What's the next big thing? The last big thing was housing, and it's over. So what's next? We may be in a real estate slump, but as California communities and planners begin mapping out their futures, it is not too early to start thinking about what the next big thing will be in the world of real estate development. The question is more important to the future of California's communities than you might think. There is a lot of talk these days about how the state is becoming a more urban place – not only more people and more traffic but also higher densities, more transit, more walking, and a general departure from California's suburban past. But greater urbanity – as opposed to simply more congestion – does not happen on its own. It requires long-term planning, and it requires leveraging short-term trends in the real estate development business, so that new projects can serve as catalysts for the new urbanity. And one thing is for sure in the development business: The next "up" cycle will be different from the last one. We tend to think of real estate recessions as cyclical – and they are. The market goes up and down, and development activity spirals up and then down. But what often gets lost in the shuffle is the fact that real estate development is faddish. The "hot" development product – the one investors want to invest in and developers want to build – is always changing. So the catalyst for the next round of urban development – the next lever that planners will use to create more urbane cities – is always changing. Back in the 1980s, when California Planning & Development Report was first published, the hot development project was the office tower. From the 72-story Library Tower (now US Bank Tower) in downtown Los Angeles to the multistory office buildings constructed in outlying business centers such as Orange and Contra Costa counties, office buildings were the favored investment in the real estate business. So cities and planners took advantage of dense office clusters in their placemaking. Think, for example, of downtown Walnut Creek, especially around the BART station. Office space was decentralizing during the '80s, and the BART station provided an organizing principle for office density to occur, transforming the downtown area in the process. Of course, the office market got overbuilt and eventually the entire real estate industry crashed, partly because office developers took advantage of relaxed banking rules to gain control of savings and loans. After a deep real estate recession, the new hot product was the entertainment retail center – and, in particular, the multiplex movie theater. As with office buildings during the '80s, real estate investors poured billions of dollars into entertainment retail, and cities leveraged that investment into signature revitalization efforts. The multiplex theaters and other entertainment venues stimulated a whole new generation of walking-oriented places in California – some of them in downtowns, some near existing retail areas, and some adjacent to the office high-rises built during the '80s. But it is worth noting that very little new office development has occurred in the last 20 years. Entertainment retail didn't get stuck in the typical overbuild-crash-burn cycle that office buildings got caught in. Rather, the movie theaters tapered off somewhat as the movie industry itself leveled off, and entertainment retail petered down during the mild recession that followed 9/11. At about that time, however, the housing market began to take off. The housing boom of the early 2000s was similar to the office boom of the 1980s in one important respect – it was fueled by easy money. The boom didn't necessarily lead to overbuilding, but it did lead to overvaluation of housing. And while we are currently experiencing the downside of overvaluation – the inevitable correction – the upside was a surge in high-density urban housing projects that simply did not "pencil" back in the '90s. Again, cities and planners leveraged this boom in construction to help create and strengthen an emerging set of urban places that simply did not exist 20 years ago. As cities and planners in California look to the future, three things about this history stand out. The first one is that there is always another real estate boom. Real estate booms are usually the result of wealth creation – all that capital has to be invested somewhere – and since the early '80s we have seen unprecedented wealth creation throughout the world. We will likely see more wealth creation worldwide in the future and a good portion of this wealth will be re-invested in American real estate. The second thing that stands out is that tomorrow's boom is never based on the same thing as yesterday's boom. Right now, for example, practically everybody involved in the planning and development business in California is waiting for the real estate recession to pass so that they can get back to the business of building urban condos and mixed-use projects. But history would suggest that urban condos won't be the hot product in the next boom simply because they were the hot product in the last boom. It's true that California will always have a strong housing market if the population is growing, and the trend toward more urban living appears to be permanent. But it's also possible that urban condo prices won't rebound enough to make a lot of the hoped-for projects financially feasible. So it may be something other than condos that drives the next boom. It's impossible to know what that something else might be. Office buildings are experiencing a bit of comeback these days, while the retail development business is struggling. The last striking point from the history is that the strongest places that have been created over the last 20 years – mostly inner suburbs with strong downtowns or commercial centers – have benefited from all three booms. They got offices during the '80s, entertainment retail during the '90s, and urban condos during the 2000s. They've emerged as great places today not just because they've gotten lots of investment, but because they've gotten different kinds of investment, during different boom times, so they have become interesting, varied, and successful places. There will be another boom sooner or later. The boom will focus on specific types of real estate development products, but we can't yet predict what those products will be. However, if cities and their planners play their cards right, they will learn – as they have in the last three booms – how to leverage whatever the hot product is into further improving California's emerging urban places.

Restoration of Alameda Creek in the East Bay reached a milestone this spring when what appeared to be hundreds of steelhead trout hatched in a tributary to the creek. If the young fish are indeed steelhead — experts should know soon — they would mark the first natural reproduction of steelhead in the creek since the 1960s. While the return of steelhead to Alameda Creek's lower reaches is being celebrated as a success story, the battle over how to manage the creek for the rare fish is ongoing. The coming fight is over the San Francisco Public Utility Commission's rebuilding of Calaveras Dam, which holds back waters feeding the upper portion of Alameda Creek and its tributary Calaveras Creek. Environmentalists and, recently, the National Marine Fisheries Service, insist the SFPUC must construct and operate the dam in a way that aids steelhead. Thus far, the SFPUC and the Army Corps of Engineers have declined to consider steelhead as part of the dam reconstruction project. Still, Alameda Creek has come a long ways during the past decade. Four small dams have been removed, fish screens have been installed at diversion points, and habitat at the mouth of the creek in San Francisco Bay has been upgraded. And more restoration projects are on the way. "We're looking at getting steelhead into Sunol Valley by 2012," said Jeff Miller, who heads the Alameda Creek Alliance. That would mean the rare fish could navigate more than 20 miles of waterway that for decades was inhospitable. At about 670 square miles, the Alameda Creek watershed is the third largest in the Bay Area and includes portions of Alameda and Santa Clara counties. Historically, the creek and its tributaries supported anadromous fish such as steelhead and salmon that reproduce in freshwater but spend most of their adult lives in the ocean. Since the 19th century, however, Alameda Creek has been managed in a fashion detrimental to the fish. Dams were erected to create reservoirs and diversions were installed to provide municipal water supplies. After flooding during the 1950s, the Army Corps built a sterile channel for the lower 12 miles of Alameda Creek through Fremont and Newark. During the 1970s, a 9-foot-high cement weir was built to protect a BART line. And for many years, salt production ponds on the edge of the bay eliminated wetlands habitat. By the 1970s, wildlife officials had essentially given up on steelhead and salmon in Alameda Creek. But things began to change — albeit slowly — when the U.S. Fish and Wildlife Service listed the Central California Coast steelhead as a threatened species under the Endangered Species Act in 1997. That year, environmentalists formed Alameda Creek Alliance, which succeeded an earlier group that had called it quits. The biggest player in the Alameda Creek watershed is the San Francisco PUC, which diverts most of the flow from the upper watershed into Calaveras and San Antonio reservoirs. Although controlled by San Francisco, the Commission provides water to cities and agencies that serve about 2.5 million people in San Francisco, San Mateo, Alameda and Santa Clara counties. In recent years, the SFPUC has vowed to be more environmentally friendly, and in 2006 it removed the Sunol and Niles dams on Alameda Creek. Although the dams were relatively low (about 10 and 15 feet, respectively) they were impassible by fish. The dams were also obsolete and had been since the SFPUC completed its Hetch Hetchy water project during the 1930s. The SFPUC also joined 16 other public agencies in agreeing to collaborate on studies of stream flow and fish habitat needed for Alameda Creek steelhead restoration. While those studies are ongoing, several projects are planned or under way. Alameda County Water District and the Alameda County Flood Control District plan to build four fish passages, including a ladder at the BART weir. The water district also plans to remove a rubber dam; in May, the district installed fish screens at water diversion points. In addition, Pacific Gas & Electric has agreed to bury a pipeline that now acts as a barrier in the creek. Plus, agencies continue to convert old salt ponds into tidal marsh that are vital for salmon and steelhead fingerlings. Once the creek projects are completed over the next three to four years, fish will be able to swim many miles upstream from the bay into potential spawning grounds. This winter, biologists rescued two fish (whom they named Bonnie and Clyde) that were stuck just below the BART weir and transported them upstream into Niles Canyon. Biologists believe Bonnie and Clyde successfully spawned the fry that were found swimming in Stonybrook Creek in late April. But the big fight is coming over Calaveras dam. State inspectors in 2001 deemed the existing, 83-year-old earthen dam seismically unsafe and ordered the SFPUC to limit storage to 40% of capacity. The SFPUC intends to replace the dam with a new earthen structure just downstream of the existing dam. The project is part of a 20-year, $4.3 billion upgrade to the Hetch Hetchy system (see CP&DR Public Development , April 2002). A draft program EIR for the overall project found that the Calaveras dam replacement would have no impact on steelhead. The Alameda Creek Alliance and other environmentalists rejected that conclusion. They contend the SFPUC should guarantee minimum flow rates in Alameda and Calaveras creeks to ensure a coldwater fishery can survive, and they want to see a fish ladder around the dam so that steelhead and possibly salmon could reach the upper portion of the watershed. They gained an ally in the National Marine Fisheries Service (NMFS), which in April told the SFPUC and the Army Corps to consult with NMFS on conserving fish and wildlife resources. In a letter to the SFPUC, Richard Butler, supervisor of NMFS's Santa Rosa office, said that anadromous fish could reach the Calaveras dam site as soon as the construction stage. Thus, dam replacement "will affect steelhead by blocking access to historic headwater habitat and altering flow regimes in both Calaveras and Alameda creeks," Butler wrote. Environmentalists also want a 32-foot-tall diversion dam, which directs water from Alameda Creek into Calaveras Reservoir, removed. Thus far, SFPUC has resisted that request. The dam reconstruction EIR remains under review.

JOIN US IN BEAUTIFUL CONTRA COSTA COUNTY! Contra Costa County is one of nine counties that comprise the San Francisco–Oakland Bay area, and is located directly east of the City of San Francisco.  The current population of Contra Costa County is just over 1,000,000, and is the ninth most populous county in the State of California. Contra Costa boasts one of the fastest growing work forces among Bay Area counties, with growth in its employment base driven primarily by the need to provide services to a growing local population. We offer excellent benefits such as: Competitive Compensation Packages, Education Reimbursement, Professional Development Allowance, Health and Life Insurance Options, 13 Holidays and 2-3 Weeks Vacation, Retirement and Deferred Compensation, Employee Wellness Program, Credit Union and More! A great place to live and a great place to work, make Contra Costa County your employer of choice! Job title: Planner IIAnnual Salary Range: $58,152-$70,680 The Contra Costa County Department of Conservation and Development has an excellent career opportunity for individuals interested in a Planner II position. The Department currently has two vacancies, one each in the Solid Waste/Recycling and Water Agency Units of the Community Development Division, and both positions will be located in Martinez. If assigned to the Solid Waste/Recycling Unit, the incumbent will be responsible for various tasks related to the Department's waste reduction, reuse, and recycling functions. Duties will include but are not limited to: oversight of the County's solid waste and recycling collection franchise agreements with several private haulers serving various unincorporated areas; oversight of existing land use permits and related implementation/mitigation monitoring programs for solid waste processing and disposal facilities located in unincorporated areas; act as project planner for land use entitlements to establish new or allow modifications to existing solid waste facilities located in unincorporated areas; assistance with development and implementation of North Richmond Waste & Recovery Mitigation Fee Expenditure Plans involving multiple strategies intended to reduce illegal dumping and blight; and assistance with implementation of waste reduction and recycling programs, including public outreach. If assigned to the Water Agency Unit, the incumbent will be responsible for a number of tasks and programs associated with the Department's habitat conservation functions. Duties will include but are not limited to: reviewing requests by project proponents for authorization to impact endangered species habitats; assisting with land preservation, restoration and management programs; coordinating with local, state and federal agency partners on habitat conservation related issues; and tracking and monitoring conservation and development actions. Applicants should have knowledge and interest in the topics of conservation biology, restoration ecology, land use planning, hydrology and environmental policy. For application instructions and to find out more about the requirements for this position, the County, and other employment opportunities, please visit our website at www.cccounty.us/depart/hr . You may also visit our office location at 651 Pine Street, 2nd Floor, Martinez, CA, 94553 or call us at (925) 335-1701. We will begin accepting applications for this position on May 27, 2008 and the final filing date is June 13, 2008. Contra Costa County is an Equal Opportunity Employer Please do not apply via this website-please visit our website for application instructions

Almost 30 years ago, an ambitious young developer named Rob Maguire created an audacious proposal for the greatest development project never built in downtown Los Angeles. Responding to a request from the Community Redevelopment Agency for a development plan atop Bunker Hill, Maguire put together a magnificent team – including most of the leading architects and planners of the day – and proposed combining a reconstruction of Bunker Hill's historic urban fabric with a few tall office towers. Everybody agreed "A Grand Avenue" was a spectacular plan for urban redevelopment – but nobody believed Maguire had the financial wherewithal to pull it off. The CRA instead gave the project to Metropolitan Structures, then a leading developer of high-rise offices. Met Structures proceeded to build the more prosaic California Plaza – and, of course went bankrupt in the process. But no matter. Maguire had made his presence known – and it wasn't long before he set the tone for big-time development in L.A. during the 1980s. In a decade when nobody could envision The Grove or the condo-rich mixed-use projects that have characterized L.A. in recent years, office buildings were king. And Maguire – who was ousted from his real estate empire by his own board this month – gradually mastered the art of the complex urban development deal by building strong relationships with corporations in need of big office space. Maguire began as a builder of routine offices for typical corporate clients. But he always understood how to leverage his clout. When I was a student at the UCLA architecture and planning school, I was selected as a "Northrop Corporation Fellow." Why the Northrop Corporation had any interest in urban planning was beyond me until many years later, when I realized Maguire was a big donor to the school and had strong armed Northrop – his first office building client – for a donation. After "A Grand Avenue," however, Maguire and his then-partners Jim Thomas and Ned Fox set out to build the best urban development projects in L.A. using corporate offices as their base. And they did. Later in the decade, Maguire Thomas Partners pulled off the ultimate '80s development deal – the Library Tower project. At 70-odd stories, Library Tower (now US Bank Tower) was the tallest office building on the West Coast when it was built. But the tower itself was the least of it. Under ordinary zoning rules, such a tall building would not have been permitted. But the city was thinking about tearing down the landmark Central Library across the street. In exchange for permission to build Library Tower (and the nearby Gas Company tower as well), Maguire coughed up $140 million (in 1980s dollars!) for the library. The CRA used the money not only to renovate the Central Library but also to create a distinguished addition that has made the library one of Los Angeles's great landmarks. He also hired the great landscape architect Lawrence Halprin to create Bunker Hill Steps, the landscaped stairway between the flats of Fifth Street on the south and Bunker Hill on the north. Eventually the office boom of the '80s came to an end, and for the past 15 years the glitz in the real estate business has gradually shifted away from corporate offices, which simply are not needed today the way they once were. Maguire was gradually pushed away from the real estate limelight to be replaced by such latter-day retail and mixed-use superstars as Rick Caruso, who built The Grove on the Westside and the Americana on Brand in Glendale. Maguire wasn't able to pull off his version of Playa Vista, for example, and eventually had to give that project up too. So perhaps it was inevitable that Maguire would be shoved aside by his own board. Even though he's now in his 70s, Maguire will undoubtedly be back in some form. After all, wily developers have at least nine lives – and they usually go bankrupt between each one. But he deserves a lot of credit for pioneering the office-based urban development in Los Angeles way back when. The next time you're descending the stairs between McCormick & Schmick's and Starbucks – gazing at the expanded Central Library – think of Rob Maguire. The office building will go condo sooner or later, but the Bunker Hill Steps and the Central Library will forever be monuments to his dealmaking genius. This piece appeared in the Los Angeles Times .

Do cities have tourniquets that can be used to stop the subprime mortgage bleeding? They like to think so, but the answer appears to be no. Instead, cities are increasingly focused on two things: First, increased code enforcement to make sure that abandoned houses and neighborhoods aren't rundown. And second, finding a silver lining in the dark cloud by helping first-time homebuyers purchase repossessed houses. That, at least, was the take-home message from the Regional Housing Summit in Riverside last week, put together by the Southern California Association of Governments . The Inland Empire – with its plethora of starter homes – has been especially hard-hit by the subprime mortgage crunch. No surprise in the era of $4 gas , considering how far the Inland Empire is from the major employment centers in L.A., Orange, and San Diego counties. "We've had meetings to try to talk people out of walking away from their homes," said Riverside Mayor Ron Loveridge . But he admitted it may not do much good. Loveridge did say that the city is retooling its first-time homebuyer program to try to get houses out of bank "repo" as quickly as possible. Only repossessed houses may be bought with first-time homebuyer funds. Both Loveridge and Rialto Councilmember Deborah Robertson said their cities are adopting new ordinances to crack down on problems with abandoned homes and make sure that the current owners – even if they are banks – maintain those houses so that neighborhoods don't become rundown. Loveridge acknowledged, however, that it can be hard even to determine who the owner of the property is because the subprime mortgages were bundled and sold as securities on Wall Street. Cities with redevelopment agencies may yet wind up bailing out subprime borrowers. AB 2594 , which would give redevelopment agencies the power to provide subprime refinancing, has passed the Assembly and is now pending in the Senate. The bill wouldn't mandate that redevelopment agencies bail out subprime borrowers, however. -- Bill Fulton

When gasoline costs $5 a gallon, and diesel $6, who is going to buy a house in the exurbs? With those fuel prices appearing inevitable within a year or two, I have been posing that question in casual conversations with people. Their answers is, well … no one. During the housing boom that now feels like a lifetime ago, the mantra was "drive until you qualify." If you couldn't afford San Diego, you drove up I-15 until you found a subdivision that fit your budget in a place like Lake Elsinore or Perris. If you made $70,000 a year in Silicon Valley, you headed out 580 to Tracy or Manteca in the Central Valley. If Sacramento was too expensive, you drove 45 minutes north to Yuba City. All of that driving seems less feasible with every passing day. Recent figures released by the California Building Industry Association indicate that housing construction, which is slow everywhere, may be slowest in these exurban areas . In the last few days, we've seen news reports that prices in even relatively close-in suburbs have fallen much farther than prices in central cities — and may not rebound for a long time. The Wall Street Journal reported on Tuesday that while prices are holding fairly steady in San Francisco proper, "Alameda and Contra Costa, across San Francisco Bay from the city and chockablock with anonymous tract housing, are down 18% and 27%, respectively. Bargains exist, but with so much inventory, prices aren't expected to rebound quickly." A few days ago in a Los Angeles Times story, Stuart Gabriel, director of UCLA's Zimer Center for Real Estate, questioned the still-planned development of Newhall Ranch because it is too far from L.A. job centers. "Residential development in the future is going to look different than in the past. We're in a new energy price environment," Gabriel told the Times . "The emphasis is going to be on reducing commutes and carbon emissions." In a commentary arguing against a federally funded housing bailout, the Wall Street Journal 's Holman Jenkins Jr. makes this observation : "A real quandary for policy makers may soon be how to handle the subprime debris – the physical waste – of housing complexes far from town, unwanted by anybody with the wherewithal to maintain them." In other words, what smart growthers have been pushing for years — infill, redevelopment, density, and housing near transit — may become a reality not because of careful planning, but because people can't afford to fill their gas tanks twice a week. – Paul Shigley

In a follow-up to a report issued last year, the state controller's office has determined that K-12 school districts understated the amount of pass-through payments received from redevelopment agencies by $105 million in the 2005-06 fiscal year, and community college districts underreported by $8.2 million. The errors caused the state to backfill $17.8 million to K-12 districts and $3.9 million to the colleges that the state did not owe. Mostly what the state controller has found is a complicated system that is implemented inconsistently by schools, redevelopment agencies and counties. In fact, community college districts "currently have no means to separately identify pass-through payments" in reports to the Community Colleges Chancellor's Office. The controller also found that some redevelopment agencies failed to make required pass-through payments. One result of all this is an unnecessary hit on the state's general fund. Aside from the school district pass-through discrepancies, the state controller also found some redevelopment agency projects "incurred obligations that cannot be repaid with the projected revenue sources, thus potentially creating significant liability for the localities." For example, based on reported revenues, one project area in Vallejo — a city already flirting with bankruptcy — would need until 2184 to fully repay a debt reported at $255 million in 2006, according to the controller's office. The report on distributing and reporting local property tax revenue is available on the state controller's website: www.sco.ca.gov/eo/pressbox/2008/05/pr08024report.pdf.

A $1.4 million award of damages to the owners of a San Bernardino adult cabaret has been thrown out by the state Supreme Court. In a unanimous ruling, the state high court said that an appellate court had answered the wrong question when it decided the City of San Bernardino was liable for Flesh Club's expenses and lost income during a 53-month period when the cabaret was shut down. At issue is whether the city must pay damages because it sought and received a court injunction to close the nightclub based on a city zoning ordinance that was later found to be unconstitutional. " he Court of Appeal focused on whether the city was immune from liability because it had relied in good faith ‘on a preliminary injunction duly issued by a trial court,'" Justice Ming Chin wrote for the state high court. "However, the critical question is not whether the city is immune from liability, but whether the city's seeking a preliminary injunction and a stay were acts in violation of the First Amendment that caused injury to for which the city could conceivably be liable under <42 u.s.c.> § 1983." The city could be liable only if it made material misrepresentations to the court while seeking the injunction, ruled the state Supreme Court, which sent the case back to the trial court to determine whether important misrepresentations were made. Although both sides have claimed victory with the Supreme Court ruling, Flesh Club has asked for a new hearing. The cabaret contends that the basis for the decision is wrong, and the issues for trial court reconsideration should be broader. San Bernardino has been trying to close down Flesh Club ever since owner Waldon Randall Welty and his Manta Management Corporation converted a comedy club on Hospitality Lane into a nude dancing club in 1994. At the time, the city's zoning ordinance limited adult businesses to "commercial heavy" and "industrial light" zoning districts. The ordinance further required a buffer of 2,000 feet from other adult businesses and 1,000 feet from a school, church, public park, residence or residentially zoned land. Flesh Club complied with the buffer requirements but was in the wrong zone. The city sued in January 1995, seeking to shut down what the city called a public nuisance. A San Bernardino County Superior Court judge granted a preliminary injunction ordering Manta to cease operating an adult cabaret. Manta appealed and filed a cross-complaint seeking damages under § 1983, the federal civil rights law. Manta had sued the city over the constitutionality of the ordinance in 1994, and in 1996, a Superior Court judge declared the law unconstitutional because it did not serve a substantial governmental interest and did not allow for reasonable alternative avenues of communication. In 1999, the Fourth District Court of Appeal upheld the lower court and dissolved the injunction ( People v. Manta Management Corp. , No. E019635). The two sides returned to Superior Court, where Judge Donald Alvarez ruled that the city's requesting and obtaining a preliminary injunction and a stay pending appeal to enforce a law that was unconstitutional established a basis for liability under § 1983. A jury later awarded $1.4 million for Flesh Club expenses and lost profits during the 53 months it was ordered closed. The Fourth District upheld the award in 2006 (see CP&DR Legal Digest , June 2006 ). But the state Supreme Court determined the lower courts were wrong about awarding damages. The issue, Chin wrote, is whether the act of asking the court to enforce the city's ordinance "caused the harm suffered by Manta to the extent that the city is liability for damages." In other words, was there a direct link between the city's legal action and the alleged damages? The court said maybe not. " e hold that, where a court is provided with appropriate facts to adjudicate a motion for preliminary injunction or a motion for a stay pending appeal, the courts' intervening exercise of independent judgment breaks the chain of causation for purposes of § 1983 liability. We also hold that this general rule of superseding causation does not apply when the judicial officer reached an erroneous decision as a result of being pressured or materially misled as to the relevant facts," Chin wrote. " e conclude that Manta does not need to prove that the city's failure to provide the court with accurate information was intentional," Chin continued. "Instead, Manta needs to show only that the misrepresentations were material, in that they would have undermined the courts' ability to exercise independent judgment on the issues presented." The central "misrepresentation" concerns how much territory was available for an adult night club under the city's old ordinance. Back in 1995, the city said 224 acres met the criteria but much later conceded it was closer to 80 acres. Whether that discrepancy was "material" to the courts' earlier approvals of the injunction and stay is now a question for the trial court. Meanwhile, Flesh Club is closed again, the result a new order by Judge Alvarez in a separate "red light abatement" suit filed by the city. City officials argued that Flesh Club is a "whorehouse" where prostitution is a regular occurrence. Although nude dancing is protected by the First Amendment, the club's activities went beyond mere dancing, Alvarez determined in a ruling issued in August 2007. "The ongoing nature of the Flesh Club activities graphically demonstrate a pervasive climate of blatant promiscuous and lewd behavior that in the court's view finds no sanctuary under the umbrella of First Amendment protection," Alvarez wrote at the conclusion of a lengthy trial. He ordered an eight-month closure and fined Manta $25,000. The club closed in November. The Case: Manta Management Corp. v. City of San Bernardino , No. S144492, 2008 DJDAR 5845. Filed April 24, 2008. The Lawyers For Manta: Roger Jon Diamond, (310) 399-3259. For the city: Christopher Lockwood, Arias, Lockwood & Gray, (909) 890-0125.

A water supply assessment provided by a water agency for a proposed development project is not subject to legal scrutiny until it becomes part of an environmental impact report, the Second District Court of Appeal has ruled. The unanimous three-judge appellate panel upheld a Los Angeles County Superior Court judge who had ruled that a water supply assessment may be challenged in court as part of a California Environmental Quality Act review, but not independently. A water supply assessment (WSA) "is a technical, informational document and not a ‘final' act or determination" subject to court review, the Second District ruled. "It teaches us something that's very helpful, but not unexpected," said Eric Robinson, an attorney for the Association of California Water Agencies (ACWA) who filed an amicus brief in the case. "It teaches us that opponents of a land development project may not try to stop the project by challenging the water supply assessment for the project." Attorney Anne E. Mudge, who represented the developer in the case, said the case is important because it is the first published opinion that centers squarely on a water supply assessment law approved in 2001. Although the decision did not address the contents of a water study, the decision answered a key procedural question, namely, whether a water agency's supply assessment is subject to legal challenge. The answer was no. As with many water supply cases, this latest one comes from the Santa Clarita Valley, along Interstate 5 just north of Los Angeles. In 2003, the City of Santa Clarita approved GateKing Properties' proposed business park — 4.2 million square feet of industrial and commercial space on 161 acres, with another 200-plus acres dedicated as open space. Local environmental groups sued over the GateKing EIR and won an important decision three years ago in California Oak Foundation v. City of Santa Clarita , (2005) 133 Cal.App.4th 1219. In that case, the Second District, Division Eight, ruled the EIR was inadequate because the water supply assessment prepared by the Newhall County Water District failed to fully explain the uncertainty over future water deliveries (see CP&DR Legal Digest , December 2005 ). Specifically, the court found that the water supply assessment erroneously assumed that a contested transfer of 41,000 acre-feet of State Water Project water from Kern County to the Newhall district was a certainty. After losing in court, the city asked the water district to prepare a new water supply assessment. It did so and in May 2006, the city certified a revised EIR containing the new water study. Under a state law amended in 2001 (SB 610, Costa), a water supply assessment is required for residential projects with more than 500 units and large commercial projects, including industrial parks with more than 650,000 square feet (see CP&DR , October, 2001 ). Before the city certified the revised EIR with the new water supply assessment, an organization called the California Water Impact Network (C-WIN) sued the water district, alleging the assessment was legally deficient and misleading. The district, the city and the developer argued the document was not subject to legal review, and Los Angeles County Superior Court Judge Dzintra Janavs agreed. "WSA's are not immune from judicial review, but must be challenged and reviewed as part of CEQA review," Judge Janavs ruled. After C-WIN appealed, the Second District, Division Seven, ruled that Janavs got it right. On appeal, C-WIN argued it should be able to challenge the water supply assessment either as an adjudicative act taken after a public agency accepts evidence, or as an arbitrary decision. But the appellate panel ruled otherwise. It found that under state law, the city — not the water provider — makes the final decision on water supply issues. " he WSA's role in the EIR process is akin to that of other informational opinions provided by other entities concerning potential environmental impacts — such as traffic, population density or air quality," Justice Norvell Woods Jr. wrote for the court. The water supply assessment "is not a final agency decision, determination or action" subject to court review, he wrote. "While the lead agency must include the WSA in the EIR, the lead agency is not required to accept the WSA's conclusions," Woods continued. "The lead agency may in evaluating the WSA accept or disagree with the water provider's analysis or may request additional information from the water provider. In any event, the lead agency is required by statute to make the ultimate determination, based on the entire record, whether water supplies are sufficient." The court noted that, in fact, the same parties to the original lawsuit over the project EIR are back in court over the revised EIR. That lawsuit, which is pending at the appellate level, contains "nearly identical" complaints about the water supply assessment, including the contention that the 41,000 acre-foot transfer remains in doubt. Robinson, the ACWA attorney with Kronick, Moskovitz, Tiedemann & Girard, agreed with the court. He said the decision simply "eliminates one piece of unnecessary litigation" without preventing development opponents from having their day in court. The decision, said GateKing attorney Mudge, "establishes that you only get one bite of the apple. I think you're still going to see water supply litigation, but it will be in the CEQA context." The Case: California Water Impact Network v. Newhall County Water District , No. B197570, 08 C.D.O.S. 4413, 2008 DJDAR 5483. Filed April 16, 2008. The Lawyers: For C-WIN: Babak Naficy, (805) 593-0926. For Newhall: Thomas Bunn III, Lagerlof, Sebecal, Gosney & Kruse, (626) 793-9400. For GateKing Properties: Anne E. Mudge, Cox, Castle & Nicholson, (415) 392-4200.

A fence atop an historic wall in the Hollywood hills is not exempt from environmental review, the Second District Court of Appeal has ruled. The court found that the City of Los Angeles did not have enough evidence supporting the California Environmental Quality Act (CEQA) exemption to shift the burden of proof to project opponents. Rather, the court directed the city to conduct an initial study to determine the appropriate level of environmental review. The decision of the unanimous three-judge appellate panel appears to be first published case regarding a "Class 5" exemption for "minor alterations in land use limitations," such as minor lot-line adjustments and setback variances, according to Douglas Carstens, an attorney for the fence opponents. The case also appears to be the first published decision to cite the historic impact exception to CEQA exemptions, he said. The court found that the exemption to CEQA review did not apply because of the potential impact to an historic resource. The city has asked the state Supreme Court to review the case. The city contends that the Court of Appeal incorrectly applied the "fair argument" standard in the case, rather than the "substantial evidence" test. The former is more favorable to project opponents. The decision "creates confusion" for the city, said Deputy City Attorney Gerald Sato. "The city and most agencies have always felt that if there is substantial evidence , that should be enough to shift the burden of proof," Sato said. Instead, the court required the city to prove the exemption applied. The project involves approval of an exception to a specific plan. The Hollywoodland housing tract was developed in the Hollywood Hills during the early 1920s. One of the neighborhood's primary features is the numerous granite support walls abutting the winding, hilly streets. These walls range from only a few to 20 feet in height and have no guardrails or fences. In 1992, the city adopted the Hollywoodland specific plan, which prohibits the attachment of fences to the historic walls and granite stairways. In 2002, the owners of a house on Durand Drive built an unpermitted six-foot high wooden fence atop a wall at the rear of their property. Their yard sits at the base of a 15-foot wall, with the street above. The owners wanted the fence for privacy and safety, as both vehicles and pedestrians had tumbled into the yard in the past. The city issued a citation because the fence was on city property and, under the specific plan, had to be set back by three feet. The property owners said the setback was infeasible because it would create a chasm between the wall and the fence, so they applied for an exception to the specific plan. While the application was pending, Robert Cutler purchased the property. A group called Hollywood Heritage urged denial of the application, arguing that an existing steel guardrail keeps cars on the street and the fence would set a bad precedent. The city's Historic Preservation Section and, initially, the Hollywoodland Design Review Board recommended denial. In late 2004, the City Planning Commission approved a specific plan exception allowing a 54-inch tall fence. The commission also adopted findings for a categorical exemption from CEQA. In April 2005, the City Council upheld the Planning Commission decision. Historic preservation advocates sued. Los Angeles County Superior Court Judge Daniel Pratt ruled for the city, finding that the wall itself was not on the public right-of-way and that a fence on top of the curb would not affect the wall. On appeal, the Second District, Division Seven, took the somewhat unusual step of first considering the city's approval of the project, not the environmental review. The court found there was evidence to support the specific plan exception because of unusual circumstances: The yard is below grade, making the three-foot setback problematic, the property has no real backyard, and there is a safety concern. But after finding the exception to the specific plan — essentially, the project approval — was justified, the court rejected the project's environmental review. "The city found the fence exempt because allowing it constituted a minor alteration to a land use limitation," Justice Laurie Zelon wrote for the court. "The record does not demonstrate, however, that the city had evidence to support the exemption and shift the burden to the challenger. First, the record is unclear whether fence posts will be drilled into the curb or the wall; whether the curb is part of the historic resource; and whether the proposed fence will harm the physical stability of the wall. Additionally, the city conceded in its findings that a fence higher than 42 inches would impair the scenic view of the granite wall from nearby streets, and the city therefore erred in failing to consider the impact of granting an exception from the height limitation in the Municipal Code. "Second, the city failed to consider whether the circumstances of this project, namely the fence, differ from the general circumstances of projects covered by the exemption, and whether those circumstances create an environmental risk that does not exist for the general class of exempt projects," Zelon continued. "The building of a fence atop the wall will significantly impact the environment by altering the historic resource, both as to its physical integrity and its aesthetic appeal from the neighboring streets." Thus, the court overturned the environmental review but upheld the project approval. Assuming the state Supreme Court does not accept the case, the trial court will need to determine how to implement the appellate court ruling, said attorney Carstens. "You can't have an approval without an environmental review," he said. Sato said the court's standard for reviewing a CEQA exemption — not the fence itself — is the city's primary concern. Sato, Carstens and Justice Zelon all noted that courts are divided on whether the fair argument standard or the substantial evidence standard applies to potential exceptions to a CEQA exemption. In this case, the Second District concluded the city's exemption failed under either test. The Case: Committee to Save the Hollywoodland Specific Plan v. City of Los Angeles , No. B197018, 08 C.D.O.S. 4105, 2008 DJDAR 5055. Filed March 12, 2008. Modified and ordered published April 4, 2008. The Lawyers: For the committee: Douglas Carstens, Chatten-Brown & Carstens, (310) 314-8040. For the city: Gerald Sato, city attorney's office, (213) 978-7734. For the property owner: Frank Gooch III, Gilchrist & Rutter, (310) 393-4000.

The campaign in Napa County over a ballot measure that would impose a 1% growth limit may be a microcosm of the entire Bay Area. On one side are slow-growth advocates with the usual arguments about density, traffic, greedy developers and untrustworthy politicians. On the other side are developers with promises for creating housing in a very nice setting within a few miles of tens of thousands of jobs. In between are local government officials, who may end up arm wrestling with lawyers over who should review the project. You can read my summary of the ballot measure and the 3,200-unit redevelopment project the measure seeks to block in our May edition . This morning, San Francisco Chronicle urban design writer John King weighed in with these deep thoughts: "As our region grows more complex and interconnected, we need to rethink how we grow. And when inventive designers are put to work on something that could be enduringly distinct — for all classes of society, not just the upper crust — it's foolish to try to chase them away." Meanwhile, the Napa Valley Register has recently published four thoughtful editorials on the situation, ultimately urging rejection of the initiative. Still, urban growth is not popular in Napa County. This is definitely an election to watch. - Paul Shigley

As Barack Obama would be the first to say, you can't underestimate the importance of North Carolina anymore. At 9.1 million people and counting, it's now the 10th most populous state in the nation, and it has added a million people just since the 2000 Census. Another few boom years and North Carolina – along with Georgia – will pass Michigan in population. All this growth is clearly increasing North Carolina's political significance. But is it bad for a place that has always called itself "the good growth state"? Only three days after the North Carolina primary, the state's policy wonks gathered in Greensboro at the behest of the Institute for Emerging Issues at North Carolina State University. The stated purpose was to talk about how to deal with the fact that growth is straining the state's infrastructure. But in the process, the wonks are gingerly beginning to address the question of whether growth should be managed. (I attended as an observer and as an out-of-state expert .) As a Californian, I was struck by how similar the situation in North Carolina today is to what we in California experienced during the postwar boom – and how intractable the problems sometimes seem. North Carolina, for example, has hundreds of small water agencies, many of them on the economic margin; yet the small agencies have no political incentive to consolidate, and the big agencies have no economic incentive to absorb them. The state's school finance system is muddled, with both county and state government playing a role in paying for new schools; yet there are no standards for school design or construction and, of course, there is not enough money. There is never enough money for roads and highways, but there also isn't much recognition that the actual pattern of growth may play a role in demand for transportation. The event itself was held at The Proximity , a brand-new hotel in Greensboro selected for the event partly because its building operations make it one of the nation's "greenest" hotels. But the Proximity isn't really proximate to anything. It straddles a parking lot in an industrial park alongside a limited-access highway two miles from downtown. It is nearly impossible to walk from the Proximity to the nearby office buildings. Which raises a systemic problem in North Carolina: an unrelenting pattern of sprawl that is driven partly by the state's own rural past. Half of the state's residents use septic tanks and a third use water wells. Most residents aspire to the very large lot in the woodsy, rural-style landscape. There is virtually no urban tradition. There are exceptions throughout the state. In Durham, the old tobacco warehouses have been converted to lofts and restaurants, and downtown has taken off partly because of the new Durham Bulls stadium. And in Charlotte, Mayor Pat McCrory , the Republican candidate for governor this year, has created a buzz around light rail. But Durham and Charlotte are far from the norm. McCrory faces an uphill battle, and not just because the state usually elects Democrats as governor. It's nearly impossible for the mayor of Charlotte to win votes in the rest of the state because he is usually viewed as too urban in orientation. Indeed, the growing divide between urban and rural may be North Carolina's biggest problem in facing growth. Textile mills have closed in the small towns, and the rural areas are losing population. Meanwhile, the three big metro areas along the I-85/I-40 corridor – Charlotte, the Piedmont Triad (Greensboro, Winston-Salem, and High Point), and the Research Triangle (Raleigh, Durham, and Chapel Hill) – are growing faster than anyone could have imagined and sprawling so much they will soon blend together. Here in California, we're lucky in certain ways. We must address growth issues because our metro areas are bounded. The four South Atlantic states – Virginia, North Carolina, South Carolina, and Georgia – are combined almost exactly the same geographical size as California. California currently has 38 million residents; these four states currently have 31 million residents. But more than half of the land in California is publicly owned and off-limits to development, whereas most undeveloped land in the South is in private hands. And, of course, California has a peculiar history. We skipped the agrarian era of development and, because of the Gold Rush, went straight to an urban, mercantile economy. This created different expectations from the beginning about what life would be like – close to the ground but close to each other, as Cal Poly's architecture dean Tom Jones likes to say – and so we have never had to struggle with emerging from a rural past. Like the rest of the South, North Carolina must struggle every day with the dream of being rural and the reality of being urban. That's what makes it increasingly difficult to keep growth good. – Bill Fulton