Remember the "see-through" office building phenomenon that hit Houston during the mid 1980s and then Los Angeles in the early 1990s? Well, it's back. This time, it is the Bay Area that is afflicted with empty office buildings. For anyone who has followed the economy during the last two years, this is no surprise. But, because we tend to get more sophisticated with land economics as we weather one dip after another, the dynamics have changed a bit. First, it is the would-be tenants who are often holding the bag this time. And, second, developers are already fast at work with planning agencies to restructure empty inventory for the next big surge. Unlike the downturn of the early 1990s that put Southern California's speculative office developers on the ropes, the Bay Area skid is hurting the businesses that hold space leases that they now cannot fill. This difference is because of the technology industry's frantic space grab during the late 1990s. Worried about being closed out of their own home base, computer, telecom, and dot-com companies went on a speculative purchase and long-term lease binge of their own. So this time around, companies not ordinarily in the real estate business are eating the cost of empty office space. Companies have also simply canceled some projects. The most publicized of these was Cisco System's plans for a vast campus at a San Jose site known as the Coyote Valley. Although courts have recently rejected CEQA-related legal challenges on the 6.6 million-square-foot development, Cisco has already folded its tent due to drastically revised space absorption projections. The San Jose Mercury News documented some of the inventory glut last fall. In addition to abandoning Coyote Valley, Cisco Systems is leaving empty 11 buildings in San Jose and Milpitas, Inktomi is not filling two buildings in Foster City (still under construction); and 3Com has decided not to occupy an entire new campus in Santa Clara. And that's just the Peninsula and Silicon Valley. Although not known primarily as a technology sector office location, downtown San Francisco is taking a beating as well. San Francisco's financial industry and the South-of-Market dot-coms were part of the boom market, and downtown San Francisco office space grew tight even though it was among the most expensive in the country. Real estate analysts at Grubb & Ellis reported that the downtown San Francisco's negative net absorption – analyst lingo for vacancy growth – was the worst on record for the third quarter of 2001. Grubb & Ellis predicts a vacancy rise to 25% by June of 2002 — compared with a vacancy rate of only 2% two years earlier. The dampening market has also deeply affected lease rates. According to combined reports, Class A space in downtown SF has slid from nearly $79 per square foot per year for the second quarter of 2000 to $33 at the end of first quarter of 2002. This free fall in rents could be disastrous for landlords because $30 per year is widely considered the break even lease rate for offices in the vicinity of Montgomery Street. Many space owners are quickly working with local planning officials to reposition inventory. The emerging market is for users of less than 10,000 square feet, according to David Shiver, principal with Bay Area Economics in San Francisco. "In year 2000, the question at large tech companies was ‘how can I get control of my real estate picture?' Lots of people grabbed lots of pieces they ended up not needing," Shiver said. He is helping clients see the slowdown as an opportunity to do more balanced planning. Bay Area Economics is working on projects that include subdivision of campuses or large office buildings for use by multiple tenants. The way Shiver sees it, the new buildings will eventually be needed because they include the type of wiring and space flexibility that was lacking in Silicon Valley in older developments. "Today, we are planning for intensification of these areas, especially in conjunction with smart growth concepts," Shiver said. He suggested that the Silicon Valley will become denser with more integration of land uses. The greatest densities will be near transit stops accompanied with high-density housing. Still, it will take time for the smaller-user market to reverse the trend. Shiver expects that 2003 will be the turn-around year. By then, new growth may be occurring with more foresight, flexibility, and with newer urban planning concepts in place. And, possibly, the tech behemoths will have covered their poor real estate decisions of the late 1990s. Stephen Svete, AICP, is president of Rincon Consultants, Inc., a Ventura-based consulting firm. Remember the "see-through" office building phenomenon that hit Houston during the mid 1980s and then Los Angeles in the early 1990s? Well, it's back. This time, it is the Bay Area that is afflicted with empty office buildings. For anyone who has followed the economy during the last two years, this is no surprise. But, because we tend to get more sophisticated with land economics as we weather one dip after another, the dynamics have changed a bit. First, it is the would-be tenants who are often holding the bag this time. And, second, developers are already fast at work with planning agencies to restructure empty inventory for the next big surge. Unlike the downturn of the early 1990s that put Southern California's speculative office developers on the ropes, the Bay Area skid is hurting the businesses that hold space leases that they now cannot fill. This difference is because of the technology industry's frantic space grab during the late 1990s. Worried about being closed out of their own home base, computer, telecom, and dot-com companies went on a speculative purchase and long-term lease binge of their own. So this time around, companies not ordinarily in the real estate business are eating the cost of empty office space. Companies have also simply canceled some projects. The most publicized of these was Cisco System's plans for a vast campus at a San Jose site known as the Coyote Valley. Although courts have recently rejected CEQA-related legal challenges on the 6.6 million-square-foot development, Cisco has already folded its tent due to drastically revised space absorption projections. The San Jose Mercury News documented some of the inventory glut last fall. In addition to abandoning Coyote Valley, Cisco Systems is leaving empty 11 buildings in San Jose and Milpitas, Inktomi is not filling two buildings in Foster City (still under construction); and 3Com has decided not to occupy an entire new campus in Santa Clara. And that's just the Peninsula and Silicon Valley. Although not known primarily as a technology sector office location, downtown San Francisco is taking a beating as well. San Francisco's financial industry and the South-of-Market dot-coms were part of the boom market, and downtown San Francisco office space grew tight even though it was among the most expensive in the country. Real estate analysts at Grubb & Ellis reported that the downtown San Francisco's negative net absorption – analyst lingo for vacancy growth – was the worst on record for the third quarter of 2001. Grubb & Ellis predicts a vacancy rise to 25% by June of 2002 — compared with a vacancy rate of only 2% two years earlier. The dampening market has also deeply affected lease rates. According to combined reports, Class A space in downtown SF has slid from nearly $79 per square foot per year for the second quarter of 2000 to $33 at the end of first quarter of 2002. This free fall in rents could be disastrous for landlords because $30 per year is widely considered the break even lease rate for offices in the vicinity of Montgomery Street. Many space owners are quickly working with local planning officials to reposition inventory. The emerging market is for users of less than 10,000 square feet, according to David Shiver, principal with Bay Area Economics in San Francisco. "In year 2000, the question at large tech companies was ‘how can I get control of my real estate picture?' Lots of people grabbed lots of pieces they ended up not needing," Shiver said. He is helping clients see the slowdown as an opportunity to do more balanced planning. Bay Area Economics is working on projects that include subdivision of campuses or large office buildings for use by multiple tenants. The way Shiver sees it, the new buildings will eventually be needed because they include the type of wiring and space flexibility that was lacking in Silicon Valley in older developments. "Today, we are planning for intensification of these areas, especially in conjunction with smart growth concepts," Shiver said. He suggested that the Silicon Valley will become denser with more integration of land uses. The greatest densities will be near transit stops accompanied with high-density housing. Still, it will take time for the smaller-user market to reverse the trend. Shiver expects that 2003 will be the turn-around year. By then, new growth may be occurring with more foresight, flexibility, and with newer urban planning concepts in place. And, possibly, the tech behemoths will have covered their poor real estate decisions of the late 1990s. Stephen Svete, AICP, is president of Rincon Consultants, Inc., a Ventura-based consulting firm.

March's statewide ballot proved to be a popular place to raise money and make budget decisions, and voters can expect to make similar decisions in November. In March, 57% of voters approved Proposition 40, which, at $2.6 billion, is the largest parks and environment bond ever proposed in California. Slightly more than two-thirds of the electorate voted for Proposition 42, which earmarked gasoline sales tax revenue for highway, street, road and public transit projects. Right after the election, backers of a high-speed train — including state Sen. Jim Costa (D-Fresno) — said they would try to get a $6 billion bond on the November ballot. The bond would provide enough money to build only part of the proposed 700-mile system: A route tying San Francisco and Oakland with Los Angeles via the San Joaquin Valley. Links to Sacramento, Riverside and San Diego would be built later (see CP&DR Public Development, December 2001, In Brief, March 2002). Also after the election, the Planning and Conservation League began gathering signatures on an initiative that would designate 30% of the state's share of the sales tax on motor vehicles for public transit, roads, bike lanes, sidewalks, and school bus replacement. The measure would generate about $870 million a year. Also likely to appear on the November ballot are a $13 billion school bond, and a $2 billion housing bond. The eight-year battle over reuse of the Tustin Marine Corps base appeared to be drawing to a close in March. The Navy, which owns the 1,600-acre site, transferred 1,000 acres to the City of Tustin. It plans extensive residential and commercial development. The Rancho Santiago Community College District received 15 acres for a new campus. The Navy will keep 240 acres, which it plans to sell to a developer. Approximately 300 acres are designated for parks. However, the longstanding fight between Tustin and the Santa Ana Unified School District over land for elementary and high schools continued, although negotiators said they were close to resolving things. Rancho Santiago and Santa Ana Unified had wanted a 100-acre site to build a K-14 learning center (see CP&DR Deals, October 2001). However, Tustin did not want to give up that particular site. Tustin offered Santa Ana Unified 22 acres elsewhere on the base, plus $38 million. The sticking point in negotiations was over a backup plan if the 22 acres proved to be too polluted for a school. All sides resumed negotiations in late February, when Duncan Holaday, the Navy's top base-reuse official, traveled to Orange County. Navy officials had suggested they would sell off the land if local officials could not reach agreement on reuse. The Belmont Learning Complex in downtown Los Angeles may get built yet. The Los Angeles Unified School District board voted in mid-March to complete the half-built high school. In January 2000, the district suspended work on the 34-acre campus designed to serve 4,600 high school students because of concerns over methane and hydrogen sulfide vapors remaining from the site's previous use as an oil field. Downtown advocates and Latino activists urged the district to complete the project. The board voted to resume construction after engineers presented a system for capturing and safely venting the hazardous gases. The school district has already spent about $175 million on construction and legal fees, and completing the campus could cost another $100 million, making Belmont the most expensive high school in state history. Some public health advocates remained unconvinced that the plan for handling gases will work. A 572-home subdivision proposed for the Verdugo Mountains was unanimously rejected in March by the Glendale City Council. Area residents had rallied in opposition to the "Oakmont View V" project, which called for building luxury homes on steep hillsides above existing neighborhoods. An environmental impact said the development would harm air quality, wildlife and scenic vistas. City planners said the project was inconsistent with the general plan and could pose a landslide hazard. Upon voting, Councilmembers said the project would irreparably harm the hillsides that help frame Glendale. The developer, Gregg's Artistic Homes, said it would file a takings lawsuit against the city. City of Los Angeles voters could decide no fewer than three proposals to carve new cities out of the existing city this November. Separate proposals for secession of the San Fernando Valley, Hollywood and the harbor area all could appear on the ballot at the same election. In March, the Los Angeles Local Agency Formation Commission released a report that said Hollywood would be a financially viable city, even if the new city paid Los Angeles between $11 million and $25 million annually (depending on the size of the new city) to make Los Angeles fiscally whole. Earlier, LAFCO concluded that the San Fernando Valley could make it as a city, while the harbor area would lack enough money to survive. LAFCO is scheduled to decide later this year whether to place any or all of the secession proposals before voters in November. Secession requires a majority vote both inside and outside the proposed boundaries of a new city. A permit for a gravel mine on federal land in the Soledad Canyon, just outside the City of Santa Clarita, was denied unanimously by the Los Angeles County Board of Supervisors in late February. The decision cheered city officials and residents, who say the 460-acre quarry would congest roads, add to air pollution, threaten groundwater, and look ugly. Transit Mixed Concrete had already sued the county, insisting that the county must abide by a Bureau of Land Management permit that allows the mine. Groundbreaking for the University of California, Merced, campus has been postponed from May until September because of a lawsuit filed by three environmental groups. The groups say that the environmental impact report approved by UC regents in January was inadequate and that UC has illegally segmented the project to avoid comprehensive study, charges that UC denies. Water quality regulators have begun reviewing Central Valley farms' longstanding exemption from the state Clean Water Act. The Central Valley Regional Water Quality Control Board, which has jurisdiction over the valley and foothills from Redding to Fresno, announced in March it would prepare an environmental impact report on runoff from farms. Also, the state Water Resources Control Board said it would contribute $1 million toward monitoring drainage canals in the valley. The federal Clean Water Act exempts agriculture, but the state law does not specifically exempt farm discharges. Still, the Central Valley regional board has not applied the rules concerning pesticide and silt runoff to farms. Environmentalists insist that farms cause some of the biggest water pollution problems in Northern California. They hailed the state regulators' announcements as an important first step. Angry farmers said they already do their part to control and filter runoff. The Southern California Association of Governments has hired Calthorpe Associates to lead a six-county "growth visioning" effort. The project will attempt to bring together government agencies and private enterprise to address ways to provide housing, services and infrastructure for an anticipated 6 million additional residents. Calthorpe, headed by renowned New Urbanist Peter Calthorpe, has led similar efforts in Salt Lake City, Portland and other metropolitan areas.

In its first takings case decision in three years, the state Supreme Court has upheld a San Francisco law that regulates the conversion of residential hotel rooms to tourist use. In a 4-3 decision based largely on its 1996 Ehrlich decision, the court ruled that exactions that are part of a broad plan deserve deferential review, while ad hoc exactions are subject to much closer court scrutiny. The state's high court overturned a First District Court of Appeal ruling for the owners of the San Remo Hotel, who argued that the hotel conversion ordinance (HCO) itself and the city's application of the ordinance to their property violated state constitutional protections against uncompensated takings. In the majority opinion, Justice Kathryn Mickle Werdegar wrote, "The HCO applies to all property in the class logically subject to its strictures, that is, to all residential hotel units; no more can rationally be demanded of local land use legislation in order to qualify for deferential review." Local government officials and planners were watching the case closely to see whether the state's high court would apply the "heightened scrutiny" standard established in the Nollan and Dolan line of cases to the San Francisco law. The appellate court said that the trial court, which had originally ruled for the city, should have used the heightened scrutiny standard, which requires a close relationship between the exaction and the project's impact. The city argued for a deferential standard, under which a court could strike down a law only if it were arbitrary. The state's high court agreed. "Extending Nollan and Dolan generally to all government fees affecting property value or development would open to searching judicial scrutiny the wisdom of myriad government economic regulations, a task the courts have been loath to undertake pursuant to either the takings or due process clause," Werdegar wrote. "The majority opinion maintains the status quo," said state Deputy Attorney General Daniel Siegel, who filed an amicus brief on behalf of San Francisco. "The Court of Appeal decision altered the status quo by expanding the application of heightened scrutiny. The Court brought the law back to where it was." Deputy City Attorney Andrew Schwartz argued that the hotel conversion ordinance is a policy issue for the elected Board of Supervisors, not for the courts. The state Supreme Court decision "is important for all California, and to the extent that the California Supreme Court is a leader nationally, it is important across the country," Schwartz said. "It upholds the validity of development impact fees that public agencies across the country rely on … to mitigate the impacts of new development." But Paul Utrecht, who helped represent the hotel owners, said the decision is another indication that the state Supreme Court "has no patience" for takings law. "Except for Ehrlich , every takings case that has come across their desk has gone for the government," Utrecht said. The controversy over San Francisco's regulation of residential hotels extends back to the late 1970s, when a shortage of affordable housing became acute. In 1981, the city adopted a hotel conversion ordinance (HCO) — which the city amended in 1990 — that prohibited the conversion of residential units to tourist use unless hotel owners replaced the converted units with new affordable housing or paid a mitigation fee. When the ordinance first took effect, the San Remo was classified as a 62-unit residential hotel based on a survey of the hotel operator. The hotel owners, Thomas and Robert Field, later disputed that classification, saying they always provided a majority of rooms to tourists. City officials refused to budge and said the Field brothers would have to pay $567,000 — equal to $9,000 per room, or 40% of replacement costs — to convert the hotel to tourist use. In 1996, the owners paid the fee in protest and then filed suit in federal court, alleging violations of federal civil rights law, 42 U.S.C. 1983. A federal appellate court moved the case to state court. San Remo Hotel v. City and County of San Francisco , (9th Cir. 1998) 145 F3d 1095 ( San Remo I ); see CP&DR Legal Digest , July 1998. The San Francisco Superior Court sustained numerous demurrers from the city. On appeal, however, the First District ruled that the hotel owners should be allowed to proceed with the case at the trial court level. The city appealed that decision to the state Supreme Court. The court first tackled the question of whether the hotel owners even needed a conditional use permit for the conversion. Without getting into how many units were actually rented to "tourists" for fewer than 32 consecutive days and how many were rented to "residents" for longer stays, the court said the proposal to convert the hotel to full tourist use triggered the need for a use permit. Citing the city's Planning Code, Werdegar wrote, "A permitted conditional use may continue ‘in the form in which it lawfully existed,' but ‘may not be significantly altered, enlarged or intensified, except upon approval of a new conditional use application.' Clearly, a change from partial tourist use to complete tourist use would be a significant alteration or enlargement of the existing use, requiring a new conditional use permit." Then Werdegar reached the key issue: Is the city's ordinance subject to heightened scrutiny? The U.S. Supreme Court in Nollan v. California Coastal Comm'n , (1987) 483 U.S. 825, ruled that there must be a "substantial nexus" between an exaction and a project. In Dolan v. City of Tigard , (1994) 512 U.S. 374, the U.S. Supreme Court ruled that an exaction must be roughly proportionate to a project's impact. In 1996, the state Supreme Court applied the Nollan and Dolan case law in Ehrlich v. City of Culver City , (1996) 12 Cal.4th 854. In Ehrlich , the state Supreme Court ruled that Culver City's exaction of $280,000 in recreation mitigation fees from a developer who proposed building condominiums on the site of a defunct private tennis club was subject to "substantial nexus" and "rough proportionality" standards, and that the exaction failed to pass those tests. But, Werdegar wrote, the San Remo case was different from Ehrlich , where "the condition was imposed ad hoc, entirely at the discretion of the city council and staff." "The HCO is generally applicable legislation in that it applies, without discretion or discrimination, to every residential hotel in the city," wrote Werdegar, who picked apart the lower court's analysis. "In suggesting that an ordinance, to be considered generally applicable, must apply to ‘every other property in the city,' the Court of Appeal invoked an impossible standard, one that would be met by almost no rationally drawn land use regulation." The court then considered the hotel owners' claims that the hotel conversion ordinance itself was invalid and that the city's application of the ordinance to the project was illegal. The court sided with the city in both instances. "Plaintiffs fail to demonstrate from the face of the ordinance that fees assessed under the HCO bear no reasonable relationship to housing loss in the generality or great majority of cases, the minimum showing we have required for a facial challenge to the constitutionality of a statute," Werdegar wrote. Chief Justice Ronald George and Justices Joyce Kennard and Carlos Moreno (in his first land use case) joined Werdegar's opinion. In a concurring and dissenting opinion joined by Justice Ming Chin, Justice Marvin Baxter agreed with the majority's ruling regarding the inapplicability of heightened scrutiny. However, he wrote, the court should have set a clearer standard that considers the "cause-and-effect relationship between the owner's desired use of the property and the social evil that the fee seeks to remedy." Baxter also wrote that the court should have remanded the case so that the trial court could apply the proper standard to the takings claims, and to determine the exact number of hotel units at issue. Justice Janice Rogers Brown submitted a dissenting opinion in which she appeared to question most land use regulations. "San Francisco has implemented a neo-feudal regime where the nominal owner of property must use that property according to the preferences of the majorities that prevail in the political process — or, worse, — the political powerbrokers who often control the government independently of majoritarian preferences." "The government, in effect, says: We have the power; therefore, pay us to leave you alone," Brown continued. "By any measure, that is extortion. Moreover, it turns the takings clause on its head. Instead of the government having to pay compensation to property owners, the government now wants property owners to compensate it to get back the fair value of property the government took away through regulation." Hotel owners' attorney Utrecht said Brown "got it totally right." But the city's Schwartz said Brown holds an ideological viewpoint that "departs from all established law." The Case: San Remo Hotel LP v. City and County of San Francisco , No. S091757, 02 C.D.O.S. 2048, 2002 DJDAR 2463. Filed March 4, 2002. The Lawyers: For San Remo: Andrew Zacks and Paul Utrecht, (415) 956-8100. For San Francisco: Andrew W. Schwartz, deputy city attorney, (415) 554-4620.

The Interior Department has announced plans to withdraw temporarily "critical habitat" designations for 19 different species of salmon and steelhead throughout the West. The March revelation came in the context of a federal judge's decision to order economic impact analyses of the critical habitat designations. Greeted with predictable boos from environmentalists and cheers from builders, the move could make it easier to develop raw land throughout California. Much of the Central Valley, for example, had been designated as critical habitat because of its proximity to streams and rivers that affect anadromous fish. The Bush Administration's critical habitat move is subject to approval from U.S. District Court Judge Colleen Kollar-Kotelly, who ordered the economic impact analyses. Environmentalists complain that it is part of a Bush Administration trend – compromising on critical habitat designations rather than fighting builder-backed lawsuits over the Endangered Species Act. In fact, the recent move reveals an important trend in species protection: The Interior Secretary's interpretation of the Endangered Species Act – and, in particular, her approach to litigation – has become more important in determining the law's impact than the words contained in the law itself. To many longtime activists in the species arena, this is something of a surprise. After all, the Endangered Species Act has often been characterized as the single strongest and most inflexible environmental law ever passed in the United States – a law that contains no trap doors or escape valves, and one that has not been significantly amended by Congress in 20 years. This is part of the reason why the law has been so important in California land use battles. The parochial debates over whether to develop property or not are instantly trumped by the listing of an endangered species, meaning that biologists from the U.S. Fish & Wildlife Service essentially function as regional land-use czars when species issues are at stake. Partly because amending the law seems so difficult, however, interpretation of the law has become more important. Both sides put a lot of effort into getting the Interior Secretary to interpret the law the way they want it interpreted. And this is an approach that began not with Republicans but with Democrats. Almost a decade ago, during his confirmation hearings as President Clinton's Interior secretary, Bruce Babbitt pleaded with the Senate to allow him to enforce the Endangered Species Act as it was then written. The law had just begun to impede growth on private land in Southern California and elsewhere, and Congress was under increasing pressure from developers and others to consider weakening the law so that economic concerns could be taken into account. In the face of such pressure, Babbitt asked the Senate to confirm him and give him the chance to use the Southern California species effort – which has since come to be known, under California law, as Natural Communities Conservation Planning (NCCP) – to show that the law could work as written. In other words, he asked for leeway in interpreting the law because he feared that otherwise Congress would weaken it. Nine years later, Bush's Interior secretary, Gale Norton, is seeking leeway in interpreting the law – not out of fear that the law will be changed, but, rather out of fear that it won't. Today there is a Republican president, a Republican House, and a narrow Democratic majority in the Senate that emerged only after four years of Republican rule. Yet not one word of the Endangered Species Act has been changed since Babbitt appeared before Congress, and the likelihood that substantial legislative change will occur in the foreseeable future is nil. Needless to say, Norton has a different approach to species protection than Babbitt did. Without little chance of weakening the law, she is looking for other ways to push her agenda. So she appears to be looking to her own independent authority, which under the federal system is considerable. She can determine how to approach litigation, and she can use budget proposals as policy tools. Norton and her policy chief, former Reason Public Policy Institute president Lynn Scarlett, have advocated an approach that relies less on regulation and more on stewardship by private landowners who would be induced by government financial incentives to do the right thing. They call this approach "Citizen-Centered Conservation," and the proposed 2003 Interior budget proposal includes $100 million for the "Cooperative Conservation Initiatives," which will provide grants to communities to protect species, and $60 million for the Landowner Incentive and Private Stewardship program, which provides direct payments to landowners. Environmentalists have excoriated this approach as a sellout to Western landowners, just as they excoriated both Norton and Scarlett as anti-environmentalists when they were appointed. (The environmentalists did agree to halt the Norton-bashing after 9/11, when she had to make hard decisions about security at national parks and national monuments.) Both Norton and the environmentalists throw the word "citizen" around a lot in discussing their approaches to environmental protection, but the environmentalists appear to have a different view of citizens' role in the species protection process than Norton does. Last year, they hammered her for attempting – as part of the Interior Department budget bill – to suspend some portions of the species law that permit private citizens to petition the secretary to consider listing an endangered species. The citizen-driven listing process has always been a controversial part of the law. In practice, it permits scientists outside the government to research the status of a species and then force the Interior Department to take action. Many of the most controversial endangered species battles have begun with this kind of listing, including the famous battle over the California gnatcatcher, whose situation was first researched by a Ph.D. student in ornithology who later petitioned the government for listing. This listing process is different than other government environmental policy processes, but one that's consistent with environmentalists' view that citizens should be empowered to take action to protect the environment. It's pretty clear that when Gale Norton and the environmentalists talk about "citizens," they have different people in mind. Norton is speaking of Western landowners who control the natural resources she oversees; the environmental activists are thinking of themselves and sympathetic scientists. This is an old battle that we have seen throughout California during the last 15 years: Do you work with the landowners or fight them? The decision to withdraw the critical habitat designations suggests that the Bush administration has chosen, not surprisingly, the landowners' side. But a good environmental policy probably requires government officials to play a tricky game of working with private landowners while fighting them at the same time. As an experienced and cagey Western politician, Bruce Babbitt was pretty good at burning both ends of that particular candle. It remains to be seen whether Gale Norton is interested in trying.

This year marks the 30th anniversary of the first voter-approved growth control initiative in California. In 1972, voters in the City of Petaluma — in Sonoma County, 40 miles north San Francisco — capped approval of new homes at 500 units per year, or about half the previous year's total. Growth has remained a hot issue in Petaluma, but today it lacks the urgency it had during the 1970s. "Twenty-five or 30 years ago, Petaluma was really just thinking about itself. Now we're much more connected to the rest of the Bay Area," said Vice Mayor Mike Healey. "The regional forces have been driving things." Residential growth has slowed to below the 500-unit cap in the last few years, and rapid development of office space for the region's high-tech companies is emerging as an issue. On the local political front, the residential growth management system that voters imposed 30 years ago is overshadowed by an urban growth boundary (UGB) that the electorate approved in 1998. Residential development pressure hit a peak in Petaluma during 1969, when Caltrans completed the Highway 101 freeway from the Golden Gate Bridge into Sonoma County. Until that time, Petaluma had been mostly a dairy and poultry town that saw a few hundred new homes built annually. The freeway transformed Petaluma into the northern-most bedroom community for workers in San Francisco. In 1970, builders erected about 600 homes in Petaluma, an increase of two-thirds from the year before. The number of new homes jumped to 900 in 1971. The rapid growth overwhelmed public services: Schools went to double sessions and the wastewater treatment system failed. "Things were just getting out of hand," recalled Jack Balshaw, one the seven citizens who drafted the ballot initiative. "Basically, what got the whole community in an uproar is that the schools went on screwy sessions." Balshaw said he presented the number 500 as a starting point for negotiations, but people immediately accepted it without discussion or study. Unlike most caps approved later in other cities, the initiative did not address building permits or certificates of occupancy. Rather, it controlled the city's ability to create parcels or housing units through subdivision maps and other regulated activities. Balshaw, who later spent four years on the Planning Commission and 13 years on the City Council, said initiative supporters wanted to slow growth to a manageable rate so that the city and other public entities could provide adequate schools, streets, water lines, sewer treatment, parks and public safety facilities. Developers immediately challenged the initiative in court. But the Ninth U.S. Circuit Court of Appeals upheld the initiative in the landmark case Construction Industry Association, Sonoma County v. City of Petaluma , 522 F2d 897 (9th Cir.) 1975. The case set a precedent because the court recast the police power, said Thomas Jacobson, a professor in the Sonoma State University environmental studies and planning department. Previously, local government used the police power to facilitate development. But the Ninth Circuit said it was not unconstitutional for Petaluma voters to use the police power to dictate a slower rate of growth. Moreover, voter approval of the initiative combined with the court ruling challenged the notion that growth is always good, said Jacobson, who called the Petaluma situation "a pivotal event occurring at a pivotal time." City councilmembers were not always happy with the constraint and several times they backed ballot measures to overturn the 1972 initiative. But voters always said no. Over time, the residential growth management system became an accepted part of the political and planning landscape. Community Development Director Michael Moore said the original initiative did what it was supposed to do and has help give Petaluma a stable rate of growth for three decades. "It created an opportunity for the city to look not just at growth in numbers, but for the city to look at facilities and services," Moore said. "The system was really set up to take a long-term view of growth." Today, Petaluma's population of 56,000 is about double what it was 30 years ago. Nearly all growth during that time was east of Highway 101, creating something of an east-west rivalry in town. Downtown has very slowly morphed into a trendy shopping and nightlife district. A niche of the telecommunications industry has made its home in southern Sonoma County, and Petaluma received applications for about 2 million square feet of office space in only 18 months. Yet Petaluma remains well-connected to its rural roots. Pastures and open space surround the city. Two creameries still operate in town. Tall feed silos that hover over downtown are still in use. A handful of manufacturers and resource companies still use the Petaluma River through the middle of town for transporting materials and products. "One of the things that is attractive about Petaluma is that mixture of old and new," Moore said. A proposed specific plan commits the city to protecting the older land uses that could otherwise get crowded out. Grain silos and creameries "still support the surrounding agricultural community, and people see that as an important tie to the community's past." Hoping to further protect agriculture, Petaluma voters in 1998 approved an urban growth boundary; since then, UGBs have swept through Sonoma County to protect the vineyards, pastures and open space that contribute to the local character. Petaluma's boundary is just beyond the city's sphere of influence, and Moore worries that it places too great a constraint on the town because there are few large, vacant parcels remaining within the UGB. Further complicating the situation is the popular opposition to increasing densities within existing urbanized areas, and the city's lack of serious redevelopment efforts. In fact, redevelopment earned a bad name in Petaluma in a roundabout way. An auto mall built along Highway 101 during the 1990s was a redevelopment project. The city insisted on minimizing auto mall signs so it allowed the developer to erect one large marquee. Locals dislike the large, brightly lit sign next to the freeway and see it as a failing of redevelopment, Moore explained. Thus, there is a hesitation to increase redevelopment efforts. The city has maintained an aggressive housing program, and 22.5% of units built since 1984 are affordable. Still, Vice-Mayor Healey noted, the city will reach buildout inside the UGB in less than 20 years. He said city officials must pursue infill and redevelopment projects, which he called "healthy and challenging." "Those things would be harder to make happen if the fields around town were available, which, for the most part, they are not," Healey said. Contacts: Michael Moore, Petaluma Community Development Department, (707) 778-4301. Thomas Jacobson, Sonoma State University, (707) 664-3145. Jack Balshaw, 1972 initiative proponent, (707) 763-2846. Mike Healey, Petaluma vice mayor, (707) 778-4360.

A water connection fee charged by a special district is a development fee not subject to the constraints of Proposition 218, the Third District Court of Appeal has ruled. However, a "fire suppression" assessment levied by the same district is subject to Proposition 218 and required two-thirds voter approval. In 1994, the Shasta Community Services District, in the foothills west of Redding, approved a water service and connection fee of $2,000 for new users. The fee included a $400 fire suppression charge. In 1997, the district raised the connection fee to $3,176 based on the estimated cost of providing new capacity and the number of projected users. The district board also decided to continue levying the $400 fire suppression fee. Subdivision developers within the district filed a lawsuit, arguing that both charges were subject to Proposition 218, the Right to Vote on Taxes Act of 1996. Shasta County Superior Court Judge Richard McEachen ruled for the district. A unanimous three-judge panel of the Third District overturned part of McEachen's ruling. The court held that the connection fee clearly fell outside the boundaries of Proposition 218, which expressly excluded development fees. " he distinguishing feature between a tax or assessment and a development fee is the voluntariness of the latter," Justice Harry Hull wrote for the court. "A property owner is not compelled to pay a development fee unless and until he or she elects to develop the property. Considered as a whole, Proposition 218 was not intended to reach such fees." To meet the requirements of Proposition 218, the district would have to identify the parcels for which water service would ultimately be requested, and then conduct an election. But, Hull wrote, it would be impossible for the district to identify those parcels. Thus, the proposition could not apply to the connection charge. The fire suppression fee, however, was different. The charge was an assessment for general government services, and all such fees — even existing fees — had to comply with the election mandate of Proposition 218 by July 1, 1997, the court held. The special district never conducted an election of the fire suppression fee, so it is illegal. The Case: Jerry Richmond v. Shasta Community Services District, No. C034239, 02 C.D.O.S. 1187, 2002 DJDAR 1427. Filed February 5, 2002. The Lawyers: For Richmond: Walter McNeill, (530) 222-8992. For the district: David L. Edwards, (530) 221-0694.

Dawn Serpa is president of The Surland Companies, a private, 13-year-old residential and commercial developer that builds 100 to 200 houses per year. It is currently building Redbridge in Tracy, a 450-home project that mixes an array of housing sizes and styles in one subdivision, and plans to build Tracy's first mixed-use urban village. Unlike some developers, Serpa does not fear the "smart growth" movement. She even complains that many local regulations prevent traditional neighborhood developments. CP&DR Managing Editor Paul Shigley interviewed Serpa at her office in San Ramon. CP&DR: You do business on both sides of the Altamont Pass. How big a difference is there in the two locations? Serpa: There are still large pieces of land in Tracy, and in San Ramon there clearly aren't. There are tremendous political differences. Tracy is still a small town and still operates more like a small town. Things in that community have a lot to do with what you do in the community, how you give back to the community and how involved you are and your reputation. San Ramon is a little more strategic. It's very much by the book, follow the rules and go through the process and say a few prayers. But San Ramon is fairly friendly to development, versus Danville and Pleasanton and Livermore. CP&DR: How would you characterize the political atmosphere in the Tri-Valley area? Serpa: I tend to see things as opportunities rather than as obstacles. Many of the politicians are becoming more educated on development and on the entitlement processes and on what options are available to them. Politicians are a little bit savvier about trying to see certain development opportunities occur in their communities that benefit the entire community. And I see that as a positive. I think there are lots of ways to make money in this business. Why not make it while you are making someone else happy and doing something good for the community you are building in? I do think there are people in the industry who see it as another obstacle and just as an excuse for no-growth and an opportunity for no-growthers to stand up at a podium and condemn their projects. But I think if you really listen to what they say, the Sierra Club and most of these groups and these people ask for very specific things. They want transit-oriented development, they want sustainable development, and they can articulate those things and define them. They are sort of banking on the fact that most of us don't get it, and if we don't get it we're not going to get our project approved and, therefore, there is slow growth or no growth. But I think if you actually listen to what they say and give it to them, what are they going to say then? I'm of the mindset, give them what they are asking for. CP&DR: That's a different approach than many developers take. Serpa: Yeah. I think we spend a lot more time figuring out how we can do it, how it can be financially viable. And there are so many opportunities at the state level and at the federal level to get funding for these projects. But you do have to invest some time in figuring it all out, making sure that your team understands it and wants to go in that direction. CP&DR: Give me some examples. Serpa: The quintessential builder team is comprised of the director of purchasing and the forward planner and the VP of finance and the head of construction and the president. It just has that conventional program in terms of manpower. It's probably going to have a difficult time because they are not going to have high-level people on staff who understand these other issues that take research and a different level of sensitivity and a whole different area of experience — understanding the ins and outs of smart growth and some of these public-private partnership benefits. You need to invest some time and some money in people who have different skills than what we're used to having. CP&DR: What sort of people would you bring in to work on a project? Serpa: We have some development consultants who are specifically interested in doing infill type of development and redevelopment and revitalization. Most of the people who are interested in that can help in forward planning and putting together projects that are transit-oriented development and mixed-use, rather than a typical subdivision. CP&DR: Is it difficult to build in the Bay Area? Serpa: It's difficult if you want to do things the easy way and the way that we as developers and builders have done them for years, which is to find a site and build 100 houses with four different plan types and three different elevations and not go through the aesthetic review process. … It's difficult unless you are willing to be flexible and reinvent parts of your business. CP&DR: Does the development community as a whole recognize that? Serpa: I think they recognize it. Whether or not too many of them are willing to do anything about it is another story. It's hard to change CP&DR: What's the market like these days? Serpa: The more affordable market is stronger. The discretionary market is not as strong. People aren't as wealthy as they were last year. Job-security is an issue for people. CP&DR: Where is the market going? Serpa: It will rebound like it always does. It's going to rebound slower than most people think. The only thing that's saving us in our industry is that there is such a shortage of product in the market and there is still such a pent up demand from people who want to buy a house. But I think we're going to run through that. I happen to think things are going to get a little bit worse before they get better for some people. CP&DR: You've been building in Tracy for nine years. How have you seen that market evolve? Serpa: It's become more sophisticated. For quite a while it was a real affordable bedroom community. We sold a couple houses last year for $975,000. I think it's an evolution. What we're selling for $225,000 to $250,000 is a two-bedroom cottage that's on a 3,000-square-foot lot. It's a little tiny dollhouse. You can't get a three-bedroom ‘real' house for less than $350,000 — when the average sales price there two years ago was about $170,000. Because land prices in the Bay Area went up so high and the very basic tract homes in the San Ramon and Pleasanton area sell for $700,000, $800,000, then Tracy at $350,000 still seems like a bargain. CP&DR: Is it good, from your perspective, that prices have gone up in Tracy? Serpa: They have enough affordable housing to last them through eternity. You can't say we need that much affordable housing in one community with a population that size. They did need move-up housing so they could start seeing job-growth and seeing businesses relocate there and establish themselves there. … They were sort of a dumping ground for a while. CP&DR: Tracy seemed receptive to anything. Serpa: It was their naivete. They didn't really have the mechanisms to watch over things like that. They didn't understand how it would affect their community in years to come. So when the big growth boom occurred over the last three years, they went, ‘Woah.' And that's when Measure A passed. CP&DR: Do ballot initiatives like Measure A worry you? Serpa: They do because anything that sort of boils everything down to a number doesn't really help the bigger issue. In Tracy, their bigger problem is they just weren't getting what they wanted from the development world. … They were getting a lot of really affordable housing — not attractive housing — going up very quickly and in areas, such as view corridors, where maybe they didn't want to see that. So instead of saying we want to control the development process from a creative and visionary standpoint, they controlled it by numbers, which is what the average citizen does. They don't know how to handle it any other way. CP&DR: Do you try to head off these ballot initiatives? Serpa: The industry does – the BIA and the HBA. Some of them are not all bad. Did we actively, aggressive fight ? No. I understood where these people were coming from. It's hard to philosophically argue with people saying, ‘Hey, this is too much for us. This is overwhelming our community. We're not happy about what we're seeing.' I couldn't really disagree with them. CP&DR: What would make you life easier as a builder? Serpa: Land being less expensive. When we're not being in the position of developing the land, either the developer or the landowner understanding the bigger picture. It's difficult when everyone is gouging everyone. It's hard to have anything left to do anything great. It becomes all about cutting and cutting and just trying to eke something out. And I think that's a tragedy. It would be really nice if landowners, whether it's a farmer or whether it's a developer, would understand that to get a great project, you can't get the ‘maximum' value out of the land that you're consultant is telling you to get. CP&DR: That has to be a tough sell. Serpa: It's impossible. I don't see that changing. But I think the great projects that you see in California or anywhere in the country are generally about a developer or a landowner saying this is going to be something amazing and I'm going to do my fair share and contribute some of the profits I would make to make this thing amazing.

The controversial formation an assessment district that includes territory outside the water district that will receive the money has been upheld by the First District Court of Appeal. The court rejected arguments that Solano County manipulated the formation and election processes to circumvent residents who objected to the county's plans. After seven years of discussion and study, landowners in the rural English Hills north of Vacaville approved formation of the Rural North Vacaville Water District in 1996. Based on one-parcel, one-vote, landowners approved the district 285 to 40. The district, in the court's description, "follows a somewhat crazy-quilt pattern, excluding from its perimeter those parcels with water wells …" County officials then proposed an assessment district to pay for a water system. They proposed zone 1, which consisted of lots within the water district, and zone 2, composed of 233 parcels just outside the district boundaries. Parcels in zone 1 would pay about $20,000 each, which would fund water hookups and fire hydrants. Lots in zone 2 would pay about $2,400 apiece for fire hydrants. The county then conducted an election, with votes weighted in proportion to the potential financial obligation. Under this voting method, the assessment district passed 79% to 21%. Landowners in zone 2 filed a lawsuit alleging that the assessment district election violated the state and federal constitutions, that formation of the assessment district required environmental review, and that county officials had conspired with landowners inside the water district to ensure development and block opposition. Solano County Superior Court Judge Franklin Taft ruled for the county. A unanimous three-judge panel of the First District, Division Four, upheld the decision. Courts give local governments broad discretion in creating assessment districts and will overrule the legislative decision only when there has been an abuse of discretion, Justice Patricia Sepulveda wrote for the court. In this instance, the assessment district was justified because the landowners received special benefits, such as potentially increased property value, potentially reduced fire insurance rates, and enhanced safety in a fire-prone area that lacks adequate water to fight a conflagration. As for the weighted voting, the court held that Proposition 218 from 1996 (California constitution articles XIII C and D) required special assessments to be approved "according to the proportional financial obligation of the affected property." The weighted voting process did not violate the federal one-person, one-vote requirement because both the U.S. Supreme Court and the state Supreme Court have recognized exceptions for special purpose entities that benefit a defined set of constituents. Moreover, giving a landowner who would pay only $3,000 the same vote as a landowner who would pay $20,000 "would have produced an anomalous disproportionality," Sepulveda wrote. As for the environmental review, the court held that formation of an assessment district was not a project under the California Environmental Quality Act. Formation of the water district itself may have qualified as a project requiring environmental review, but the assessment district was created simply to recognize economic benefits and impose a corresponding fiscal burden, the court ruled. As for the alleged conspiracy, the court said that the landowners failed to provide proof. Instead of collecting their own evidence, the landowners relied solely on the legislative record, which was unconvincing. "We recognize that excluding petitioners from voting on the formation of the water district, while permitting them to cast weighted ballots in the subsequent assessment district voting (with reduced voting power) may smack of an inherently unfair way of administering the financing of local public improvements," Sepulveda wrote. "On the record made below, however, we discern no illegality." The Case: Not About Water Committee v. Solano County Board of Supervisors, No. A092383. 02 C.D.O.S. 998, 2002 DJDAR 1217 The Lawyers: For Not About Water: Paul Norton McCloskey, Wagstaffe & Wagstaffe, (650) 366-9593. For the county: James Laughlin, county counsel's office, (707) 421-6140.

Welcome to Celebrity Architectural Boxing. In this corner is the reigning champion, the New Urbanism. (Cheers.) Although he looks older than his years, this youngster is a good citizen when it comes to walkable streets, parks, open spaces, human scale and contextualism. (Yay!!) On the other hand, he has suffered some defeats in his bouts with style. At times a golden haze of nostalgia descends over New Urbanism, like a scene out of "The Natural." (Boo-o-o-!!!) In the other corner is the recently toppled champion, Modernism, now spoiling for a comeback. (Jeers.) Mod is a fighter known for brains, high-mindedness and a taste for emerging building technologies. (Yay!!!) He has it all over other fighters when it comes to theories and manifestoes. (Yay!!) But Mod has some weaknesses, too. He can be self-important, indifferent to nature and landscape, ignorant of his surroundings and rude to his neighbors. (Boo!!!) Shake hands, fellahs, and come out swinging. If that is the current state of the style wars (and, give or take a few I.Q. points, that is pretty much how it stands) then how do we classify a building like the Del Mar Gold-Line Station in Pasadena? Local architects Moule & Polyzoides designed the building, and Urban Partners of Los Angeles, whose principals are Ira Yellin and Dan Rosenfeld, are the developers. The project clearly is a product of the New Urbanism and has a richness of detailing that would distinguish it from the products of the International Style. Design principals Elizabeth Moule and Stefanos Polyzoides are among the founders of the Congress of the New Urbanism, and Polyzoides is the current chair of the organization. But this is not a traditional set of buildings. This is a building about urban complexity. Polyzoides, in fact, does not see a contradiction between Modernism and New Urbanism. Modernism, he has said in conversation, was not conceived as a style, per se, but as an attempt to grapple with new problems. The problem, in this case, was to design a transit-oriented development that will be inviting to the public at large, and even provide a pathway to Pasadena's Central Park, while providing comfort and privacy to several hundred residents in the three-acre project. The project must also incorporate and find a new use for the historic Santa Fe Depot, which has occupied the site since the early 1930s. In design, the project is divided into four separate buildings, which are composites, in differing degrees, of four traditional building types: tower, courtyard housing, loft housing, and a typical apartment arrangement with units lining either side of a hallway. The boldest gesture in the design is to straddle the railroad tracks so that trains run straight down the center of the project. The train travels through the center of a plaza, which is an active social space with parallel sidewalks lined with light standards. Although the designers do not describe it as such, a plaza bisected by train tracks carries powerful associations of old railroad stations and rail platforms. The frankness of the train rolling through the project, rather than being relegated to the side as if it were some evil to be shunned, is one of the great virtues of this design. Here, the project is like a theater. There is a sense of drama to the arrival and departure of the train, which makes the train seem important. The Del Mar station is also an act of city-making that addresses the city on several scales. The surrounding context is tall, 100-year-old industrial buildings. The architects' response is a tall building, which moves up to seven stories at the c enter of the project, plus an assertive, place-making tower at the important intersection of Del Mar Boulevard and Arroyo Parkway. The exterior of the loft buildings--cement board and large windows--echo the industrial character of surrounding buildings. In addition to the lofts, the housing at Del Mar Station consists of "stacked flats," including studios, and one- and two-bedroom units, which are concentrated in the midrise buildings toward the center of the block, near the tracks. The housing is notable for providing interior courtyards for the privacy of residents. Another notable Pasadena project, the mixed-use Paseo Colorado, does not set aside courtyards or other open spaces for residents only, but obliges them to use the same spaces as the public. Even though apartment dwellers may wish to use public spaces, they also need private or quasi-private spaces of their own to provide the sense of protectiveness and non-intrusion. Like all true New Urbanist buildings, the experience of the pedestrian is paramount here, and the Del Mar station provides a fine sequence of spaces and events for a person on foot. The pedestrian enters the project via a wide "paseo" on Arroyo Parkway, which is lined with loft housing with front stoops. After entering the plaza at the center of the project, visitors can board the train, or wait for the train to leave, and keep walking west. At this point, they enter the old depot building, which has been renovated as a street-level retail building; additional ground-level shops face the depot on either side. Walking straight through the depot, they reach Central Park, an Olmsted-style park dating from the 19th Century. Unlike a number of earlier attempts at creating transit-oriented developments, the Del Mar station is a convincing piece of city-building that looks inward and outward at the same time. It animates the streets on three sides and the interior with pedestrians, and adds excitement to the simple act of walking to the train, which indeed should feel both inviting and important. So, is this complex Modernist or Neo-Trad? It is both and neither. The Del Mar station is modern in its directness, its flexibility, in its willingness to let the design problem dictate the shape of the building. It is New Urbanist in its insistence on the integrity of the street, the mirroring of the surrounding urban scale and its respect for the pedestrian. At this point, style is secondary. There is a wonderful quote attributed to Voltaire in the recently published Charter of the New Urbanism: "I like all the styles except the boring kind."

Slow growth advocates won eight of 14 easily classified local land use ballot measures in the March primary election. However, development supporters won elections in some long-time strongholds of slow growth, including Napa County and the City of Scotts Valley in the Santa Cruz Mountains. The results are a reversal from the primary election of 2000, when pro-growth forces won 11 of 15 local ballot measures. California voters in March decided on total of 31 measures affecting private and public land development, including local regulations, specific projects, bonds and tax measures. In some of the most closely watched elections, voters backed big-box stores in two cities and rejected big boxes in three others. Orange County voters may have killed for good a proposed airport at the closed El Toro Marine Corps base. Elsewhere, voters appeared wary of bonds and taxes for public facilities, although Los Angeles voters narrowly approved the largest local bond on the March ballot. Big box love-hate The electorate in five cities considered measures related to big-box stores. Residents in the wealthy cities of Mountain View and Agoura Hills both said no to Home Depot. Mountain View voters rejected a precise plan amendment, while the Agoura Hills electorate approved an initiative that limits retail stores to 60,000 square feet — less than half the size of most new big boxes. Voters in the poorer cities of Calexico and East Palo Alto said yes to big boxes. In a referendum funded by Wal-Mart, voters in the Imperial County city of Calexico overwhelmingly rejected a labor-union backed ordinance that limited the amount of floor space a big-box store can devote to groceries. In East Palo Alto, voters narrowly approved a zone change and height variance for a proposed 320,000-square-foot Ikea, near University Avenue and Highway 101. Voters in the Central Valley town of Reedley narrowly rejected two measures that would have accommodated a Wal-Mart at the entrance to town; however, the retailer had already withdrawn its application. The Mountain View and East Palo Alto elections provide a glimpse of varying election dynamics. Although the two cities are only a few miles apart on the San Francisco Peninsula, they "really have very different constituencies," said Terry Christensen, chair of the political science department at San Jose State University. "Mountain View can afford to say no. East Palo Alto, as you can understand, is desperate for tax revenues," Christensen said. Furthermore, he said, the East Palo Alto vote might have been another swipe at Palo Alto, one of the country's wealthiest cities, which lies right across the freeway. A new power center next to the Ikea site has already drawn many shoppers across the freeway, and Ikea will only add to East Palo Alto's retail drawing power. Ikea proponents said the store would bring about $1.8 million annually in local sales tax revenue and offer 550 jobs averaging about $10 an hour. Those jobs are attractive to many East Palo Alto residents, Christensen said. While Ikea's campaign strategy — which included limousine rides to the polls — paid off, Home Depot's development tactics backfired. After battling with city officials for years about building a store at the site of a former Emporium department store, Home Depot pulled its application only hours before the City Council was scheduled to consider it last fall. Instead, Home Depot drafted an amendment to the Americana Precise Plan to allow the store, then gathered signatures on an initiative. Home Depot spent more than $500,000 during the campaign. "We're tired of how Home Depot has treated the town throughout this entire process," said Brian Avery, who runs a family construction company and was treasurer of the campaign against Home Depot. He said opponents scored points by noting that Home Depot used a Minnesota-based signature-gathering company, a Nebraska political consultant, and an Alabama phone bank. Avery said the prominent site along El Camino Real was wrong for Home Depot. "The trucking operation and noise that Home Depot brings is the last thing a city wants in a gateway location and what is designated as a landmark property," he said. Best of five on El Toro? The proposed airport at El Toro in southern Orange County suffered a significant setback when voters approved an initiative that designated two-thirds of the 4,700-acre site for a "great park" and a nature preserve. The rest of the site could be developed with universities, museums, and office space under Measure W, which received 57% of the vote. The initiative — strongly backed by the City of Irvine and other cities near El Toro — specifically repeals a 1994 initiative that designated the base for development of a civilian airport. This was the fourth election regarding El Toro's future since 1994. The Orange County electorate cast two votes for an airport during the 1990s, and but has now voted against the airport in the two most recent elections. Airport supporters, including 15 north Orange County cities, filed suit two weeks after the election, arguing that only the Board of Supervisors can decide how to reuse El Toro. But that argument may not serve airport supporters well because Fullerton City Councilman Chris Norby unseated incumbent county Supervisor and airport backer Cynthia Coad. Norby is an airport opponent and he will tip the Board of Supervisors 3-2 against an airport. Further complicating the situation was an announcement the day after the election from the Navy, which owns El Toro. The Navy said it would decide by late April whether to sell the property rather than hand it over to a local entity. Selling the property would almost certainly foreclose development of an airport. "Is an airport really dead? I think it is," said Steven Erie, professor of political science in the department of urban studies and planning at University of California, San Diego, and an advocate of an El Toro airport. Although Rep. Christopher Cox (R-Newport Beach) has advocated selling off El Toro for some time, the Navy announcement shocked many people on both sides of the issue. "It was almost like they were sick and tired of the whole deal," Erie said. Development wins, loses in Northern California In Napa County, more than 70% of voters approved a measure that allows owners of large agricultural parcels to develop farmworker housing on a portion of their land. In recent years, the county and grape growers have resorted to housing seasonal farmworkers in a tent village because of the local housing shortage. By a much narrower margin, Napa County voters approved a measure that allows development of a boat storage business near Lake Berryessa on property that had been designated for open space. Both of the Napa County measures were on the ballot because of a 1990 initiative that requires voter approval for development of farmland and open space. In the Santa Cruz County town of Scotts Valley, voters upheld a City Council decision to approve development on the last large piece of undeveloped property. Under the approved plan, 167 acres of the 180-acre Glenwood site will remain open space or become a public park. The project calls for 49 houses on 11 acres and a 1.6-acre site for future development. Three years ago, voters rejected a proposal to build 145 houses on a portion of the same property. In another pro-growth victory, San Joaquin County voters approved a measure allowing the county to develop up to 500 units per year of "low-rent" housing for 10 years. The election was required by Article 34 of the state constitution. Slow-growth advocates won two victories in San Francisco. Voters there backed a ban on new billboards and approved a measure that eliminates the mayor's autonomy to appoint members of the Planning Commission and Board of Permit Appeals. Under the new system, the mayor will still make the majority of appointments to both panels, but the Board of Supervisors can reject any appointee. Mayor Willie Brown opposed the measure, which was seen as a way to decrease the influence of developers at City Hall. In the East Bay city of San Ramon, voters approved a new general plan that had the support of slow-growth advocates. Developers tried, but failed, to block the measure from appearing on the ballot. The fight over development restrictions in San Ramon, however, is not likely to end with this election. In the tiny City of San Juan Bautista, voters overturned an ordinance that set local standards for approval of development agreements. During the referendum campaign, opponents of the ordinance said city officials were trying to make the town into "another Hollister." Local bond and tax measures on the March 5 ballot generally did not fare well. In the City of Los Angeles, a $600 million bond to build new and replacement police, fire and dispatching stations passed by only about 200 of the 331,000 votes cast. Voters in Oakland approved a $59 million zoo, museum and science center bond. In National City, a $6 million library bond won approval. Voters in the East Bay Regional Park District failed to provide two-thirds approval for a parcel tax to fund park development and maintenance. A parcel tax for park development and recreational programs also failed in the high desert City of Adelanto. A parcel tax to build a swimming pool and locker rooms in the Ventura County city of Fillmore received 65% approval — but not the two-thirds vote required to pass. In the Yolo County town of Winters, voters rejected a parcel tax to build a new library. Also in Yolo County, Woodland voters decided not to extend a half-cent sales tax to fund a flood control project. A proposed half-cent sales tax in Kings County to build a new jail and expand the juvenile hall received widespread support, but not the necessary two-thirds vote. A tax on a power plant in Huntington Beach to raise money for city infrastructure failed badly.

The results: Alameda County o Oakland. Measure G. $59 million bond to pay for zoo, museum and science center expansion and renovation. Measure G — Yes: 40,099 (75.0%), No: 13,332 (24.9%). Alameda and Contra Costa counties o East Bay Regional Park District. Measure K. 12-year tax of $12 per house and $8.28 per multi-family unit to fund park development and maintenance. Measure K — No: 141,600 (38.6%), Yes: 225,627 (61.4%). 2/3 vote required. Contra Costa County o San Ramon. Measure P. Consideration of a general plan update, as required by a previous ballot measure. The revised general contains an urban growth boundary and places an emphasis on maintaining open space surrounding the town. Davidon Homes filed a lawsuit to block the election but failed. Measure P — Yes, 5,433 (77.1%), No: 1,611 (22.9%). Fresno County o Reedley. Measure C is a general plan amendment and Measure D is a rezoning to accommodate a proposed Wal-Mart. The City Council placed the measures on the ballot. However, Wal-Mart withdrew its application in December because it said the city's mitigations were too stiff. Measure C — No: 1,751 (50.9%), Yes: 1,690 (49.1%). Measure D — No: 1,761 (51.4%), Yes: 1,665 (48.6%). Imperial County o Calexico. Measure B. A Wal-Mart backed referendum of a city ordinance that limits retail stores larger than 150,000 square feet to 7.5% floor space for groceries. Measure B — No: 2,651 (65.8%), Yes: 1,381 (34.2%). Kings County o Kings County. Measure J. Half-cent sales tax for 8 years to build a new jail and expand juvenile hall. Measure J — No: 4,967 (35.1%), Yes: 9,163 (64.9%). 2/3 vote required. Los Angeles County o Agoura Hills. Measure H. An initiative to limit retail stores to 60,000 square feet. The initiative came about when Home Depot proposed a 139,000-square-foot store on Agoura Road. Measure H — Yes: 2,468 (51.1%), No: 2,361 (48.9%). o Los Angeles. Proposition Q. A $600 million general obligation bond to pay for new and replacement police and fire stations, dispatch facilities and public safety administration centers. The bond would increase the tax on most houses by $30 to $40 annually. Proposition Q — Yes: 220,918 (66.7%), No: 110,277 (33.3%). 2/3 vote required. Marin County o Sausalito. Measure B. An advisory vote on building a new combination police and fire station. Opponents said the proposed 22,000-square-foot building on Caledonia Street would be bad feng shui. Measure B — No: 1,794 (66.4%), Yes: 910 (33.6%). Monterey, San Benito and Santa Cruz counties o Pajaro Valley Water Management Agency. Measure N. This would allow district to triple groundwater pumping charges to fund a pipeline to the Central Valley Project. The idea is to reduce groundwater pumping because overdraft is causing seawater intrusion. Measure N — Yes: 4,825 (51.1%), No: 4,587 (48.7%) Napa County o Napa County. Measure K. A general plan amendment and rezoning of 4.7 acres near Lake Berryessa now designated as watershed/open space to allow development of a boat storage business. Election required by Measure J of 1990. Measure K — Yes: 11,601 (50.8%), No: 11,252 (49.2%) o Napa County. Measure L. This measure would allow large agricultural properties to be split off for development of farmworker housing on parcels of at least two acres. Election required by Measure J of 1990. Measure L — Yes: 17,210 (71.5%), No: 6,862 (28.5%). Orange County o Orange County. Measure W. The Orange County Central Park and Nature Preserve Initiative would create a "great park" at El Toro. It designates 3,000 acres for parks, recreation facilities and a nature preserve. About 1,500 acres would go for universities, cultural amenities, and research and development parks. The initiative repeals Measure A from 1994, which designated El Toro for a civilian airport. Measure W — Yes: 263,000 (57.8%), No: 191,998 (42.2%). o Huntington Beach. Measure EE. An initiative backed by landlords to prohibit all rent control. This was a preemptive strike at the growing rent-control movement among residents in 18 mobile home parks. Measure EE — Yes: 24,104 (68.3%), No: 11,185 (31.7%). o Huntington Beach. Measure HH. Placed on ballot by the City Council, this measure eliminates the AES power plant's exemption from the city's utility tax on natural gas. The city opposed the company's plan to restart two idle generators, but the California Energy Commission approved the plan in mid-2001. The city proposed what some people call an "ugly tax." It would raise $2.3 million annually. Measure HH — No: 22,135 (66%), Yes: 11,421 (34%). o Huntington Beach. Measure GG. Requires that the tax on the power plant go to an infrastructure fund. Measure GG — Yes: 18,637 (57.5%), No: 13,789 (42.5%) o Huntington Beach. Measure FF: Calls for establishing infrastructure fund equal to 15% of city general fund. Measure FF — Yes: 18,546 (56.9%), No: 14,075 (43.1%). San Benito County o San Juan Bautista. Measure R. Referendum on an ordinance that streamlined the process for development agreements. Measure R — No: 208 (62.5%), Yes: 125 (37.5%). San Bernardino County o Adelanto. Measure N. $25 parcel charge to develop 25 acres of parkland, upgrade existing parks and fund a new Parks and Recreation Department. Measure N — No: 477 (53.8%), Yes: 408 (46.1%). 2/3 vote required. San Diego County o National City. Proposition H. $6 million bond to build a 56,000-square-foot library downtown. Proposition H — Yes: 2,550 (73.2%), No: 929 (26.7%). o Poway. Proposition J. An amendment to Proposition FF of 1988 to allow construction of fire stations on sites with greater than 10% slope. FF prohibited public uses on slopes steeper than 10%. The proposed site of city's third fire station is on Pomerado Road south of Ted Williams Parkway. Proposition J — Yes: 6,766 (80.5%), No: 1,634 (19.4%) San Francisco City and County o San Francisco. Proposition D. Changes the appointment process for Planning Commission and Board of Permit Appeals. Now all are appointed by mayor. This measure gives the mayor 4 Planning Commission appointees and the president of the Board of Supervisors 3 Planning Commission appointees. The Board of Permit Appeals would be 3 mayor appointees and 2 president of the Board of Supervisors appointees. The measure also allows the Board of Supervisors to reject any proposed appointee. Proposition D — Yes: 59,143 (58.1%), No: 42,598 (41.9%) o San Francisco. Proposition G. A measure to prohibit new billboards. This also allows existing billboards to be moved from their current locations. Placed on ballot by the Board of Supervisors. Proposition G — Yes: 84,726 (79.2%), No: 22,188 (20.7%) San Joaquin County o San Joaquin County. Measure L. An "Article 34" election required by state constitution. Allows the county to develop up to 500 units a year of "low-rent" housing for 10 years. Similar measure was approved 10 years ago. Measure L — Yes: 45,133 (58.6%), No: 31,946 (41.4%). San Mateo County o East Palo Alto. Measure C. Rezoning of 10.5 acres near Highway 101 and University Avenue and allows exception to height limit. This measure would permit development of 320,000-square-foot Ikea store. Placed on the ballot by the City Council. Measure C — Yes: 1,562 (52.4%), No: 1,419 (47.6%) Santa Clara County o Mountain View. Measure N. A measure that would amend the Americana Precise Plan to allow development of a Home Depot on the site of a closed Emporium department store. Measure N — No: 8,759 (64.7%), Yes, 4,776 (35.3%). Santa Cruz County o Scotts Valley. Measure M. Referendum on the latest Glenwood project. The previous project was defeated in a 1999 referendum. The new proposal: 49 houses on 11 acres, 1.6-acre reserve for future development, 7-acre park, 160 acres of open space. Measure M — Yes: 1,493 (51.0%), No: 1,433 (49.0%) Ventura County o Fillmore. Measure Q. $15 annual parcel charge to build a swimming pool and locker rooms. Measure Q — No: 682 (34.3%), Yes: 1305 (65.7%) 2/3 vote required. Yolo County o Winters. Measure B. $66 annual parcel charge (which can rise by 2%/year) for 35 years to build and operate a new 10,000-square-foot library. Measure B — No: 841 (50.8%), Yes: 813 (49.1%) 2/3 vote required. o Woodland. Measure G. Extending half-cent sales tax another 6 years to 2012. The money would fund a flood protection project. FEMA has ruled recently that 35% of Woodland lies in the Cache Creek floodplain. Measure G — No: 6,101 (70.6%), Yes: 2,530 (29.3%).

During a recession, government efforts to boost the economy often gain higher profiles. Three recent studies of state economic development activities paint a mixed picture of the effectiveness of existing programs. The nonprofit, nonpartisan California Budget Project released a report in January that attempted to gauge the effectiveness and cost of all economic development activities, including state tax breaks. The CBP said that these activities cost the state $7.8 billion annually, but no one is sure what the state gets for the money. The CPB also found that economic development activities are uncoordinated and not reviewed regularly. The Budget Project's study followed on the heels of an examination by the State Auditor of the Technology, Trade and Commerce Agency. The State Auditor dinged the trade agency for lacking an agency-wide strategic plan and for not enforcing quantified goals. On a brighter note, a California Research Bureau study found that the state's 48 enterprise zones generally are effective at creating jobs in distressed areas. The study contrasts with a 1994 University of California study that concluded enterprise zones were ineffective. The California Budget Project tried to look at everything — $2.3 billion of "on budget" spending, such as state job training programs, and $5.5 billion of "off budget" expenditures, which come in the form of tax breaks for businesses that grow or perform certain tasks. Budget Project Executive Director Jean Ross said the organization left out spending by UC because information was too difficult to get. Still, she said, the report provides the most comprehensive look ever at the cost of economic development activities. What the Budget Project found was a lack of vision and planning. "We don't even have the tools needed to determine what kind of results these programs have produced," Ross said. The report states: "While recent policy debates around issues such as education have focused on accountability and performance standards, no similar standards have been applied to state spending for economic development … . Moreover, the state has failed to adopt a strategy, goals or objectives to guide the use of resources devoted to promoting a healthy economy." "Many state economic development programs," the report continues, "were created to emulate federal programs, or to implement a ‘good idea' brought to a legislator with little analysis of how well the program may fit California's overall needs. … Once created, programs are rarely eliminated." Most tax breaks (or "tax expenditures") go to "general relief of business and are not targeted to specific policy goals." The Budget Project recommended that the state formulate a unified economic development strategy, prioritize spending on the most important areas, systematically review all tax expenditures, and evaluate budgeted programs based on outcomes. Ross said the Budget Project does not advocate creation of a "super agency" but does want to see all entities collaborate, coordinate and communicate better. The Budget Project also urges better data collection. However, Michael Dardia, a research fellow at the Public Policy Institute of California who has studied economic development extensively, questioned some of the Budget Project's assumptions and conclusions. "I don't think there's anything all that new in it," he said of the report. Dardia said the Budget Project report leads readers to the conclusion that business tax exemptions are bad. But, he noted, breaks for individuals, such as the personal income tax exemption and the home mortgage interest exemption, cost the state more than three times as much as the business tax breaks. Moreover, the business tax breaks —the sales and use tax exemption on airplanes and vessels built in California is one of the biggest — play a role in business retention, he said. "If you want plane production to move from here to Seattle, go right ahead and slap the sales and use tax on airplane sales," Dardia said. The Budget Project concluded that the $7.8 billion spent on economic development amounted to 9.7% of general fund expenditures. But Dardia said if tax breaks for businesses and individuals are considered, the $7.8 billion is only about 7.5% of state spending. "To me, that doesn't sound like a big number considering that all of our money comes from economic activity in the state," he said. Although Dardia has doubts about the report — and the Davis administration was immediately defensive — other analysts and interest groups have given it high marks. "Different people have found different hooks," Ross said. The Budget Project report mirrored concerns expressed by the State Auditor in a study of the Technology, Trade and Commerce Agency. The separate studies even have similar recommendations regarding strategic planning and more quantifiable program criteria. " he agency has discontinued an agency-wide planning process and backed away from a result-oriented approach," the State Auditor concluded. "Program-specific plans now guide its actions, but all the plans we reviewed are weakened by a lack of strategic planning elements." In a response to the Auditor, the trade agency said the energy crisis, a "dynamic environment" and staff vacancies have hampered strategic planning. The agency defended its planning process but said it would implement many of the report's specific recommendations. The Research Bureau's report on Enterprise Zones received a mixed reception from zone administrators, but Roger Dunstan, Research Bureau assistant director and co-author of the study, said the overall news is good. "Compared to other distressed areas, enterprise zones are creating jobs more rapidly," he said. Enterprise zones got their start in California in 1984; since then, the Legislature has designated 48 zones in economically depressed urban, suburban and rural communities. Businesses in enterprise zones get tax breaks for hiring people and buying equipment. The businesses also get preferences when bidding on state contracts. Dunstan and Suzanne O'Keefe, a professor at California State University, Sacramento, compared census tract data from within an enterprise zone with a census tract with similar characteristics outside an enterprise zone. For the time period studied, they identified 154,000 new jobs in enterprise zones, compared with 101,000 in similar areas outside enterprise zones. The net gain of 53,000 jobs cost the government $4,800 per job, which Dunstan called "extremely low." The enterprise zone tax credit for new jobs tops out at 150% of the minimum wage, so the program emphasizes lower-paying work. But, Dunstan noted, these are poor and often undesirable areas that are not going to attract top jobs. The next step, said Dunstan, should be an examination of how long enterprise zones should be in place. Currently, the designation expires in 15 years, and state officials can extend it for another five years. Contacts: Jean Ross, California Budget Project, (916) 444-0500. Roger Dunstan, California Research Bureau, (916) 653-7843. Michael Dardia, Public Policy Institute of California, (415) 291-4400. California Budget Project website: http://www.cbp.org/ State Auditors reports website: http://www.bsa.ca.gov/bsa/since93.html California Research Bureau reports website: http://www.library.ca.gov/html/statseg2a.cfm