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People wanting to buy their own place in San Diego for less than $300,000 have essentially one option: apartments that have been converted to condominiums. Owners of approximately 15,000 apartment units have converted them into for-sale condominiums or filed applications for conversions in recent years — making San Diego the hottest market in the state for condo conversions. But things might be about to change. San Diego City Attorney Michael Aguirre advised city planners in November that condo conversions are subject to California Environmental Quality Act (CEQA) review. In December, affordable housing advocates sued the city for not applying CEQA to condo conversion applications. And a state legislator whose district has seen 80% of San Diego’s condo conversions is asking tough questions about the practice. “The big concern is that people are being displaced,” said Tom Scott, executive director of the San Diego Housing Federation. “They can’t afford to buy their rental units, and they don’t have anywhere else to go. We aren’t building any more rental units.” San Diego is not alone. As California’s housing prices have continued into the stratosphere, the importance of condominiums as entry-level, for-sale housing has increased. For a variety of reasons, though, the number of newly constructed condominiums has been relatively low in recent years — making condo conversions an attractive option. The trend actually is a repeat of the past. Condo conversions first became commonplace during the 1980s. Local governments, worried about the loss of rental housing, responded by enacting ordinances limiting conversions. Now, some of those ordinances are getting a fresh look, and other cities are considering new legislation. But not all cities. Some see the transformation of apartments into for-sale units as a form of urban renewal and are encouraging the trend. Over a 17-month period ending in June 2005, the City of San Diego received applications to convert 11,422 rental units, a stunning increase over applications for 2,275 conversions filed from 1999 to January 2004, according to the city attorney’s office. The recent applications amount to 5% of the city’s total rental stock. The city has been processing the conversions under a categorical CEQA exemption for existing facilities, but city planners requested an official opinion from Aguirre. “The categorical exemption for existing facilities,” Aguirre responded, “is not applicable because the change in use from rental to condominium is qualitatively different to warrant environmental review. There are significant adverse impacts and cumulative impacts including displacement impacts to renters, loss of rental and low-income housing, and growth inducing impacts associated with condominium conversions.” Furthermore, Aguirre wrote, the city should require condo conversions to comply with current building, fire and electrical standards. California Environmental Quality Act expert Terry Rivasplata, of Jones & Stokes in Sacramento, said the only way to exempt condo conversions from CEQA is if a city determines that the conversion would result in no physical change to the environment. But, he added, the use does change and with that change may come impacts on things like parking and traffic. For example, a city may require one off-street parking space for an apartment, but two spaces for a condominium, he noted. Those are the sorts of impacts that concern Assemblywoman Lori Saldaña (D-San Diego), who, with Aguirre, convened a public hearing in December that attracted 300 people and lasted three hours. “I’ve seen these development trends come and go for decades,” Saldaña said. “Oftentimes, the ones that seem like a real good idea at the time are detrimental to the community over time.” The same apartment that houses one or two people may become home to a young family with children when turned into a condominium, creating more traffic and increasing the need for public services, Saldaña said. “Entry level housing has a different impact than long-term rental housing,” said Saldaña, a renter herself. At the public hearing, testimony was mixed. Renters told of the hardships they face when their apartments become condominiums. Developers and real estate agents spoke of the opportunities that conversions provide to first-time buyers. Saldaña said she has no interest in carrying legislation on the issue, but said she will urge the new mayor, Jerry Sanders, and city planners to at least slow down the conversions. That appears likely to happen one way or another. Although the Development Services Department questioned Aguirre’s opinion, the groups Affordable Housing Coalition of San Diego and Citizens for Responsible Equitable Environmental Development sued the city in December, challenging the city’s approval of about 50 conversion projects without CEQA review. The groups also have appealed about 100 other conversion approvals. Undoubtedly, requiring CEQA review of condo conversion applications would slow the process. Affordable housing advocates are concerned because, as the Housing Federation’s Scott explained, rents typically are 30% to 50% less than mortgage payments on the same unit. Thus, most renters are forced out, a particular hardship in San Diego, which has a rental vacancy rate of only 3%. An analysis released last fall by Burnham Real Estate confirmed affordable housing advocates’ fears. Burnham reported that only about 5% of residents in converted buildings end up buying a condo in the same complex. “This means the 95% who have to find another place to live are either going to buy a condo in a different complex, or rent another apartment,” Burnham’s Mark Langston said. “Overall, the need for rental housing has not decreased and turnover can provide owners the opportunity to raise rents for new tenants moving in, especially in the lower and middle market sectors.” San Diego does require the payment of three months rent by conversion applicants to low-income renters who are displaced when the vacancy rate is less than 7%. Like many others, the city also imposes its inclusionary housing requirements on conversions. In San Diego, this means at least 10% of converted units must be affordable to people making no more than 150% of median income. In 2004, the California Association of Realtors sponsored a bill (AB 2175, Canciamilla) that would have limited local regulation of condo conversions. The majority of cities have such regulations, according to a bill analysis. An overwhelming number of affordable housing and social service organizations opposed the bill, and it died. Two years later, local regulations appear to be more vigorous than ever. For example, the City of Napa recently revised an ordinance dating from 1987. The old ordinance allowed a limited number of conversions if vacancy rates were 3% to 5%, and unlimited conversions if the vacancy rate were more than 5%. The revised ordinance permits some conversions only if the vacancy rate is at least 5%, Senior Planner Jean Hasser explained. Under the regulation, property owners may convert half the number of multi-family units built the previous year, or the number of units equal to the difference between a 5% vacancy rate and the current vacancy rate. Vacancies now stand at 5.6%. The 0.6% difference equates to 48 units, she said. The city has received two applications for the conversion of a total of 80 units, so for the first time Napa will have competition for the use permits. While Napa was amending its rules, the City of Dublin was adopting its first ordinance. That city now permits the conversion of no more than 7% of apartments in any one year, and the City Council made clear that figure could change over time. Still, some cities would like to trade some apartments for condominiums. For example, the City of El Cajon since 2002 has waived off-street parking requirements for conversions, and the city no longer requires separate water meters for condominiums. The majority of housing units in El Cajon are apartments, and city officials see the conversions as a way to increase home ownership, leading to long-term neighborhood improvement. Contacts: Jean Hasser, City of Napa, (707) 257-9530. Tom Scott, San Diego Housing Federation, (619) 239-6693. Assemblywoman Lori Saldaña, (619) 645-3090. Terry Rivasplata, Jones & Stokes, (916) 737-3000. San Diego City Attorney’s opinion: http://genesis.sannet.gov/infospc/templates/attorney/law_mol.jsp

A nonprofit corporation created by the City of San Diego to carry out downtown redevelopment may not meet in closed session with legal counsel for the city’s redevelopment agency, the Fourth District Court of Appeal has ruled. The ruling may not have widespread implications because San Diego’s system is uncommon; however, the ruling definitely could affect how San Diego does business. City Attorney Michael Aguirre, who was elected after the litigation at hand commenced, praised the court’s decision — even though his office lost the case. An outspoken advocate of open government, Aguirre told the that the decision “strengthens my hand in advising the city in the future.” The city created the Centre City Development Corporation (CCDC) in 1975 to provide redevelopment services to the Redevelopment Agency of the City of San Diego. The city is the sole member of the CCDC and appoints the board. Among the CCDC’s tasks are land acquisition and proceedings related to eminent domain filings. Although only the redevelopment agency is empowered to conduct condemnation actions, the CCDC is responsible for obtaining appraisals and negotiating with the owners of condemned properties. While trying to settle eminent domain cases, the CCDC Board of Directors has conferred with a law firm hired by the redevelopment agency to handle the eminent domain lawsuits. These meetings have occurred in closed session, pursuant to Government Code § 54956.9, a section of the state’s open meeting law, known as the Brown Act. Melvin Shapiro, a San Diego civic watchdog, sued. Several years ago, Shapiro won a Brown Act case against the San Diego City Council regarding closed door meetings for the downtown baseball stadium and related projects. In , (2002) 96 Cal.App4th 904, (see , May 2002), the court ruled that the council’s agenda descriptions of closed door negotiations were too general and some topics should have been discussed in public. In his lawsuit over the CCDC meetings, Shapiro argued that because CCDC is not a party to the eminent domain litigation, it must meet with the redevelopment agency’s counsel in open session. San Diego County Superior Court Judge Richard Strauss ruled against Shapiro. Shapiro appealed and a unanimous three-judge panel of the Fourth District overturned the lower court. Section 54956.9 provides a “pending litigation” exception to the Brown Act’s mandate that local government agencies convene in public. The statute defines “pending litigation” as litigation “to which the local agency is a party.” The CCDC and redevelopment agency argued that because CCDC is an agent of the redevelopment agency, it has the same right as the agency to discuss eminent domain litigation in closed session. That might be true if the normal attorney-client privilege applied. However, the court ruled, “according to the clear terms of § 54956.9, the general rules of attorney-client privilege do not apply to determine whether a meeting with legal counsel may be held in closed session. Instead a legislative body of a local agency is permitted to hold closed-session meetings with counsel to discuss pending litigation only as permitted by the terms of § 54956.9.” The statute, the court continued, has no provision for the legislative body of one agency to meet in closed session with the legal counsel of another agency. The CCDC leaned heavily on a 1984 opinion of the state attorney general (67 Ops.Cal.Atty.Gen. 111) that concluded an airport commission created by a board of supervisors may meet in closed session with county counsel about airport-related litigation in which the board of supervisors is a defendant. However, the court determined this opinion was irrelevant because the Legislature amended the key Brown Act provisions three years after the attorney general released the opinion. The Case: , No. D045506, 05 C.D.O.S. 9899, 2005 DJDAR 13150. Filed November 22, 2005. The Lawyers: For Shapiro: Charles Wolfinger, (858) 272-8115. For CCDC: Helen Holmes Peak, Lounsbery, Ferguson, Altona & Peak, (760) 743-1201. For the San Diego City Council: Claudia Gacitua Silva, city attorney’s office, (619) 533-5800.

I am writing to comment on “North Natomas: Cutting Edge or Only More of the Same?” ( , October 2005), an article that expressed several concerns about development in the North Natomas area of Sacramento. The article highlights the diligent efforts of collaborative working groups in the 1990s to create the North Natomas Community Plan, “a ‘smart growth’ plan before there was such a term.” The “smart-growth” concept encompasses many amenities, including a transit-oriented system of neighborhoods, with roads and pedestrian and cycling routes, parks, open space, schools, and access to the proposed Downtown-Natomas-Airport (DNA) light rail line. However, the article expresses concerns regarding whether development is following that plan, and, in particular, voices concerns about the proposed Greenbriar project. Greenbriar, however, is a logical development project that reflects these exact “smart growth” principles and should have been included in the North Natomas Community Plan from the beginning for several reasons. First, the map used in the article does not show the Greenbriar project location and thus does not fully reflect that the project is surrounded on three sides by development. Greenbriar is situated adjacent to Metro Air Park between Interstate 5 and Highway 99 and is essentially a “notch” in the existing plan. Greenbriar is designed as a pedestrian-friendly and transit-oriented infill project on the proposed DNA line, a perfect opportunity for a creative infill, “smart-growth,” project. In fact, Sacramento Regional Transit (RT) supports the Greenbriar project. At the August 3, 2005, Local Agency Formation Commission meeting, Dr. Beverly Scott, CEO/general manager of Sacramento RT, testified to RT’s “strong support” of the annexation of the Greenbriar project into the City of Sacramento. Dr. Scott testified that the “project is not just an assemblage of a lot of good elements. think that . . . really tries to create an overall environment that is transit supportive.” During the design process of this project, the planners incorporated the seven growth principles established by the Sacramento Area Council of Government’s (SACOG) Blueprint process: transportation choices, mixed-use development, compact development, housing choice/diversity, use of existing assets, quality design, and natural resources conservation. The result of these considerations is a project with many housing options for residents employed in the metro Sacramento area that incorporates easily accessible public transportation with sidewalks and green space for pedestrians and cyclists in a vital, mixed-use neighborhood set in a beautiful tree-lined community. Indeed, SACOG also testified before the Local Agency Formation Commission in support of the Greenbriar project. Moreover, Greenbriar will significantly enhance the financial viability of the proposed DNA line. The DNA line will expand transit service from downtown Sacramento and the airport and promote patterns of smart growth while minimizing environmental impacts, but the process of obtaining federal funding for light rail transit (LRT) projects is extremely competitive. The higher the ridership, the more cost effective, and therefore competitive, the LRT project. Greenbriar will generate an estimated 1,162 daily riders, thereby making the DNA significantly more viable for federal funding. According to Dr. Beverly Scott, the Greenbriar station’s 1,162 boardings would put the station within RT’s top quarter in terms of transit utilization. Oddly, the Environmental Council of Sacramento and Sierra Club are quoted in the article as opposing the extension of the LRT line to the airport. Finally, the article's supposition that developers are not willing to build at higher densities is not accurate. The article states, quoting Randy Pestor, a former member of the Natomas Community Association's planning committee, that “ t's been a real effort to get developers to build at a higher density. They come in with proposals at densities well below the community plan, and we have had to consistently push for higher densities.” For developers, however, this has not been the case. Several recent projects in the North (and South) Natomas area have attempted to incorporate higher densities, but neighbors have adamantly opposed these developments. In many instances where projects have proposed higher densities, several neighbors and homeowners associations have attended Planning Commission and City Council meetings to voice their opposition to medium or high densities. Developers of these projects, however, steadfastly supported higher densities, and as a result there are several higher density developments in the Natomas area, between 10-20 dwelling units per acre, that are consistent with the North Natomas Community Plan. Greenbriar is proposing higher densities; it is the kind of development that Mr. Pestor wants to see. Tina A. Thomas, counsel for AKT Development

It has now been two years since Arnold Schwarzenegger was elected governor of California under perhaps the most peculiar circumstances in American history. His political stock has been dropping rapidly for almost a year, culminating in his across-the-board loss in the November special election on which he had laid all his political chips. Having appropriated the pro-business agenda in 2005, the governor appears to be veering back toward the middle in hopes of getting re-elected in 2006. This is the standard political line on Schwarzenegger these days. Is it also the line on planning and development? It’s hard to say. Although Schwarzenegger appointed some ardent environmentalists and Democrats to high positions at first, his approach to planning and development has been pretty much the same as his approach to everything else: Take the pro-business position and try to sell it as needed reform. Within the Schwarzenegger administration, the planning and development issue has largely boiled down to housing. Business, Transportation, and Housing Secretary Sunne Wright McPeak is one of the strongest personalities in the Cabinet. For two years, McPeak has traveled the state promoting two basic ideas: first, requiring cities to provide a 20-year land supply for development; and second, a “take care of your own” housing requirement. Her basic message is that the state must plan for housing more aggressively and on a more long-term basis. McPeak has failed over and over again to get housing – or any other planning issue – on Schwarzenegger’s short list. But she apparently sees an opportunity in Schwarzenegger’s special election miseries. Ever since it became apparent, earlier this fall, that the special election would go down in flames, McPeak’s office has been ramping things up – in particular, by having meetings of a wide-ranging Housing, Land Use, and CEQA Task Force every two weeks. You would think McPeak’s strategy has a chance of working. After all, what else does Schwarzenegger have to run on? Every other pending pro-business issue was either resolved in 2004 or shot to pieces in 2005. But the average home price in the state is now ten times annual household income; a huge percentage of new mortgages are adjustable interest-only loans; and interest rates are going up. On the other hand, the housing market started cooling during August, and prices have now leveled off after tripling in seven years. So the problem as the public perceives it could easily flip from high housing prices and a shortage of supply to overleveraged homeowners. Furthermore, Schwarzenegger’s director of the Department of Housing and Community Development, Lucetta Dunn, quit right before the election, after less than a year and a half on the job, and the administration appears to be in no hurry to replace her. McPeak is a powerhouse who essentially serves as her own housing director; nevertheless, purely in public relations terms, how can you short-list housing as an issue when you don’t even have somebody warming the chair at the Department of and Community Development? Then there’s the question of how the Democrats will play the planning issue this year, especially in the governor’s race. It has been 16 years and three governors since growth was an issue in a gubernatorial election. The leading Democratic contender, Treasurer Phil Angelides, is a rabid partisan with strong ties to the labor unions, but he’s also the darling of the national smart growth crowd, with a long record of rhetoric in favor of infill development, mixed-use growth, and New Urbanism. (Angelides was the developer of Laguna West in Elk Grove, one of the first New Urbanist suburbs in the state.) The other leading Democratic candidate, Controller Steve Westly, is less well-known on the topic. But Westly is a former local economic development official and he comes from Silicon Valley, where infill has been the order of the day, so you could make some assumptions about his disposition on planning. One could imagine an interesting debate over housing and growth during the governor’s race this year. Schwarzenegger could be expected to take the pro-homebuilder position, adopting the McPeak argument that some infill is necessary, but some greenfield development is required as well. Angelides (or Westly) could be expected to take a hard-line smart growth position, arguing in favor of an aggressive infill strategy throughout the state. Of course, if Schwarzenegger moves back to the middle in 2006, he will have to court environmentalists – perhaps his most logical Democratic constituency. That would mean he’d have to tone down the rhetoric on greenfield development. The Democratic candidate could get trapped between the pro-CEQA position of the environmentalist constituency and the pro-infill housing position of the urban Latino constituency. Add up all of this, and the housing issue might become moot. A more likely scenario is that planning squirrels its way into the governor’s race by way of the infrastructure bond. It’s likely that some kind of infrastructure bond of $50 billion to $100 billion will receive bipartisan support in Sacramento and find its way onto the November ballot, meaning that both sides will be jockeying to spin it their way. Schwarzenegger will focus on the road-building benefits to suburban Republican constituencies, while the Democrat – especially if it’s Angelides – will undoubtedly use it rhetorically as a way to support a wide-ranging infill and smart growth agenda. In December, Angelides appeared to be staking a position on every side of an infrastructure bond. Last year, I wrote a column stating that the stars could be aligning in Sacramento on certain types of planning and housing reform (see , January 2005). Schwarzenegger seemed to be positioning himself on the issue, and McPeak – a Democrat – was close to certain key Democratic legislators. The whole special election debacle made for a lost year in Sacramento, blowing all of those stars out of the sky. But between housing prices and traffic congestion, some aspect of planning is still on everybody’s mind during 2006. McPeak may not put housing on the governor’s short list, but planning may find its way into the gubernatorial debate one way or another.

The First District Court of Appeal has rejected a property owner’s claim that an Alameda County ballot measure rendered any application for development futile and, therefore, effected an unconstitutional taking. The property owner has not submitted a development application to the county since Alameda County voters approved Measure D in November 2000, the court noted. And without the county’s “elucidation of the precise extent of the regulation,” the First District ruled, “a court simply cannot decide whether Measure D has effected a regulatory taking.” Measure D was a complex initiative backed by the Sierra Club. It established urban growth boundaries in portions of the county and imposed a number of restrictions to protect agricultural land and open space (see December 2000, October 2000). San Leandro Rock owns 58 acres off Lake Chabot Road where the company operated a quarry for almost a century until 1986, when a use permit expired. During this litigation, company co-owner Robert E. Lee filed a declaration stating that the county told him the property, although zoned agricultural, would be suitable for a residential subdivision, and Lee apparently explored the possibility with developers during the 1990s. In 1994, the county approved a conditional use permit for a golf driving range on the property. Measure D rezoned the property from agricultural to resource management, a designation that permits agriculture and grazing, recreational and environmental uses, certain quarries, and very low-density residential development. Only voters may change the land use designation. In November 2002, San Leandro Rock filed an inverse condemnation complaint arguing that Measure D constituted a taking under the federal and state constitutions. The property owner argued that it was excused from the usual requirement of having to file a development application because Measure D made clear that any application would be futile. Alameda County Superior Court Judge Steven Brick rejected the county’s motion for summary judgment. Judge Brick ruled in March 2005 that the county had not disproved San Leandro Rock’s contentions that none of the permitted uses of the property was viable, that no land use agency could permit any economically viable uses, and that all permissible uses were known. The county appealed, and the First District, Division Five, disagreed with the lower court. The First District panel pointed to its own decision in , (2003) 110 Cal.App.4th 1246 (see , September 2003), in which the court ruled that a property owner’s “as applied” challenge to Measure D was not ripe for a judicial decision because the property owner had not submitted a development application. The three-judge appellate panel directed Brick to defend his decision. Brick responded that the decision did not apply because it was undisputed in the record that the only economically viable use of San Leandro Rock’s property was a residential subdivision, and because the normal application process “cannot result in any variance or exemption from the strict limitations of Measure D.” The appellate court, however, was not persuaded by the record or by Brick’s reasoning. “ nder both federal and California law, before a plaintiff may establish a regulatory taking, it must first demonstrate that it has received a final decision from the land use authority regarding application of the challenged land use regulation to its property,” Justice Linda Gemello wrote for the court. Federal and state law does provide a “futility exception,” though, and it was the basis for San Leandro Rock’s lawsuit. The company argued that Measure D left the county without discretion to permit any economically viable use of the property — an argument the First District rejected, citing numerous cases, including , (1998) 62 Cal.App.4th 108 (see , April 1998). “In , this Division stated that ‘the futility exception … relieves a developer from submitting’ multiple applications when the manner in which the first application was rejected makes it clear that no project will be approved,” Gemello wrote. “San Leandro Rock cannot claim the exception because it has not satisfied the requirement imposed by California case law that it first submit a development proposal.” “Courts require taking claimants to resort first to administrative procedures to give the implementing agency ‘the opportunity … to decide and explain the reach of the challenged regulation,’” Gemello wrote, citing , (2001) 533 U.S. 606 (see , August 2001). “Here, the county has not had the opportunity to explain the reach of the challenged regulation, and we are not persuaded that all permissible uses of the property are in fact known. Although Measure D restricts the permissible uses of the property, it allows certain general categories of uses, such as recreational and agricultural uses, as well as others.” Both Judge Brick and San Leandro Rock relied heavily on Lee’s declaration regarding permissible uses that are economically viable. The First District, however, refused to give such weight to Lee’s statement because doing so would require speculation. “Because the county had not had ‘the opportunity to exercise its full discretion in considering the landowner’s plans for the property in light of the measure,’ the takings claim was not ripe,” Gemello wrote, again citing . The Case: , No. A109576, 05 C.D.O.S. 9136, 2005 DJDAR 12439. Filed October 18, 2005. The Lawyers: For the county: Richard Winnie, county counsel , (510) 272-6700. For San Leandro Rock: James Whitaker, (415) 789-9720.

A 2001 U.S. Supreme Court decision limiting the Army Corps of Engineers’ regulatory authority under the Clean Water Act does not limit the Corps’ jurisdiction over wetlands adjacent to “waters of the United States,” the Ninth U.S. Circuit Court of Appeals has ruled. In a case from Fremont, the Ninth Circuit held that the Supreme Court decision in , 531 U.S. 159 ( ) did not alter the Corps’ longstanding “adjacency rule.” The Ninth Circuit rejected the argument from Baccarat Fremont Developers that, under the Clean Water Act (CWA), the Corps can assert control only if there is a hydrological or ecological connection between the wetlands and the adjacent waters. “The text of the CWA and the implementing regulations promulgated by the Corps give no indication that a significant hydrological or ecological connection is a condition of Corps jurisdiction over adjacent wetlands,” Judge William Fletcher wrote for the Ninth Circuit. “Baccarat relies on the Supreme Court’s decision in to support its contention that adjacent wetlands must be hydrologically or ecologically connected to waters of the United States. , however, did not address the Corps’ adjacency jurisdiction. Rather, it invalidated the Corps’ Migratory Bird Rule.” The Ninth Circuit’s decision, however, could come under scrutiny. The Ninth Circuit’s reasoning closely follows — and the decision cites — a 2004 Sixth Circuit decision, . Shortly after the Ninth Circuit’s decision, the Supreme Court accepted and a similar case for review. Oral arguments are scheduled in February. In 1997, Baccarat acquired 31 acres near San Francisco Bay and proposed the development of a six-building business park. The site contains 7.66 acres of wetlands, so in early 1998, Baccarat asked the Corps to make a jurisdiction determination. The Corps’ San Francisco District office determined that it had jurisdiction. Baccarat subsequently filed a permit to fill 2.36 acres of wetlands. However, days after the Supreme Court issued its decision in , Baccarat asked the Corps to reconsider its jurisdiction determination. After a year-long administrative process, the Corps stuck to its original position. In February 2002, the Corps offered Baccarat a permit to fill the 2.36 acres with conditions, including creation of a like-sized freshwater wetland elsewhere on-site and enhancement of the remaining 5.3 acres of existing brackish wetlands. Baccarat signed the permit but reserved the right to seek judicial review. Baccarat then sued the Corps and other parties in state court. The suit was moved to federal court, and District Court Judge Claudia Wilken ruled for the Corps. On Baccarat’s appeal, the Ninth Circuit upheld the lower court. The Corps had asserted its authority because the wetlands are separated only by manmade berms from flood control channels that are navigable and connect to tidal waters. Under the Clean Water Act, navigable waters and tidal waters are “waters of the United States” over which the Corps has clear regulatory authority. Baccarat argued that the decision blocked the Corps of Engineers’ regulatory authority over isolated waters that are not hydrologically or ecologically linked to “waters of the United States.” In , the Supreme Court ruled that the Corps did not have jurisdiction over isolated ponds in Illinois where a consortium of cities planned to bury garbage (see , May, 2001; , February 2001). However, according to the Ninth Circuit, the Supreme Court rejected the Corps’ use of its Migratory Bird Rule, in which the Corp asserted jurisdiction over isolated waters that are used by migratory birds. “The Corps did not assert that the waters at issue in were adjacent to waters of the United States, and the court’s opinion did not address the Corps’ jurisdiction over adjacent wetlands,” Judge Fletcher wrote. Instead, the Ninth Circuit said that ., 474 U.S. 121 (1985) was the controlling case. In , the Supreme Court unanimously upheld the Corps’ jurisdiction over wetlands adjacent to waters of the United States, whether or not the wetlands and waters were “significantly intertwined.” The fact that there is connection is most cases was adequate justification for the Corps’ adjacency rule, the Supreme Court ruled. If wetlands were lacking in importance to the larger aquatic environment, the Corps could always issue a permit for development, the Supreme Court ruled. Baccarat argued that the high court’s decision in was a retreat from — an argument the Ninth Circuit rejected. “Indeed, repeatedly referred to the holding in — ‘that § 404 (a) of the Clean Water Act extends to nonnavigable wetlands adjacent to open waters’ — without giving any indication that it intended to modify or overrule that unanimous ruling,” Flecher wrote. “ simply did not address the issue of jurisdiction over adjacent wetlands.” Even if the connection demanded by Baccarat were required, Fletcher continued, the Corps found that the connection existed. The Corps found that the wetlands are in “reasonable proximity” to the flood control channels, contribute to the aquatic environment in general, are within the 100-year floodplain of tidal waters, and are part of a hydric soil unit contiguous with the area covered by tidal waters. “Taken together, the Corps’ findings would be more than sufficient to establish a significant nexus between the wetlands on the site and the flood control channels, were such a showing required,” the court concluded. The Case: , No. 03-16586, 05 C.D.O.S. 9028, 2005 DJDAR 12321. Filed October 14, 2005. The Lawyers: For Baccarat: Robert R. Moore, Allen, Matkins, Leck, Gamble & Mallory, (415) 837-1515. For the Corps: James Coda, Office of the U.S. Attorney, (415) 436-7200.

An attempt to certify the validity of parcels in Ventura County created during the 1940s has been rejected by the Second District Court of Appeal. The court found that the land in question was subdivided illegally during the 1940s, and the county has no obligation to recognize the subdivision now. The case marks yet another effort by courts to determine the validity of an antiquated subdivision under the Subdivision Map Act. Although the court’s decision turned on its interpretation of the 1937 and 1943 versions of the map act, the facts of this case were telling. In September 1940, LA-Ventura Land Co. recorded a survey that purported to divide the southern portion of a 140-acre parcel near Simi Valley into 15 parcels. From September 7, 1940, to August 16, 1941, LA-Ventura Land conveyed 10 parcels. The company retained four parcels. Thus, the conveyances created 14 parcels from the original 140-acre “parent” parcel, according to the court. In 1943, LA-Ventura Land sold a portion of a retained parcel to Harry Kahn, who divided the land into four lots. Twice during the 1950s, LA-Ventura Land sold portions of a retained parcel. More recently, George and Evelyn Meltzer purchased what the court described as a “potpourri of parcels, some of the original 10 conveyances and others later conveyed from the retained parcel.” In 2001, the Meltzers applied to Ventura County for certificates of compliance for 12 parcels. A certificate of compliance verifies a parcel’s legality. The Meltzers argued that the 1940 survey created 10 of the parcels, and the “annual quartering exception” to the map act made two later conveyances legal parcels. The county surveyor determined two of the parcels were legal and issued two certificates of compliance. Later, the county said that was an error but it did not retract the certificates. The holders of an option to purchase the Meltzers’ land, Wayne and Carol Fishback, then sued to forced the county to issue certificates of compliance for 10 more parcels. They also sued over a county ordinance requiring a person seeking a certificate of compliance to file an application, survey and maps, and to pay a fee. Ventura County Superior Court Judge Kent Kellegrew ruled for the county. A unanimous three-judge panel of the Second District, Division Six, upheld the lower court. In their appeal, the Fishbacks dropped their contention that the 1940 survey created 10 parcels. Instead, they relied on what they called the “annual quartering exception” to the Subdivision Map Act (SMA). Under the 1937 and 1943 versions of the map act, the division of a parcel into four or fewer parcels within one year was not governed by the statute. However, in less than a year, LA-Ventura Land created 14 parcels, 10 of which it conveyed to other entities. “The Fishbacks argue that under the annual quartering exception, the first four parcels conveyed are legal,” Presiding Justice Arthur Gilbert explained in the court’s opinion. “But the SMA defined a subdivision as a division of a unit of land into five or more parcels in any one-year period. Once the fifth parcel is created within a one-year period, all the parcels created within that year constitute a subdivision.” The Fishbacks tried a number of arguments to get around this conclusion. The Fishbacks contended that the land retained by LA-Ventura Land was a “remainder parcel” not governed by the map act. Essentially, a divider of land may designate a remainder parcel that is not part of the land division. But the court pointed out that the remainder parcel provision was not added to the map act until 1979, so it did not apply here. The court also shot down the Fishback’s other attempts to parse the map act in their favor. The court further refused to let the Fishbacks rely on a 1969 attorney general’s opinion, , 52 California Attorney General Opinion 79. In that opinion, the attorney general said that a lot retained by a subdividing landowner did not require a subdivision map because the landowner did not intend to convey the retained parcel. “The flaw in the attorney general’s reasoning,” Justice Gilbert wrote, “is the assumption that the intent to sell, lease or finance must apply to each parcel created by the division of a unit of land. The definition of subdivision applies if a unit or a portion of a unit of land is divided for sale. … It is irrelevant that the owner may not have had the intent to sell all of the parcels in the unit.” The Fishbacks also argued that, at the very least, the four parcels that Harry Kahn created in 1943 were legal. Again, the court said no. “LA Land conveyed an illegal parcel to Kahn. It was part of an illegal subdivision created when LA Land conveyed 10 lots from the parent parcel within a year. In effect, the Fishbacks argue that four legal parcels can be created by dividing an illegal parcel,” the court ruled. The court then turned to the validity of the county’s ordinance regarding certificate of compliance applications. The Fishbacks argued that the county’s requirements conflict with Government Code § 66499.35, subdivision (b), which is the portion of the map act regarding certificates of compliance. The Superior Court ruled that the statute of limitations barred the Fishback’s challenge of the county ordinance, and the Second District agreed. Because the Fishbacks were contesting the validity of the ordinance itself — and not the county’s application of the ordinance to their situation — the Fishbacks had to sue within 90 days of the county’s adoption of the ordinance. That timeframe has long since passed. The Case: , No. B177462, 05 C.D.O.S. 9370, 2005 DJDAR 12739. Filed October 26, 2005. The Lawyers: For Fishback: Kate Neiswender, (805) 649-5575. For the county: Linda Ash, county counsel’s office, (805) 654-2580.

Property rights activists and redevelopment opponents are preparing statewide ballot measures that could greatly limit the use of eminent domain. While it is far from certain that any proposed initiatives will qualify for the November ballot, redevelopment officials, planners and local government officials are extremely concerned about the measures. As of late December, four initiatives had been submitted to the attorney general’s office for preparation of title and summary. Signature gathering could begin this month. All the measures vary a bit, but their intent is the same: to limit government’s ability to take private property via eminent domain. The ballot measures feed on the popular sentiment stirred by the U.S. Supreme Court’s decision in (see , August 2005, July 2005). By a 5-4 vote, the court upheld a Connecticut city’s taking of several homes to make way for an economic development project. Even though appears to have carved no new legal ground, at least in California, public opinion has been extremely negative. Local government officials now believe that their longtime opponents in the anti-redevelopment and property rights lobbies will use that public opinion to their benefit. “These measures clearly would hurt cities’ ability to build housing and provide the economic development projects that we so badly need,” said Megan Taylor, spokeswoman for the League of California Cities. “We’ve been poring over the details,” said California Redevelopment Association Executive Director John Shirey, “seeing what they really mean and whether there are any ambiguities.” Although longtime redevelopment opponents, led by Orange County Supervisor Chris Norby, are backing at least some of the initiatives, the measures would affect use of eminent domain by any pubic agency — not simply redevelopment agencies. One proposal, called the California Property Owners Protection Act, comes from Norby, state Sen. Tom McClintock (R-Thousand Oaks), and Jon Coupal of the Howard Jarvis Taxpayers Association. The measure would prohibit the government from taking private property for private use. The measure defines private use as: “1. Transfer of ownership or use of private property to any person or entity other than a public agency; 2. Transfer of ownership or use of private property to a public agency for the same or a substantially similar use as that made by the private owner; or 3. Use which provides an economic benefit to one or more private persons at the expense of the private property owner, such as a limitation on the amount a property owner may charge another private person to purchase or use his or her property.” The proposed initiative also would require that when the government does take private property via eminent domain, the property owner would have immediate access to money deposited with the court by the government, even while the property owners challenges the determination of fair market value. A second constitutional amendment is backed by Norby, McClintock, Coupal and Assemblyman Doug LaMalfa (R-Richvale). Called The Homeowners and Private Property Protection Act of 2006, the measure states, “Private property shall not be taken or damaged without the consent of the owner for purposes of economic development, increasing tax revenue, or for any other private use, nor for maintaining the present use by a different owner.” A third measure was submitted by Douglas McNea, who is running against U.S. Rep Zoe Lofgren (D-San Jose), and Karin Hipona, a school board candidate in Daly City. Both spoke about redevelopment and eminent domain abuse during a legislative hearing in November (see , December 2005). Their measure is called the California Eminent Domain Limitation Act and hits specifically on development of housing and jobs. The proposed initiative states in part, “The power of eminent domain shall not be used for economic development. The term ‘economic development’ means taking private property, without the consent of the owner, and conveying or leasing such property from one private person or entity to another private person or entity for commercial enterprise, or to increase tax revenue, tax base, employment, housing density or general economic health.” The initiative does contain exceptions for uses such as hospitals, railroads and incidental private uses “such as a retail establishment on the ground floor of a public building.” A fourth initiative, The Protect Our Homes Act, was filed just before Christmas by Anita S. Anderson, who was not identified in the filing. The measure is similar to the first two, with a few twists, including this one: “Unpublished eminent domain judicial opinions and orders shall be null and void.” All of the measures must be reviewed by the attorney general’s office and the Legislative Analyst’s Office. Among the things the LAO is looking at are the provisions in all four measures that appear to treat “damage” to private property just the same as the taking of private property. Defining “damage” could be tricky, as one might argue that land use regulations damage a person’s property. The abundance of proposed initiatives suggests that property rights advocates and redevelopment opponents have given up on the legislative process, at least for now. Nevertheless, lawmakers are poised to push forward a number of bills related to redevelopment and eminent domain, and the California Redevelopment Association is working on a legislative package of reforms, according to Shirey. An intense focus on eminent domain and related activities has become commonplace in many states since the decision, said Steven Preston, San Gabriel deputy city manager and chair of the American Planning Association’s Legislative and Policy Committee. He pointed to dozens of bills in statehouses across the country that would impose new restrictions on government powers. Some of the bills have been acted, such as SB 7 in Texas, which prohibits the use of eminent domain for economic development purposes or to confer a benefit on a private party. “We’re not alone and we’re not even in the vanguard of how redevelopment practices are being pursued,” Preston said. Like other organizations, the APA’s California Chapter has not taken a formal position on the proposed initiatives, and Preston noted that planners are not in uniform agreement about the use of eminent domain. Clearly there is concern, though. “I think everybody in the planning profession believes good redevelopment, done properly and based on a comprehensive plan that the community agrees on, is a good thing,” Preston said. Contacts: John Shirey, California Redevelopment Association, (916) 448-8760. Steven Preston, American Planning Association, (626) 308-2810. Attorney General’s list of initiatives: http://caag.state.ca.us/initiatives/activeindex.htm

The Environmental Trust, Inc., (TET) became the first land trust in the nation to declare bankruptcy in March 2005. The San Diego nonprofit organization’s bankruptcy raises questions about the long-term stability of land trusts and mitigation banks, and casts concern over the fate of TET's 3,542 acres of preserves, all in San Diego County. In December, the trust finalized its bankruptcy plan that lays out a strategy for liquidating its assets and for the continued protection of roughly 90 preserves. U.S. Bankruptcy Court Judge Louise Adler is scheduled to consider the bankruptcy plan on January 16. Not only is TET’s bankruptcy without precedent, but it also spotlights a rather unorthodox group. While most trusts have strong member and donor support emphasizing private acquisition and management, TET dealt exclusively in mitigation banking, according to Darla Guenzler of the California Council of Land Trusts. TET’s business came solely from developers forced to mitigate the destruction of sensitive habitat. Formed in 1990, TET quickly gained a reputation as a fierce competitor, eventually becoming the most dominant of the region's nonprofit mitigation banks. But its business model may have been flawed. TET's problems began with a systematic under-valuation of the cost of land-management, said Sherry Teresa, executive director of the Fallbrook-based Center for Natural Lands Management. TET would regularly underbid its competition, she said, leaving it with insufficient endowment funds for maintaining its preserves. As a result, TET regularly drew from the principal of its endowments to maintain preserves, steadily eating away at its financial base. TET’s board also set high targets for financial return on their endowments, a strategy that caused a real problem when the stock market began to decline. In December 2003, the majority of the board resigned, and Brad Thornburgh, then TET's director, took control in an attempt to salvage what he could of the trust's remaining responsibilities. Ultimately, he concluded that Chapter 11 bankruptcy presented the most viable option. "We could have continued to operate for many more years," Thornburgh said, "but it was obvious that matters would only get worse." Presently, the trust holds roughly $3.1 million in endowment funds and roughly $100,000 in cash, while it expects to face claims totaling up to $4.8 million, according to TET’s Chapter 11 counsel, Michael Breslauer. This bankruptcy begs the question: How can a land trust whose assets are wrapped up in conservation and open space easements, and which are therefore not saleable, recoup its losses? TET holds fee title to 90 parcels on approximately 2,380 acres, and has conservation easements totaling 1,202 acres on 37 parcels. TET owns one unencumbered piece of land, valued at around $400,000, but that is unlikely to be enough to cover all of its liabilities. Adding to the intrigue is concern over the validity of many of TET's easements. Standard practice when recording an easement on one's own property is to have another party hold the easement; otherwise, real estate law considers that easement to be "merged" with the property's deed, nullifying the easement’s protections. According to Breslauer, TET recorded its conservation easements on preserves that TET owns. Under the terms of TET's bankruptcy plan, all easements—properly recorded or not—would be handed off to a capable land-manager and be permanently protected. The plan specifies that the developer from which each preserve originated would receive first opportunity to reclaim the land and could choose to manage the property itself or else locate a suitable conservation group to do so. Should the developer refuse, the properties would then be offered to local municipalities, then to the U.S. Fish & Wildlife Service or the State Department of Fish & Game, then to other capable nonprofits, and finally to the state. If no one is interested, TET’s interest in the land will be abandoned. Keith Greer, San Diego deputy planning director, said the city's interest depends on the level of liability associated with each preserve, most notably how much money TET can provide for ongoing stewardship. According to Breslauer, TET has enough funding to provide roughly 76% of each endowment’s original value. The city would be willing to consider assuming some liability for the preserves with the greatest resource value, Greer said. Seventeen of TET's preserves are within the city's jurisdiction. In an attempt to increase interest in TET's preserves, a group of local conservationists has hatched a plan to raise additional funding. In November 2004, San Diego County voters narrowly passed a half-cent sales tax increase, known as TransNet, for transportation-related improvements. To win conservation groups’ support, TransNet backers earmarked $850 million for land conservation. Mike Kelly of the San Diego Conservation Resources Network and other environmentalists have proposed that a very small slice of the $850 million be offered to qualified land managers willing to take responsibility for TET's preserves. However, should Judge Adler reject TET's bankruptcy plan, most all of this could be thrown out the window. If that happens, Guenzler wonders whether the improperly filed easements will be in jeopardy. While the legal scenario is ongoing, land conservation practices in San Diego County have already self-corrected in light of TET’s troubles. First and foremost, said San Diego's Greer, the city now requires that a trust's endowments be held by a qualified financial institution. For example, the city has already arranged to work with The San Diego Foundation, an organization that specializes in managing the endowments of nonprofits, and providing other services and financial advice. “TET’s case,” said Emily Young, director of the foundation’s Environmental Analysis and Strategy Group, “provides an impetus to make sure that land trusts have the tools and skill-sets needed to effectively acquire and steward lands. That includes stable resources, accountability, and transparency.” Plenty of other land trusts have adhered to this sort of advice, said veteran San Diego conservationist and mitigation banker James Whalen, "Look at the Center for Natural Lands Management,” said Whalen. “They've been around just as long, and they’re expensive, but they're still there." Contacts: Darla Guenzler, California Council of Land Trusts, (707) 469-0926. Sherry Teresa, Center for Natural Lands Management, (760) 731-7790. Brad Thornburgh, The Environmental Trust, (858) 395-0300. Michael Breslauer, Solomon, Ward, Seidenwurm, & Smith, (619) 231-0303. Keith Greer, City of San Diego, (619) 235-5200. Emily Young, The San Diego Foundation (619) 235-2300 James Whalen, J. Whalen Associates, (619) 683-5544. The case: ., U.S. Bankruptcy Court, Southern District of California, Case No. 05-02321-LA11

Southern California “lifestyle” center developer Rick Caruso won two recent rounds against the owners of traditional shopping malls. The rulings, one published and the other unpublished, both came from the Second District Court of Appeal. In the published decision, the court effectively ruled that the owners of Santa Anita Park horse track own a 2.3-acre parcel, which is part of a site Caruso plans to develop. The owner of an adjacent shopping mall, which had taken ownership of the 2.3-acre plot by mistake, tried to keep the parcel. The unpublished decision came in a lawsuit filed by General Growth over Caruso’s proposed Americana at Brand project in Glendale, adjacent to General Growth’s Glendale Galleria. The court upheld the contracts and environmental impact report for the project. The Santa Anita fight pits Westfield Corporation — which owns the Westfield Shoppingtown Santa Anita mall in Arcadia — against the track owners and Caruso. The developer proposes a 800,000-square-foot lifestyle retail center, 300 apartments and a four-acre lake on some of the horse track’s massive parking lots. The project would be right next to Westfield’s mall, so Westfield, which has its own expansion plans, is using every angle to fight the project. In November, Westfield even nominated Santa Anita Park for the National Register of Historic Places. The litigation stemmed from the purchase of the track from a real estate investment trust by the current owners, known as The Santa Anita Companies, as well as a purchase from the same trust of the shopping mall by Westfield. Both purchases were completed in December 1998. The race track deal, however, contained an erroneous title report that gave the 2.3-acre “Gate 1 parcel” to Westfield. The new track owners learned of the mistake seven months later when they sought financing. In May 2002, they filed a lawsuit against Westfield to clear up the parcel ownership. According to the court, there is no dispute that the property in question was transferred to Westfield by mistake. Westfield did not even know it owned the property, as the company sought permission from the track owners to use the site for overflow parking in 1999, and mall redevelopment proposals submitted to the City of Arcadia in 2000 and 2002 did not include the parcel. The trial court ruled for the track owners. On appeal, the only question that Westfield raised concerned the statute of limitations. Code of Civil Procedure § 338, subdivision (d), provides a three-year statute of limitations to seek relief because of fraud or mistake. The Santa Anita Companies filed its lawsuit three years and six months after completing the purchase. However, the company argued that it did not learn of the mistake until June 9, 1999 — two years and 50 weeks before it filed the lawsuit. Westfield argued that statute of limitations started to run from the date of purchase because the Santa Anita Companies should have known the terms of the contract it executed. The Second District sided with the track owners, concluding that they did not have “constructive or inquiry notice” of the mistake until June 9, 1999. “The ‘discovery rule’ is an exception to the general rule for ‘defining the accrual of a cause of action,’” Justice Richard Mosk wrote, citing , (1999) 21 Cal.4th 383, 397. “Under the discovery rule the limitations period begins once a party ‘has notice or information of circumstances to put a reasonable person on inquiry,’” Mosk continued, this time citing , (1988) 44 Cal.3d 1103, 1110. “Santa Anita did not have notice or information of circumstances that would have put a reasonable person on inquiry about the mistake nor, with reasonable diligence, should it have discovered the mistake,” Mosk wrote. The Santa Anita Companies relied on experienced attorneys’ reviews of two surveys and at least two appraisals, and the seller orally assured the company that the Gate 1 parcel was part of the deal, the court pointed out. Additionally, Westfield itself was unaware it owned the parcel. The fight 15 miles west of Santa Anita Park has been, perhaps, even more intense. Caruso’s Americana at Brand project would replace 15.5 acres of buildings and parking lots in downtown Glendale with 475,000 square feet of new retail and entertainment uses, and up to 338 residential units. The project site is across the street from the Glendale Galleria, a 1.5-million-square-foot shopping mall owned by General Growth. The Galleria owners fought the Caruso project during the administrative and environmental review processes, which concluded in 2004 with the city’s certification of an environmental impact report and approval of the project. Because Americana at Brand is a redevelopment project, the city also entered into a disposition and development agreement (DDA) with Caruso. General Growth forced a referendum onto the ballot, but voters in September 2004 narrowly upheld the project’s zoning change, specific plan and development agreement. General Growth also sued, arguing the development agreement, DDA and EIR were flawed. A trial court judge and the Second District, in an unpublished opinion, rejected the arguments. General Growth contended that the DDA did not adequately explain how much the project would cost the public as required by the Community Redevelopment Law. The company also argued that the development agreement was invalid because Caruso did not own an interest in the property at the time the agreement was signed. The court, however, found that the DDA met the letter of the law, and that the development agreement was acceptable because it was subject to Caruso’s acquisition of the site. The EIR contentions concerned preservation of a fire station and a Pacific Bell building, traffic and the analysis of alternatives. The court ruled that the EIR adequately explained that the buildings were not of historical significance, that General Growth failed to show why the traffic analysis was inadequate, that the EIR did deal with traffic, and that the alternatives analysis was acceptable. Meanwhile, Caruso has an antitrust and anticompetitive lawsuit against General Growth that is pending. Construction of Americana at Brand was scheduled to commence in late December. First Case: , No. B175820, 05 C.D.O.S. 9852, 2005 DJDAR 13420. Filed November 17, 2005. The Lawyers: For Santa Anita: John Sturgeon, White & Case, (213) 620-7700. For Westfield: Larry Feldman, Kaye Scholer, (310) 788-1000. Second Case: , No. B181311. Filed November 17, 2005. The Lawyers: For Glendale I Mall: Jeffrey Dintzer, Gibson, Dunn & Crutcher, (213) 229-7000. For the city: Gillian van Muyden, city attorney’s office, (818) 548-2080. For Caruso Affiliated Holdings: Mark Dillon, Gatzke, Dillon & Balance (760) 431-9501, and Michael Zischke, Morrison & Foerster, (415) 268-7000.

Slow-growth advocates dominated local balloting during the November special election, winning 16 of 24 easily classifiable local ballot measures. In the northern part of the state, voters rejected large housing projects in Livermore, Davis and Monterey County. Voters did what they could to block redevelopment efforts in Humboldt County and the City of Half Moon Bay. In advisory elections in Amador and Yuba counties, voters said no to Indian casino development. In Southern California, voters denied a 200-room resort in Calabasas and voted against small housing projects in Redlands and Encinitas. They also approved new growth restrictions in Calabasas and Norco. But the news was not all bad for developers. Perhaps the brightest spot for builders was in eastern Contra Costa County. Voters in Antioch and Pittsburgh approved developer-backed measures that open to builders 1,050 acres in Antioch and approximately 2,400 acres in Pittsburg. A similar measure in the nearby city of Brentwood narrowly failed. Elsewhere, voters in Placer County endorsed a proposed four-year university and adjoining community near Roseville. And in the Silicon Valley city of Cupertino, voters rejected three growth-control initiatives that would have prevented most future development in the largely built-out suburb. Four initiatives sponsored by development interests made the East Bay the central front in the latest round of growth wars. In Livermore, Pardee Homes spent at least $3.2 million on its ballot measure to expand the city’s urban growth boundary by roughly 1,400 acres north of Interstate 580. Besides outspending its opponents, Friends of Livermore, by at least 15-to-1, Pardee threw numerous goodies into the proposal, including solar panels for every housing unit, a huge sports park, a 750-acre open space preserve, and additional money for schools (see , October 2005). Pardee’s over-the-top campaign appears to have backfired. Livermore voters rejected the growth boundary initiative by nearly 3-to-1. They also re-elected slow-growth Mayor Marshall Kamena and incumbent Councilman Tom Reitter, and placed longtime Friends of Livermore backer John Marchand on the City Council. The winners, who ran as a bloc, opposed the Pardee project; the losing council and mayor candidates supported it. Pardee representatives declined to speculate about the future of the 1,400 acres but the company did release a statement suggesting the developer might take another shot in the future. While Pardee was licking its wounds, developers 20 miles to the north were celebrating. A partnership headed by Castle Companies won the right to pursue a 700-unit “estate” housing project on the Roddy Ranch in Antioch. In neighboring Pittsburg, A.D. Seeno Construction was successful with its initiative, which would accommodate new housing subdivisions on its property. Unlike Pardee, Castle and Seeno spent only six-figure sums on the campaign. What the initiatives in Antioch, Pittsburgh and Brentwood sought to do was give the Contra Costa County cities — and, some argue, developers — the upper hand in a long-running dispute between the cities and the county over growth boundaries (see , September 2000, April 1999). In 1990, county voters directed the county to adopt an urban limit line that ensured no more than 35% of the county would be developed. The county adopted a loose urban limit line at first, and in 2000 it tightened the boundary by 14,000 acres, angering a number of city officials. Although the urban limit line is a policy of the county and not the cities, the Local Agency Formation Commission largely abided by the county-drawn boundary. Last year, voters approved a transportation sales tax measure that requires cities to have voter-approved urban growth boundaries by 2009 to qualify for the money if the cities and county cannot agree on countywide boundaries. The cities and county have been unable to agree, so developers took control, placing growth boundaries on the ballots of three cities in November. The Seeno-backed Measure P in Pittsburg sets a growth boundary outside the county’s urban limit line and prezones the land. It also helps carry out the city’s plans for the hills near the Concord Naval Weapons Station. Seeno controls about 600 of 2,400 acres involved and has plans for 1,700 housing units. “The acts that they took help implement our general plan,” said Pittsburg Planning Director Melissa Ayers. “Much of it was planned for development.” The next step is for Seeno to go directly to LAFCO with an annexation request or to seek the city’s approval of the project subject to annexation, she said. In Antioch, the election apparently concluded a decade of fighting over the fate of the Roddy Ranch. The city has long viewed the grassy hills of Roddy Ranch south of town as a growth area, and thousands of units have been proposed in the past. Opponents and the county’s tightened urban limit line helped kill those plans (Roddy Ranch got moved outside the growth boundary) and longtime property owner Jack Roddy lost the property in bankruptcy. Roddy, a former rodeo star and popular figure in town, remains the front man for the project, which backers now see as Antioch’s version of Blackhawk, a popular, gated subdivision in Danville. Prior to the election, it appeared that developers would have the most success in Brentwood because development proponents, the school district and some slow-growth advocates reached a consensus on future development. But voters narrowly said no to Measure L, which would have made 1,300 acres outside the county’s urban limit line available for 2,800 housing units. Despite the election results in Antioch and Pittsburg, the Sierra Club and Greenbelt Alliance vowed to continue fighting both the Roddy Ranch and Seeno developments. “We may have lost the battle in Pittsburg and Antioch, but the war will go on,” said Greenbelt East Bay Field Representative David Reid. “There is more than enough land within the existing county urban limit line to accommodate housing and job growth for 20 to 30 years.” About 100 miles south, in Monterey County, development interests lost at the ballot box — but the election may not have mattered. By a 3-to-1 ratio, Monterey County voters rejected the Rancho San Juan specific plan, which opponents had placed on the ballot via referendum. However, one day before the election, the Board of Supervisors approved a revised specific plan that covered only one quarter of the 2,500-acre ranch, where 4,000 housing units and extensive retail development was planned. The revised specific plan provides only for HYH Development’s 1,100-unit Butterfly Village project, which had been only a small part of the referended specific plan. Supervisors said the county needs the housing, including the 30% of Butterfly Village units designated for low- and moderate-income residents. Julie Engell, who heads the Rancho San Juan Opposition Coalition, said her group would pursue a referendum of the revised project. “People are angrier now than they were to start with. I really don’t think we’re going to have too much trouble gathering the signatures,” she said. In Humboldt County, redevelopment opponents in the unincorporated towns of Redway and Manila won advisory elections. The county formed a redevelopment agency about two years ago and has been trying to settle on a noncontiguous project area ever since. All seven towns the county is eyeing were lumber towns where the mill closed and there has been little new private investment — classic cases where redevelopment is needed, said Humboldt County Planning Director Kirk Girard. Skepticism of the county is strong, though. Girard said the county would drop Redway from the proposed redevelopment project area but intends to keep Manila in. There is a strong contingent that favors redevelopment in Manila, and the vote was fairly close, Girard said. In Half Moon Bay, the City Council placed on the ballot an advisory measure that would prohibit the use of eminent domain in cases where the primary reason for condemnation would be more city revenue. The measure was a direct response to the Supreme Court’s decision in . Not surprisingly, the ballot measure passed overwhelmingly. The Results: Alameda County Measure D would have expanded the city’s urban growth boundary by about 1,400 acres to permit development of 2,450 housing units and a neighborhood retail center. Measure E permits the city to tie into a regional wastewater treatment project, but limits the additional sewer service to areas inside the current growth boundary. Measure D: No, 72.1% (Pro growth, no) Measure E: Yes, 73.4% (Pro growth, yes) Amador County In an advisory election, Measure I asked if voters supported development of more Indian casinos. Measure I: No, 84.2% (Pro growth, no) Contra Costa County Measure K establishes the city’s growth boundary to take in an area where 700 high-end houses are proposed. Measure K: Yes, 59.6% (Pro growth, yes) Measure L would have drawn a city growth boundary to permit potential development of 2,800 residential units on about 1,300 acres that now lie outside the county urban limit line. Measure L: No, 50.8% (Pro growth, no) 164 votes Measure P sets the city’s growth boundary to include about 2,400 acres outside the county urban limit line. Measure P: Yes, 51.5% (Pro growth, yes) A $21 million bond to build a new library failed to win two-thirds voter approval. Measure R: No, 38.5% (two-thirds required) El Dorado County The first try at incorporation of El Dorado Hills, a rapidly-growing area on Highway 50 abutting Sacramento County with a population of about 30,000 people, failed after the county, and business and development interests mounted an aggressive campaign against cityhood. Measure P: No, 57.0% Humboldt County Measure R asked whether the county should place the Manila Community Services District in the county’s proposed redevelopment project area, while Measure S asked whether Redway CSD should be part of the redevelopment zone. Measure R: No, 54.4% (Pro growth, no) Measure S: No, 85.0% (Pro growth, no) Los Angeles County Measure C was an advisory measure on whether the city should annex 152 acres on Mulholland Highway to accommodate a proposed 200-room resort and five estate homes. The project would replace an 81-lot subdivision that was approved by the county in 1998 but which was never built. Measure D prohibits changes to open space zoning without two-thirds voter approval. Measure C: No, 59.9% (Pro growth, no) Measure D: Yes, 84.2% (Slow growth, yes) Measure E would have placed the “restricted open space zone” designation on the beach and the greenbelt that runs through town. The measure apparently could have prevented construction of recreational facilities and parking lots, and possibly limited large commercial events on the beach. Measure E: No, 56.5% Marin County Bolinas Community Public Utility District Voters approved a downtown parking plan that precludes meters, clusters parking spots and simplifies signage. Measure D: Yes, 54.6% Monterey County In a referendum, voters overwhelmingly rejected a specific plan for 2,500-acre Rancho San Juan. The precise impact of the voter is unclear, however, because the day before the election the Board of Supervisors revised the specific plan to cover only 670 acres, where about 1,100 housing units are planned. Measure C: No, 75.8% (Slow growth, yes) Measure W asked whether the district should study acquiring the system owned by California American Water. Measure W: No, 62.8% Placer County An advisory measure asked whether the county should designate 1,136 acres just west of Roseville for development of a private four-year university and adjoining community, a project backed by AKT Development. Measure H: Yes, 60.6% (Pro growth, yes) Riverside County Voters backed a city charter amendment to require four-fifths City Council approval for changes to agricultural, residential, hillside, planned development and specific plan zones. Measure G: Yes, 74.5% (Slow growth, yes) San Bernardino County Measure P would have tightened existing growth controls by setting new standards for traffic, noise and building heights. Measure R was a referendum of an 85-house subdivision that the City Council had approved for lightly developed Live Oak Canyon. The seemingly conflicting results left both sides of the growth debate and the city in something of a conundrum. Measure P: No, 62.8% (Slow growth, no) Measure R: No, 58.1% (Slow growth, yes) San Diego County In an advisory election, voters said they did not want the city to rezone 38 acres of the 68-acre Paul Ecke Ranch, a leading producer of flowers, from agricultural to residential. The rezoning would have permitted development of 101 houses, which ranch owners say is necessary to raise capital for the flower operation. Proposition A: No, 65.4% (Pro growth, no) San Francisco A $208 million bond to improve streets and sidewalks failed to received two-thirds voter approval. Measure B: No, 43.8% (two-thirds required) San Mateo County A ballot measure that prevents development of the rugged hillsides above Carlmont High School and in the San Juan Canyon without subsequent voter approval won easily. Measure F: Yes, 73.5% (Slow growth, yes) A measure endorsed by the Half Moon Bay City Council prohibits the city from using eminent domain to take property primarily for the purpose of “increased city revenue.” Measure O: Yes, 72.8% (Slow growth, yes) Santa Clara County Voters rejected three growth-control initiatives. Measure A would have limited mixed-use and residential development to 15 units per acre. Measure B would have prohibited buildings more than 36 feet tall. Measure C would have required most new buildings to be set back at least 35 feet from the street. All three initiatives contained exceptions for the area around Vallco Mall. The local Building Industry Association, business groups and environmentalists all joined together to fight the initiatives, arguing that Cupertino can provide good infill development sites. Measure A: No, 53.6% (Slow growth, no) Measure B: No, 54.0% (Slow growth, no) Measure C: No, 58.1% (Slow growth, no) Ventura County In an “Article 34” election, voters rejected a measure that would have permitted development of up to 100 units of low- and moderate-income rental housing units. City officials said they would probably pursue the projects anyway. Measure C5: No, 56.9% (Pro growth, no) Yolo County The proposed 1,800-unit Covell Village project — a follow up to the Village Homes project, an environmentally oriented project built during the 1970s — failed to win approval. A ballot measure approved in 2000 required voters to decide on the 400-acre project because it lies on agricultural land north of the current city limits. Measure X: No, 58.7% (Pro growth, no) Yuba County An advisory measure asked voters whether a “destination resort/hotel and American Indian gaming casino” should be constructed near an existing concert amphitheater south of Marysville. Measure G: No, 52.1% (Pro growth, no)

The City of Stockton has successfully defended against a lawsuit filed by a developer whom the city cut out of two downtown redevelopment projects. The Second District Court of Appeal ruled that the developer, Civic Partners Stockton, LLC, could not pursue its lawsuit alleging breach of contract because the developer did not present the city with a claim for damages before filing suit. The city had signed two development contracts with Civic Partners, one for rehabilitation of the Hotel Stockton and one for development of a cinema. In May 2001, the city leased Civic Partners 65,000 square feet on the upper floors of the hotel, apparently for development of office space. Three months later, the city repudiated the lease and demanded that Civic Partners find a new use for the space. The city suggested senior housing, so Civic Partners moved forward with planning, designing and financing proposals for senior housing development. In January 2002, the city notified Civic Partners that Cyrus Youssefi and his company, CFY Development, would take over renovation of the hotel’s upper floors, the housing project and a tax credit application. Stockton Redevelopment Agency officials assured Civic Partners that the city would repay the company’s investment and overhead, and not undermine the hotel development contract. Civic Partners agreed to turn over its plans for the housing project, and a March 15 memorandum from Civic Partners to the redevelopment agency stated that the company understood that the city would assume a $800,000 loan to Civic Partners and would reimburse the company for expenditures after December 1, 2001, and that CFY would lease the first floor of the hotel to Civic Partners for 55 years. Apparently, city officials orally agreed to those terms, and Civic Partners turned over its plans, which the city then gave to Youssefi. However, the city did not pay Civic Partners’ costs or assume the $800,000 obligation. As for the cinema deal, the city terminated its agreement with Civic Partners after the company had already obtained a lease from Kirkorian Premier Theatres. Instead, the city signed its own lease with a different theater chain. Civic Partners sued the city, the redevelopment agency and Youssefi, alleging breach of the hotel lease by the city, breach of the hotel development agreement by the agency, breach of the cinema development agreement by the agency, and intentional interference with the development agreements by the city and Youssefi. The city and its redevelopment agency filed demurrers contending that Civic Partners had failed to present claims prior to filing the lawsuit, as required by the Government Code. Sacramento County Superior Court Judge Jeffrey Gunther rejected the demurrers, concluding that the requirement for submitting a claim did not apply because the lawsuit was based on contracts. The city appealed. A unanimous three-judge panel of the Third District Court of Appeal overruled the lower court and sustained the demurrers. The Government Claims Act (Government Code § 810 et seq.) requires that all claims for damages or money against a public entity be submitted within either 6 or 12 months, depending on the cause of action, and contain certain details. No lawsuit for money or damages may be brought until the public entity has been presented with the claim and has either acted upon it or been deemed to have acted. The Third District ruled that Judge Gunther “clearly erred” in determining that the Claims Act did not apply. The court cited , (1998) 64 Cal.App.4th 635: “‘In short, unless specifically excepted, any action for money or damages, whether sounding in tort, contract or some other theory, may not be maintained until a claim has been filed with the relevant public entity and either the public entity acts on it or it is deemed to have been denied by operation of law.’” Thus, Civic Partners was required to present a claim to the city, the court ruled. The developer argued that a February 19, 2002, letter and the March 15 memorandum qualified as a claim because they put the city on notice that litigation could result if Civic Partners was not paid. But the court was not convinced. “All of the correspondence between Civic and Petitioners amounted to negotiations either to mitigate Civic’s damages from Petitioners’ earlier breaches or for new contractual arrangements to replace the two development agreements and the lease,” Justice Harry Hull Jr. wrote for the court. The documents “did not notify Petitioners of the amounts Civic claimed to be owed or the basis for such debt and did not alert Petitioners that Civic intended to file suit,” the court ruled. “Thus, they did not serve the primary purposes of the Government Claims Act — to alert Petitioners of the need to investigate and to allow Petitioners an opportunity to decide whether the claims will be litigated.” The court did rule that the city should not be allowed to pursue a cross-complaint that it had filed against Civic Partners. If the city does pursue the cross-complaint, then Civic Partners may file “any defensive claims they may have,” the court ruled. The Case: , No. C048162, 05 C.D.O.S. 9415, 2005 DJDAR 12870. Filed October 4, 2005. Ordered published October 28, 2005. The Lawyers: For the city: Charles Reese, Wulfsberg, Reese, Colvig & Firstman, (510) 835-9100. For Civic Partners Stockton: Malcolm Misuraca, (925) 284-0840.