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A Santa Barbara County special district had no standing to sue over the apportionment of property taxes from a resort development within the district's boundaries, the Second District Court of Appeal has ruled. And even if the district did have standing, its claim was filed after the 60-day statute of limitations for challenging a government agency's action under the Cortese-Knox Local Government Reorganization Act, the court held. At issue in the case was tax revenue from a hotel and resort that Santa Barbara County approved for a 73-acre coastal site north of Santa Barbara. The property lies within the Embarcadero Municipal Improvement District (EMID), a special district that provides or has provided wastewater treatment, parks and recreation, drainage, trails, emergency services, trash collection and other services starting in 1960. From 1980 through 1998, EMID received 17.6% of property taxes generated within its boundaries. When the Board of Supervisors approved the hotel, it required that the parcel be annexed to the Goleta West Sanitary District — which provides sewer service to the project — and to the Santa Barbara Metropolitan Transit District. In October 1997, those two districts and the county adopted joint resolutions that divided tax increment from the hotel as follows: 10.26% for the county, 6% to the sanitary district, 0.354% to the transit district, and 1% to EMID. Because the EMID board did not adopt a similar resolution, the county approved EMID's allocation — a move apparently allowed by Revenue & Taxation Code § 99.01 subdivision (a)(4). After annexation was completed and upon further negotiation, the county raised EMID's share of property tax revenue to 6% and cut the county's portion to 5.26%. However, the sanitary district refused to give up its 6% cut. In October 1999, EMID sued, claiming that it was not given proper notice of the tax allocation negotiations and that county officials had colluded to reduce EMID's rightful share of tax revenue. Superior Court Judge Thomas Anderle held that the tax allocation was "inextricably intertwined" with the annexation approval, and, therefore, was subject to the 60-day statute of limitations in Code of Civil Procedure §6. A unanimous three-judge panel of the Second District, Division Six, upheld that ruling. But before getting to the statute of limitations issue, the appellate court tackled the issue of whether EMID could sue at all. Writing for the court, Justice Paul Coffee cited two cases that suggested the answer was no. San Miguel Consolidated Fire Protection Dist. v. Davis, (1994) 25 Cal.App.4th 134, and Sacramento County Fire Protection Dist. v. Sacramento County Assessment Appeals Bd., (1999) 75 Cal.App.4th 327. In San Miguel, a fire district challenged the early 1990s property tax transfer to schools, known as ERAF. The court ruled that special districts have no "vested right" to property tax revenues and no "property interest" in those revenues "because as against the state, the county has no ultimate interest in the property under its care." In the Sacramento case, a fire district challenged the lowering of an assessed valuation because it would require the refunding of millions of dollars the district had already spent and would reduce future levels of service. But the court held that the district had "neither a ‘vested right' nor a ‘property interest' in a particular assessed valuation for particular property." In the case at hand, Coffee wrote: "If the district in Sacramento County Fire Protection Dist. had no beneficial interest in taxes it had already received and spent, then EMID certainly can have no property interest in any portion of a future tax increment generated by new development to which it did not provide services in the past, nor intend to provide services in the future. The tax allocation agreement does not take away funds that were specifically appropriated for EMID's use. The agreement maintains EMID's historic 17.6% share in the property tax revenues generated from the area in which it provides services, and in the event EMID begins providing services to the 73-acre property, the County is bound to renegotiate EMID's allocation. "The statutory scheme," Coffee continued, "gives the County unfettered discretion to determine EMID's allocate share if EMID refused to agree." Robert Goodwin, EMID's attorney, said that portion of the ruling was particularly troubling because the applicable law, Revenue and Taxation Code §99.01, does not address what happens when a county and a special district cannot agree on apportioning tax revenue. "The court cites no authority for that proposition. Our position was that it had to negotiate with us," Goodwin said. He also noted that the issue of standing was never raised at the trial court level. "None of us ever had any doubts about the ability of EMID to sue another government entity over this or anything else," Goodwin said. The district was trying to enforce its post-Proposition 13 allocation of local property tax revenue, he said. The decision allows counties to unilaterally change that allocation formula, which was established by a state law commonly known as AB 8. Even though the appellate court ruled that EMID lacked standing to file suit, the court still addressed the statute of limitations question. The court noted there is a 60-day statute of limitations regarding public agency actions of this type. The special district was challenging an intermediate step in such an action, and Cortese-Knox and case law "make clear that EMID cannot challenge an intermediate step in the annexation process long after the validity of the annexation itself has become conclusive." Goodwin said EMID was not challenging the annexation, it was challenging the distribution of property taxes, which is subject to at least a three-year statute of limitations. Goodwin was unsure if the tiny special district would ask the state Supreme Court to review the case. The Case: Embarcadero Municipal Improvement District v. County of Santa Barbara, No. B141893, 01 C.D.O.S. 3325, 2001 Daily Journal, D.A.R. 4057, filed April 25, 2001. The Lawyers: For EMID: Robert Goodwin, Goodwin & Associates, (925) 443-0840. For the county: Alan Seltzer, chief deputy county counsel, (805) 568-2950. For Goleta West Sanitary District and Santa Barbara Metropolitan Transit District: Stanley Roden, Hatch & Parent, (805) 963-7000.

A new method of awarding state funding for school construction projects under Proposition 1A appears to be favoring urban districts at the expense of suburban and rural districts. The change has satisfied, for now, a number of ethnic and anti-poverty groups that had sued over an earlier state funding method. However, the change has angered many school districts, about 110 of which have sued the State Allocation Board. Meanwhile, the Legislative Analysts Office has released a report that recommends an entirely new approach. The LAO recommends the state provide capital facilities funding on an annual, per pupil basis after a "transition program" that would bring districts across the state to comparable starting points. The LAO report has received a mixed reception. The policy debates and lawsuits rage at a time when demand for school construction dollars outstrips available funding. California has 6 million grade school and high school students, about one-third of whom are taught in crowded or substandard classrooms. A new school bond is likely to appear on the statewide ballot in November 2002, but nothing is certain. In 1998, state voters approved Proposition 1A, a $9.2 billion bond that contained $6.7 billion for K-12 school construction and modernization, and $2.5 billion for community college facilities. Legislation to implement Proposition 1A (SB 50) called for awarding the K-12 money largely on a first-come, first-served basis, with local funding matches required in most cases. It was the type of system the State Allocation Board has used for years. By September 2000, the State Allocation Board had spent nearly $5.4 billion for K-12 projects, including all modernization funding. However, some fast-growing urban districts, often in poor areas of Southern California, had received little or no money. "That just did not make sense given that the statute was intended to address school overcrowding," said Hector Villagra, staff attorney for the Mexican American Legal Defense and Educational Fund (MALDEF). So that organization and others sued the state last year to force a change in State Allocation Board practices. Under the contested system, a district needed to have land for a school, arrange various environmental clearances, get state approval for construction plans, and line up local matching funds before the district could apply for Proposition 1A money. Those steps took urban districts longer because there is often little land available for new schools, Villagra said. Urban districts often must consider a brownfield site that needs extensive study and possibly cleanup, or must acquire property through eminent domain. Thus, it appeared all $6.7 billion would be spent before these districts got in line for funding, Villagra said. Los Angeles County Superior Court Judge David Yaffe agreed and ordered the state to craft a fairer system. When the State Allocation Board drew up a "priority points" system that favored the most overcrowded schools, the group of mostly small and medium-sized districts and the Coalition for Adequate School Housing (CASH) filed their lawsuit claiming the Board did not have authority to change the system. The State Allocation Board went ahead and adopted the priority points system last December, causing MALDEF to put its lawsuit on hold but infuriating districts that were in line for money under the previous rules. "The system is awry," said Thomas Duffy, of CASH. "They are hurting the districts that were pushing forward with the things they needed to do." Under the new system, the State Allocation Board awards $125 million per quarter in seven cycles through June of 2002, explained Philip Shearer, chief of operations for the Office of Public School Construction. In August of 2002, the board will have $450 million of Proposition 1A funds remaining. That money will go to urban districts most in need of new classrooms. Under the new system, there is already a backlog of $600 million worth of school construction, and the backlog will grow because the priority points system is withholding money, Shearer said. Representatives of CASH propose going back to the old SB 50 system, with additional money awarded to "underperforming" districts. A similar method worked well for 25 years, Duffy argued. But the Legislative Analyst's Office report, released in May, concluded that the system has not functioned effectively. "The state's first-come, first-served approach did not … necessarily allocate construction aid to districts where the need was greatest," the report states. "In the case of the SB 50 program, for example, some districts (such as Irvine Unified) submitted applications and received state aid to build facilities for all eligible students. Other districts with large construction needs (such as Los Angeles Unified and Santa Ana Unified), in contrast, have been slower in submitting applications and have received funding for just 2% of their eligible population." The LAO recommended the state fund capital projects annually, just as it pays for school operations. Under the recommended program, the state would provide districts with about $550 per student, with adjustments for poor districts. School districts would have broad discretion to spend the money. Assuming districts match the state funding, there would be about $3.2 billion available every year for capital projects — enough to cover a moderate backlog and fund future needs. The longstanding practice of a large slug of bond money becoming available at unpredictable intervals makes school planning difficult, said Marianne O'Malley, principal fiscal and policy analyst for the LAO and an author of the report. "The notion that we pass a great big bond and some districts get shiny new schools — and some districts don't — does not make sense," O'Malley said. "It's not a good way to run a capital outlay program." The longstanding system also confuses the public, as local school officials blame the state for being stingy, while state officials blame the locals for poor planning, according to O'Malley. Thus comes the recommendation to make districts responsible. O'Malley described reaction to the report as ranging from "cautiously very interested to nervous." Duffy, from CASH, outright rejected the recommendations. He said districts with large capital needs would not receive enough money, while districts in good shape would receive more money than necessary. But MALDEF's Villagra said the LAO report "is pushing us in the right direction." A steady stream of funding makes sense, especially because bonds appear irregularly and are always oversubscribed, he said. A school bond appears likely for the November 2002 ballot, although nothing is final. Some people have noted that selling a bond to the Legislature and public could be difficult because of the State Allocation Board's plan to have $450 million available as late as August 2002. "There will be a lot of skeptics," warned Shearer, "who say, ‘How can you have another bond when there is still money in the account?'" Contacts: Philip Shearer, Office of Public School Construction, (916) 445-2704. Thomas Duffy, Coalition for Adequate School Housing, (916) 441-3300. Hector Villagra, Mexican American Legal Defense and Education Fund, (213) 629-2512. Marianne O'Malley, Legislative Analyst's Office, (916) 445-6442. LAO report, "A New Blueprint for California School Facility Finance," www.lao.ca.gov

All quiet on the western real estate front? The silence is probably a result of California's property owners collectively holding their breath while listening for the other shoe to drop. The first shoe to fall with a thud was the reversal of fortune in the state's storied dot-com sector. Since the dramatic about-face during the second half of last year, stories have been leaking out of the Bay Area and West L.A. about plummeting commercial leasing activity and lease rates, particularly in San Francisco's South of Market area. But so far, the bust has not significantly affected the state's housing markets. And even some commercial and industrial markets are still humming right along. The widely-publicized misfortunes of Internet giant Cisco Systems — which cancelled real estate projects in three Bay Area counties (Sonoma, Contra Costa, and Santa Clara) — has sounded an alarm in the real estate pages of California's daily newspapers. Layoff announcements that underscore the "Tech Wreck" are weekly occurrences. Yet, the other shoe fails to drop. Two watchdogs of California's real estate health are still publishing reports that insist the market remains strong. The Construction Industry Research Board's April report says, "California private building activity, measured by building permit valuations, totals $3.814 billion, up 19% from February, and down 5.8% from March 2000." The CIRB goes on to predict that developers will build 152,000 housing units this year, the highest number since 1990. Furthermore, the inflation-adjusted dollar totals for all building activity is forecast to reach $47 trillion, the highest number since 1999. What remains to be seen is whether these statistics are harbingers of a new recession – much as the 1989 and 1990 figures now appear to have been. Meanwhile, according to the California Association of Realtors, the state's median home price rose nearly 10% for the first three months of 2001 compared to one year earlier. This includes a 22.5% rise at the epicenter of the Tech Wreck, Santa Clara County. In fact, every housing market tracked by the CAR logged increases from the first quarter of 2000. The Northern Wine Country (Sonoma, Napa, and Mendocino counties) logged the largest spike in median price – a 27% increase to $348,000. One of the popular axioms from the 1990s recession was that consumer confidence ultimately drives the overall economy. And it's well known that home-buying activity is strongly linked to consumer confidence. If economic health can be rendered at a micro level, then perhaps market-level data on home-buying activity is a better indicator of the real-time health of a local economy than alarming trends in certain economic sectors. At a statewide level, the only down-trending data in the housing markets are the sales activity numbers. Transactions posted a 5.4% decrease from the first quarter of 2001 compared with the first three months of 2000. But other sales data countered even this statistic. For example, the number of days it took for single family home to sell dropped from 35 days in the first quarter of 2000 to 28 days in 2001 — hardly evidence of a chilling market. And, whereas sales activity weakened in a more than half of the 16 state markets tracked by CAR, some of the more affordable markets (Central Valley, Sacramento, and Northern California) logged sizeable increases during this year's first quarter. In fact, the Central Valley logged an 11.3% increase in first quarter sales — and a 20% increase in the median priced home. It's fair to assume that some that the Valley's metropolitan regions such as Stockton, Modesto and Bakersfield are experiencing spill-over growth from the Bay Area and Los Angeles to combine with the booming agricultural sector. John Frith, a Sacramento-based lobbyist for the California Building Industry Association, has noticed that the Capital's housing market is not the only thing that appears strong. "A new downtown high rise office project that is largely leased was just announced last week. And Sacramento continues to experience a significant migration of technology sector firms relocating from the Bay Area, joining already established Apple and HP," Frith observed. Sacramento experienced a nearly 3% growth in sales activity for the first quarter of 2001, combined with a 23% growth in the median home price. Meanwhile, Silicon Valley first quarter sales activity dropped 28%from a year ago, though the already high median price still grew substantially to nearly $600,000. So, despite the hand-wringing on the business pages these days, the picture is not black and white. It's reasonable to assume that the Silicon Valley's problems will affect localized Bay Area housing markets — and may cause ripples elsewhere. But it's also looking like the state's housing markets are more subject to local economic conditions – some of which are decidedly not recessionary. We may be waiting for that other shoe to drop for quite a while. Stephen Svete, AICP, is president of Rincon Consultants, Inc., a Ventura-based consulting firm.

A Sacramento County Superior Court judge has overturned eight amendments that the Wilson administration made to the Guidelines for implementing the California Environmental Quality Act. And although Judge Ronald Robie had not issued a final judgment as of late May, sources said his decision was unlikely to be appealed. Robie essentially gutted a new portion of the Guidelines that address cumulative impacts, finding that the changes were contrary to the statute (Public Resources Code § 21000 et seq.). Robie also threw out a Guideline dealing with local environmental standards, and a Guideline that excluded at least some government reorganizations and administrative activities from CEQA review. The decision on the Guidelines (14 Cal. Code Reg. 150000 et seq.) drew a mixture of responses. Environmental groups that filed the lawsuit praised it. The California Building Industry Association, which intervened to defend the Guidelines, decried the ruling. Both the CBIA and the state, which did not defend five of the overturned Guidelines, appeared to have little interest in pressing the case further. Some practitioners said the decision would result in more reliance on "substantial evidence in the record," and, thus, longer environmental impact reports. Everyone involved seemed to agree that the 12 Guidelines that environmentalists challenged were the most important changes adopted during the 1998 update. "These were the big ticket items, and these were the ones that seemed illegal," said Richard Drury, attorney for the lead plaintiff, Communities for a Better Environment. "These were adopted at the end of the Wilson Administration, and our feeling was that they did not reflect the requirements of the statute," added Ellison Folk, an attorney with Shute, Mihaly and Weinberger who represented the Environmental Protection Information Center (EPIC), and Desert Citizens Against Pollution in the lawsuit. But Maureen Gorsen — lead author of the revised Guidelines for the Resources Agency and now an attorney with Weston, Benshoof, Rochefort, Rubalcava & MacCuish, which represented the CBIA — said the decision only makes CEQA compliance more difficult for lead agencies. "I think all the rules that were struck put an outline on open-ended impact requirements," Gorsen said. Consultants and local government officials had settled on standard practices to satisfy CEQA "and all the Guidelines really did was put in the rules what was standard practice," she said. "There was no groundbreaking change in the Guidelines." But Folk contended that there were major changes, and she pointed to Guideline 15064(h), which allowed a lead agency to determine that a project's impacts were insignificant if the project complied with local thresholds of significance. Folk argued – and Robie agreed – that the rule conflicted with the "fair argument" standard, under which an environmental impact report is required if someone makes a fair argument that a project may affect the environment. "It really shifted the presumption away from environmental review, which the courts have repeatedly upheld," Folk said of the Guideline. Robie struck down rules addressing what projects must be considered in a cumulative impacts analysis (Guidelines 15130(b)(1)(B)(2). Under the amended rules, projects to consider were limited to previously approved projects that had not been built, projects for which applications had been filed, projects in an adopted plan of some sort, and public projects for which money was budgeted. Robie focused on the word "or" between the types of projects, which he said limited study to only one of the four project types. Gorsen said the intent was to include all four project types in cumulative impacts analyses. Robie also rejected three rules addressing "de minimus" findings for cumulative impacts (Guidelines 15130(a)(4), 15064(i)(4) and 15152(f)(2). And he tossed out a rule that allowed a lead agency to find a project's cumulative impact was insignificant if the project complied with an adopted plan that provided mitigation for the impact (Guideline 15064(i)(3). A rule that limited the definition of a project (Guideline 15378(b)(5)) also was tossed out. The Guideline said that purely "political" activities, such as governmental reorganizations and administrative activities that would not result in physical changes, were exempt from review. Gorsen said the rule was aimed at actions such as the redrawing of school attendance boundaries. But Robie indicated the new Guideline went beyond existing court precedent. Folk said the rule was too broad. The question under CEQA, she said, is whether an activity will lead to a reasonably foreseeable change in the environment. The simple practice of drawing lines on a map is part of a chain of decisions that can lead to changes in the physical environment, she said. Robie upheld four revised rules. Guideline 15064.7 encourages agencies to develop thresholds of significance. Guideline 15041(a) says that mitigation measures must be connected to the project and be "roughly proportional" to the project's impacts – standards encompassed by the U.S. Supreme Court's Nollan and Dolan decisions. Guideline 15330 exempts certain environmental cleanups costing less than $1 million. Guideline 15332 exempts urban infill projects of less than 5 acres, provided that the project will not result in significant traffic, noise, air quality or water quality impacts, and will have adequate public services and utilities. Drury said he was surprised Robie upheld the infill exemption, which appeared to conflict with the judge's conclusions regarding cumulative impacts. Drury said that if the other side appeals the decision, he would cross-appeal the infill exemption ruling. The case appears to be the first ever facial challenge of the CEQA Guidelines since they were first introduced about 20 years ago, said Marian Moe, a deputy attorney general who represented the Resources Agency. The typical lawsuit concerns how the Guidelines are applied to a particular project, she said. The Resources Agency is expected to release a new round of Guideline revisions this summer. The Case: Communities for a Better Environment v. California Resources Agency, Sacramento County Superior Court, Case No. 00-CS00300. The Lawyers: For CBE: Richard Drury, (510) 302-0430. For the Resources Agency: Marian Moe, deputy attorney general, (916) 322-5460. For the California Building Industry Association, John A. Henning, Weston, Benshoof, Rochefort, Rubalcava & MacCuish, (213) 623-2322.

Long considered a poor stepchild in Orange County, Santa Ana is working to turn around its image. The city is pressing forward with downtown redevelopment efforts, and the midtown Civic Center continues to cement its position as a center of government. The city recently landed the first Mexico Trade Center, beating out Los Angeles and San Diego for the office. And business leaders have undertaken a "branding" campaign that they hope to convert into a major marketing effort. "They appear to be doing a great job downtown. They are preserving a lot of the old buildings," said Alan Saltzstein, chair of the division of Political Science and Criminal Justice at California State University, Fullerton. "It does seem like they are doing a lot of interesting things despite not having a lot of money." Some of those interesting things come with a measure of controversy. As the city focuses on downtown redevelopment, some people in the Latino community fear they are being forced out. Downtown's Fourth Street has long been a bustling hub of retail trade — nearly all of it conducted in Spanish. But a thriving artist's village and some new offices have brought a hip, yuppie-type crowd to the district. With a population of 338,000, Santa Ana is Orange County's largest city. Over time, that population has become increasingly Latino. The 2000 Census found that 76% of Santa Ana's residents are Hispanic, up from 44% of a population of 200,000 only 20 years ago. In recent years, Santa Ana's overcrowded public schools have become dominated by Latino students. "It's unique in that it has been more of a center for Latino heritage in Orange County," Saltzstein observed. Santa Ana certainly did not fit with the upper-middle-class, white bread image portrayed by much of Orange County. More significantly, the city struggled with one of the county's highest crime rates and with extensive poverty in some neighborhoods. But those conditions helped the city win status as a federal "Empowerment Zone," one of only 15 such zones designated in 1999 by the Department of Housing and Urban Development. The designation was supposed to come with $100 million in seed money for healthcare, workforce training, housing, economic development, youth development, community safety and transportation and other programs. The city established a nonprofit corporation in late 1999 to run the Empowerment Zone program. Since then, officials have developed a large number of partners and have connected entities that were not working together, said Shawna Lahey, zone manager. So, for example, workforce development groups are collaborating with economic development planners, and healthcare organizations are working with child-care advocates. Empowerment Zone programs have put about 500 zone residents into jobs, and officials are working to build a community center in a long-neglected part of town. However, federal funding has not come through as expected. Congress must allocate the city's Empowerment Zone funding every year. The first two fiscal years, Santa Ana received only $3 million and $3.6 million, respectively. This year (2000-01), Santa Ana got $12.3 million. Zone directors have about $8 million remaining to allocate. To qualify for the federal program, city officials promised the community would match federal dollars 25 to 1. They have been able to do that by using things such as volunteer labor as a match. The bulk of the four-square-mile Empowerment Zone lies south of downtown, but the Zone does straddle Main Street to reach into downtown, which is undoubtedly the heart of the city. "We have the only real downtown in Orange County, and it's a very large downtown," boasted Larry Yenglin, a redevelopment project manager for the city. The city is working with downtown merchants on extensive streetscape and façade improvements, and officials are trying to decide how to rehabilitate and reuse an old, large building the city has acquired at Fourth and Broadway. But the downtown project getting the most attention now is construction of 86 live-work lofts. The for-sale lofts will be newly constructed on three separate sites in the Artists Village along Second Street. The city is working with The Olson Company on planning and designing the lofts, which will be marketed for singles and couples, Yenglin said. The lofts would pump even more life into the six-year-old, eight-block Artists Village, where monthly open houses draw throngs of art enthusiasts from around the region. A CSU Fullerton arts center opened there two years ago, and the University of California, Irvine, is considering opening its own arts center in the district. Private capital is also finding its way to the Artists Village and adjacent downtown streets. Last year, DGWB Advertising moved its office and 100 employees from Irvine to the 66-year-old former City Hall building, which the firm purchased and renovated. Leaders of the national advertising company said the art deco building and lively neighborhood drew them to the area. Nearby, a private developer has purchased and restored a 1930 Masonic Hall, which sat empty for nearly two decades. The hall is being converted into a performing arts center with multiple stages, restaurants and banquet facilities, according to Yenglin. In the early planning stages is a 38-story office tower on Broadway that is not getting as warm a reception. Some city officials believe the tower would be the crowning achievement of redevelopment; however, historic preservationists complain that the project would wipe out a number of historic buildings along Broadway. Just north of the downtown bustle is the Civic Center, where about 20,000 people work for various government agencies. The County of Orange has extensive offices, and the Ronald Reagan Federal Courthouse opened there in 1999. Two state appellate court buildings are scheduled to be built next year. Still, keeping all of those workers in midtown and downtown Santa Ana after 5 p.m. continues to be a challenge. Next to the Civic Center is the new International Business Center, the first tenant of which is the Mexico Trade Center. Business experts credit Santa Ana Mayor Miguel Pulido for bringing Mexico's first trade center in the United States to Santa Ana. "When we were looking for different sites, he immediately started calling," Juan Hernandez, an advisor to Mexican President Vicente Fox, told the Orange County Register. "He doesn't know how to accept maybe." Besides the Mexican trade outpost, city officials hope the International Business Center — a city-owned office building — will provide a home for CSU Fullerton and UCLA business development classes, a Small Business Administration District Office, a federal Export Assistance Center, a California-Mexico Trade Assistance Center and county business development offices. Santa Ana also has one of the state's oldest enterprise zones, which offers tax credits to businesses that purchase equipment and add employees. The fact that Santa Ana appears to be pulling itself up by its bootstraps is largely unknown to the outside world. So the Santa Ana Chamber of Commerce has hired DGWB Advertising to conduct a "brand audit." DGWB is interviewing about 40 "opinion leaders" inside and outside Santa Ana, as well as average citizens. The effort is similar to what Madison Avenue undertakes for consumer products, such as cars or beer. Only in this case, the "brand" is a city. "We want to understand what the perceptions are of Santa Ana and what the prospects are for Santa Ana," said Gil Aranowitz, DGWB director of planning. "You're talking about how to build the appeal of Santa Ana. … You can say ‘Santa Ana' as a brand the same way you can say ‘Coca Cola' as a brand." Too many people have a poor, outdated perception of Santa Ana, conceded Chamber President and CEO Mike Metzler. Many people fled the city for Orange and Riverside county suburbs years ago, especially when crime was increasing, and those people have never been back since. "There are a number of perceptions that are out there that are not positive," Metzler said. "It's time to get out the real story about the city." Chamber leaders hope to settle on a "brand" this fall and then begin a full year marketing blitz aimed at businesses, potential residents and tourists. "I think you'll see other communities trying to do this in the future. I'm surprised no one else has done this yet," Metzler said. Contacts: Shawna Lahey, Santa Ana Empowerment Zone, (714) 647-5372 Larry Yenglin, Santa Ana Community Development Agency, (714) 647-5360. Gil Aranowitz, DGWB Advertising, (714) 881-2300. Michael Metzler, Santa Ana Chamber of Commerce, (714) 541-5353. Alan Saltzstein, CSU Fullerton Division of Political Science and Criminal Justice, (714) 278-3771.

The latest round in the legal saga of an adult bookstore in Las Vegas has been won by the city. The U.S. Ninth Circuit Court of Appeals upheld the city's regulatory system for adult businesses after the city adopted measures to ensure prompt reviews of adult business license applications by city officials and state courts. The decision follows two earlier Ninth Circuit victories by the adult bookstore, when the court struck down the city's ordinances for regulating adult businesses. Baby Tam & Co., Inc. v. City of Las Vegas , 154 F.3d 1097 (1998) ( Baby Tam I ) and Baby Tam & Co., Inc., v. City of Las Vegas , 199 F.3d 111 (2000) ( Baby Tam II ). See CP&DR Legal Digest , March 2000. In Baby Tam I , the Ninth Circuit threw out the city's ordinance because it failed to provide for prompt judicial review of a denial of a license for an adult bookstore. The lack of prompt legal recourse made the regulation a restraint of speech that violated the First and Fourteenth amendments, the court held. After that decision, Las Vegas amended its ordinance and secured changes to state law to ensure that such legal challenges would be decided within 30 days of the filing of a writ. But the court was still not satisfied and ruled 2-1 in Baby Tam II that the licensing scheme was illegal because it set no time limit for the city's director of the Department of Finance and Business Services to rule on an application. In March 2000, Las Vegas officials revised their ordinance again. The amended law gave the director 30 days to decide on a license upon receipt of an application and "applicable fees." If the director did not decide within 30 days, the application would be deemed approved. And if the application was denied, and the state court did not rule on a lawsuit over the denial within 30 days, the city had to issue a temporary bookstore license. After adopting those changes, the city asked U.S. District Court Judge Philip Pro to lift an injunction that prohibited the city from denying a business and zoning license to Baby Tam. Baby Tam, which operates an adult bookstore on West Charleston Boulevard, filed a counter motion asking Judge Pro to compel the city to issue a license. In May 2000, the judge ruled for the city and vacated the injunction. The city then issued citations to Baby Tam, which closed its bookstore. The city also obtained a state court injunction prohibiting Baby Tam from operating in an improper zone and without a business license. Baby Tam then appealed to the same three-judge panel that has struck down past city ordinance. This time, however, the bookstore lost, despite presenting an array of arguments. First, the bookstore argued that because the court found the city's licensing scheme invalid in Baby Tam I , the business was entitled to a license because it was a lawful business at the time and is entitled to legal nonconforming use status. But the unanimous three-judge panel pointed to a city ordinance that grandfathers businesses in existence on September 16, 1992. Baby Tam did not register as a business corporation until 1997. " t is established that city zoning may eliminate features of the landscape that pre-existed the zoning code and have been found objectionable under it," Judge John Noonan wrote. He continued, "We note that at no time did this court or the district court order the City to license Baby Tam. Litigation in this case has proceeded on the assumption that the City could amend its licensing scheme to meet Baby Tam's challenges." The bookstore owners also argued that the new regulatory scheme was flawed because it did not ensure prompt judicial relief if a denied applicant brought suit in a federal court, rather than state court. But the Ninth Circuit ruled that there is "no constitutional requirement of prompt review by both court systems. State courts are entirely capable of adjudicating federal constitutional claims." The court also rejected Baby Tam's contentions that the "applicable fees" portion of the revised ordinance could stall the process by giving the director too much discretion, and that the fees are a tax on the exercise of free speech. The court found the definition of fees to be straightforward — $30 for processing and the advance payment of a semiannual license fee based on projected gross sales. "The gross sales tax of the City falls on all businesses in the City. The tax is not imposed on the exercise of free speech. Furthermore, it is minimal. It ranges from $25 on semiannual gross sales of $12,000, to $670 on $1.2 million of such sales. It is not a burden on speech," Judge Noonan wrote. The court also rejected arguments that the city's definition of an "adult" business was unconstitutionally vague and conferred too much discretion on the city. "The ordinance is specific in spelling out what sexual acts and what parts of the human body and what sexual toys qualify as sexual," Noonan wrote. "No set of regulations can be applied without a modicum of judgment being exercised by the regulators. This ordinance cabins their discretion and directs their judgment and therefore passes constitutional muster." Finally, the court rejected the argument that the regulatory scheme improperly places the burden for seeking legal recourse on the applicant. The Case: Baby Tam & Co., Inc. v. City of Las Vegas , No. 00-16123, 01 C.D.O.S. 3295, 2001 Daily Journal D.A.R. 4083, filed April 26, 2001. The Lawyers: For Baby Tam: Michael Stein, Michael Stein & Associates, (702) 380-1000. For the city: William Henry, senior litigation counsel, (702) 229-6201.

If you do not care about either law or land use, there is much to laugh at in the story of how Majestic Realty used the state Legislature as a club with which to beat the City of Redlands. The premise seems funny enough: A somewhat naïve, small-town city council says no to a regional mall, then finds itself overmatched by a billionaire developer with a beetled brow and a notoriously heavy hand. They are fighting over 1,200 acres of orange groves and empty space known locally as the Doughnut Hole, which nobody cared about until very recently. Gray Davis himself appears in a comic cameo as the Good Witch who grants the developer his wish in the name of "military-base reuse." For anyone who cares about local land-use control, however, the story of the Doughnut Hole is an infuriating example of how money and power can subvert government and orderly land-use regulation. The Doughnut Hole is an unincorporated piece of land in San Bernardino County entirely surrounded by Redlands. In 1972, the county LAFCO placed the Doughnut Hole within the city's sphere of influence. Redlands did not think of annexing the land until the 1990s, probably because most of the site was farmland protected by Williamson Act contracts. In the late 1980s, the Pentagon announced the closing of Norton Air Force Base, which lies immediately west of the Doughnut Hole. In 1990, the Inland Valley Development Agency, the joint-powers group responsible for the reuse of Norton, included the Doughnut Hole acreage in its jurisdiction; the agency is promoting development in a 14,000-acre area, which includes the former Air Force base. Farmers, who can smell development like they can smell rain, stopped renewing their ag preserve contracts and began selling to investors. One developer that stood particularly tall among the orange groves was Majestic Realty, which is based in City of Industry and is probably the largest and wealthiest developer in Los Angeles County. Under chief executive Ed Roski Jr., Majestic developed an enormous portfolio of industrial buildings, then branched out to office buildings, a Las Vegas casino and half-ownership of Staples Center arena in downtown Los Angeles, where Roski also plans to build a long-awaited convention-center hotel. In 1993, Roski applied to the City of Redlands to build the 1.4 million-square-foot Citrus Plaza on a 125-acre site. The developer and the city did not come to terms on development fees, however, nor did the city grant water and sewer hook ups for the project. Roski and other would-be Doughnut Hole developers sued the city multiple times over the standoff. In 1999, Roski convinced State Assemblyman Thomas Calderon (D-Montebello) to author a bill that would take the Doughnut Hole out of Redlands' sphere of influence and give it back to San Bernardino County. Smelling rich sales-tax revenues — Roski had dangled an astronomical $18 million in annual sales tax from his project — San Bernardino County was receptive. The bill, one of dozens of special-fix bills that come swarming through at the end of the legislative session like salmon flapping up fish ladders, was vetoed by California's sharp-eyed freshman governor. At the same time, Davis said Redlands' position of turning down virtually all development was "ridiculous" in the light of the 10,000 jobs lost when Norton closed. Seeing the Roski project and others as potential job creators, Davis promised to sign a similar bill the coming year if the parties did not work out their problems among themselves. They did not work out their problems. Instead, the lawsuits became strategic and nasty, such as an environmental challenge brought by Roski and his fellow developers over a 500,000-square-foot Hershey's candy warehouse proposed inside the city of Redlands. In other words, if Redlands was going to stand in the way of Roski's mall, Roski was going to stop the city from building its own favorite projects. True to his word, Davis signed the second Calderon bill in August 2000. The governor's spokesmen hotly rejected the suggestion that governor had shown favoritism to the developer, who had contributed $80,000 to Davis's gubernatorial campaign. Roski spokesman Tim Chaikovsky also dismissed the idea. "Ed supports people that basically are supportive of business growth in the state of California," Chaikovsky told the Los Angeles Times. The governor's rationale that the Doughnut Hole is somehow important to the redevelopment of Norton Air Force Base is hard to accept, other than the mall would be a big provider of low-paying, service-industry jobs. I do not believe, however, that Davis took a dive for Roski. The governor, instead, has a history of favoring solutions that are both friendly to business and of minimal political risk to himself. If this held true, the governor's pro-business instincts won out over his local-control convictions. In February of this year, everybody agreed to stop the lawsuits. The Redlands City Council, the San Bernardino Board of Supervisors and the developers all signed a cease-fire that essentially gave Roski the right to build, and the city the right to control the process. The fight had been costly for Redlands, which spent more than $1 million fighting a developer whose pockets are far deeper than the city's. Today, Roski is moving forward with the first phase of Citrus Plaza, a 450,000-square-foot power center anchored by a Target store and a multiplex theater. Property-rights advocates might say, with some justification, that the city got its just desserts for trying to deny Roski's right to build anything at all. But was Sacramento justified in stepping into this local dispute? I think not. The Calderon bill weakens local land use control by allowing a well-heeled developer to turn to the Legislature for a better deal. There are indeed cases when the state should step in, such as when cities refuse to build an adequate amount of affordable housing. But in a straightforward land use dispute, the courts have a role, not made-to-order legislation. (It is also true that both sides used the courts, not to resolve the dispute but to punish each other.) There is no denying that the Doughnut Hole is a funny story. But the punch line of the Doughnut Hole leaves an empty feeling where local control should be.

The City of Vernon has lost a case in which it alleged that the California Public Utilities Commission should have required environmental review of a proposed rail yard expansion. A unanimous three-judge panel of the Second District Court of Appeal ruled that Vernon failed to prove that the project was unreasonable. The case demonstrates the differences between projects controlled by the California Environmental Quality Act, and projects that fall under other sections of the state Public Resources Code. " nlike review under CEQA where the burden of demonstrating the reasonableness of a project lies with its proponent, the burden here was on Vernon as the opponent of the Hobart Yard expansion to show that it was unreasonable," Justice Robert Mallano wrote for the court. The Hobart Yard is a large "intermodal" facility partially located in the City of Vernon and owned by Atchison, Topeka & Santa Fe Railway. Large shipping containers are transferred from trains to trucks at the yard. In 1994, Santa Fe filed an application with the city for conditional use permits to allow an expansion of the Hobart Yard. Vernon refused to process the application, saying Santa Fe needed to file an application covering the entire yard, not just the additions. In 1995, Santa Fe sued the city; Vernon responded with a complaint to the Public Utilities Commission (CPUC). In February 1996, a Superior Court ruled in favor of Santa Fe, a decision that an appellate panel upheld later in an unpublished opinion. In November 1996, the CPUC also ruled for Santa Fe. The CPUC found that the project was exempt from CEQA because it was a project of a public utility that did not require approval or other discretionary acts. The CPUC held that Vernon could only complain about utility conduct that was unreasonable. However, the CPUC allowed Vernon to amend its complaint, which the city did. The city argued that the Hobart Yard expansion would increase truck traffic, that the additional trucks would cause unsafe conditions and lower the level of service at five intersections, and that Santa Fe could reduce the impacts by paying 7% of the cost of a $26 million intersection improvement project. In December 1998, the CPUC again rejected Vernon's complaint, citing Public Resources Code § 21082.2. The commission held that the impact on the intersections did not require mitigation because the level of service would be identical whether or not Santa Fe expanded its rail yard. The commission held that the significant environmental effects were unavoidable. Vernon sought a rehearing, which the CPUC denied. Vernon then took its case to the Second District Court of Appeal, where the city argued that the CPUC "clearly had an affirmative responsibility to conduct an environmental review which would give prime consideration to preventing environmental damage." But the court said Vernon had not proven its case. "Vernon had the burden of demonstrating to the Commission that changes to the Hobart Yard project ‘ought reasonably be made', giving consideration to the project's ‘influence on the environment,'" Justice Mallano wrote. He noted that Public Utilities Code §§ 762 and 762.5 controlled the Commission's decision, not CEQA (Public Resources Code § 21000). " he commission … has not on any occasion that has been brought to our attention deemed itself to be generally bound by the requirements of CEQA," Mallano wrote. "In short, by no stretch of law or logic may the requirements of CEQA be engrafted onto a determination of reasonableness under Public Utilities Code §§ 762 and 762.5" Although Vernon and Santa Fe differed on the extent to which the rail yard expansion would increase traffic, Mallano wrote, "we find nothing in the record that would compel us to conclude that Santa Fe's projections were not supported by substantial evidence. More important, Vernon offers nothing that would cause us to question the Commission's findings … ." The Case: City of Vernon v. Public Utilities Commission of the State of California, No. B131559, 01 C.D.O.S. 3263, 2001 Daily Journal D.A.R. 4005. Filed March 26, 2001, ordered published April 24, 2001. The Lawyers: For Vernon: David Brearley, city attorney, (626) 336-3408. For CPUC: Peter Arth Jr., CPUC counsel, (415) 703-2015. For Santa Fe: John C. Nolan, Gresham, Savage, Nolan & Tilden, (909) 884-2171.

A developer whose project was the subject of a California Environmental Quality Act lawsuit is not entitled to attorneys fees for helping a city defend the suit, the Fourth District Court of Appeal has ruled. The unanimous three-judge panel held that Lutheran High School Association of Orange County (LHS) did not meet the requirements of the private attorney general doctrine under Code of Civil Procedure § 1021.5. That law allows judges to award attorneys fees to a successful party a lawsuit that "has resulted in the enforcement of an important right affecting the public interest." However, no real party in interest — usually, as here, the project developer — has ever received fees under this doctrine in a CEQA case, the court said. In 1999, the City of Orange Planning Commission approved a conditional use permit and mitigated negative declaration for the high school, which has been on a 12.82-acre site on Santiago Boulevard for 30 years. The permit allowed the school to build a second story, allowing an enrollment increase from 682 to 950 students. The permit also allowed construction of a new gymnasium, erection of ball field lights, and expansion of the parking lot from 250 to 392 spaces. Jere Jobe, a neighbor, fought the project throughout the city's approval process, saying the larger high school would impact traffic, lower property values and create "special problems" for the neighborhood. Jobe demanded an EIR. After the City Council rejected Jobe's appeal of the Planning Commission decision, he filed a lawsuit against the city that attacked nearly all of the city's environmental findings and the environmental review process. Orange County Superior Court Judge Randell Wilkinson ruled for the city, saying Jobe had not presented "substantial evidence" support a "fair argument" that the project may have a significant environmental impact. The appellate court upheld that ruling in a lengthy — though unpublished — portion of its decision. The court ruled that Jobe's arguments regarding traffic, aesthetics, air quality, water quality and hazardous materials were based on his opinion, not on any evidence in the record. The court also ruled that it need not consider other arguments Jobe raised in his lawsuit because he did not raise them at the City Council level. The court upheld the city's process and the imposition of mitigation measures that were not identified in the mitigated negative declaration. In the published part of its opinion, the court dealt with the high school's appeal of a postjudgment order denying attorneys' fees. The high school argued that it advanced an important public right, namely education. The school argued that by privately educating students, the school was saving taxpayers money. The school also argued that because it is a nonprofit organization, it had no economic interest in the project. The court disagreed. The high school "certainly has a significant pecuniary interest in the physical expansion of the high school it owns and operates. The facilities are a significant asset of LHS." The court cited Woodland Hills Homeowners Organization v. Los Angeles Community College Dist., (1990) 218 Cal.App.3d 79, a suit over the leasing of surplus district property to a religious organization. The religious organization defended the suit alongside the district and prevailed. But the group did not receive attorneys' fees. "Where the result of the litigation is judicial approval of a challenged governmental action, the defense of which was in the pecuniary interest of the defendant litigating alongside the governmental entity, it is difficult to satisfy the requirements of Code of Civil Procedure §1021.5, i.e., that the defense by the private litigant was necessary and that the financial burden resulting from its defense is appropriately shifted to the plaintiff," the court concluded in Woodland Hills. The Fourth District added, "An award of attorney fees under Code of Civil Procedure § 1021.5 requires that the claimant show the cost of its legal victory transcended its personal interest. LHS made no such showing here." The Case: Jere A. Jobe v. City of Orange, Nos. G026974, G027732, 01 C.D.O.S. 2907, 2001 Daily Journal D.A.R. 3543. Filed April 10, 2001. The Lawyers: For Jobe: Michael K. Maher, Maher & Maher, (949) 721-7555. For the city: David DeBerry, city attorney, (714) 744-5580. For the high school: Ronald Van Blarcom, Van Blarcom, Leibold, McClendon & Mann, (714) 639-6700.

Redevelopment of closed military bases in the City of Alameda is moving forward thanks to the settlement of a lawsuit filed by affordable housing advocates and environmentalists. The settlement clears the way for a 600-unit housing development and a 1.3-million-square-foot business park at the former U.S. Navy Fleet Industrial Supply Center. Meanwhile, the city is in the process of choosing a master developer for about one-third the 2,600-acre former Alameda Naval Air Station, which is next to the closed supply center at the northwest end of the island city. City officials, planners and civic activists agree that the closed military bases offer the city both great opportunities and enormous challenges. The closed bases provide the nearly built-out city with its last chances for large-scale development — and on a waterfront site with spectacular views of San Francisco Bay. However, the sites contains a great deal of contamination left from the Navy, and there are concerns about how to handle the traffic that development will generate. The Naval Air Station closed in 1997. At its peak, the base employed 14,000 civilians and service personnel. Since the closure, the City Council (the official base reuse board) has leased 2.7 million square feet of former Navy buildings to about 90 private companies. Approximately 2,000 people now work on the closed base, according to city Development Services Director Doug Yount. Just prior to the base's closure, the city adopted a 20-year plan for the site, which is now known as Alameda Point. Although short on specifics, the plan calls for a wide range of uses, including single-family and multi-family homes, retail businesses, offices, light industry, a public marina, a golf resort, parks and a wildlife refuge. "It is truly a mixed-use, urban infill development," Yount said. What form that development will take depends a great deal on the master development agreement proposed for 770 acres of the Naval Air Station. After receiving proposals from seven developers, the city has whittled the finalists to three heavyweights — Catellus Development, Centrex/Shea Homes/Shea Properties and Harbor Bay/Lennar. All three have pitched variations on a New Urbanist-style development. City officials hope to select one master developer this summer for what could be up to $1 billion worth of development, Yount said. Naturally, reuse of the base has be a controversial topic in a town where growth battles date to the 1970s, when voters approved a ballot measure that prohibits replacement of single-family homes with multi-family structures. Complicating things is the fact that activity at the base has been below peak levels since the mid-1990s. "You have a lot of folks who forget what it was like when the base was here. We used to have 14,000 people working and living at that base," Yount said. "People have gotten used to having it quiet." Traffic remains a major concern because the city relies on various bridges and tubes to connect to the mainland cities of Oakland and San Leandro. Yount contends the city needs to get as creative as possible with light rail, a tram, ferries and even hovercraft service. "It may seem like a crazy idea," he said, "but what's your alternative? Build another bridge?" Patrick LaCava, an Alameda resident and restaurant owner who has followed the city's planning process, said he is confident city officials can figure out how to handle traffic from Alameda Point. His bigger concern is seeing the right mix of housing and retail development that will bring people to the area. "It's got the greatest views around, and it would be wonderful to make better use of those," LaCava said of the site. City residents, he added are "spending our money elsewhere. We go to Berkeley or Walnut Creek, and we'd much rather spend the money on the island." The full extent of contamination at Alameda Point remains unknown. Yount estimates there is at least $100 million worth of remediation necessary. The Navy is responsible for the cleanup. Dave Berger, assistant city manager for community and economic development, said the property is now "worth less than nothing" because of the contamination and need to build new infrastructure. "We've told the developer that this is not for the squeamish," Yount said. However, city officials worked past contamination concerns at the 215-acre Fleet Industrial Supply Center (FISC) adjacent to the closed Naval Air Station. Last year, the Department of Toxic Substances Control approved a "dirty transfer" of the site from the Navy to the city, meaning that full remediation was not required prior to transfer, as it usually is. At issue are about 12 acres tainted with PCBs, cadmium, petroleum wastes and other toxic materials that will cost at least $3.5 million to remediate, according to the state. The Navy is still responsible for the cleanup and is planning to begin work later this year, said Jeff Bond, the city's development manager. In May of 2000, the city approved a mixed-use project on the 215-acre site, for which Catellus is the developer. The project called for about 540 dwelling units, a 1.3 million-square-foot office and research and development park, five parks of various sizes, a waterfront promenade and an elementary school site. But two advocacy groups quickly filed a lawsuit alleging the city violated the California Environmental Quality Act. Alameda County Superior Court Judge Richard Hodge urged the parties to settle, which they did in March. Under the settlement, the city and Catellus agreed to provide an additional 60 units of very low- and low-income housing, and agreed to earmark more of the already approved moderate-income housing for people with incomes of 100% of median or less. Additionally, the city agreed that 25% of all housing developed in the overall base redevelopment will be affordable. Getting affordable housing concessions has been particularly tricky because of popular sentiment against development of lower-cost units, said Tom Matthews, chairman of Renewed Hope, a housing advocacy group that sued the city. He and others urged the city to refurbish 590 units of shuttered military housing on the FISC site for poor people. "We were not successful in convincing the city not to tear down those units and replace them with $400,000 and $500,000 homes," he lamented. But Matthews, a former housing official for the city, understands the politics. "Like most communities, everybody talks about it as a great thing for the community. But when it comes time to approve a particular project on a certain site, nothing gets approved." Assistant City Manager Berger, however, said the old Navy apartments in question would have cost $83,000 per unit to bring up to code, a cost that did not include needed infrastructure improvements. He said the city's commitment to affordable housing can be seen in the lawsuit settlement. The settlement also calls for additional soils testing at the FISC site, with results to be made public, said Eve Bach, an economist and planner for Arc Ecology, one of the plaintiffs. Although the settlement does not require more cleanup, "I guess we feel confident that if there is a problem there, they won't be able to sweep it under the rug," Bach said. The lawsuit delayed development by about nine months, said Bond, the city's development manager. Officials are now piecing together a financing package to fund demolition of old military buildings and construction of backbone infrastructure at the FISC site. Housing construction could begin by about the first of the year, he said. The timing of business park development depends partly on the economy. While the city is closely involved with development of the FISC site, it wants a private company to handle redevelopment of the much larger Naval Air Station site. A city the size of Alameda does not have the staff, capital and expertise to serve as executive developer of such a large project, said Assistant City Manager Berger. City officials are pleased to have received interest from large developers who are pursuing the project. "We want it to be spectacular, but it's not going to have anything that is out of character with the community," Bond said. That means houses with million-dollar views will be part of the project — and waterfront amusement parks will not. The city figures the 770 acres can accommodate about 1,300 houses, 750 multi-family units, 3.2 million square feet of offices and businesses, 900,000 square feet of light industry, 100,000 square feet of retail uses, a marina with 900 boat slips, and 144 acres of parks and public open space. Elsewhere on the closed Naval Air Station, city officials have set aside a large portion called the "Northwest Territories," for which they are in the early stages of planning a golf course and resort, said Berger. Because the Northwest Territories are in the Tidelands Trust, the property must remain in the city's possession, and it can only be developed with recreational amenities, visitor-serving commerce, and maritime-related facilities. Another 574 acre along the bay has been set aside as a wildlife refuge for the California least tern, an endangered bird that breeds on the site. Contacts: Doug Yount, Alameda development services director, (510) 749-5810. Dave Berger, Alameda assistant city manager, (510) 749-5920. Tom Matthews, chairman, Renewed Hope, (510) 231-3991. Eve Bach, economist/planner, Arc Ecology, (415) 495-1786. Alameda Point redevelopment website: www.alameda-point.com

The new U.S. Census figures tell us that California is growing, which we knew. But the Census also reveals that California is changing in ways we may not have recognized – and that may mean that we no longer have the luxury of planning our communities the way we used to. According to figures released in late March, the state's population increased by more than 4 million people during the 1990s, reaching 33.9 million. That's less than the 6-million-person increase of the 1980s, but it maintains the state's longstanding trend of rapid population growth. California has reliably added about a half-million people annually for the past 60 years. But it is not the growth per se that is altering California anymore. We as a state are fundamentally changing as well — and that's because we are becoming a more mature and much more ethnically diverse state. This is not exactly news, as the same trends turned up in the 1990 Census. But the 2000 Census figures drove home the point in ways no one could deny. The fact that we are a mature and diverse state is reinforced by two underlying forces. These two trends are: 1. We are becoming an Hispanic state far faster than anyone predicted. 2. Most of our population growth is still in coastal areas. Individually, these two trends are important enough. The first is obvious, but the depth and extent of it is just becoming clear. The second is counter-intuitive — not something that even planning experts usually realize. Together, they paint a powerful portrait of the California that is emerging today. And they call into question many traditional land use planning practices in California. Most of California's planning laws and practices — ranging from the General Plan to the California Environmental Quality Act — assume that California operates under what might be called the "suburban growth" model of urban development. Planning is necessary because new suburban communities are created to accommodate a growing population. But in most cases, this isn't true anymore. What the two Census trends suggest, more than anything else, is that the suburban era is over in California. Let's take those two trends one at a time. 1. We are becoming an Hispanic state far faster than anyone predicted. The news media did a good job of reporting the rapid Hispanic population growth. Today, more than one-third of the state's population is Hispanic. But even the news reports did not truly convey the extent of the Hispanic switch. Here's the best way to let it sink in: Almost 80% of the state's net population growth was Hispanic. Between 1990 and 2000, California grew by approximately 4.1 million people. The Hispanic population grew by 3.2 million people. Some parts of the state are bucking this trend. As the accompanying map shows, in virtually all of the foothill and High Sierra counties, the percentage increase in Hispanic population is far below the overall population growth — indeed, in most of these counties Hispanic growth as a percentage of overall growth is only half the statewide average or less. And "Hispanicization" of the population is moving more slowly than the statewide average in big chunks of the state — principally the Bay Area and adjacent Central Valley counties such as Sacramento and San Joaquin. But in Southern California, the trend is overwhelming, as it is throughout most of the San Joaquin Valley. And the shift in population is occurring fastest in a few isolated and sparsely populated counties, including Modoc, Trinity, Glenn, and Inyo counties. On the municipal level, this trend is accelerating remarkably throughout the state — especially in Southern California, but elsewhere as well. In many cases, older, mature cities that are not growing are changing dramatically. For example: o In the college town of Berkeley, the city's population remained constant at approximately 103,000 people. But the Hispanic population grew from 1,300 to 10,000 people. o In Inglewood, an historically African American community near Los Angeles International Airport, the population grew by only 3,000, to 112,000. But the Hispanic population increased by 9,500, and Hispanics now represent almost a majority in the city. o Even in cities that long ago gained Hispanic majorities, the Hispanic population growth is still remarkable. For example, in Bell Gardens, a poor suburb of Los Angeles, the population was already 90% Hispanic in 1990. But the 2000 Census revealed that Hispanics now make up 96% of the population. The Hispanic population grew by 4,000, while the non-Hispanic population dropped by 2,400. o In a number of cities, the Hispanic population rose even though the overall population went down. One case in point was Marina, a Monterey County community hard-hit by the closure of Fort Ord. Overall population dropped from 26,400 to 25,100. But the Hispanic population doubled to 5,800 and now represents more than 20% of the population. There were a few exceptions. Some Sacramento suburban communities that are rapidly becoming more middle-class shed Hispanic population and added non-Hispanic population. In most cases, however, even the exceptions to the Hispanic trend prove the rule of California's new ethnic diversity. Many cities that increased in population but lost Hispanic population — Rosemead, Walnut, San Gabriel — are actually turning over from a Hispanic/white mixture to a largely Asian population. 2. Most of our population growth is still in coastal areas. This one's counter-intuitive but true — and the truth carries important implications. We constantly hear about rapid growth in California's inland areas, especially the Central Valley and the Inland Empire. The percentage of growth in these areas is enormous — and the potential impact on the environment and agriculture is considerable. But the fact of the matter is that the state's coastal areas are still adding more people than the inland areas. Some of percentages are not as great because the population base is already large. But the raw numbers are staggering. For example, the population increase in the four Southern California coastal counties — Ventura, Los Angeles, Orange, and San Diego — totaled almost 1.5 million people during the 1990s, or almost 40% of the state's growth. The population increase of the nine Bay Area counties was about three-quarters of a million people, or about 15% of the growth. Together, these 13 urban counties — all touching either the coast or the bay, and most already very crowded — added 2.2 million people, or 54% of the state's population growth. Los Angeles and Orange counties alone added more people than the entire Central Valley. The Valley added only slightly more people than the Bay Area (850,000 versus 760,000). Perhaps the most dramatic way to show this is to compare the growth in the South Bay and East Bay counties with the adjacent Central Valley counties that are becoming bedroom suburbs. All of these counties were among the top 15 for population increases during the 1990s, and the Central Valley counties grew at a faster percentage rate. But the Bay Area counties added far more residents. People in Sacramento, for example, are always talking about spillover from Silicon Valley — sometimes in a good way (good jobs) and sometimes in a bad way (worse traffic). In fact, Santa Clara County and Sacramento County added almost exactly the same number of people during the 1990s — between 180,000 and 185,000. The difference, of course, was that in Santa Clara County, the new residents tended to double up and live in garages; whereas, they were much more likely to gobble up starter homes in Sacramento County. Even more remarkable is the fact that the East Bay counties added much more population than their Central Valley counterparts. Everybody knows about the commute spillover across Altamont Pass on Interstate 580. The common assumption is that this is occurring because Alameda and Contra Costa counties are either "filling up" or "shutting down," or both. There is no question that the Central Valley counties are growing fast. Stanislaus and San Joaquin counties together added about 160,000 people during the 1990s. What is remarkable, however, is that this was the same population increase as was experienced in Alameda County alone. And Contra Costa County added almost as many (145,000). In fact, the three East/South Bay counties added more people than did the three Central Valley counties — Stanislaus, San Joaquin, and Sacramento — most affected by Bay Area spillover. The Bay Area counties added about 500,000 people; the three Central Valley counties added about 340,000. There is no question that a large percentage population gain appears more startling. Traffic congestion might get worse quickly, and the threat to natural lands becomes obvious. But in the end it is the other trends — the rapid increase in Hispanic population and the continued population growth in mature areas — that will shape California most dramatically. Indeed, in some cases these two trends converge to give us a glimpse of what California is really like today. It is a society that is multi-ethnic and becoming more ethnically mixed, yet at the same time it appears persistently segregated. A mapping analysis of Census trends back to 1940 by Phil Ethington of the University of Southern California reveals a surprising trend: Despite the enormous increase in Hispanic population in Los Angeles County during the last 20 years, the basic geographical distribution of Hispanic ethnicity was set by 1980. Since then, the predominantly Hispanic communities — mostly east and southeast of downtown Los Angeles — have not spread but, rather, have deepened. Hispanic areas are not much more widespread than they were in 1980, but they are much more Hispanic. If these trends continue for another decade or two, something will have to give. The rapid population growth — mostly of Hispanics — may spill over dramatically into predominantly white suburbs. Or existing urban areas will continue to "densify" until they are far more crowded than they are today. In either case, the future of California may not lie in the Central Valley after all, but in the rapidly changing older suburbs along the coast. And that requires us, more than ever before, to re-examine our planning tools and planning practices. Building on raw land or farm fields is still important, of course. But managing change in urban communities — the main focus of planning in the Northeast and Midwest for decades — must become the focus of planning in California as well.

The California Supreme Court has dropped its review of a business tax case from San Diego after deciding the court should not hear the case after all. The action means that the Fourth District Court of Appeal decision that exempted a tax on residential rentals from Proposition 218 remains in effect. However, the opinion will go unpublished. Last year, the Fourth District ruled that the City of San Diego's tax on rental residences was not subject to Proposition 218, the Right to Vote on Taxes Act of 1996 (see CP&DR Legal Digest, August 2000). The city assessed a business tax on all residential properties that are rented. The court held that Proposition 218 only applies to taxes imposed as an incident of property ownership. The San Diego tax is a general tax based on use of the property, the court held. The property owners contended that Proposition 218, which was intended to close Proposition 13 loopholes, applied to any taxes relating to property ownership. At the time, the ruling appeared to conflict with a Los Angeles case, in which the Second Appellate District struck down a tax levied on apartment owners to fund a slum-abatement program. The state Supreme Court reversed that decision in January. Apartment Association of Los Angeles v. City of Los Angeles, No. S082645 (see CP&DR Legal Digest, February 2001, October. 1999). The case that was dismissed is Edward Teyssier v. City of San Diego, No. S090271, C.A. 4th Div. No. D033171/D033622.