A use permit condition limiting groundwater extraction to 12,000 acre-feet of water per year did not constitute a taking of property, the Fourth District Court of Appeal has ruled. An owner of farmland in Imperial County unsuccessfully tried just about every argument there is to convince the court that a taking had occurred. But the unanimous three-judge appellate panel ruled that there had been no physical appropriation of the water, and that the landowner had not shown that the county effected a regulatory taking. In 1994, Allegretti & Company, which owns 2,400 acres of land, filed an application for a conditional use permit to redrill an inoperable well. The well, one of several on the property, would provide water for crop production on 200 acres. Nearly three years later, the county approved the permit but with a condition limiting Allegretti’s draw of groundwater to 12,000 acre-feet per year from all wells on site. Allegretti never recorded the permit, and there exists today no county-imposed restrictions of groundwater pumping at the site. In November 1997, Allegretti sued the county for inverse condemnation, arguing that the county had no jurisdiction to require a conditional use permit and that a regulatory taking had occurred. After procedural wrangling that made its way to the Fourth District, Imperial County Superior Court Judge Jeffrey Jones ruled for the county. Judge Jones found that not only did the permit conditions not deprive Allegretti of all economically viable use of its property, Allegretti had failed to show that the conditions “would have any economic impact at all.” On appeal, Allegretti tried numerous approaches to win a reversal. First, Allegretti alleged that the county’s action amounted to a physical taking in that the county had denied the landowner access to water on its land. Allegretti relied heavily on a Federal Circuit Court of Claims decision in , (2001) 49 Fed.Cl. 313. In that case, the court ruled environmental regulations that prohibited farmers from receiving water deliveries to which they were contractually entitled amounted to a physical taking (see , March 2004). The Fourth District, however, said that it was not bound by the decision of an intermediate federal court, that the cases were different because only involved contractual water rights, that a more recent decision in , (2005) 67 Fed.Cl. 504, undercut , and that it disagreed with the holding. The court then considered the regulatory takings arguments. Allegretti contended that the county’s regulation amounted to a total regulatory taking because the landowner had been deprived of all “economically beneficial or productive use” of its property. The court quickly dismissed this argument, noting that a tenant had farmed 400 to 800 acres of the property’s 1,600 cultivatable acres. The court then undertook a takings analysis, which emphasizes three factors: the economic impact of the regulation, the extent to which the regulation interfered with “distinct investment-backed expectations,” and the character of the government action. The court found that Allegretti failed to pass the test. “Allegretti has not demonstrated any economic impact from county’s 12,000 acre-feet per year limitation other than unspecific lay testimony regarding reduced profits via a below market rental rate or diminution in value as a result of its inability to use the entirety of its 2,400-acre property for farming,” Justice Terry O’Rourke wrote for the Fourth District. “It is well established that mere diminution in value of property, however serious, does not constitute a taking.” Moreover, although Allegretti has superior groundwater rights as an overlying user, those rights are restricted to reasonable beneficial use consistent with Article X, §2 of the state constitution, O’Rourke noted. The final argument concerned whether the government regulation substantially advances a legitimate state interest. Last year, the U.S. Supreme Court in , (2005) 544 U.S. 528, disavowed this as a stand-alone takings test (see , July 2005). Allegretti argued that the substantially advances test still applies in California because the state Supreme Court used it in one of its most recent takings cases, , (1998) 17 Cal.4th 1006 (see , January 1999, June 1998). The court was willing to entertain the argument, and explained, “Under , no taking occurs if objectively there is ‘sufficient connection between the land use regulation in question and a legitimate governmental purpose, so that the former may be said to substantially advance the latter.’” Allegretti argued that the permit conditions could not advance a legitimate purpose because the county has no jurisdiction over groundwater usage. The court rejected the argument. “The permit condition, imposed under county’s police power for the purpose of conserving groundwaters and preventing their undue waste, had an objectively sufficient connection to that valid governmental interest,” O’Rourke wrote. “Allegretti does not identify and thus does not meaningfully challenge county’s underlying reasons for its action, nor does it explain why county’s limitation is in any way arbitrary.” As long as a governmental entity engages “in decision-making whose purpose is not delay for delay’s sake but legitimate oversight,” there is no compensable taking, the court concluded. The Case: , No. D045156, 06 C.D.O.S. 3519, 2006 DJDAR 5057. Filed March 28, 2006. Ordered published April 26, 2006. The Lawyers: For Allegretti: Michael Berger, Manatt, Phelps & Phillips, (310) 312-4000. For the county: Ralph Cordova, county counsel’s office, (760) 482-4400.

A Rohnert Park mobile home park owner’s demand that a court grant a rent increase because an unconstitutional city law held down rents has been rejected. The landlord sought a rent hike to make up for a rent cap based on an ordinance that a federal court threw out. But the First District Court of Appeal denied the increase because the property owner did not show that it was denied a fair return on its investment. In fact, the property owner argued that it did not have to show it was deprived a fair rate of return, a legal strategy that “defeats any possible right to recovery,” the court ruled. The controversy here started nearly 20 years ago, when the City of Rohnert Park adopted a rent control ordinance that limited mobile home park rent increases. Park owners chafed under the ordinance, and in 1996 a federal district court ruled the law unconstitutional because it did not provide landlords with a fair rate of return on capital improvements. The city appealed that decision, but the Ninth Circuit declared the appeal moot because the city in 1995 had amended the ordinance to allow park owners to recoup the cost of capital improvements. In 2002, a district court ruled that the amendment had corrected the constitutional defect. In 2003, the owners of the Rancho Grande Mobilehome Park — Hillsboro Properties and Goldstone Enterprises, whom the court called simply “Hillsboro” — filed an application for a rent increase to compensate for the period from 1988 to 1995, when the unconstitutional ordinance limited rents. The park owners contended that they were due a “ adjustment.” In ., (1997) 16 Cal.4th 761, the state Supreme Court said that future rent increases could make up for prior enforcement of a rent control law that overreaches. In a follow up case, , (2001) 24 Cal.4th 1003 (see , March 2001), the state Supreme Court ruled that a property owner could receive damages for a violation of constitutionally protected rights only by showing that a rent ceiling had been confiscatory and a adjustment was inadequate. Rohnert Park, however, refused to process the application because the city’s Mobile Home Rent Review Board has no jurisdiction over such an application. The city contended that the property owners had to seek either a net operating income (NOI) adjustment or a capital improvement pass-through. In September 2004, the park owners sued the city, alleging inverse condemnation. Sonoma County Superior Court Judge Raymond Giordano ruled for the city, finding that the takings claims were precluded by the five-year statute of limitations and that the challenge to the ordinance was also filed too late. He also ruled that the park owners had not shown that they were due a adjustment. A unanimous three-judge panel of the First District Court of Appeal upheld the outcome, although it took a different approach to the case. The appellate court first determined that the statute of limitations might not bar the takings claim because the claim might not have arisen until the city refused to process the 2003 application. The court did not decide on the statute of limitations issue, though, because it determined the property owners had not “made the allegations necessary to support any form of relief.” “ he crux of the dispute in this case,” Justice Stuart Pollak wrote for the court, “comes down to a single issue: Is Hillsboro entitled to recover rental income (either from its tenants or from the city) that it was precluded from charging by a constitutionally defective rent control ordinance if it was not thereby deprived of a fair rate of return on its investment?” Yes, the property owners argued, because the mere application of the defective ordinance denied them their substantive due process rights. There was no need to show they were denied a fair rate of return, the property owners contended. “Hillsboro’s position is based on a faulty premise,” Pollak countered. “One is not denied substantive due process simply because one is affected by the application of a governmental promulgation that for some reason is found to be constitutionally defective. A denial of due process giving rise to a claim for relief arises only if application of the defective measure deprives one of a constitutionally protected right.” “The constitutionally protected right that is involved in this case, as in , is the right to receive a fair rate of return on one’s property,” Pollak continued. “Hillsboro’s argument proceeds on the unarticulated premise that a property owner has the constitutionally protected right to charge as much as it wants for the use of its property, so that enforcement of an invalid rent ceiling deprives it of a constitutionally protected right. That is not what the federal or state constitutions, or or any other case, protect.” “A rent control measure is ‘confiscatory’ and its enforcement constitutes a violation of the substantive due process rights of the owner if it deprives a property owner a fair return,” the court ruled. Siding with the city, the court said the property owners should have sought an NOI adjustment or capital improvement pass-through. “ e are unable to conceive of any circumstance in which an owner would not receive a fair return that does not come within the scope of the NOI increase or capital improvement provisions,” Pollak wrote. The Case: , No. A110441, 06 C.D.O.S. 2882, 2006 DJDAR 4147. Filed April 6, 2006. The Lawyers: For Hillsboro: David Spangenberg, (707) 473-4340. For the city: Michelle Marchetta Kenyon, McDonough, Holland & Allen, (510) 273-8780.

Now little more than a stopping point for truck drivers and weary travelers, Santa Nella may be on the verge of becoming the next bedroom community for Bay Area commuters. Over the last five years, Merced County has adopted an updated community plan for Santa Nella and approved subdivisions containing more than 5,000 new lots, and a handful of new houses have been built. However, major infrastructure needs and endangered species habitat concerns must be addressed before large-scale development gets rolling. “We have a lot of tentative maps, but not a whole lot of building,” said Bill Nicholson, Merced County assistant planning and development services director. “The biggest problem has been the Endangered Species Act with the San Joaquin kit fox, and working out habitat areas and migration corridors.” Ever since Interstate 5 started serving motorists between the Bay Area and Los Angeles about 35 years ago, the town with the mysterious name (there is no Saint Nella) has provided a stopping point. The unincorporated town of about 1,500 people located 45 miles due south of Modesto continues to function mostly as a rest stop full of fast food, gas stations, truck stops and inexpensive motels. Just as location has spelled success for Santa Nella’s roadside business industry, location is now the attraction to builders. The town is about 10 miles closer to the Bay Area than Los Baños, which has emerged during the last decade as a bedroom community for Silicon Valley workers. That does not mean that the drive is short or easy. Santa Nella is about 65 miles from the southern tip of San Jose, and included in that distance are about 15 miles of two-lane highway outside of Gilroy that are notoriously congested. Highway improvements are planned, though, and the growth of Los Baños — whose population has doubled to about 34,000 in less than 15 years — gives developers hope. The community plan, which the county updated in 2001, calls for about 6,000 new houses. That is about 10 to 15 years worth of growth, planners say. The Santa Nella County Water District provides water and wastewater services to most of the planned growth area. The design of a new wastewater treatment plant that could handle up to 2.5 million gallons per day of sewage is nearly done, and the district is preparing an environmental impact report for the project, said Dennis Moniz, the district’s general manager. The district also has plans to build a water treatment plant that would produce between 5 million and 9 million gallons of water per day. The district currently gets its water from the San Luis Water District, a wholesaler that has a contract to receive water from the federal government’s Central Valley Project. (San Luis Reservoir, which stores water from the Central Valley Project and the State Water Project, is only a few miles west of Santa Nella.) Santa Nella County Water District officials are negotiating a contract with the Bureau of Reclamation that would eliminate the San Luis district as a middleman. The Merced County Local Agency Formation Commission also is reviewing the proposed water rights transfer to the Santa Nella district. Moniz, who became general manager in May, could not say when the infrastructure projects would be complete, but he suggested it may be several years. The district must not only complete the wastewater treatment plant’s environmental review, but must also acquire the land for the plant and for the disposal of treated effluent. Moniz conceded that developers are pressing the district to move quickly, but he noted that the regulatory process is strict. “We’ve got to respond to the Department of Health Services and the Regional Water Quality Control Board,” Moniz insisted. Roads are also an issue — and an expensive one. The growth area is served by Interstate 5 and state highways 152 and 33. However, there are few other roads, and, because of water canals from San Luis Reservoir, the road system will require numerous bridges, Nicholson said. The county has set road impact fees at about $20,000 per housing unit in the Santa Nella community plan area, by far the highest in Merced County. Developers also are expected to pay for the new wastewater and water treatment plants. Like much of the San Joaquin Valley’s west side, the Santa Nella area does not have the best farmland, although the county is insisting that developers ensure preservation of an acre of farmland elsewhere for each acre of farmland developed in Santa Nella. The more significant natural resource is a corridor for the endangered kit fox, a house-cat sized member of the dog family that lives in the Central Valley’s natural grasslands. “It’s a pinch point in terms of habitat,” said Cynthia Wilkerson, of Defenders of Wildlife’s Sacramento office. “There’s habitat to the north, and there’s habitat to the south. There’s a very small space at Santa Nella.” Large-scale urban development in Santa Nella could be problematic, Wilkerson said, because it could discourage migration. The result could be isolated kit fox populations, which is bad for genetic diversity. Individual developers have been working on small-scale habitat conservation plans, and the U.S. Fish and Wildlife Service approved an interim habitat plan earlier this year that allows for about 120 acres of development, according to Nicholson. Environmentalists, however, are insisting on a regional plan rather than piecemeal habitat planning. Nicholson said developers and county officials are frustrated because the Fish and Wildlife Service has identified land zoned for growth as kit fox habitat. How that conflict will play out is unclear. At this point, the county is insisting on a letter from the Fish and Wildlife Service clearing a project for endangered species purposes. How a developer gets that clearance is up to the developer, Nicholson said. Contacts: Bill Nicholson, Merced County Planning and Community Development Department, (209) 385-7654. Dennis Moniz, Santa Nella County Water District, (209) 826-0920. Cynthia Wilkerson, Defenders of Wildlife, (916) 313-5800.

Back in January, Gov. Arnold Schwarzenegger – still stinging from a unanimous round of losses in the 2005 special election – decided to focus on infrastructure as a way to change the subject and exhibit political leadership as he prepared to run for re-election. Calling his idea the “Strategic Growth Plan,” he called for a huge set of bond issues over the next decade to supplement other infrastructure funding in order to meet the state’s growth needs (see , February 2006). Politically, Schwarzenegger’s strategy worked. Sacramento has talked of little else in the planning and development arena this year besides “the infrastructure bond.” In the end, the Democrats decided it was good politics to sign on. As a result, this November California voters will be asked to approve a $37 billion bond package (in four different pieces) endorsed by both Schwarzenegger and the Democrats. The components, roughly speaking, are: • $20 billion for transportation • $10 billion for education • $4 billion for flood protection • $3 billion for housing This is approximately $1,000 per resident – a lot even in California. There is no question that if the bond package passes (along with an open space bond that qualified via initiative), the resulting projects will have a profound impact on the way California grows. But the nature of that impact isn’t clear. The bond package contains little in the way of new policy language about growth management. If the state follows existing laws and policies – for example, the requirements of AB 857, passed in 2002 – the bonds could create a new set of infrastructure policies focused much more on smart growth goals. AB 857 requires all state actions to promote three growth goals – infill development where possible, compact development on greenfield sites, and preservation of agricultural and open space land. However, pressure to use state infrastructure bonds for pork barrel purposes usually is so strong that such goals fall by the wayside. As it stands, most of the money that could be devoted to smart growth purposes is contained in a $1 billion pot of funds in the housing bond; another half billion is in the environmentalist-sponsored open space bond. Schwarzenegger’s original package focused almost exclusively on transportation, education, and flood protection. The Democratic criticism was that the package ignored housing and parks/open space – two areas of “infrastructure” that have traditionally been identified more with Democrats than Republicans. In the end, Schwarzenegger caved on housing, as everyone knew he must, given high housing prices and the power of the homebuilding lobby with the Republicans. But the Democrats folded on parks and open space. In order to put the state’s bond package on the ballot, Democratic lawmakers agreed to focus the natural resources bond on only levee protection and flood control, rather than attempting to expand it to include parks and open space. However, environmentalists have placed a separate $5.4 billion parks/open space bond on the ballot this fall – a measure they were working on long before Schwarzenegger introduced his proposal last January. Meanwhile, a long-delayed $10 billion bond for high-speed rail will be delayed again. Passed by the Legislature in 2002, the bond was originally scheduled for 2004, then bumped to 2006. Now it will likely be postponed again to 2008 because it is not part of Schwarzenegger’s infrastructure vision. Unlike local bonds, state bonds do not increase taxes. State bonds are, in effect, a pre-allocation of the state’s general fund, requiring the state to pay principal and interest on the bonds before available funds are spent for other purposes. And when the state passes huge bond issues such as those proposed this year, the money is not borrowed all at once. If the bond package and the open space bond pass, the state will likely borrow the money over a period of several years. When interest groups such as environmentalists qualify a bond measure for the ballot, it’s generally clear to the voters what they are buying. That’s because the enviros have to specify the uses of the money to gain the support of the local organizations who help gather signatures to place the measure on the ballot. (For parks and open space bonds, this is typically called the “park barrel” approach.) But when the Legislature places bond measures on the ballot, it’s not always so clear what the money is going to be used for. That’s because the Legislative deal often occurs late at night after lengthy negotiations. This year, the bond package passed the Legislature at 12:30 a.m., and even some of those involved admit to being a bit fuzzy on the details. More than half the money will go to transportation – a switch from recent years, when K-12 education has gotten the biggest chunk – and this huge pot of funds holds vast potential to encourage either sprawl or smart growth. More than $6.5 billion is earmarked for large projects to be determined by the California Transportation Commission, including a $2 billion infusion into the cash-starved State Transportation Improvement Program and a new $4.5 billion pot of money focused on high-congestion highway corridors. But another $4 billion would be earmarked for rail and bus capital expenditures, presumably allowing local transit agencies to complete big-ticket lines in the Bay Area and Los Angeles. Other pots include $1 billion to local governments for transportation improvements, $1 billion for the Highway 99 corridor, and $2 billion for “trade corridors” (see ). The $4 billion flood control bond would flow almost entirely to levee reinforcement in the Central Valley – an issue that became hot after Hurricane Katrina struck Louisiana. Unlike past efforts, the $10 billion school bond has significant pots of money for special purposes, such as charter school facilities ($500 million) and small schools (a $200 million fund that could promote smart growth). Most of the funds, however, are allocated to K-12 and higher education modernization, and new construction and will flow through the Department of Education. Which brings us to the housing bond. Schwarzenegger got reamed by homebuilders and affordable housing advocates for leaving housing out of the original infrastructure bond proposal – especially because funds available under 2002’s Proposition 46 are running out. As approved by the Legislature, about $2 billion of the $3 billion housing bond would replenish existing state housing programs. The other $1 billion would go for infill and smart growth. As usual, the details are vague, but $850 million is earmarked for “regional planning, housing, and infill” and another $200 million for infrastructure improvements in older urban neighborhoods that would receive infill development. However, not even Department of Housing and Community Development officials are clear yet as to what the $850 million would be used for. Meanwhile, the environmentalist-sponsored open space bond contains a pot of $580 million for “sustainable communities.” This money would go mostly to local parks but about $200 million would go to joint use and “smart land use” projects. The bottom line: If voters approve the bonds, most of the money will probably be doled out in pork barrel fashion, with little consideration for the impact on the state’s overall growth patterns. The transportation bond is tilted toward highways, not transit. Some small but significant pots of money could be available for infill and smart growth, especially in the housing bond. If a Democrat beats Schwarzenegger, it’s possible that the new administration could use AB 857 as a smart growth lever. But if interest rates keep going up and housing production slows down, even that seems unlikely.

I tend to be skeptical about land use policy and development trends in California. Every time I leave the state, I see creative developments and practices that we Californians should be implementing. Instead, we’ve got “smart growth” developments that are nothing more than dense suburbia, and a system of funding government that encourages more of the same. Can’t we get anything right? I wonder. A recent trip to the East Coast suggests that, yes, we Californians can get things right. While attending a program at the Lincoln Institute of Land Policy in Cambridge, Massachusetts, I and about two dozen other journalists had the opportunity to tour three transit-oriented development (TOD) sites. What I learned was that California — especially the Bay Area — is way ahead in the TOD game. The first project we visited, which is in the early stages of development, is a residential-office-retail project in the suburb of Medford, Massachusetts. The second site, in Revere, is only a parking lot, but planners envision a mixed-use project with a linear park. The third project, mostly complete, is part of a larger South Boston waterfront redevelopment. All three sites are accessible via the “T,” the Boston region’s public transit system. By California standards, the Medford and waterfront projects are nice but ordinary. What struck me is how new they are. The T is the second oldest subway system in the country, and it has about 600,000 riders a day. A similar number of people use various commuter rail, trolley and bus services. These are big transit numbers, due in part to the fact that driving — and parking — in Boston is impractical. Yet, according to Office for Commonwealth Development, only four TODs, two of which are quite small, have been built. Only now is the trend finally taking hold, as 11 projects are under construction and at least 30 more are in the planning stages. The Bay Area, in contrast, has been building TODs since the 1980s, mostly adjacent to BART stations. In Southern California, cities are planning TODs in anticipation of getting rail transit. One Pasadena project was completed and occupied years before the Metro Gold Line showed up. I happen to think it’s a good idea to place residences, offices, shops, civic facilities and colleges in close proximity to public transit. And with gasoline at $3.50 a gallon, I’m betting that a few thousand people living or working in Contra Costa Centre — right next to the Pleasant Hill BART station — are feeling awfully smug right now. In Revere, Massachusetts, today, an asphalt parking lot covers two acres between a subway station and a popular ocean beach. Think that real estate would still be a parking lot if it were in California?

The Second District Court of Appeal has ordered the City of Santa Paula to place a slow-growth initiative on the ballot. The Santa Paula city clerk blocked the measure from reaching the ballot last year after concluding the initiative petitions did not satisfy state elections law because they did not include sections of the general plan the initiative would amend. The unanimous three-judge appellate panel ruled that the city clerk's demands went beyond the state Elections Code requirements. The initiative — which would require a public vote on any project of at least 80 acres proposed at a density greater than the general plan allows — could appear on the November ballot. In making the ruling, the court built on a 1998 decision from the City of Hayward regarding what language an initiative petition must contain. In , 69 Cal.App.4th 93 (see , February 1999), the court ruled that an initiative did not comply with Elections Code § 9201 because the petitions did not contain 17 pages of the city general plan to which the initiative text referred. The decision contained some "loose language," said Richard Francis, the attorney for the Santa Paula initiative backers, and development interests have used that language to argue that petitions for ballot measures seeking to amend a general plan need to contain the entire general plan. The decision in the Santa Paula case "really is a very helpful clarification — to know that you don't have to do that," Francis said. Santa Paula City Attorney Karl Berger read the decision differently. "Depending on your point of view, it's either a clarification of what the law is, or it's a departure from what the law is. I think it's a departure," Berger said. Berger conceded the city leaned heavily on the decision, which, he said, followed a long line of cases with similar outcomes. "The city clerk felt she had no other choice but to bounce the petition. That's certainly was what I advised her," he said. In May 2005, a group called We Care – Santa Paula submitted signed petitions for their initiative. City Clerk Josie Herrera verified that the petitions contained sufficient valid signatures to qualify for the ballot. However, Herrera rejected the petitions because they did not show where in the general plan the proposed language would be inserted, what parts of the general plan would be amended or the current text of the land use element. We Care sued, and Ventura County Superior Court Judge Steven Hintz accepted Herrera's arguments. The Second District, however, quickly dismissed those arguments. "The city points out," Presiding Justice Arthur Gilbert wrote for the court, "that We Care's petition seeks to amend the general plan. It believes this requires that the land use portion of the general plan be included in the petition. But the amendment does not change any land use or density designation in the general plan. Nor does it even purport to prohibit any change in land use or density. It simply adds a provision to the general plan requiring that any increase in density for projects involving 81 or more acres be approved by popular vote. The petition contains the full text of the measure. There is no need to include any portion of the general plan. Certainly, the passage of We Care's initiative will affect the general plan. But § 9201 does not require that a petition include the text of every plan, law or ordinance the measure might affect." The court distinguished We Care's petitions from those in the case, and petitions in other cases where courts identified Elections Code flaws. The petitions in the case referenced portions of the general plan by heading and chapter number but did not include the text. Similarly, referendum petitions rejected in , (1985) 171 Cal.App.3d 1225, identified the ordinance in question by number and title but did not contain the ordinance's text. Three other cases involving rejected referendum petitions also failed to provide the text of ordinances to be repealed. By contrast, Gilbert wrote, "We Care's petition does not omit the text of an incorporated exhibit or any other portion of the proposed enactment. Instead, the petition contains the full and complete text of everything that will be enacted if the voters approve it." Berger said the City Council would likely seek a political compromise with We Care rather than request a state Supreme Court hearing. Interestingly, the project that spurred the We Care initiative is scheduled to be decided by voters this month. That project is a 2,165-unit development proposed by Centex for an area in which the general plan now allows about 450 houses. The City Council approved the project in December 2005, but We Care forced a referendum vote. The Case: , No. B186242, 06 C.D.O.S. 3822, 2006 DJDAR 5617. Filed May 9, 2006. The Lawyers: For We Care: Richard Francis, (805) 486-5898. For Herrera: Karl Berger, Jenkins & Hogin, (310) 643-8448.

A $1.4-million damages award that a jury granted to the owner of a San Bernardino adult cabaret has been upheld by the Fourth District Court of Appeal. The damages were based on expenses and lost income from a 53-month period when the City of San Bernardino’s zoning ordinance - which was eventually ruled unconstitutional - prevented Flesh Night Club from operating. The court upheld the award of damages even though both the Superior Court and the Fourth District approved an injunction blocking the night club from operating, the night club’s owner did not insist that the city post an injunction bond to cover potential damages, and a substantial portion of the club’s profits apparently came from prostitution. The court ruled that the forced closure violated the club owner’s First Amendment rights and the owner was due damages under the federal civil rights statute (42 U.S.C. § 1983). “ e conclude that a city is liable for damages under § 1983 if it chooses to enforce an unconstitutional ordinance by means of a preliminary injunction,” Justice Art McKinster wrote for the unanimous three-judge panel of the Fourth District, Division Two. “It is no defense that the injunction was sought in good faith, nor does the city’s reliance on a preliminary injunction duly issued by a trial court insulate it from liability.” Roger Jon Diamond, attorney for Flesh Night Club, told the that the court made a “courageous decision.” “It will tell cities they need to be very careful before trying to shut down an existing business if it’s protected by the First Amendment,” he told the newspaper. A San Bernardino deputy city attorney called the matter “pending litigation” and said city attorneys would have no comment. San Bernardino has been trying to shutter the adult night club since it converted from a comedy club to topless entertainment in 1994. The night club’s owner, Waldon Randall Welty, who does business as Manta Management Corporation, started the court proceedings in November 1994, when he sued the city in federal court. He contended that the city’s zoning ordinance was unconstitutionally restrictive. At the time, the city’s ordinance limited locations for adult businesses to “commercial heavy” and “industrial light” zones, and required a buffer of 2,000 feet from any other adult business, and 1,000 feet from a school, church, public park, residence or residentially zoned land. Flesh Night Club’s location complied with the buffer requirements, but the Hospitality Lane site was in the wrong zoning district. In January 1995, the city attorney bought an action in the name of the People alleging the business constituted a public nuisance and seeking to close the night club through a preliminary and permanent injunction. The following month, San Bernardino County Superior Court Judge Duane Lloyd granted a preliminary injunction and ordered Manta to cease operating as an adult cabaret. Manta appealed the injunction and filed a cross-complaint against the city, seeking relief under § 1983. After a lengthy bench trial in 1996, Superior Court Judge Carl Davis declared the city’s ordinance unconstitutional because it did not serve a substantial governmental interest and did not allow for reasonable alternative avenues of communication. The city appealed that decision, and the Fourth District in an unpublished ruling affirmed the trial court ruling and dissolved the injunction in early 1999 ( ., No E019635). The litigation then returned to the trial court for a two-step trial, first to determine liability and second to determine damages. Superior Court Judge Donald Alvarez ruled that the act of requesting and obtaining the preliminary injunction and stay pending appeal constituted a basis for liability under § 1983. A jury later awarded Manta $1.4 million in damages. On appeal, the city argued that seeking redress in court is not a First Amendment violation and, for that reason, the city cannot be held liable. However, in this case, the city’s ordinance had been ruled to violate the First Amendment, and, the court noted, a city may be sued for “monetary, declaratory or injunctive relief” if it implements an unconstitutional policy. Although city officials and employees have immunity, “municipalities themselves have no immunity from damages liability ‘flowing from their constitutional violations,’” McKinster wrote, citing , Mo., (1980) 445 U.S. 622. The fact that the city received a court-ordered injunction and relied on that injunction in good faith provides no immunity, he court ruled. The city noted that Manta did not obtain an injunction bond, which under state and federal law provides a means for recovering damages. But the court, again citing , said an exception exists for § 1983 claims. “The trial court recognized this, holding that the injunction was the vehicle by which the city sought to enforce an unconstitutional ordinance, and that Manta’s cross-complaint was thus based not on the mere wrongful issuance of an injunction but on ‘a separate and distinct action for violation of Manta’s constitutional rights,” McKinster wrote. “ he absence of a bond is irrelevant.” The court then turned to the evidence behind the damages award. Manta sought $2.6 million based on $1.66 million in net profits during the 53 months after Flesh Night Club reopened and $943,000 in expenses while the club was shuttered. During the trial, the city presented evidence that Flesh dancers, with Welty’s encouragement, engaged in prostitution. The jury determined that some profits earned from 1999 to 2004 were from illegal activity but the jury carved out what it considered lawful profits. On appeal, the city argued that because some of the night club’s income was from prostitution, Manta should be barred from recovering any lost profits. But the court said it is possible for a jury to separate legal profits from illegal income. Assuming the jury awarded Manta all $943,000 for expenses, the jury awarded Manta only $456,000 for lost profits, or about 25% of what Manta claimed. Evidence exists, the court continued, that Manta derived income from legal means, such as lap dance fees, admission charges and the sale of soft drinks “at greatly inflated prices.” Flesh Night Club attorney Diamond told the he would now seek about $500,000 in attorney fees from the city. Meanwhile, a city lawsuit that seeks to shut down the club because of prostitution is pending. The Case: , No. E036942, 06 C.D.O.S. 3913, 2006 DJDAR 5715. Filed May 11, 2006. The Lawyers: For Manta: Roger Jon Diamond, (310) 399-3259. For the city: Christopher Lockwood, Arias, Lockwood & Gray, (909) 885-1229.

“Thank God for hospitals,” I said to myself a few weeks ago while speeding to the local emergency room, doubled over in the back of an ambulance. Only after the painkillers had deadened a hitherto-undetected kidney stone could I begin to think about hospitals from an urban-design standpoint. As thankful as I am for hospitals, I have to acknowledge they do not make good neighbors. Hospitals are multi-headed beasts—an ungraceful amalgam of hotel, clinic, restaurant and catering service, public areas for visitors, emergency facilities, nursing stations, testing laboratories and big loading docks that are constantly receiving shipments of food, drugs and equipment. Not to speak of a stream of patients being checked in and out at all times of day and night. Beyond consuming enormous amounts of land, hospitals need a lot of parking, nearly as much as a regional mall, so hospitals traditionally are surrounded by asphalt lots or parking structures on all sides, sometimes disguised half-heartedly by planting. The perimeters of hospitals tend to be burnt-out zones, exacerbated by traffic. Having completed its entitlement process recently, the $456 million Sutter Health campus planned for midtown Sacramento is trying not to be a typical urban hospital. Rather than taking the mega-structure approach to designing an urban hospital, Sutter is showing some fresh thinking in the way that hospitals fit into cities. Unlike the single-purpose character of traditional hospitals, the Sutter campus is an inclusive place that finds room for historic structures, a new church, a children’s theater, a new medical office building and even 32 new units of housing on a site that Sutter is selling to a local homebuilder. (The housing has no direct relationship to health care and was included in the plan as a good-will gesture to the neighborhood, according to Tom O’Leary, the hospital’s project manager.) In short, Sutter Medical Center is an attempt to rethink the hospital as urban infill and mixed use. Unusual projects often arise from unusual conditions. “The plan represents the confluence of three projects,” said architect Jim Diaz, managing partner of KMD Architects, which designed the site plan and the Sutter Health buildings. Beyond the expansion of the existing medical complex, those projects were an expansion of the nearby Trinity Church, which the local Episcopal diocese wants to enlarge into a cathedral, and a new location for the non-profit B Street Theater, which was combing the city in search of a venue for its stage productions for children. After city officials asked Sutter Health to be mindful of the other projects in the vicinity, the hospital operator decided to include the cathedral and the theater in the planning process; eventually, the Episcopal diocese and the health-care provider filed a single EIR for the combined hospital and cathedral construction. Although it’s a little hard to see from the illustrations plan printed here, one ingenious aspect of the plan is the way the hospital complex threads itself delicately among existing buildings on the site, including the Old Pioneer Church, at least two existing retail structures with popular restaurants, and an old brewery building dating from the 1850s that Sutter is restoring to something close to its Nineteenth Century state. Parking, the eternal fly in the ointment of urban design, is also cleverly handled here. Sutter is building a new parking structure directly beneath the elevated highway, next to an existing Sutter Health garage, “on land that otherwise has little value,” according to Diaz. The 1,100-space garage is intended as a community parking structure, with a flex-parking strategy. During the day, the hospital is expected to use 700 parking spaces. At night and weekends, when traffic is heaviest for the churches, the restaurants and the theater, the majority of the spaces will be available for those uses. KMD has worked hard to make the hospital look like something other than what it is: an enormous, graceless office building with enormous floors. The firm, renowned for its careful detailing, goes to town here, trying to carve some sculptural interest out of this giant refrigerator, and with some success. KMD also understands that architecture, in the sense of gorgeous facades, would not solve all problems by itself. Equally praiseworthy as architecture, if less flashy, is the way the HMO and the architects have handled scale, stepping down from tall buildings to shorter ones. Sutter Health located its tallest building, the 150-foot-tall hospital tower, directly next to the elevated highway, where a tall building would seem least intrusive in the low-rise neighborhood. The high-rise scale of the tower steps down to four stories, to the new medical office building, which steps down, terrace-style, to two stories, so that it does not overshadow Sutter’s Fort, located in a park directly across the street. Materials also transition, from the high-tech metal and glass of the hospital tower to a historically friendly copper façade of the medical office building. In Diaz’s surmise, Sutter Medical Center will be “the most comprehensively designed hospital in an urban context.” Given the variety of different businesses operating over this six-block site, it might not be surprising to find some kind of “synergies” among some of the users. One synergy that O’Leary finds is amenities for children. The B Street Theater puts on plays for young audiences, and that might make a good match with the children’s hospital that will be part of the larger medical campus. He also hopes that changing exhibits at Sutter’s Fort, now a museum, can address an audience of children. He sees the hospital area becoming a destination for children, with school buses arriving regularly to bring audiences to the theater and visitors to the historic birthplace of Sacramento. Making Sutter Medical Center into an attraction for children, however desirable, would be icing, not cake. The cake, so to speak, would be a full-scale medical center that has found a way to co-exist with a mixed-use neighborhood without becoming a nagging pain. Thank God for hospitals that can heal — and even provide adequate parking — without scorching the earth all around them.

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.