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The meetings of two Malibu City Council members whom the council had charged with reviewing and negotiating over a land use plan prepared by the Coastal Commission were not subject to the state's open meeting law, an appellate court panel has ruled. A citizens group argued that then-Mayor Joan House and Councilman Jeff Jennings were functioning as a committee that should have been covered by the Brown Act, which regulates local government meetings. But the court ruled that House and Jennings composed a “limited term ad hoc committee” that was not required to meet in public. Adoption of a Local Coastal Plan (LCP) - a plan that regulates development in the coastal zone - has been a controversial issue in Malibu since the city incorporated in 1991. The city never adopted an LCP, so the state Legislature directed the Coastal Commission to prepare a plan for the city. The city has fought the Coastal Commission every step of the way. In September 2001, the Coastal Commission issued a draft of the land use plan (LUP), one element of the coastal plan. Thereafter, House and Jennings conducted private meetings with various individuals and staff members to “go over the city's response” to the draft plan, according to the court. In December 2001, House and Jennings recommended that the City Council not accept the Coastal Commission's plan. The council directed House and Jennings to continue negotiating with the Coastal Commission. Some people had asked that House and Jennings open their meetings to everyone, but city officials insisted that public meetings were not required. A group called Taxpayers for Livable Communities sued, arguing that the meetings violated the Brown Act (Government Code § 54950). Los Angeles Superior Court Judge Ronald Sohigian ruled for the city, finding that House and Jennings were not a “legislative body” to which the Brown Act would apply. Taxpayers for Livable Communities appealed. A three-judge panel of the Second District Court of Appeal, Division Eight, upheld the lower court. Taxpayers for Livable Communities argued that House and Jennings were a standing committee for land use and planning. Standing committees of a legislative body are subject to the Brown Act. Jennings and House were the only two members of the Land Use and Planning Committee, but the trial court and the appellate panel ruled that the City Council had reserved for itself jurisdiction over the city's response to the Coastal Commission. “ ust because the Land Use and Planning Committee tried to develop Malibu's Local Coastal Program does not mean the City Council gave the Land Use and Planning Committee jurisdiction over the city's response to LUP for Malibu,” the appellate court ruled. Taxpayers for Livable Communities also argued that House and Jennings were an “other body” within the meaning of the Brown Act because they had decision-making authority. The appellate court, however, pointed to the Attorney General's “2002 Handbook on the Brown Act.” “ he Handbook,” wrote the court, “offered as an example of an exempt advisory committee 'two city council members named to a committee for the purpose of producing a report in six months on downtown traffic congestion.' The Handbook explains that the Brown Act does not apply to the traffic committee because it is a 'limited term ad hoc committee' charged with accomplishing a specific task in a short period of time. Change the subject matter from traffic congestion to the Coastal Commission's Land Use Plan, and Jennings and House are indistinguishable from the Handbook's hypothetical council members.” Taxpayers for Livable Communities argued that the evidence regarding the responsibilities of House and Jennings could be interpreted differently, but the Second District ruled that the trial court properly resolved any conflicts in favor of the city. The Case: , No. B168630. 05 C.D.O.S. 1366. 2005 DJDAR 1855. Filed February 15, 2005. The Lawyers: For Taxpayers: Corin Kahn, (818) 907-8986, For the city: Christi Hogin, Jenkins & Hogin, (310) 643-8448.

Raise the topic of suburban sprawl in California, and you most likely launch a conversation about the San Fernando Valley, coastal Orange County, or the bedroom communities inland of San Francisco Bay. Only belatedly, if at all, will the conversation wander to the high desert, historically home only to scattered, windblown settlements scraped out of sand and creosote bush. That image is no longer accurate. The high desert is booming, particularly the Antelope Valley and the hinterlands of San Bernardino County, thanks to cheap desert land, soaring housing costs near the coast, and the apparently boundless willingness of Californians to commute on congested freeways. That boom has raised the stakes with regard to a habitat conservation plan (HCP) released in March by the Bureau of Land Management (BLM) and two local agencies. The West Mojave Plan is the largest HCP ever developed in the United States, a complicated set of strategies intended to balance development and other activities with conservation of habitat for more than 100 sensitive wildlife species. The plan encompasses 9.3 million acres, a tenth of the state. The planning area includes public and private land in Kern, Los Angeles, San Bernardino and Inyo counties; 11 incorporated cities, including Palmdale, Lancaster, Victorville, Apple Valley, Yucca Valley, Ridgecrest and Barstow; four military bases; and two national parks. It runs from Olancha south to Joshua Tree, and from the San Gabriel Mountains east to Baker. About 2.9 million acres in the plan area are privately owned; the remainder is in public hands. Twelve years in the making, the plan consists of two parts: new management regulations for the BLM's domain in the west Mojave - part of the sweeping California Desert Conservation Area established more than two decades ago - and an HCP governing private activities that affect protected species of plants and animals. The HCP is intended to streamline a permitting process that developers and property owners decry as time-consuming, costly, uncertain and needlessly complicated, thanks to Endangered Species Act protections for federally listed species such as the desert tortoise, and for candidate species such as the Mohave ground squirrel. Legal protections for unlisted species such as the burrowing owl, commonly found in urban areas in the desert, make the development process even more complicated and expensive. The Mojave HCP is like the other 500 or so HCPs adopted nationwide, in that it trades permission to destroy protected species and their habitat in exchange for preservation of habitat elsewhere and other protective measures. The Mojave Plan sets aside specific zones around the region's fast-growing cities and towns where development will be allowed without requiring individual landowners to conduct wildlife surveys and apply for incidental take permits under the ESA. Local governments must sign on to the plan for its provisions to apply to development in their areas. Once they do, landowners will be able to obtain incidental take permits from the federal government through the standard city or county planning and approval process. Streamlining that process for fast-growing desert communities was one of the primary reasons so many local agencies participated in the long, delicate process of negotiation that produced the plan, said Larry LaPre, desert district wildlife biologist for the BLM. The plan sets aside 1.5 million acres as “desert wildlife management area” to protect the tortoise and other sensitive species. In those areas, some activities such as mining, off-road vehicle use and grazing will be allowed, but under strict limitations intended to keep ground disturbance to 1% or less of the surface area, LaPre said. The plan also establishes a schedule of mitigation fees for development in the west Mojave, ranging from $385 an acre for construction on already disturbed land to $3,800 an acre inside wildlife conservation areas. The money is intended to help pay for $79 million worth of conservation projects identified in the document, LaPre said. The BLM will impose the fees for development on its property as soon as a record of decision is signed and the plan is implemented. For the fees to take effect on private property, individual cities and counties will have to adopt them by ordinance. Local government officials and planners were cautiously optimistic about the plan, development of which was spearheaded by the BLM, San Bernardino County and the City of Barstow. “We believe the plan strikes a good balance between protecting the environment and the sensitive lands while allowing for growth consistent with the city's general plan,” said Scott Priester, Barstow's community development director. Environmentalists, however, are alarmed by increasing pressure to develop the high desert. And environmentalists are less enthusiastic than local officials about the West Mojave Plan, saying the restrictions it places on development, mining and off-road use are inadequate to recover the desert tortoise and protect other species. “Because the government has decided to ignore science and endangered species recovery, the West Mojave Plan will be challenged” in court, said Daniel Patterson, desert ecologist for the Center for Biological Diversity. “The plan really is a giveaway to industry … It's a big disappointment to the conservation community.” No matter one's view on the plan, growth is proceeding at a rapid pace, as illustrated by a recent U.S. Census report. According to figures released April 14, San Bernardino County grew 3.2% last year, adding about 59,000 residents. Over the past four years, the county's population has grown by 12.4%, more than twice the rate for the state as a whole. That growth is most rapid in the high desert. Victorville, for example, expects to see 4,000 new houses this year alone. On the western edge of the high desert, the Antelope Valley continues to boom. The combined population of Lancaster and Palmdale is now more than 260,000. What the populous and pleasant coastal counties cannot offer, however, is relatively affordable housing, and that is the factor largely responsible for population growth in such places as Victorville and Morongo Valley. Although increasing demand is driving up prices even in desert towns, the desert remains considerably more affordable than the Southern California metropolitan area as a whole. The median house price in the Southern California metro region in March was $439,000, but in the high desert the median price was only about $260,000. Contacts: Larry LaPre, Bureau of Land Management, (951) 697-5220. Daniel Patterson, Center for Biological Diversity, (520) 623-5252. Scott Priester, City of Barstow, (760) 256-3531. San Bernardino County, (909) 387-4147.

Six months after his re-election, President George W. Bush is seeking to place his distinct imprint on federal urban policy. In the popular press, Bush's proposals for both Section 8 housing vouchers and Community Development Block Grant (CDBG) funding have been characterized as classic Republican “cutting and gutting.” True to form, however, Bush is not just “cutting and gutting” but seeking subtly to make a radical shift in federal policy. In so doing, he is proposing to wipe out popular reforms put into place by his own Republican predecessors - partly by claiming they are Democratic programs that have failed. It is unlikely that Bush will succeed in an overhaul this year; both programs have strong support in Congress and appear likely to make it through at least one more fiscal year without significant change. But even if his “Strengthening America's Communities Initiative” doesn't fly this year, Bush does not look like he is going to give up. A task force designed to promote the idea met for the first time during April in Fresno, hosted by Mayor Alan Autry, a task force member. On Section 8, Bush is seeking to take a housing assistance program revamped by the Reagan administration on a voucher model and move it toward a block grant model. On the CDBG program, Bush is proposing to do away with a block grant program shaped by the Nixon administration and replace it with a new set of programs that are targeted at economic development efforts. Along the way, he is seeking to shift control over much federal urban policy from the Department of Housing and Urban Development (HUD), which has a constituency of mostly Democratic central-city mayors, to the Department of Commerce, which has a constituency of mostly Republican business leaders. Not surprisingly, low-income housing advocates and local officials around the country are making a lot of noise. One coalition of community development organizations said the president wants to “divert the public's attention from the huge funding cuts that he wants to make to housing and community development programs that help low-income people.” (It's true that Bush proposes scrapping $5.1 billion in HUD programs - mostly CDBG - and replacing them with $3.7 billion in Commerce Department programs.) The Section 8 debate has been more technical but no less spirited. Throughout it all, one thing is clear: Bush is proposing a far more radical shift than either Ronald Reagan, who happily ignored most urban programs, or his father, who appointed the inspiring Jack Kemp as HUD secretary. In the case of the CDBG and a number of other federal programs, the Bush administration argues that their purpose should be narrowed and re-defined. “Most of these programs,” the administration's overview of the Strengthening America's Communities Initiative states, “currently lack clear goals or accountability measures.” But that was the whole point when the Nixon administration created the CDBG program in 1974, mostly as a sop to the emerging suburban constituencies of the time. The Great Society effort of the 1960s had created a passel of categorical urban aid programs - federal programs designed to address specific categories of urban problems. Among other things, these programs were designed to provide aid directly to Democratic mayors, bypassing Republican state governments. It was Nixon, seeking to mollify a Democratic Congress even while nurturing suburban Republicans, who rolled these programs into block grants, giving local governments more spending flexibility. The CDBG has survived with bipartisan support ever since. Whether or not it is “successful” depends on your definition of success, but it is certainly popular. The Bush proposal would re-establish strong federal control over the goals and purposes of community and economic development programs by using the money to target specific development strategies in specific distressed communities. In this way, the Bush administration proposal represents an eerie mirror image of the Johnson administration's original vision of urban aid. But it's a tough sell on Capitol Hill. Virtually all American municipalities feed at the CDBG trough, and they are fighting hard to keep maximum funding and maximum flexibility. Many presidents have learned the hard way that it is difficult to target federal aid once Congress gets involved. In the words of Baltimore developer Robert Embry, who hatched the Urban Development Action Grant program as an assistant HUD secretary in the Carter administration, “If you want Congress to pass a program for distressed areas, you had better make sure there are 218 distressed areas in the country.” (The House of Representatives has 435 members; 218 is 50%+1.) Bush's Section 8 reform proposals are even more indicative of how things have changed for Republicans during the last 20 years. The last major Section 8 revamp came when Reagan ditched Johnson-era housing programs aimed at housing production in favor of voucher programs that gave low-income renters the ability to obtain housing in the private marketplace. Most Section 8 vouchers are given to extremely poor people, usually those making 30-50% of median income. The tenants pay 30% of their income for rent; HUD pays the rest. Though controversial at the time, the voucher approach was a logical evolution. The original construction programs were aimed at eliminating substandard housing for the poor - the biggest problem of the 1960s. The voucher programs were aimed at dealing with the biggest problem of the 1980s - the fact that poor people couldn't afford housing. But over the long term maintaining a market-oriented voucher program has proven more expensive than building affordable housing for the simple reason that there is no brake on rents in the open market. The gap between market rents and the incomes of poor people has grown, meaning that the feds have had to throw more money into the subsidies, especially in high-cost housing markets like California. Furthermore, during the past few years, Congress has expanded the Section 8 voucher program to provide ongoing housing assistance to poor families who had been living in the federally assisted housing projects originally built during the '60s and '70s. Many of those projects reverted to market rents after 30 years. All this means there are more than 2 million families using Section 8 vouchers, and most of HUD's discretionary funding now goes to Section 8. The specifics of Section 8 are very technical, and Section 8 defenders have provided fine-grained rebuttals claiming that program costs are not rising as fast as the Bush administration claims. The bottom line, however, is that Bush's proposal would cap on Section 8 expenditures and possibly create a block grant program for local public housing authorities. The administration appears to be hoping to free up money to fund a home ownership program that would focus on families that are poor (60% of median income) but not extremely poor, as Section 8 does. Bush is proposing a Single-Family Ownership Tax Credit program, similar to the Low-Income Housing Tax Credit program. Difficult as it is to keep Section 8 going in an expensive market like California, it would be just as difficult to accomplish ownership goals, especially if the tax credits were focused on single-family detached dwellings. On the other hand, an ownership program would “lock in” costs at the front end of a project so that federal subsidies would not have to keep rising as the real estate market goes up. There is nothing wrong with re-thinking the goals of federal programs over time. A more targeted community development program might be more effective than a block grant program at achieving certain goals; an ownership housing program might help stem the Section 8 program's red ink. But Bush's proposals highlight the idea that there are no permanent solutions. One generation's magic bullet - liberal or conservative - can become the next generation's boondoggle or sacred cow.

A lawsuit filed by Malibu property owners while the City of Malibu was suing the Coastal Commission was not a Strategic Lawsuit Against Public Participation, the Second District Court of Appeal has ruled. The unanimous three-judge appellate panel also upheld the trial court's award of $35,000 in fees to the property owners and ordered the city to pay appeals costs. As with most Malibu land use controversies, local history colors this case. That history extends to the first nine years of Malibu's cityhood, during which the city never adopted a required Local Coastal Plan (LCP). Because there was no locally certified LCP, the Coastal Commission itself had to decide on applications for development permits. The state panel often spent one day a month dealing with permit applications from Malibu, nearly all of which lies in the coastal zone. In 2000, the Coastal Commission sought and won statutory authority to write an LCP for Malibu. The Commission adopted the plan in 2002. Malibu voters responded by gathering signatures on a petition to force a local referendum of the state-authored plan. The city then declared the LCP invalid, but the Coastal Commission refused to budge. The city sued the Coastal Commission but lost at both the trial court and appellate court levels. In ., 121 Cal.App4th 989 (see , October 2004), the court held that the state Legislature could require the Coastal Commission to write the LCP and that the state-prepared plan was not subject to local referendum. In July 2003 - while Malibu's appeal was pending before the Second District - property owners David and Sandra Visher applied for a coastal development permit (CDP) so that they could build a house on their vacant lot. The city refused to issue the permit. The city contended that granting the permit would amount to voluntary compliance with the trial court's order, thus jeopardizing the city's appeal. The Vishers sued to force the city to process their application. The city argued that the Vishers filed their lawsuit in response to the city's appeal in the Coastal Commission case, making the Vishers action a Strategic Lawsuit Against Public Participation (SLAPP). Such lawsuits are intended to hinder constitutionally protected rights of free speech and petition, and Code of Civil Procedure § 425.16 subdivision (b)(1) authorizes courts to dismiss SLAPP lawsuits. Thus, the city asked the trial court to dismiss the Vishers' lawsuit. Los Angeles County Superior Court Judge Allan Goodman, however, ruled that the Vishers sought only a permit to build a house, and he rejected the city's SLAPP argument. Judge Goodman also awarded the Vishers $35,000 in fees. The city appealed, but the same three-judge panel that ruled against the city in the Coastal Commission case upheld Goodman's decision. Writing for the Second District, Justice Laurence Rubin cited , 29 Cal.4th 69 (see CP&DR Legal Digest, October 2002). There, the city had adopted a mobile home rent control ordinance. Mobile home park owners filed suit in federal court contending that the ordinance was unconstitutional. The city then filed a validating action in state court. The park owners argued that the city's validating action was a SLAPP, but the state Supreme Court disagreed. The court said that the actual controversy was the ordinance itself, not the park owners' federal lawsuit. “Likewise here,” Rubin wrote. “The Vishers' petition arose from Malibu's refusal to process CDPs. It did not arise from Malibu's lawsuit against the Coastal Commission. Indeed, Malibu's refusal to process CDPs tellingly predated both its lawsuit against the Coastal Commission and the Vishers' lawsuit against Malibu. While the onset of litigation may have given Malibu an additional reason not to process the Vishers' CDP, it was Malibu's refusal to process CDPs of which the Vishers complained, not Malibu's engagement in the protected activity of suing the Coastal Commission.” Malibu also argued that the award of fees was improper because it did not file the anti-SLAPP motion in bad faith. The trial court disagreed, and so did the Second District. “ he sanctions order here involved the reasonableness of Malibu's resorting to a SLAPP motion to rid itself of the Vishers' petition,” Rubin wrote. “Malibu completely failed on that point.” The Case: , No. B173471, 05 C.D.O.S. 961, 2005 DJDAR 1355. Filed February 1, 2005. The Lawyers: For Visher: David and Sandra Visher for themselves. For the city: Christi Hogin, Jenkins & Hogin, (310) 643-8448.

I recently had an unsettling experience in a parking lot in Lompoc. I was standing in the middle of an enormous asphalt parking lot, surrounded by large buildings emblazoned with the logos of national retail chains, and, for a split second, I didn't know where I was. I don't think that I was losing my mind, at least on this occasion. The real problem was that the landscape had been taken over by the signs and symbols, the logos and trademark architecture, of the national chains. Nothing local or regional was in view. I realized that if I had awoken from a deep sleep and looked around me, I would not know whether I was in South Jersey or North Carolina or Santa Barbara County. Although Lompoc, like all places, has its own history and topography, I had no way of knowing that I was in Lompoc. In actuality, I was in Anywhere, USA. And, to paraphrase Neil Young, everybody knows that Anywhere is nowhere. I suspect that nearly every Californian, perhaps every American, can recall an experience similar to my aphasia in Lompoc. Local officials have begun to confront this “formula retail” problem. Although different cities have different legal definitions for the phenomenon, let's define formula retail simply as national retail chains who use familiar logos and/or building design to establish their presence in any given market. What is crucial here is that consumers are already familiar with the brand long before the retailer puts up a sign in a new location. To borrow the language of semiology, the golden arches are a “signifier,” that is, a bearer of meaning that stands for something larger and perhaps better known than a shopping center in Lompoc. The golden arches stand for McDonalds as a collective entity, as a societal force, rather than a single building. Recognition by itself creates trust, and people obviously will spend money where they feel comfortable. That is the genius of branding. And that power, beyond the ugliness or garishness of any particular sign, is why formula retail is bad for cities. A branded landscape can overwhelm the set of images and meanings that make a town a recognizable place. The question, then, is how to best strike a balance between the legitimate claims of a business owner, whether or not I approve of its marketing campaign, and the need of communities to give urban design standards the upper hand in the competition for visual supremacy. Cities, of course, always have the option of negotiating each new building on a case-by-case basis. In Arcata, the city in Humboldt County where this story is being written, city officials recently conducted talks with developers regarding the design of a Target outlet. The city insisted on a design that conforms to the city's residential character, especially Arcata's large stock of Victorian and wood-frame houses. The solution, which I think successful, forgoes Target's traditional big white box in favor of exterior walls covered in dark, multi-colored brick. The brick is accented by four white structures that look like pitched roofs and break up the massiveness of the building. Arcata takes a more systematic approach to formula restaurants, which the city tightly restricts (see , October 2002). San Francisco has gone much further with the systemic approach. The desire to protect a four-block area in Hayes Valley, a rejuvenating neighborhood, was the impetus for a 2004 ordinance championed by then-Supervisor Matt Gonzalez. With Hayes Valley showing new life thanks to the city's redevelopment effort, the big chains were sniffing a new market. Gonzalez asked Deputy City Attorney Sarah Owsowitz to prepare an ordinance that controlled formula retail. In the preamble to the ordinance, formula retail is characterized as unfair competition to local business startups because formula businesses are “typically better capitalized and can absorb larger startup costs, pay more for lease space, and commit to longer lease contracts.” The ordinance defines formula retail as a chain that has at least a 11 other existing outlets, and “maintains two or more of the following features: a standardized array of merchandise, a standardized façade, a standardized décor and color scheme, a uniform apparel, standardized signage, a trademark or a servicemark.” As approved by San Francisco's Board of Supervisors one year ago, the ordinance bans formula retail outright from Hayes Valley's commercial streets. In the rest of the city, with some exceptions, the ordinance enables local residents to request a public hearing and challenge the formula retail applicant's request for a conditional use permit. In the Cole Valley neighborhood, any application for a formula business automatically triggers a public hearing, even if neighbors do not ask for one. Significant exceptions to the regulation include Fisherman's Wharf and the area surrounding Union Square, both of which are rife with national brands and presumably past all hope. The ordinance also directs the Planning Commission to develop guidelines for evaluating formula retail applications that come up for public review. Among those guidelines are considering the existence of other formula retail businesses in a given neighborhood, determining whether comparable goods are already available within the same area, judging the compatibility of the proposed business with the character of the neighborhood, taking into account the retail vacancy rate in the area, and the balance of neighborhood-serving versus citywide or regional-serving businesses. This is the type of bold, almost radical solution that can work in the Bay Area but may not be able to travel south of Silicon Valley. One can already hear the raised voices of protest from those who believe in completely unrestrained free-market competition - as if a national chain and a local entrepreneur compete on the same level. If cities do not hold up their end of the debate, however, the commercial strips of every city will become little more than bulletin boards for corporate brands, and a lot more people will find themselves unsure of exactly where they are.

A billboard company has lost a lawsuit seeking damages from the City of Los Angeles for planting trees that obstructed visibility of six billboards. The loss of visibility, without loss of access, was not enough to sustain Regency Outdoor Advertising's inverse condemnation claim, the Second District Court of Appeal ruled. The appellate panel also upheld a lower court's decision to award the city $104,145 in costs, including $83,295 in expert witness fees. Five years ago, the city planted palm trees and placed lighted pylons on Century Boulevard between the San Diego Freeway and Los Angeles International Airport as part of an airport enhancement project. After Regency rejected a settlement offer - the city offered to remove one tree and pay Regency $1,000 - the company sued the city and its Department of Airports, seeking compensation for lost value. Los Angeles County Superior Court Judge Jean Matusinka ruled for the city, finding that Regency failed to prove damages. Regency appealed. A unanimous three-judge panel of the Second District, Division Four, agreed with Regency that Judge Matusinka had relied on the wrong legal principals. Still, the appellate panel held that the trial court's ultimate decision was correct. Matusinka based her decision on , (1960) 54 Cal.2d 855. In , the state Supreme Court ruled that a property owner could not recover damages caused by the construction of a public improvement on an adjoining property. However, according to the Second District, the Legislature in 1975 amended the applicable law by adding Code of Civil Procedure § 1263.420. Subdivision (b) abrogated by allowing recovery for damages regardless of the location of the damage. The Second District applied the amended statute to this case, but still ruled for the city. Regency cited a number of cases to support its claim for damages: , (1907) 150 Cal. 592; , (1943) 23 Cal.2d 390; , (1954) 127 Cal.App.2d 786; , (1962) 207 Cal.App.2d 729; and , (1969) 1 Cal.App.3d 1. Although the cases established that lost visibility could entitle a property owner to payment of damages, none of the cases stood for the proposition that loss of visibility alone mandated the payment of damages, the court ruled “Some decisions describe the easement of reasonable view as separate from the right of ingress and egress, but none has found substantial impairment of property rights based solely on loss of visibility” Presiding Justice Norman Epstein wrote for the court. “Since the only claimed damage in this case was the impairment of visibility of Regency's billboards, we find no error in the trial court's conclusion that there was no substantial or actionable impairment of Regency's property rights.” Epstein continued: “This conclusion follows logically from the established law that there is no obligation to compensate a landowner for diminution of property value resulting from highway changes which do not interfere with access, but cause diversion of traffic or circuitry of traffic beyond an intersecting street. (See , 207 Cal.App.2d 729, 737.) If reduction of a business's value caused by the rerouting of traffic is not compensable, then there is no reason to reach a difference conclusion where the routing remains the same, but the visibility of the business is changed by the planting of trees.” Regency also pointed to the Outdoor Advertising Act (Business & Professions Code § 5200 et seq.), which prohibits the government from compelling removal of a lawful sign or blocking customary maintenance and use. But the act, the Second District ruled, does not address impairment of visibility. “Since city did not require removal of the signs, or limit their use or maintenance, it had no statutory obligation to compensate Regency,” Epstein wrote. As for legal costs that the lower court awarded to the city, Regency contended that expert witness costs incurred before a settlement offer was made were not eligible, and that the city did not make the settlement in good faith. The appellate court, however, ruled that Judge Matusinka had discretion to award the costs, and that, because the city successfully defended the lawsuit, the city's settlement offer was reasonable. The Case: , No. B159255, 05 C.D.O.S. 1482, 2005 DJDAR 1967. Filed February 17, 2005. The Lawyers: For Regency: Michael M. Berger, Manatt, Phelps & Phillips, (310) 312-4000. For the city: Eduardo Angeles, Los Angeles World Airports, (310) 646-3260.

Kern County should have prepared an environmental impact report before adopting an ordinance regulating the disposal of sewage sludge on agricultural land, the Fifth District Court of Appeal has ruled. The court ordered Kern County to study direct and indirect impacts of the regulation, including the effects that result from out-of-county agencies having to find new sludge disposal methods. The court did uphold the county's authority to regulate the land application of sewage sludge, and the court ruled that sanitation agencies should have completed environmental reviews of contracts for the hauling and land disposal of sewage sludge. The court also left the county's sludge regulation in place while the county completes an EIR. The ruling came in a lawsuit filed against Kern County by Los Angeles County, Orange County and City of Los Angeles sanitation agencies, as well as sanitation associations and a private sludge disposal company. They object to a 1999 Kern County ordinance that requires the heightened treatment of sludge that is applied to land (see , July 2000). Both sides claimed a measure of victory in the 104-page decision. The ruling makes clear that Kern County must evaluate the beneficial impacts of sludge application on farmland and consider the potential impacts of alternative disposal, such as hauling the sludge longer distances to willing counties, said Daniel Hyde, attorney for Los Angeles County Sanitation District No. 2. “If it's an impact on the environment, it doesn't matter whether it occurs in Kern County or not,” Hyde said. The county still must study it. Deputy Kern County Counsel Charles Collins, meanwhile, said that the ruling is important for local agencies because the court rejected the sanitation agency's argument that the commerce clause precluded Kern County from regulating sludge disposal. Less than a week after the court issued its decision, Kern County supervisors directed staff members to prepare an ordinance that would prohibit the importation of any sludge into the county. The Fifth District decision “did an awful lot to give us more authority over our own future,” Board of Supervisors Chairman Ray Watson told the . The issue of sludge disposal is controversial in many rural counties. Because of other regulatory barriers and the rising cost of dumping sludge in landfills, sanitation agencies during the 1990s began hauling most of their sludge to farmland, where the material is used as a soil amendment. However, officials and citizens in Kern and other counties that receive out-of-town sludge worry about the health impacts of large-scale land application of the wastewater treatment bi-product. In the industry, sludge is known as “biosolids,” a term that describes human and industrial waste that has been filtered from treated wastewater, pumped into tanks and allowed to cook in its own biologically generated heat until bacteria and other pathogens have been neutralized. Whether the federal and state governments have done enough study and regulating of biosolids is a question that receives much debate. The Central Valley Regional Water Quality Control Board issued the first general order permitting use of sludge as a soil amendment in 1993. More recently, the State Water Resources Control Board adopted a regulatory framework and completed a program EIR. Kern County successfully challenged that EIR in court, and the state board revised it last year. In October 1999, Kern County adopted Ordinance G-6638. It permitted the continued disposal of “class B” sewage sludge on already approved sites for three years. Starting January 1, 2003, sludge disposed on land would have to be “exceptional quality,” meaning it has received more treatment than Class B sludge. The county concluded that no environmental impact report was necessary and adopted a negative declaration. The sanitation agencies and associations sued Kern County, arguing that the county should have prepared an EIR, that the county did not have authority to regulate sludge disposal, and that a “biosolids impact fee” was illegal. The county counter-sued the sanitation agencies, arguing that changes they made in their sludge disposal programs should have undergone environmental review. Tulare County Superior Court Judge Paul Vortmann essentially let everything stand. He upheld Kern County's negative declaration, ordinance and fee, and he upheld actions of the sanitation agencies. Both sides appealed. The county contended that the ordinance itself needed no further environmental study because the law sought to improve the environment. As for the ordinance's broader impacts caused by different sludge disposal techniques, the county argued that any such impacts were too speculative to address. The court disagreed, noting there was evidence that the disposal of sludge had beneficial effects, such as dust reduction and making marginal land useable. “ or projects that may cause both beneficial and adverse significant impacts on the environment, preparation of an EIR is required because the consideration of feasible alternatives and mitigation measures might result in changes to the project that decrease its adverse impacts on California's environment,” Justice Betty Dawson wrote for the court. The court sided with the sanitation agencies and associations regarding broader impacts. They argued that evidence showed sanitation agencies would have to truck sludge longer distances, increasing vehicle traffic and, thus, increasing air pollution. They also contended the regulation would burden landfills, and force farmers to use more pesticides and untreated animal manure, thus harming water quality. Plus, they said, treating sludge to exceptional quality standards requires heating the material in gas-fired boilers, which consumes a great deal of energy and produces air pollution. The court ruled that all of these impacts were reasonably foreseeable and the county must study them in an EIR. The county cited , 105 Cal.App.4th 468 (see , March 2003), in which the Fifth District rejected a challenge to a similar Kings County ordinance. In that case, the court upheld the county's determination that its regulation was categorically exempt from CEQA. was different, the Fifth District ruled, because there was no substantial evidence to support a fair argument that the ordinance would cause adverse impacts. “There is no re-inventing of the wheel here,” said Hyde, attorney for Los Angeles County Sanitation District No. 2. “It's a failure to look at impacts that were widely known and readily available.” Deputy County Counsel Collins, though, wondered where exactly to draw the line. “If courts continue to look at things this way, you're going to see more public entities looking into larger and larger geographical areas as part of 'the project,'” Collins said. “You can make an argument that everything is related. It almost gets philosophical.” Regarding, the commerce clause, the sanitation agencies and associations argued that the ordinance was unconstitutional because it discriminated against out-of-county biosolids and because it was adopted for the protectionist purpose of upholding Kern County agricultural products' reputation. The court rejected both contentions. Justice Dawson wrote, “ he ordinance's burden on the sewage sludge industry is the same without regard to the place of origin of the sewage sludge.” And the court ruled, “ he possibility that the reputation of agricultural produce from Kern County benefited from the enactment of Ordinance G-6638 is not enough to violate the commerce clause.” Moreover, state Water Code § 13274 permits the county to regulate the application of sludge to land, the court ruled. As for the biosolids fee, the court ruled that the fee violated the Vehicle Code but remanded the issue to the Superior Court for further proceedings. As for Kern County's argument regarding the sanitation agencies' hauling and disposal contracts, the court agreed that the agencies must perform environmental reviews. The Case: , No. F043095, 05 C.D.O.S. 2907. Filed April 1, 2005. The Lawyers: For Sanitation District No. 2: Daniel Hyde, Lewis, Brisbois, Bisgaard & Smith, (213) 250-1800. For Orange County Sanitation District: Tami Crosby, Woodruff, Spradlin & Smart, (714) 564-2635. For City of Los Angeles, Keith Pritsker, deputy city attorney, (213) 978-8141. For California Association of Sanitation Agencies: Roberta Larson, Somach, Simmons & Dunn, (916) 446-7979. For Southern California Alliance of Publicly Owned Treatment Works: Robert Dowd, Griswold, LaSalle, Cobb, Dowd & Gin, (559) 584-6656. For Responsible Biosolids Management, Inc.: Mark Jones, Jones & Beardsley, (661) 664-2900. For Kern County: Bernard Barmann Sr., county counsel, (661) 868-3800.

Local governments in California have no authority over Indian casinos and collect no taxes from the casinos. But some cities and counties still see value in having a casino nearby and manage to reap economic benefits of a casino and its accompanying facilities. The state Economic Development Department reports that Indian casino payrolls continue to expand, and casinos now employ nearly 50,000 workers, which helps make some cities and counties comfortable with a gambling hall. Indian casinos also can generate storms of angry protest because they involve gambling and because locals have no control over the developments. Thus, some localities fight tooth and nail to keep casinos out. The issue of “reservation shopping” - in which tribes seek out the best land for developments even if ancestral links are weak - can also complicate the situation. Stuck in the middle are jurisdictions that accept they have no authority and try to get Indian tribes to pay for public services and infrastructure. Until recently, Indian casinos were largely a county issue because most reservations are in rural areas. But the issue is becoming one for cities because tribes are finding sites in urban areas and because urban growth is headed in the direction of some formerly distant reservations. “It's certainly an emerging issue for cities,” League of California Cities lobbyist Daniel Carrigg said. “I'm sure there is going to be a spectrum of opinion. In some communities, it's going to be a real lightening rod issue. In other communities, it's going to be seen as a new jobs and economic development opportunity.” No city in California has a more intimate relationship with an Indian casino than Palm Springs. The Agua Caliente Band of Cahuilla Indians has a large Indian casino right downtown - not surprising considering that the tribe's reservation includes 6,700 acres within the city limits. For eight years, the tribe had a casino in a large tent. Eighteen months ago, the tribe opened the new, much larger Spa Resort Casino. The city has tried to capitalize on the Agua Caliente Band's investment, said John Raymond, Palm Springs community and economic development director. The casino is located just a couple blocks from the convention center, and sits between the convention center and the downtown's main drag, Palm Canyon Drive. “It is a positive to the hospitality industry,” Raymond said. “Now, is it a positive for the rest of downtown? That depends on the retailer you talk to.” A resort and retirement community, Palm Springs' downtown problem is the opposite of most cities. In Palm Springs, downtown is full of people after 5 o'clock. During daytime business hours, however, downtown is quiet, Raymond pointed out. The gambling hall may exacerbate the dominance of eating and drinking establishments in downtown. Partly for that reason, the city is trying to entice regional and national retailers to the area. Although some of the Agua Caliente Band's development plans are controversial in Palm Springs, Raymond said that the only people who complain about the casino itself are gambling opponents and some residents who gripe when the tribe closes streets for special events. “It doesn't stick out like a sore thumb,” Raymond said of the Spa Resort Casino. “They didn't do a 23-story hotel with a ground-floor casino, which is the Vegas model.” Palm Springs gets no direct revenue from the casino, but non-Indian hotels - there are large ones within walking distance of the casino - collect a 13.5% transient occupancy tax for the city. And, Raymond noted, the tribe annually gives out more than a $1 million to community groups. Palm Springs' attitude is an exception right now, but it might portend the future. A more typical response can be found in the Bay Area, where local governments around a proposed Indian casino near the Oakland Airport are united in opposition to the project. The Cities of Oakland, San Leandro and Alameda, plus Alameda County and the East Bay Regional Park District recently signed an agreement to work jointly on defeating the plans of the Lower Lake Rancheria-Koi Nation, a landless 30-member tribe of Pomo Indians. Working together should allow the jurisdictions to maximize what little leverage they have, Oakland City Attorney John Russo said. “What you don't want is cities saying, 'Don't put it here, put it there. No, put it there,'” Russo said. Russo argued that the economic benefits of the proposed casino do not add up, especially because of the proposed location. People could fly into Oakland Airport, take a shuttle to the casino, stay at a casino hotel and eat at casino restaurants, Russo said. People could make the whole trip without spending money at a business that pays taxes to the city. “It is not everything it's cracked up to be fiscally, if you look at a municipality as a corporation. We believe the public service costs far outweigh the benefits,” Russo said. About 20 miles north on the Interstate-80 corridor, however, the City of San Pablo has endorsed the idea of converting a 10-year-old card room into a larger Indian casino - specifically because of the economic benefits. The proposed 300,000-square-foot casino could provide 3,000 jobs in the city of 31,000 people. “San Pablo is a working-class city trying to survive economically,” Councilman Leonard McNeil told the . “If you are economically well-off, you can afford to take a moral stance about whether people should gamble or not.” The San Pablo City Council voted to endorse the casino in February. Less than two months later, the Contra Costa County Board of Supervisors voted to oppose all urban gambling. The proposal from the Lytton Band of Pomo Indians for converting the San Pablo card room has become a national issue. Legislation by U.S. Rep. George Miller (D-Martinez) placed the card room site in trust for the Lytton Band, a necessary step toward casino development. Since then, Miller has distanced himself from the project, saying he did not envision a project as large as the Lytton Band has proposed. Nearby, the City of Richmond has designated part of an old Navy base now controlled by the city for a large Indian casino and hotel (see , February 2005). Like their colleagues in San Pablo, Richmond leaders cited the number of jobs that a large casino would bring to a long-struggling city. Contacts: John Raymond, City of Palm Springs, (760) 323-8228. John Russo, City of Oakland, (510) 238-3814. Daniel Carrigg, League of California Cities, (916) 835-8222.

Water problems both physical and legal are threatening to slow development in the foothills and mountains of eastern Fresno County. Groundwater resources are proving increasingly unreliable, causing the Board of Supervisors to impose stricter well pumping tests for new structures. Meanwhile, surface water in two reservoirs that developers have long planned to tap is legally out of reach, at least for now Although Fresno County remains a relatively growth-friendly jurisdiction, the water constraints are making some officials hesitant. County Supervisor Phil Larson said the first question he asks anyone talking about new development is, “Where are you going to get the water?” “We don't have any water here,” Larson explained. “They have to bring water with them.” The Board of Supervisors was expected to give final approval to the new groundwater regulations just as was going to press. Those regulations require landowners to prove their wells can produce at least 1 gallon of water per minute - double the previous standard. Landowners whose wells do not produce at least 5 gallons per minute will be required to have 2,000 gallons of water storage. The county will no longer allow new homes to rely on trucked-in water, which at least one 60-home subdivision currently does. The regulations apply to anyone seeking a building permit or approval of a parcel map. Since 2000, the county has required proof of water for any subdivisions of five or more lots, said Leona James, a county planning and resources analyst. The problem is that urban refugees build a home in the foothills or high country, and then learn they have no water. They turn to the county for help, but the county has no assistance to offer, Larson said. Some developers and contractors have grumbled about the new regulations, but there has been no widespread protest. Last year, a group of residents formed the Sierra and Foothill Citizens Alliance to bring attention to the problem, said group President Gary Temple. Wells are not producing as they once did, and some have gone dry, he said. Temple called the new regulations “steps in the right direction.” Besides imposing new regulations, the county has also hired hydrogeology company Geomatrix to study groundwater issues. Groundwater in the mountains is in fractures and fissures, not in a more easily defined aquifer. So predicting where groundwater lies and what impact a new well will have on an existing well is tricky. Temple also endorsed the county's decision to study the situation. “It seems like there's something going on, and before we allow a great deal more development, we should find out more,” said Temple, an Auberry architect. “They are building houses in this area like they are going out of style. But ultimately where the water is going to come from is anyone's guess.” At least two developers hope ultimately to get water from existing reservoirs. This is where the legal issues arise. In 1984, the county approved a specific plan for a new town in the hills above Millerton Lake, a Central Valley Project reservoir approximately 20 miles northeast of Fresno. The plan has been amended a few times since then and the county has approved four vesting tentative tract maps, but the project remains largely the same as originally envisioned: 3,500 housing units, shopping areas, a hotel and conference center, and a golf course. The new town would cover approximately 1,400 acres. A community services area would provide a variety of services, including water and wastewater, storm drainage, parks, street lighting and garbage collection. The county approved the project and subsequent amendments with the understanding that water from Millerton would serve the development. Developer Ben Ewell has reportedly invested more than $5 million in pumps, pipelines and a water treatment plant to serve the new town and the adjacent 400-lot Brighton Crest subdivision. The county has even taken possession of the infrastructure. However, although the territory lies within the Bureau of Reclamation's irrigation service boundary, all of Brighton Crest and nearly all of the new town are outside of the Bureau's “municipal and industrial” service boundary. No one seems to agree on exactly how long all of the parties have known about this discrepancy. Bureau of Reclamation spokesman Jeff McCracken said the agency has known since the 1980s and informed the developer then. Ewell, who declined to speak with , told the that he did not find out until last year that nearly all of the land was outside the boundary. County officials seem to have learned of the problem at varying times. McCracken said the Bureau will ensure that the “place of use” boundary gets moved. “It's something that has to be drawn on a piece of paper,” he said. However, only the State Water Resources Control Board can draw that line. And the state will do so only after preparing an extensive study and environmental impact report, board spokeswoman Liz Kanter said. That process can take years, and it has not started, she warned. “We're waiting for the people with the water rights - in this case the Bureau of Reclamation - to tell us they want to change the use,” Kanter said. Farther up the mountains, development near Shaver Lake also is facing an uncertain future. The county has approved about 1,400 lots in the area, and roughly half of those have been developed with homes. All development relies on groundwater, and county officials insist that 2,000 lots is the maximum they will approve until developers gain water rights to Shaver Lake. Earlier this year, while approving changes to the 600-lot Wildflower Village plan near Shaver Lake, supervisors capped the number of new homes in the subdivision at 250 until the surface water becomes available. The Shaver Lake situation has drawn the attention of the state Department of Health Services, which has warned the county not to approve new development until water sources are proven. Drawing water from Shaver Lake for nearby residential development may be even more difficult legally and politically than gaining access to Millerton. Shaver is owned by the Friant Water Users Group and Southern California Edison, and all of the water in the lake is appropriated elsewhere. Again, the Water Resources Control Board has the final say. Shaver Lake area developers have stated they will gain the surface water rights within three years. But Supervisor Larson expressed skepticism. Contacts: Leona James, Fresno County Public Works and Planning Department, (559) 262-4853. Fresno County Supervisor Phil Larson, (559) 488-3541. Gary Temple, Sierra and Foothill Citizens Alliance, (559) 855-5653. Jeff McCracken, Bureau of Reclamation, (916) 978-5100.

A recent ruling by the Department of Industrial Relations regarding labor rates for subsidized housing projects might be an advantage for affordable housing development, especially in rural areas. However, the situation regarding “prevailing wage” requirements might best be described as fluid. In late February, Department of Industrial Relations (DIR) acting Director John Rea ruled that a 120-unit affordable housing project in the City of San Marcos that is being subsidized with federal tax credits and tax-exempt bonds is not subject to prevailing wage requirements. The State Building and Construction Trades Council of California (SBCTC) has asked Rea to reconsider and has suggested it will take the matter to court if Rea declines to change his mind. In the meantime, housing developers have asked DIR to rule that projects financed with more direct subsidies - such as Community Development Block Grant funds, federal HOME funds and local redevelopment monies - also are not subject to prevailing wage requirements. A DIR spokeswoman could not say when a decision would be reached in that matter, or on the SBCTC appeal. “It's far from over as a topic of public concern. It's about as clear as mud right now,” said Jeff Loustau, executive director of the California Housing Consortium, an umbrella group of for-profit and nonprofit developers. The issue is this: In 2001, state lawmakers approved SB 975 by Los Angeles state Senator Richard Alarcon, a champion of organized labor. The legislation expanded the definition of “public works” to include nearly all development projects that receive any direct or indirect subsidy (see , September 2002). A public works is subject to prevailing wage requirements. Affordable housing projects - which often rely on multiple public and private sources of capital - were exempt from the new mandate, but only until 2004. Traditional public works projects, such as the construction of roads and courthouses, have long had prevailing wage requirements. The 2001 legislation extended the wage rules to private development projects that get public money. The DIR establishes prevailing wage rates. It is the basic hourly rate paid to a majority of workers in a particular trade or craft within a defined geographic area. However, the setting of prevailing wage rates is nearly as much art as science. The agency looks to large labor markets, such as in San Francisco or Los Angeles proper, and then relies heavily on contracts reported by labor unions for commercial projects. Thus, the established prevailing wage - which the DIR applies to broad geographic areas - is often toward the top end of the scale in the most expensive labor markets. The system is great for roofers, tile-setters, dry-wallers and others working in the construction trades, but not for developers and financers, and cities trying to provide affordable units. Depending on the project and the location, the prevailing wage requirement can raise the cost of an affordable housing development anywhere from 5% to 40%, according to developers. In general, for-profit developers oppose the wage mandate, while the nonprofit community is divided. Some nonprofit developers want to create as many housing units as possible, while others say they do not want to build at the expense of laborers. Interpreting the law The case decided by the DIR was brought by a for-profit developer called RSF Village Partners. The project is a 120-unit apartment project for seniors with incomes of 60% or less of median. The occupancy restrictions would remain in place for 55 years. Development is to be funded in part by federal low-income housing tax credits, which are awarded by the California Tax Credit Allocation Committee. The amount of tax credit is based on the cost of constructing the units. Another source of funding is tax-exempt “conduit bonds” issued by the California Statewide Communities Development Authority. The term conduit bonds comes from the fact that CSCDA acts solely as an intermediary. The Authority issues and sells the bonds at the same time. All proceeds go a private trustee for the bondholders. The trustee advances the money to the developer, which is responsible for repaying the bondholders. These details were important to Rea's ruling. In interpreting the statute (Labor Code § 1720), he had to determine whether the financing amounted to the payment of public funds or to a reduced a contractual obligation of the developer. Rea said no. With regard to the federal income tax credits, Rea wrote, “ either the state nor a political subdivision is making any payment to the owner . Moreover, a tax credit 'involves no expenditures of public money received or held … but merely reduces the taxpayer's liability for total tax due,'” Rea cited , (1989) 210 Cal.App.3d 1476. Quoting the statute itself, Rea continued, “While the tax credits may reduce owner's federal income tax obligations, these are not 'obligations that would normally be required in the execution of the contract.' The execution of the contract entails expenditures by, not income to, owner.” Rea concluded that the bonds are not public funds. “ either the conduit bond revenues nor the loan repayments ever enter the coffers of a public entity, nor are they collected for the public entity,” Rea wrote. The loan to the developer “is made by the bond trustee, so even if the interest rate were below-market, neither the state nor a political subdivision thereof is charging interest at less than fair market value.” The Trades Council contends that a financing tool that reduces a developer's tax liability is a subsidy, as are low-interest loans facilitated by a state agency. “The director ignored economic reality in concluding that this project did not get a substantial public subsidy,” said Scott Kronland, attorney for the SBCTC, which has asked for reconsideration. If the ruling were to stand - and just about everyone expects it to - the full impact is uncertain. Gary Downs, the attorney for the developer, said the decision “clarifies the rules” and sets a precedent for the entire state. Any developer may rely on it in good faith, he said. Kronland declined to go that far. “People look to the director's opinions for guidance for the future,” he said. However, only the courts can say what the law means, Kronland said. And court is almost certainly where the issues is headed. What's Next? Affordable housing developers are trying to figure out how to proceed, said Loustau, of the California Housing Consortium. State agencies, he said, are sending mixed signals. The Tax Credit Allocation Committee, for example, is requiring applicants to submit project applications with and without prevailing wage costs. The prevailing wage requirement has caused trouble for a number of affordable housing developers, Loustau said. “It has meant there's been a falloff in applications for low-income housing tax credits and projects where tax-exempt bonds are used,” he said. Those financing tools are used in almost every affordable housing project, he added. In fact, the number of applications to the Tax Credit Allocation Committee during 2004 decreased by 30% from the year before to 135. The number of units financed by the tax credits dropped by 23% to 4,349 during 2004. These figures reflect a dilemma for developers. If labor costs for a project go up, a developer either has to find an additional funding source or build fewer units, said Rob Weiner, executive director of the California Coalition for Rural Housing. “Unlike in market-rate developments,” attorney Downs said, the affordable housing developer “cannot pass along the costs for paying prevailing wage to the tenants.” Some cities - including San Marcos, the site of the disputed development in the DIR case, and Redding - have offered to increase their subsidy to help offset the higher labor costs. If the DIR ruling stands, Weiner said, “It means considerable cost savings in some markets. That's especially true in the more rural and suburban areas of the state.” While some nonprofit developers have cheered the DIR ruling, Weiner said his organization is comfortable with a prevailing wage requirement. The problem, he said, is with the way rates are established. Applying a commercial project rate from San Francisco to a residential project in, for example, Yuba County makes no sense because the markets are entirely different, he said. Two major players - the Southern California Association of Non-Profit Housing (SCANPH) and Housing California - are trying to work with organized labor and the DIR to create residential prevailing wage rates for specific jurisdictions. SCANPH has had some success: Unions for 14 trades now report a residential prevailing wage rate for Los Angeles. In exchange, SCANPH tries to steer more work to those unions. Weiner doubts that unions will be willing to establish residential rates in suburban and rural areas because too much money is at stake. The rates SCANPH has helped create are not substantially lower because of the Los Angeles labor market. Jan Breidenbach, executive director of SCANPH, said that the organization did not take a position on SB 975, and her members are divided over the prevailing wage issue. “I'm assuming in the long run, affordable housing is going to have prevailing wage,” she said. One of the biggest challenges in implementing the prevailing wage mandate is ensuring that the workers get the money, said Breidenbach. The handful of general contractors in metropolitan Los Angeles who build most affordable housing projects have grown accustomed to the regulation and the accompanying paperwork. However, subcontractors often make off-the-books deals with workers or pay in cash, and then keep the surplus that they get from the general contractor. These shady arrangements might be getting easier to pull off because a growing number of construction laborers are recent immigrants or illegal aliens. “The amazing thing is that nobody knows what people actually get paid on construction sites,” Breidenbach said. “They only tell you what people are going to be paid.” This cheating by subcontractors is something of a side issue, but it is potentially important. If prevailing wage requirements are supposed to help workers, but workers are not benefiting, something will have to give. Breidenbach said that labor costs are only one worry for affordable housing developers. Real estate prices in urban areas continue to increase dramatically, and skyrocketing materials costs have stung everyone in the building industry. Still, there is nothing that the government can do about the cost of concrete and two-by-fours, and only a limited amount it can do about real estate costs. What the government can influence is labor costs. State lawmakers have not taken up the issue publicly this year, but legislation is a possibility. “This issue will not stop being contentious,” Breidenbach said. Contacts: Jeff Loustau, California Housing Consortium, (415) 677-4436. Jan Breidenbach, Southern California Association of Non-Profit Housing, (213) 480-1249. Rob Weiner, California Coalition for Rural Housing, (916) 443-4448. Gary Downs, Pillsbury, Winthrop, Shaw, Pittman, (415) 983-1000. Scott Kronland, Altshuler, Berzon, Nussbaum & Rubin, (415) 421-7151. Department of Industrial Relations decision: www.dir.ca.gov/dlSR/coverage/2004-016.pdf (PDF).

A lawsuit challenging a building permit granted by San Francisco was not filed and served before the statute of limitations deadline, the First District Court of Appeal has ruled. The court also held that the city's notice of decision and order did not deceive the project opponent regarding the deadline. In April 2002, David Robins and Marge Chambers applied for a variance to add onto their house in the Bernal Heights district. After receiving the Planning Department's approval of the variance, Robins and Chambers applied for a building permit. Their neighbor Lisa Honig then filed a request for discretionary review of the building permit application. After a hearing in December 2002, the Planning Commission denied the request for discretionary review. Two months later, the city issued the building permit. However, Honig appealed the permit issuance to the Board of Appeals. She argued that the variance would allow Robins and Chambers to create a code violation and a fire hazard. In a notice and order dated June 10, 2003, the Board of Appeals upheld issuance of the building permit. On September 8, 2003, Honig filed a lawsuit against the city and her neighbors, alleging that the city's decisions conflicted with the municipal Planning Code, and that the decisions created a code violation and nuisance. Honig asked the court to set aside the variance and order removal of her neighbors' addition. The city said Honig was too late. In Superior Court, Honig conceded that she had missed the deadline for filing and serving a lawsuit over the variance but contended she could still challenge the building permit. San Francisco Superior Court Judge Ronald Quidachay ruled that Honig had 90 days to file and serve the lawsuit, and that she missed the service deadline. On appeal, a unanimous three-judge panel of the First District upheld the lower court. Government Code §§ 65009 and 65903 set the time limits for challenging local land use decisions. Essentially, they give someone 90 days to commence and serve a lawsuit that contests a land use decision. The short deadline is intended to provide certainty to the government agency and the property owner. Honig argued that those statutes did not apply because she was attacking the building permit, not the variance, which was clearly covered by the statutes. The First District would have none of this argument. “The attack on the building permit is, in reality, nothing more than a challenge to the variance,” Justice Mark Simons wrote for the court. “Nowhere in the petition is there any suggestion that the building permit contained a defect unrelated to the variance.” The issue involved zoning and planning; therefore, the court held, the 90-day statute of limitations applied. Honig also argued that the city's notice of decision and order was deceptive. It stated that the time to file for judicial review of the decision was governed by Code of Civil Procedure § 1094.6. That statute requires the filing of an action within 90 days but says nothing about service of the lawsuit. Thus, Honig argued she received no notice of the 90-day service requirement. The court said Honig needed to read the entire statute, which says that any conflicting, shorter statutes of limitations apply. “ othing in the language of the notice of the Board of Appeals, or in the Code of Civil Procedure sections referenced in that notice, directed appellant to apply an incorrect and untimely limitations period to filing or serving her petition,” Justice Simons wrote. The Case: , No. A106305, 05 C.D.O.S. 2166, 2005 DJDAR 2975. Filed March 10, 2005. The Lawyers: For Honig: Clifford Fried, Wiegel & Fried, (415) 552-8230. For San Francisco: Judith Boyajian, deputy city attorney, (415) 554-4636. For Robins and Chambers: Joel Yodowitz, Reuben & Junius, (415) 567-9000.

As has become customary for at least the last five years, the state Capitol is awash in legislation concerning housing. And, as usual, much of the legislation deals with small pieces of California's housing puzzle. This year, though, the cast of characters is different, and there is serious talk about major policy changes. New to the picture this year are the Schwarzenegger administration and state Senate President Pro-Tempore Don Perata (D-Oakland). Schwarzenegger representatives are shopping around a broad set of proposed housing policy changes. Perata is showing more interest in housing policy than any recent state Senate leader has. Additionally, the League of California Cities and the California Building Industry Association (CBIA) are trying to join forces on a compromise housing bill. In the past, the League and the builders have been adversaries. There also is more movement toward California Environmental Quality Act “streamlining” or “reform” than Sacramento has seen since the early 1990s. Some insiders see a consensus forming around the easing of environmental review for infill development; however, that approach could run into significant opposition from environmental justice advocates in the Legislature. At the least, there are very different ideas circulating about desirable CEQA changes. Members of the administration have been promising a big housing package since last summer (see , August 2004), but only in recent weeks has a written plan emerged. The plan has not been publicly released, but lobbyists have received copies and are offering comments. It is unclear when or in what form the package will be introduced in the Legislature. Thus far, the plan has received mixed reactions. Environmentalists appear to be the strongest opponents, closely followed by local governments. Affordable housing advocates like some of the administration's proposals, while builders appear to be the most satisfied. The administration's 45-page plan tackles many subjects. The common theme, though, is plain: Make it easier for developers to build housing units. The plan calls for cities and counties to designate enough land to meet 20 years of housing needs, a provision endorsed by builders but opposed by local governments. The administration would expand by-right housing development with certain minimum densities to prevent cities and counties from adding permit conditions in areas zoned for housing. Housing elements would be updated only once a decade (rather than every five years), but there would be new standards for actual affordable housing production, new by-right development provisions, additional reporting requirements and potential fines for noncompliance. The administration discourages inclusionary zoning by prohibiting local governments from using inclusionary units to meet production standards - another provision that divides builders and local governments. The administration plan calls for cracking down on ballot measures that restrict growth, a provision that worries environmentalists. The administration would also limit environmental review of a project if there has been prior environmental analysis. The plan would strengthen anti-NIMBY laws, but would eliminate an existing prohibition against housing permit moratoriums - two measures that provide a mixed bag for affordable housing advocates. Environmentalists say they are disappointed because Schwarzenegger campaigned on a green platform that mentioned smart growth. “We think they are missing the big picture of smart growth,” said Bill Allayaud, state legislative director for the Sierra Club. The administration, he said, incorrectly assumes that if the market is flooded with new housing, affordable units will automatically be part of the deluge. “They are getting down to housing, housing, housing,” Allayaud charged. “But we're just going to get traffic, traffic, traffic.” Allayaud noted that under the plan, local governments are encouraged to protect habitat and farmland, but local governments are required to approve more by-right development projects. Further frustrating environmentalists are the various movements to weaken CEQA. “CEQA has been a great law. Right now it's being scapegoated by the builders,” Allayaud complained. “No one has shown that it's a significant cause of higher home prices.” Builders, though, contend that CEQA - and CEQA abuse - can add years to the approval process, which costs developers and landowners money. And mitigations required by CEQA can add to the cost of development. Marc Brown, of the California Housing Law Project, is among the affordable housing advocates who would like to see CEQA reform. Exemptions for infill and low-income housing projects are too narrow to be useful, he said. “The abuse of CEQA is one of the main barriers to affordable housing that we hear about,” Brown added. The Resources Agency has a working group leading the administration's CEQA reform effort, but no proposals have emerged publicly. League of California Cities lobbyist Dan Carrigg said that CEQA changes must be connected to infill and high-density development. Carrigg has been a participant in the extensive talks between League representatives and the CBIA. “It's a good faith effort on both sides,” he said. “I think that we've been making some progress, working through some of the details. But we've got a ways to go. The land supply issue has a ways to go.” The CBIA's mantra - which the administration is picking up on - is “certainty.” The industry wants cities to designate 20-year land supplies and then allow development that meets zoning regulations to proceed by right. Designating a 20-year supply, however, raises annexation and related issues over which local agency formation commissions have jurisdiction, and could strain already difficult city-county relations, Carrigg said. Plus, development certainty cannot overrun community concerns, he said. If developers want certainty that they can build houses, cities want certainty that they will have the funds to provide infrastructure and public services to the new units. Thus, a proposal that simply clears the way for more greenfield development that relies on Mello-Roos financing for infrastructure is not worth pursuing, Carrigg warned. Carrigg may sound uncertain about where the League-CBIA effort is headed, but Brown is concerned about the alliance. Both the League and the CBI A want to “gut” the housing element law and eliminate state review, Brown said. “That would be just a total jailbreak,” Brown said. “The potential to have the Folsoms of the world working together with the high-end builders is troubling.” Then there is the effort headed by Perata and his allies, state Senate Transportation and Housing Committee Chairman Tom Torlakson (D-Antioch) and state Senate Environmental Quality Committee Chairman Alan Lowenthal (D-Long Beach). They have introduced a four-bill package of SBs 44, 521, 575 and 832 (see sidebar). It appears that SB 832 will be the centerpiece. As introduced, the bill makes modest increases to environmental review exemptions for infill projects in large cities. Bill amendments are on the way; it appears that they will have the approval of environmentalists. “While we all agree that technical improvements can be made to the California Environmental Quality Act,” Lowenthal said, “we must ensure that these changes do not weaken the act or encourage poorly planned developments that Californians do not want and cannot afford.” It is difficult to see how the Democrat's cautious approach will jibe with the administration's stated plan to reduce barriers to all types of housing. Finding common ground could become even more difficult because partisan differences over a variety of issues, including the budget, are becoming more overt. Key Pieces of Housing Legislation Introduced This Session AB 237 (Arambula). Authorizes the Department of Housing and Community Development (HCD) to forgive farmworker housing loans under certain circumstances. AB 350 (Matthews). Authorizes local governments in Alameda, Contra Costa, Santa Clara, San Joaquin and Stanislaus counties to create infrastructure finance districts in jobs-housing opportunity zones. AB 517 (Hancock). Extends the life of the Berkeley Redevelopment Agency exclusively for the purpose of carrying out affordable housing projects. AB 549 (Salinas). Creates a pilot program in which a local government may self-certify its housing element based on production criteria. AB 590 (Walters). Allows cities and counties to designate senior-only mobile home park zones and grant conditional use permits for senior-only mobile home parks. AB 712 (Canciamilla). Strengthens the “no let loss” law that limits density reductions. The bill tightens the standards for findings necessary for density reductions. AB 890 (Cogdill). A spot bill that could be amended to contain the Schwarzenegger administration's housing package. AB 906 (Houston). Provides tax credits for brownfield and mixed-use developments, and projects near transit stations. AB 912 (Ridley-Thomas). Exempts from tax the interested that financial institutions earn on loans to fund the redevelopment of brownfields in blighted areas. AB 921 (Daucher). Authorizes redevelopment agencies to extend the life of project areas by 25 years without a finding of blight. An agency would get only 50% of tax increment, and 60% of that would have to be devoted to market-rate and affordable housing. AB 939 (Mullin). Expands the area where pooled redevelopment housing set-aside funds may be expended to include sites near BART stations and along El Camino Real on the Peninsula. AB 1087 (Florez). Requires local governments to reject a development application if the government finds that the water or sewer provider has failed to provide services for affordable housing. AB 1192 (Villines). Exempts nonprofit housing construction from prevailing wage requirements. AB 1203 (Mullin). Authorizes local governments to create “greyfield housing and investment zones,” in areas where job growth and high-density housing is desired. The zones could use tax-increment financing and would have access to infrastructure and housing funds. AB 1233 (Jones). Requires the unmet housing need to be included in the regional housing needs assessment. AB 1259 (Daucher). Allocates additional tax revenue to cities and counties that produce housing equal to at least 80% of the jurisdiction's regional housing need allocation over 5 years. AB 1352 (Baugh). Permits redevelopment agencies to transfer housing funds to other agencies within the same council of governments region. AB 1367 (Evans). Requires the state to consider local growth control initiatives when calculating fair-share housing requirements. AB 1387 (Jones). Carves a loophole in CEQA for urban infill projects that comply with the transportation policies in a general plan or zoning ordinance. AB 1390 (Jones). Expands enforcement of a redevelopment agency's low- and moderate-income housing requirements, and amends certain replacement and rehabilitation housing requirements. AB 1491 (Calderon). Gives the City of Industry control over half of its redevelopment housing set-aside funds. Los Angeles County now has control over the money. AB 1702 (Frommer). Extends by-right development rights to planned unit developments. SB 44 (Kehoe). Requires all jurisdictions to adopt air quality elements that account for development patterns. SB 223 (Torlakson). Establishes a new program in which the Department of Housing and Community Development would offer forgivable loans to cities and counties for the preparation of specific plans that provide for additional infill housing opportunities of at least 500 units in metropolitan areas and 200 units in non-metropolitan areas. SB 253 (Torlakson). Authorizes a council of governments to charge a fee to local governments for the cost of the regional housing needs allocation process. SB 326 (Dunn). Amends a two-year-old law prohibiting cities from requiring use permits for certain multi-family housing developments. The bill would extend the by-right provision to development of single-family units. SB 435 (Hollingsworth). Clarifies last year's SB 1818 regarding density bonuses for projects that have an affordable component. Bill sponsors want to devise a list of incentives from which developers may choose, and limit developers to one incentive, unless a developer uses less than half of the density bonus to which the developer is entitled. SB 521 (Torlakson). Permits redevelopment agencies to use tax increment financing to develop high-density projects near transit stations. SB 565 (Migden). Increases the set-aside in the low-income housing tax credit program for small developments. SB 575 (Torlakson). Strengthens anti-NIMBY law relating to affordable housing projects by preventing cities and counties from concluding that a project is not needed or that it is an incompatible use, unless the jurisdiction has a certified housing element. SB 588 (Runner). Permits redevelopment agencies to spend “surplus” housing funds for purposes other than housing. SB 832 (Perata/Torlakson/Lowenthal). Expands the CEQA exemption for urban infill projects. Major amendments are likely. SB 948 (Murray). Requires a local government to prepare a “short form environmental impact report” for certain residential developments that are consistent with local land use requirements. SB 950 (Torlakson). Increases the types of housing that are considered “at risk” for the purpose of awarding tax credits. SB 968 (Torlakson). Requires cities and counties to identify in a general plan's land use element sufficient land to accommodate the jurisdictions' housing need for the duration of the general plan's planning period. This bill could be amended to include measures endorsed by the League of California Cities-California Building Industry Association Housing General Plan Task Force. SB 1026 (Perata). Spot bill regarding housing elements. The bill will likely address land supply for residential development.