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

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

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

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

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

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