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.

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.