfalls, such as Mildred and Cedar Creek falls. In recent years, environmentalists have tried to get this upper stretch declared a wild and scenic river by Congress. The free flow of water ends at the El Capitan and San Vicente reservoirs, built during the 1930s and 1940s to prevent flooding in the City of Santee and San Diego's Mission Valley. A seven-mile stretch of the river after the El Capitan Reservoir is still used for agriculture, followed by the remaining urbanized stretch through San Diego, where water polluted from freeways and streets enters as runoff. Although most urban rivers are similarly polluted, the San Diego River is by no means an urban horror story. Scattered throughout the river's path are a number of parks. They include the 5,800-acre Mission Trails Regional Park, which runs from Santee to San Diego, and is one of the largest urban parks in the country. Some of the parks are kept in a natural state; others contain athletic fields and urban park amenities. River supporters want to create more parks and a 52-mile trail to make the river, they are fond of saying, "like a string of pearls." Supporters envision saving wildlife while opening up the river to more recreational activities by humans. Currently there are only 8.5 miles of trail along the river. "We intend to link a bunch of parks into a continuous chain," said Deborah Jayne, executive officer of the conservancy. San Diego County has one of the highest concentrations of threatened and endangered species in the nation, and the river is home to at least 25 protected plants and animals. Endangered or threatened species found along the river include birds, such as the least bell's vireo and California gnatcatcher, the arroyo southwestern toad and plants such as the San Diego thornmint. Fish in its waters are non-native species, such as carp and bass. "We should have steelhead trout," said Rob Hutsel, executive director of the nonprofit San Diego River Park Foundation, one of several organizations that works with the conservancy to renew the river. "Most of the land on the river is or will be included within the regional natural communities conservation plans and multi-species conservation programs" being set up in the county to preserve endangered and threatened species, said Michael Beck, San Diego director of the Endangered Habitats League (see , February 2003). Beck is also chair of the San Diego River Park Foundation and Lakeside's River Park Conservancy. Lakeside is an unincorporated community of 50,000 on the river. Its River Park Conservancy recently acquired 100 acres of land along the river. Counting donated land, the Lakeside conservancy has raised more than $20 million in only a few years, he said. It is a model of what the larger river conservancy hopes to achieve, he said. "It's typical conservation," he said. "It comes from hard work." The recently adopted five-year plan calls for purchasing 1,450 acres along the river at a cost of $73 million, and also spending more than $25 million to remove non-native species and restore wetlands. But sources of money are few at this point. The conservancy currently has $5 million in funds from Proposition 40 that were designated for the river. Future funding may have to come from state bond measures and possibly from programs that carry out local habitat conservation plans. "There are a lot of overlap activities," Beck explained. For example, he said, "a very significant part of the San Diego River in El Monte Valley will be included in the Helix Water District's NCCP." Many of the same agencies involved in local habitat plans also have been involved in planning river restoration. Jayne said the conservancy also hopes to receive future donations of land, such as 104 acres bequeathed to it recently near the river's headwaters. In addition, the river conservancy is applying for federal and state money, as well as private funding, she said. The conservancy intends to prepare a complete hydrologic study of the river to understand how the cumulative impact of land use decisions made by individual jurisdictions impact the waterway, Jayne said. In some parts of the river, heavy sand and gravel mining has changed the river, as gigantic holes have been gouged out. The river is one of the most heavily mined in the state, according to Jayne. Besides being an environmental resource for the region, the San Diego River is also considered an important part of San Diego's history. The state's first mission relied on it for water, and the city's presidio and first settlements were built nearby. Archeological finds indicate humans have lived on its banks for 8,000 to 10,000 years. The San Diego River Conservancy was created in 2002, and is one of the state's eight conservancies. The San Diego River Conservancy is scheduled to sunset in 2010. Jayne said she hopes the conservancy's track record before that deadline convinces the Legislature to keep the conservancy operating. Contacts: Rob Hutsel, executive director, San Diego River Park Foundation, (619) 297-7380. Jack Minan, vice chair of San Diego River Conservancy; professor, University of San Diego School of Law (619) 260-4607. Michael Beck, San Diego director, Endangered Habitats League, (619) 846-3003. Deborah Jayne, executive officer, San Diego River Conservancy, (858) 467-2972. San Diego River Conservancy: http://sdrc.ca.gov

A City of Hanford zoning ordinance that permitted furniture sales only in large department stores has been thrown out as unconstitutional by the Fifth District Court of Appeal. The ordinance, which was intended to keep furniture stores downtown, prohibited all but the largest stores in an outlying planned commercial (PC) zoning district from selling furniture. But the ordinance contained an exception allowing stores of at least 50,000 square feet to devote up to 2,500 square feet to furniture displays. The exception created two classes of retailers, and “the disparate treatment of these two retailers does not bear a rational relationship to the goal of preserving downtown Hanford,” the court ruled. The controversy started in 2002, when Adrian and Tracy Hernandez sought a certificate of occupancy for Country Hutch Home Furnishings and Mattress Gallery, a 4,000-square-foot mattress store that would also carry bedroom furniture and accessories. The store was to be located in the PC zone. A city official told the business owners they could not sell furniture at this location, and in early 2003 the city approved a certificate of occupancy for Country Hutch that identified the merchandize the store could sell. Furniture was not on the list. The Hernandezes opened the store and started selling furniture anyway. The city cited them for violating the zoning ordinance. The store owners responded with a request that they be allowed to sell the same type of furniture already available at Wal-Mart, Gottschalks and The Home Depot in the same zoning district. The city conducted a series of study sessions before the City Council in July 2003 adopted a new ordinance prohibiting the sale of furniture in the PC zone except by department stores of more than 50,000 square feet. The city reasoned that the ordinance would protect the vitality of downtown — where the city wants to see furniture stores — while still keeping the PC zone available for department stores. The Hernandezes sued, arguing that the ordinance violated the constitution’s equal protection clause. Kings County Superior Court Judge Peter Schultz found that there was a rational basis for treating the two classes of stores differently, and he upheld the ordinance. The store owners appealed, and a unanimous three-judge panel of the Fifth District overturned the lower court in a very straightforward decision. The appellate court found that the prohibition on furniture sales in the PC zone “appears to reasonably relate to a legitimate governmental purpose, i.e., keeping large furniture stores downtown in order to preserve the economic viability of that commercial district.” The problem, wrote Justice Herbert Levy, was the exception for large stores. “Country Hutch sells mattresses and home furnishings, both permitted in the PC zone. Country Hutch also wanted to include a limited furniture department. The department stores are in the same position. They want to devote a portion of their floor space to furniture. Under these circumstances, the difference in total floor space is largely irrelevant. Thus, these retailers are in similar situations. Accordingly, in order for the ordinance to comply with the equal protection principles, this classification based on size must bear a rational relationship to the legislative goal, i.e., the preservation of downtown Hanford. “Here, with the blanket 2,500-square-foot restriction on furniture in the PC zone, the small retailer poses the same potential threat, if any, to the downtown merchants as the larger store. Thus, limiting the furniture sales exception to stores with more than 50,000 square feet is arbitrary. A rational relationship between the size classification and the goal of protecting downtown simply does not exist.” The court also rejected the city’s argument that the ordinance was legitimate because it made the PC zone attractive to large retailers. Small retailers are not a detriment to the PC zone, the court ruled. The Case: , No. F047536, 06 C.D.O.S. 2643, 2006 DJDAR 3718. Filed March 28, 2006 The Lawyers: For Hernandez: Russell K. Ryan, Motschiedler, Michaelides & Wishon, (559) 439-4000. For the city: Michael J. Noland, Kahn, Soares & Conway, (559) 584-3337.

Urban sprawl has been blamed for everything from vanishing farmland and dwindling wildlife to Baby Boomer obesity. Central Valley air pollution regulators are blaming it now for much of the region’s persistently dismal air quality, and they have embraced a radical fix never before tried: using the threat of smog-mitigation fees to encourage “smart growth” development patterns and greener building design. No other regulatory agency in the nation has made such an explicit link between land-use patterns and polluting emissions from automobile traffic, and then tried to use developer fees as a hammer to reshape community growth. Unsurprisingly, the move by the San Joaquin Valley Air Pollution Control District has drawn loud and angry condemnation from the building industry and affordable-housing advocates, who argue the fees boost the cost of new homes and shut many would-be buyers out of one of the state’s hottest markets. Opponents also believe the program unfairly targets only new construction, when existing residents contribute most of the pollution. Clovis Mayor Nathan Masgig, spokesman for a group opposing the fee, issued a press release calling it “a whopping new tax on Central Valley taxpayers, businesses and our entire regional economy, all with no guarantees of better air quality.” Environmentalist and public-health experts have been equally energetic in their praise for the new rule, which took effect March 1. And it was defended as both a legal and a regulatory necessity by district staff, who pointed out that a recently adopted state law gives them no other option for cleaning some of the dirtiest air in the county. Bakersfield, Tulare, Visalia and Fresno now rank with Riverside, San Bernardino and Houston at the top of the national list for ozone pollution. “With the amount of expected growth in the valley, every emission reduction from this rule is important,” Seyed Sadredin, deputy director of the air district, said in announcing adoption of the regulation. “Although air quality has improved greatly over the years, we still have a serious problem, and innovative programs like this will help us clean the air.” The San Joaquin Valley Air Pollution Control District encompasses eight counties, from San Joaquin in the north to Kern in the south, and is governed by county supervisors and city council members from throughout the region. The district has been criticized for years for failing to address the valley’s persistently poor air quality (see CP&DR Environment Watch, April 2002). The district adopted the new rule after the Legislature in 2003 enacted SB 709 by Sen. Dean Florez (D-Shafter), which requires the San Joaquin district to adopt, by regulation, a schedule of fees to be assessed on area-wide or indirect sources of emissions. The regulation, dubbed the “Indirect Source Review” program, was approved in December. It applies a sliding fee scale to large new developments, which it defines as those that include any of the following: • 50 residential units; • 2,000 square feet of commercial space; • 25,000 square feet of light industrial space; • 100,000 square feet of heavy industrial space; • 20,000 square feet of medical office space; • 39,000 square feet of general office space; • 9,000 square feet of educational space; • 10,000 square feet of government space; • 20,000 square feet of recreational space; or • 9,000 square feet of space not identified above. The fee is based on a complicated series of equations intended to quantify the added pollution produced by construction equipment and vehicle traffic associated with each type of project, and the estimated cost of offsetting those emissions through off-site reductions at other emission sources. The pollutants of primary concern are small particulate matter, such as the fine soot in diesel exhaust, and nitrogen oxide, a common vehicle emission and a precursor of ozone. The valley is in violation of state and federal standards for those pollutants, despite significant reductions from stationary and mobile sources. The main reason for the violations, according to air district staff, is the staggering increase in valley auto traffic. Residents drive 94 million miles a year, and population is booming, but the district cannot directly regulate tailpipe emissions from private cars and trucks. The consequences of poor air quality are serious for children and other people with sensitive health. Research has confirmed a link between airborne particulates and illnesses such as asthma. Ozone can irritate and inflame the respiratory tract, particularly during heavy physical activity, which results in heavy coughing, throat irritation, and breathing difficulties. Fresno County has the highest childhood asthma rate in the state. Most of the controversy over the rule has arisen from the requirement that developers pay for pollution produced by vehicle traffic associated with their projects over a 10-year period. That traffic includes employees driving to and from work sites in office buildings, industrial plants and other developments, as well as people driving to and from their homes in large residential projects. The fees can be steep, and they rise over time. For nitrogen oxide emissions, the impact fee starts at $4,650 a ton this year, rises to $7,100 next year and hits $9,350 in 2008 and beyond. The particulate emission fee starts at $2,907 a ton, and then rises to $5,594 and $9,011. For a typical residential development of 120 single-family homes on 24 acres, the fee would translate to $780 per home this year, climbing to more than $1,700 in 2008. Builders can reduce the fee substantially, however, by incorporating green building technologies into their projects — increased energy efficiency, for example — clustering housing units near transit stops and shopping centers, boosting density and making development more pedestrian-friendly. Depending on how many of those strategies the developer employs, the fee could drop to $557 or $454 per home — not much of an added hit for the buyer of a $250,000 dwelling. The district estimates the fee will raise more than $100 million in the first three years, which the district plans to spend on clean-running buses and street sweepers, and other pollution-reduction measures. Critics of the rule are skeptical that it will enable the district to clean the valley’s air enough to meet state and federal standards. But the region’s regulators are fast running out of sacred cows to exempt from air-pollution controls. In the bovine sense, that’s literally the case: By summer, the valley air district is expected to impose smog restrictions on cows and pigs, too. Contacts: San Joaquin Valley Air Pollution Control District, (559) 230-5800. Indirect Source Review Program: http://www.valleyair.org/ISR/ISR.htm Clovis Mayor Nathan Masgig, (559) 324-2101.

A scandal involving development of a hub for cargo carrier DHL has raised questions about reuse of the March Air Force Base in western Riverside County. Whether the scandal will cost March the DHL operation is unknown, but some people in charge of March redevelopment are questioning the governing system established for base reuse. In February, an investigated attorney hired by the March Joint Powers Authority (JPA) reported that the developer of the DHL hub, March GlobalPort, had provided the JPA and the public with an incorrect flight path for the cargo airplanes. The flight path map presented by March GlobalPort showed the planes taking off over Interstate 215 and Highways 60 and 91. The real flight path, however, takes the planes right over two Riverside neighborhoods. Residents of those neighborhoods had sued to halt the DHL project, but they lost in Superior Court and did not appeal. The flight path revelation came only days after a consultant hired by the JPA reported that March GlobalPort had overestimated landing fee revenue from the DHL operation. The consultant said fees would amount to only $9.5 million over 20 years — not the $26 million the developer had predicted. Opponents of the DHL project, including Riverside County Supervisor and JPA Commission Member Bob Buster, have seized on the new information to question both the JPA’s structure and cargo hub, which began operating last fall. Others are at least questioning the JPA, which is overseen by a commission composed of two elected officials each from the county, the City of Riverside, Moreno Valley and Perris. “There is absolutely no communication,” said Ed Adkison, a Riverside councilman who sits on the JPA commission. “When things go awry, I find out about it by reading the newspaper. How can you have oversight if you don’t know yourself what is going on?” Adkison pointed to a recent citation the JPA received from fire authorities for storing aviation fuel improperly — an embarrassment Adkison learned about in the newspaper. The JPA commission recently hired Tom Evans, a former Riverside interim city manager and former chief of the city’s municipal electric and water utility, to audit JPA operations and make recommendations. Most base reuse efforts have a joint powers authority in charge of redevelopment, and the JPAs frequently sign agreements with master developers. This is true at March. However, unlike other base reuse efforts, in the case of March, the JPA — not the local city or county —has land use police powers. Adkison said the JPA was never intended to be a permanent entity, and now that uses of most of the 4,400-acre base have been planned and approved, it may be time for a change. “At some point in time, the JPA needs to go away,” Adkison said. “The JPA was never supposed to be a municipality. Now, as you’ve got these buildings going up, they need municipal services and infrastructure.” Not all JPA members agree. Richard Stewart, a Moreno Valley councilman and current JPA chairman, has repeatedly said there is no need to break up the JPA now. In recent weeks, Stewart has clashed with county and Riverside representatives regarding the JPA’s future. Last month, the City of Riverside released a map that proposed spheres of influence over the base and adjacent lands. The map gave 4,332 acres to Riverside, 543 acres to Moreno Valley and 44 acres to Perris. The map outraged Moreno Valley and Perris officials. “We are all equal partners in this authority,” Moreno Valley Mayor Bonnie Flickinger told the Riverside Press Enterprise. “What bothers me is that this was unilateral. Perris and Moreno Valley and Riverside County are not suburbs of Riverside, and Riverside is not the center of the universe.” At the heart of the acrimony, though, is the investigative report prepared for the JPA commission by Los Angeles attorney Leonard Gumport. The JPA asked for the investigation after the Press Enterprise reported last September, shortly before DHL flights commenced, that the flight path map presented by Greg Diodati, then the managing partner of the cargo hub developer, was inaccurate. The incorrect map was displayed at two public hearings in September 2004. During the second hearing, the JPA commission voted 7-1 to approve the cargo hub. Nine days after that vote — but before a routine, “second reading” of rezoning for the cargo hub — Diodati submitted a letter to the JPA providing new flight path information. “Diodati’s October 1, 2004, letter was intentionally cryptic and misleading to the public, including the March JPA commissioners,” Gumport reported. “In the letter, Diodati obscured from the public and the commissioners the discrepancies between the flight path depicted in the inaccurate chart and the different flight path used in noise contour maps prepared by March GlobalPort’s noise consultants.” Apparently a draft of the noise consultants’ “single-event noise exposure level study” based on the correct flight path was presented to JPA staff members only hours before the commission voted to approve the project. A final version of the noise study was made public before the October 6, 2004, second reading. Diodati has publicly stated he did nothing wrong and did not intend to deceive anyone. However, he has been removed as the developer’s managing partner. Two months after the JPA approved the cargo hub, DHL selected March over the former Norton Air Force Base in San Bernardino and Ontario International Airport for a new cargo hub that could ultimately employ 250 people. Officials in San Bernardino and Ontario concede they are at least closely monitoring the situation, although DHL has not indicated it intends to relocate. Andy McCue, managing director of the Blakeley Center for Sustainable Suburban Development at UC Riverside, said the recent revelations could hinder continued redevelopment at March, which had been seen as a model for others to replicate. If the individual jurisdictions start “Balkanizing,” redevelopment could truly suffer, he said. “A lot of the momentum they had has been dissipated,” McCue said. “It’s not just the DHL project. All of these other things are starting to come out of the woodwork now. But the fact remains that for all of the cities around here and the county, March remains a very attractive economic development opportunity.” Indeed, a development agreement between the JPA and Lennar for a 1,290-acre business park remains in place. Development for a portion of that project has already begun. Contacts: Ed Adkison, City of Riverside, (951) 826-5991. Andy McCue, Blakeley Center for Sustainable Suburban Development, (951) 827-4103. March Joint Powers Authority: www.marchjpa.com

With the debate over infrastructure crashing to a halt, state lawmakers have turned their attention to housing legislation. In recent weeks, lawmakers have introduced and debated numerous housing bills, several of which chip away at local governments’ regulatory authority. Perhaps the most divisive bill is SB 1177 (Hollingsworth), the latest change to the density bonus law. The bill would prohibit local governments from requiring that developers show a requested waiver of development standards or zoning is economically necessary. Proponents of the bill argue that some cities are requiring developers to submit profit and loss statements and tax returns to prove that a waiver of development standards is economically necessary for a housing project. Local government representatives say that a waiver of community standards should require a showing of economic necessity. The Senate Transportation and Housing Committee approved SB 1177 after a sometimes heated hearing during late March. The hearing, in part, demonstrated confusion over the density bonus law, which lawmakers amended with SB 1818 in 2004, and with SB 435 in 2005 to make the statute more favorable to builders. Under the existing law, developers may build 25% more housing units than a property is zoned for if 10% of the units are affordable to low- or moderate-income residents. Developers also are eligible for one “regulatory incentive,” such as a reduction in site development standards, a modification of zoning requirements, or approval of mixed-use zoning. Developers who build a slightly greater percentage of affordable units are eligible for a density bonus of up to 35% and up to three waivers of local regulations. The existing law also lets developers request additional waivers of regulations. To get the additional waivers, though, developers must show that the waivers are necessary to make the housing units economically feasible. SB 1177 would change the economic necessity standard to one of physical necessity. Sen. Dennis Hollingsworth (R-Murrieta) said during the committee hearing that cities are abusing the economic necessity standard. He said there is “a growing recognition that the density bonus law is not being used as intended.” The California Building Industry Association, the California Association of Realtors (CAR), the California Federation of Labor and affordable housing developers are among more than 100 supporters of the bill. Ron Kingston, a CAR lobbyist, said it was impossible to quantify how an exception to architectural standards or setback requirements would make a project economically feasible. Marc Brown, of the Western Center on Law and Poverty, contended that cities use the economic necessity requirement to harass developers. Planning and local government representatives strongly oppose the bill. “Four years ago, this law worked pretty well,” said Daniel Carrigg, a lobbyist for the League of California Cities, which opposed the 2004 and 2005 amendments. “It’s become a disaster, a mess. This bill simply makes it worse.” Under the current law, if requested waivers are not granted, a developer may sue a local government, said Sande George, lobbyist for the California Chapter of the American Planning Association. Cities and counties end up granting waivers simply to avoid litigation, she contended. Several senators expressed skepticism at local government’s opposition. Sen. Denise Ducheny (D-San Diego) said economic feasibility of a development project is not a city’s concern. Besides, she said, a city could still decline to approve a requested waiver if it makes required findings. The committee approved SB 1177 on a bipartisan 10-2 vote, and the bill’s chances for approval appear good. Although authored by a conservative Republican, SB 1177 has a liberal Democrat, Assemblyman Dave Jones (D-Sacramento), as an Assembly sponsor. Local governments are supporting a competing bill, AB 2484 (Hancock), that would prohibit density bonuses for parcels already zoned for high-density development. Other housing bills under consideration: • AB 1387 (Jones) streamlines environmental review of infill housing projects near transit stops. • AB 2158 (Evans) requires councils of government, when establishing fair-share housing requirements, to consider cities’ and counties’ adopted spheres of influence and local agency formation commission policies. • AB 2331 (Villines) exempts projects funded by local governments, including redevelopment agencies, from prevailing wage labor requirements. • AB 2468 (Salinas) allows local governments to self-certify their housing elements in certain situations. • AB 2511 (Jones) places numerous restrictions on local governments’ ability to regulate and approve housing development. Among other things, the bill would remove cities’ and counties’ ability to attach conditions or require a variance for second units, and limits local governments’ ability to place conditions on certain housing proposals. • AB 2526 (Arambula) requires cities and counties to defer local fees until the issuance of a certificate of occupancy if at least 49% of a project is affordable. • AB 2562 (Saldaña) and SB 1676 (Ducheny) increase notification requirements to residents of rental properties being converted to condominiums. • AB 2922 (Jones) would increase redevelopment agencies’ housing set-aside from 20% to 50%. • AB 3042 (Evans) provides a new way for cities and counties to transfer shares of regional housing needs. • SB 1754 (Lowenthal) establishes a pilot project for formation of housing and infrastructure financing districts. • SB 1798 (Perata) expands a California Environmental Quality Act exemption for infill residential developments to projects of up to 10 acres and 200 units. • SB 1800 (Ducheny) requires cities and counties to designate a 20-year land supply for housing.

A state appeals court has provided water quality regulators with two significant victories, at least one of which could affect land use and development. The Fourth District Court of Appeal upheld the Santa Ana Regional Water Quality Control Board’s stormwater regulation for 18 local governments in San Bernardino County. A different panel of the same court upheld nearly all of a much-discussed “trash TMDL” that charges local governments with keeping all trash out of the Los Angeles River. Cities have fought the regulations since they were initially proposed, arguing that compliance would be overly expensive. The cities have asked the state Supreme Court to review the decision on the Los Angeles River regulation. The San Bernardino County stormwater ruling could have the largest impact for those in the land use planning and development fields. Regional water boards in most of the state’s urban areas have cracked down on storm drain discharges during recent years (see , October 2002, August 2001, March 2000, February 1998). The increased regulation intends to slow and filter runoff, which has forced a change in some planning and development practices. Some cities and counties — especially those located upstream — and development interests have fought the rules. The case at hand concerned a 2002 municipal stormwater permit that the Santa Ana regional board issued for 18 local government entities in San Bernardino County. Several of those entities appealed the permit’s conditions to the State Water Resources Control Board, which summarily dismissed the appeal. The cities of Rancho Cucamonga and Upland then sued the state and regional boards on procedural and substantive grounds. San Bernardino County Superior Court Judge Shahla Sabet ruled against the cities. Rancho Cucamonga alone appealed, and the Fourth District, Division Two, upheld the lower court. The Fourth District had little patience with Rancho Cucamonga’s arguments. First, the court ruled that Judge Sabet correctly dismissed the state board from the case because the state board had declined to become involved in the permit. Then the court turned to the regional board’s actions. The city raised what the court described as “an omnibus objection to the entire administrative record,” especially the inclusion of three studies regarding marine pollution and an economic study. The court ruled, though, that the city had waived its objection because it did not raise concerns about the record during the administrative process. The court then considered five substantive complaints: that the regional board failed to consider the economic impact of the permit conditions; that there was not substantial evidence supporting the board’s decision; that the lack of a “safe harbor” provision in the permit violated the Clean Water Act; that the permit conditions exceeded the “maximum extent practicable” standard for controlling pollution; and that the permit was overly prescriptive. The court discussed each argument only briefly before rejecting each one. The court determined the 2002 permit “was based on a fiscal analysis and a cost/benefit analysis.” As for the alleged lack of sufficient evidence, the court said it was unwilling “to review the many thousands of pages submitted on appeal.” Justice Barton Gaut wrote for the court: “Rancho Cucamonga had the burden of showing the board abused its discretion or its findings were not supported by the facts. To the extent it attempted to do so at the trial court level, it was not successful. … e deem the trial court’s findings sufficient.” The court called the safe harbor argument “much ado about nothing.” Under the safe harbor principle, an agency is considered in compliance with the Clean Water Act if the agency complies with its permit. The court said that the safe harbor protection exists in statute and does not need to be repeated in the permit. Regarding the actual permit conditions, the court found them in compliance with the Clean Water Act and cited its ruling in , (2004) 124 Cal.App.4th 866 (see , January 2005). In that case the court ruled that the act allowed the San Diego regional board to adopt stormwater regulations that surpassed the “maximum extent practicable” standard. “ ike the permit in ,” Gaut wrote, “the 2002 permit contemplates controlling discharge of pollutants to the maximum extent practicable through a ‘cooperative iterative process where the Regional Water Quality Control Board and municipality work together to identify violations of water quality standards.’ The 2002 permit does not exceed the maximum extent practicable standard.” The court also rejected the argument the permit conditions were overly prescriptive. “The development and implementation of programs to control the discharge of pollutants is left largely to the permittees,” the court determined. The Los Angeles River case concerned the infamous “trash TMDL.” Under the Clean Water Act, agencies are supposed to set total maximum daily loads (TMDLs) for impaired water bodies (known as the 303(d) list), such as the Los Angeles River. “‘A TMDL defines the specified amount of a pollutant which can be discharged or loaded into the waters at issue from all combined sources,’” the Fourth District explained, using a definition from , (9th Cir. 1995) 57 F.3d 1517, 1520. Once a TMDL is established, all National Pollution Discharge Elimination System (NPDES) permits must be consistent with the waste loading allowed by the TMDL. In 2001, the Los Angeles Regional Water Quality Control Board established a TMDL for trash in the Los Angeles River. Trash is defined as waste that has not been properly discarded. The regional board set the trash TMDL at zero, to be phased in over 14 years. The NPDES permit regulating stormwater discharges from Los Angeles County and 84 other local entities would have to comply with the zero-trash mandate. The State Water Quality Control Board and Office of Administrative Law approved the trash TMDL in 2002, as did the federal Environmental Protection Agency. A coalition of 22 cities sued the EPA in federal court, but lost a Ninth Circuit ruling last year in , 411 F3d 1103 (see , August 2005). In state court, the cities sued the state and Los Angeles water boards. After the case was moved to San Diego County, the Superior Court found a number of problems with the TMDL and ordered the water boards not to implement it. Both sides appealed, and the Fourth District overturned portions of the Superior Court decision favoring the cities — but not the entire decision. The Superior Court ruled that the TMDL was faulty because the water boards did not conduct an “assimilative capacity study,” did not consider economic factors, applied the TMDL to the Los Angeles Estuary even though it was not on the 303(d) list, and failed to prepare an environmental impact report or its functional equivalent. The Fourth District rejected the first three grounds for dismissing the TMDL but accepted the environmental review argument. Under an assimilative capacity study, the water board could essentially decide that some amount of trash would not harm beneficial uses of the river. The water boards, though, had decided that because the river merely transports trash without diluting the pollutant, no level of trash was acceptable. The Fourth District found that federal law mandates no such study, and noted that the TMDL requires the regional water board to reconsider the target of zero after a 50% reduction has been achieved. As for economic considerations, the court noted that the TMDL addressed the cost of several types of systems to capture and remove trash from storm drains, including a system that would cost $1.8 billion for installation and 10 years of operation and maintenance. That was good enough for the appellate panel. Regarding the estuary, described as part of Queensway Bay in Long Beach, the court found the “TMDL’s identification of the estuary as impaired could have been clearer, but we conclude it was sufficient to put all affected parties on notice.” The issue of environmental review is where the water boards stumbled. The environmental documentation consisted of a checklist that, according to the court, the regional board “obviously intended” to be the functional equivalent of a negative declaration under the California Environmental Quality Act. On appeal, the water boards argued that the checklist met the requirements of a first tier EIR. The court did not buy it. “ e conclude the check list and trash TMDL are insufficient as either the functional equivalent of a negative declaration or a tiered EIR. Moreover, an EIR is required since the trash TMDL itself presents substantial evidence of a fair argument that significant environmental impacts may occur,” Presiding Justice Judith McConnell wrote for the court. “Neither the checklist nor the trash TMDL includes an analysis of the reasonably foreseeable impacts of construction and maintenance of pollution control devices or mitigation measures.” The cities appealed portions of the Superior Court ruling in favor of the water boards, but the Fourth District upheld the lower court. The Fourth District decision appears to let the TMDL take effect once the water boards perform an adequate environmental review. In March, the cities asked the state Supreme Court to review the case. First Case: , No. E037079, 06 C.D.O.S. 845, 2006 DJDAR 1126. Filed January 26, 2006. Modified February 27, 2006, at 2006 DJDAR 2300. The Lawyers: For the city: James Markman, Richards, Watson & Gershon, (714) 990-0901. For the water board: Jennifer Novak, attorney general’s office, (213) 897-4953. Second Case: , No. D043877, 06 C.D.O.S. 797, 2006 DJDAR 1145. Filed January 26, 2006. The Lawyers: For the cities: Richard Montevideo, Rutan & Tucker, (714) 641-5100. For the water board: Gregory Newmark, attorney general’s office (213) 897-2000.