Farmland preservation, urban sprawl, economic development and long-range planning have collided in the City of Gilroy. Officials are working toward designating 664 acres of tomato fields for high-tech, campus-style development, but opponents of the idea say the city should concentrate on 1,200 acres already designated for industrial growth. What is known as Gilroy's "660 plan" has become a divisive issue in this town of 42,000 people about 25 miles south of San Jose. During the November City Council voters elected two supporters and one opponent of the industrial proposal. The election gives the 660 plan 5-2 backing on the City Council. Despite the apparent political support for the industrial designation, the controversy remains hot, as the Santa Clara County Local Agency Formation Commission is raising questions about what some people see as needless conversion of farmland. "We believe this is fundamentally an argument over where jobs should be located," Mayor Tom Springer said. The argument also encompasses what types of jobs Gilroy should have. For decades, farming has dominated this community along Highway 101 at the upper end of the Coyote Valley. The town has become known as the garlic capital, and its garlic festival attracts tens of thousands of people every year. During the last 20 years, however, Gilroy has evolved into more of a bedroom community, and an estimated 8,000 people now commute from the Gilroy area to Silicon Valley. About 10 years ago, a county task force produced a report recommending ways to keep agriculture alive in the Gilroy area. The plan emphasized "vertical integration" projects that involve food processing and packaging, in addition to the growing of crops. In 1996, the city, the county and LAFCO approved an agreement designating 20-year agricultural boundaries. In exchange for the city's keeping urban development within those boundaries, LAFCO agreed to look favorably on Gilroy annexation requests within the boundaries, according to Neelima Palacherla, LAFCO executive officer. This is where the 660 plan gets sticky because the land involved lies outside the boundary. In fact, Gilroy officials did not get serious about changing the designation of the site until they were nearly three years into a General Plan update and had already released a new draft plan. One of the primary reasons for updating the 20-year-old general plan is to increase the amount of property designated for industrial growth, Planning Division Manager William Faus said. After reviewing the draft general plan in late 1999, the City Council sent planners back to work on a revision that reconsidered 664 acres just east of Highway 101, next to a thriving factory outlet center along the freeway The city's 42-member General Plan Update Committee divided over whether the site was appropriate for industrial development. Eventually, 24 members signed a letter opposing the proposed industrial land use designation — what became known as the 660 plan. When a majority of councilmembers indicated support for the 660 plan during public hearings for the general plan during spring of 2001, committee members said they felt betrayed. By the time of the fall City Council campaign, the 660 plan dominated most political discussion, and the election became a referendum on the idea, said Mayor Springer, who contended that most opponents were out-of-town environmentalists. Voters choose industrial development when they elected 660 plan supporters Craig Gartman and Robert Dillon, and tossed out incumbent Lupe Arellano, who opposed the plan. Nine-year incumbent Charles Morales was the only plan opponent to win in November. Springer said the site is perfect for campus-style development because it is right next to the outlet center, and open land to the south is already zoned for development. The site is within 300 feet of a sewer trunk line and a city well sits on the edge of the property. "It isn't like this is land off to one far side of the city. It is within not only the sphere of influence, but within a stone's throw of the City of Gilroy," Springer said. Moreover, the site is a large block of undeveloped land with only about a dozen owners, so the city would not have to assemble multiple small pieces to attract a big developer, Faus said. But Morales said the 660 plan amounts to "urban sprawl" and is premature. "To me, it doesn't make sense. Let's develop what we have right now," he said. The city already has about 1,200 acres designated for industrial development, and Silicon Valley tech companies have shown little interest in reaching that far south. No one is sure what the demise of Cisco System's proposed Coyote Valley campus means for Gilroy, but it is another indication that the tech building boom is on hold, at least for now. (Cisco had proposed a 6 million-square-foot campus in southern San Jose, less than 20 miles from Gilroy, but the company bailed out of the project late last year because business was so bad.) "The vacancy rate is very high right now, especially with the economy we are in," Morales said. In mid-December, the LAFCO board authorized Palacherla to send a letter to Gilroy outlining concerns about the 660 plan. The LAFCO board did not take a formal position, but, according to the letter, the plan does appear to conflict with the 1996 farmland agreement among the city, LAFCO and the county. The site is prime farmland within the agricultural preserve and much of it lies within the 100-year floodplain, she explained. "The city has well over 40 years worth of vacant industrial land within its city limits," Palacherla said. Springer said there is no reason for LAFCO to get involved now. The city has not filed an annexation request — and probably will not for at least 10 years, he said. He did concede that the site has both flooding and traffic constraints. About one-third of the property would have to remain undeveloped because of potential flooding, and resolving traffic impacts from the build out of a 5,000-employee campus would cost about $140 million, the mayor said. City officials are simply trying to get in position to attract Silicon Valley-type jobs in the future, because Gilroy cannot make it as only a farm town or a commuter village, Springer said. But Morales said if there were strong market interest in building a large tech campus in Gilroy, developers would manage to assemble the needed properties from the existing inventory, he said. The Gilroy City Council is likely to make a final decision on the revised general plan — including the 660 plan — and an associated environmental impact report later this year. Contacts: Tom Springer, Gilroy mayor, (408) 846-0202. Charles Morales, Gilroy councilman, (408) 846-0400. William Faus, Gilroy planning division, (408) 846-0440. Neelima Palacherla, Santa Clara County LAFCO, (408) 299-5127.

The Interior Department did not need to prepare a programmatic environmental impact statement before proceeding with water transfers in western Nevada, the Ninth U.S. Circuit Court of Appeals has ruled. The court further held that the EIS which the U.S. Fish & Wildlife Service did complete adequately assessed cumulative impacts to groundwater and farming. Writing for the unanimous three-judge panel of the Ninth Circuit, Judge Richard Paez said that the court should not "fly-speck" the work of the Fish & Wildlife Service and argue that the agency could have done things differently. "As with the programmatic EIS discussed above, if we were preparing the EIS, we might insist on additional detail," Paez wrote. "That is not our role, of course. Rather we review the legal sufficiency of the EIS." And, the court held, the document was legally adequate. At issue in the case is use of the Truckee and Carson rivers, which has been the subject of political and legal contention for about 90 years. Indians, farmers, cities, utilities and the federal government have all fought over the water rights. In 1990, Congress passed the Truckee-Carson Pyramid Lake Water Rights Settlement Act to address comprehensively the loss of wetlands in western Nevada, the health of Pyramid Lake on the Paiute Tribe reservation north of Reno, and the endangered cui-ui fish that lives in Pyramid Lake. Essentially, the Settlement Act calls for providing more water to the lake and to wetlands in Nevada's Lahontan Valley that have been shrinking for many years. The Fish & Wildlife Service studied four strategies for acquiring water rights and a "no action" alternative. The agency settled on a plan to purchase 55,000 acre-feet of water from willing sellers in the Carson Divide, which the agency would add to already-acquired water rights from other sources. In September 1996, the Fish & Wildlife Service published a final EIS on water rights acquisition for Lahontan Valley wetlands in Churchill County, Nevada. Churchill County and the City of Fallon, Nevada, sued, arguing that the federal agency violated the National Environmental Policy Act. Federal District Judge Edward Reed initially ruled that the county and city lacked standing to file the suit, but the Ninth Circuit reversed that decision in Churchill County v. Babbitt, 150 F.3d 1972, amended by 158 F.3d 491 (see CP&DR Legal Digest, December 1998). The case then went back to Reed, who ruled that the Fish & Wildlife Service's approach to environmental review complied with NEPA. This time, the Ninth Circuit upheld the lower court. In his opinion, Paez recounted the history of the 100-year-old Newlands Reclamation Project, which diverted water from the Truckee and Carson rivers that had fed Pyramid Lake and tens of thousands of acres of Lahontan Valley wetlands. The federal government's dams and canals supplied the water to farmers. Over the years, the level of Pyramid Lake dropped about 40 feet, about 85% of the wetlands dried up and water quality in the remaining wetlands deteriorated. The Settlement Act was intended to reverse decades of environmental damage. Under its selected alternative for implementing the Settlement Act, the Fish & Wildlife Service was to acquire 55,000 acre feet of water rights from the Carson River, continue with acquisition of another 20,000 acre-feet, lease more water when available, purchase water rights upriver from Lahontan Reservoir, use treated wastewater as available, use water conserved by a U.S. Navy base, and pump groundwater near the wetlands. In all, the plan was intended to provide 125,000 acre-feet of additional water for environmental purposes. Churchill County and the City of Fallon argued that the Fish & Wildlife Service must prepare a programmatic EIS on the "cumulative and synergist impacts" of the Settlement Act's interrelated provisions. Churchill County and Fallon argued that the Fish & Wildlife Service was segmenting parts of the same program — such as the purchase of 55,000 acre-feet of water — so that the cumulative impacts would not be fully addressed. This would be a violation of NEPA. The Ninth Circuit agreed that "it would seem quite reasonable … for the responsible agencies to analyze the actions required under the Settlement Act and their cumulative impacts in one document." But, its failure to prepare such a document did not mean that the Fish & Wildlife Service acted inappropriately, the court held. "Although we can see that the Service's decision was a close call, the record does not support a conclusion that the agency's goal was to minimize the possible cumulative environmental impacts by segmenting the wetlands water rights acquisition program from the analysis of other foreseeable actions," Judge Paez wrote. "We cannot, as Plaintiffs may wish, sanction the use of NEPA's EIS requirements to challenge the policy goals served by the Settlement Act. … We agree with the district court that the Service took a ‘hard look' and that its decision not to proceed with a programmatic EIS was not arbitrary. The county and city also argued that the EIS did not adequately address the cumulative impacts, did not study impacts to groundwater and did not examine a reasonable range of alternatives. Both the county and the city were concerned that the plan would decrease water available for domestic and agricultural uses, especially if the diversions lowered water tables. But the appellate panel upheld the EIS as adequate. The document contained 15 subsections on 15 different parts of the overall water plan and summarized the cumulative impacts of the actions. The document also made clear that agricultural interests would suffer. And, the court ruled, the Fish & Wildlife Service's use of groundwater modeling allowed the agency to make an informed decision. The Case: Churchill County v. Norton, No. 00-15967, 01 C.D.O.S. 10468. Filed December 19, 2001. The Lawyers For Churchill County: Antonio Rossmann, (415) 861-1401. For Norton, Kathryn Kovacs, U.S. Department of Justice Environmental & Natural Resources Divisions, (202) 514-2000.

Planning is nothing more than built politics. In that light, cities are a kind of fossil record of all the arm-twisting, back-scratching and sheer chutzpah that has brought about the creation of cities through time. Give me the map of any major city, and assuming I have adequate knowledge and discernment, I will show you the major landowners, the political donors, the power cliques and the philanthropy that are responsibility for that city's built form. Normally, I have to turn to historians and biographers of people like Robert Moses or William Mulholland to gain a sense of the day-to-day politics that led to the lasting streets and buildings, parks and monuments of a mature city. In present-day San Diego, however, the highly public evolution of the Ballpark District is giving a front-row view of politics — punctuated by lawsuits, collapsing financial arrangements, political scandal and stalled-out construction projects — that may someday translate itself into memorable urban form. The ballpark and the city need each other, according to ROMA Design principal Boris Dramov. "The East Village was looking for the catalyst, the project that would help it reinvent itself," he said. "At the same time, the ballpark was looking for a site where it could become an integral part of the urban fabric, rather than a stand-alone facility" like San Diego's existing Qualcomm Stadium. In short, "you have a project looking for a place and a place looking for a project." The story of the Ballpark District, so far, has been messy and drawn out. The new Padres' baseball stadium began as a popular issue. In 1998, 60% of San Diego voters approved the issuance of $166 million in tax-free bonds to assist the completion of the $400 million ballpark. (Padres' Owner John Moores had begun the project with private capital a few years earlier, and run out of money.) Predictably, people who dissented from the idea of public subsidies for the ballpark sued the city. About 15 lawsuits have gone nowhere in court but they have been partly responsible for delaying the bond sale and, since late 2000, halting stadium construction. Last year, City Councilwoman Valerie Stallings pleaded guilty to two misdemeanor charges in federal court — she failed to report personal gifts from Moores — and resigned from office. If the politics of the Ballpark are messy, the site plan for the district is orderly and straightforward. The goal of the plan, according to ROMA's Dramov, is to create a mixed-use urban district where the ballpark is only one event out of many. Here, the model is clearly cities like Baltimore, Denver and San Francisco, where in-town stadiums have become engines of pedestrian movement and commercial development. The ballpark itself is squeezed into the equivalent of nine city blocks; although enormous, the ballpark is tightly hemmed in by streets, with the goal of making it accessible by foot. Presumably, this means the city must rely on a peripheral parking strategy, which is exactly what makes Denver and other downtown ballparks so successful: Baseball fans walk to the game. ROMA has extended and made regular the existing north-south grid into the former industrial areas of the East Village, which had been interrupted in spots by railroad spurs. The boldest move in the design is the creation of a new diagonal street immediately south of the ballpark, Park Boulevard. This four-lane street is designed to be the major commercial boulevard of the district and opens a view to San Diego Bay. To the east of the ballpark, Park Boulevard makes an elbow connection (a traffic circle) with 12th Street, where a large public library is planned. And 12th Street provides the important connection between downtown San Diego and Balboa Park to the north. Beneath the orderly site plan, however, we get a glimpse of the politics, or at least the mutual back-scratching of the city and the developer. Moores must be an extraordinary negotiator, or the city must be frantic to give the incentives to build the ballpark, or both. In any event, the city has been generous in granting Moores entitlements to build high-density projects, which are arranged around the ballpark like tiny boiled potatoes around a giant slab of sirloin. East Village Square, which occupies the three blocks immediately north of the ballpark, is a 500,000-square-foot retail, entertainment and office development. The Padres are listed as the developer. The remaining projects are listed as JMI, Moores's real estate alter ego. West of the Ballpark, on L Street, JMI plans a 512-room, 32-story hotel, although Westin Hotels dropped out of the deal in October. Also west of the ballpark, on J Street, Moores plans a mid-rise, 203-room all-suites hotel. On Park Boulevard, Campus @ The Park will offer 436,000 square feet of office/high-tech space in three mid-rise buildings. On the residential side is Island Village, a three-block compound off of Park Boulevard containing 455 multi-family units, including flats, townhomes and lofts. The city's deals with Moores may turn out to be unfortunate. The city and the developer are prisoners of each other. Everything — including financing for commercial projects — appears dependent on the completion of the ballpark. The ballpark cannot be completed until the city sells the bonds, and the city seems bogged down by lawsuits, and high interest rates that may make the bonds unattractive to all but the most risk-tolerant investors. Although Moores is a brilliant and versatile businessman who has proven himself in a variety of fields, the city may regret putting so many of its urban-redevelopment eggs into this developer's unsteady basket. Now, just because a project has heavy political overtones does not necessarily cast a shadow on the quality of the site planning. The ROMA scheme for the Ballpark District is a model of economy and clarity, which accomplishes a number of complex goals with a minimum of moves. This is a plan that knows what it wants to do. And, probably, the city will find the financing, or the developers, who can build it. Someday, only history buffs will be able to discern the political ruckus beneath the crystalline order of the Ballpark District.

After 20 years of argument and struggle, numerous revisions and a predictable snarl of litigation, the most expensive wetland restoration project in California history has cleared one of its final hurdles and appears poised to become reality at last. Bolsa Chica, a prime piece of oceanfront property adjacent to the upscale Orange County community of Huntington Beach, was once one of the largest and most significant coastal wetland complexes in the state. The California Coastal Commission's approval of a $100 million restoration plan in November all but assures that this rare piece of undeveloped coastline will remain the province of birds and fish, rather than well-to-do homeowners and boaters. Evidence that Bolsa Chica has long been viewed as prime real estate comes from archaeological sites on the low mesa adjoining the wetlands, where 8,000-year-old human burials have been found. Those early hunter-gatherers may have been enamored of the view, but they were drawn primarily by the abundant food supply. Long a key stop on the Pacific Flyway, Bolsa Chica is an avian refueling depot, the bounty of aquatic life in its plankton-rich waters allowing migratory birds to replenish fat stores depleted by their long flights. The abundant wildlife was a convenient source of sustenance for prehistoric humans. That abundance of waterfowl also drew modern hunter-gatherers, to the lasting detriment of Bolsa Chica's ecological integrity. A mosaic of salt and brackish marsh, tidal basins and mudflats, Bolsa Chica was connected to the Pacific via the Bolsa Chica slough. In 1899, however, members of a local gun club blocked the slough and diked the wetlands to create a system of ponds for waterfowl hunting. Despite this hydrological insult, bird life continued to flock to Bolsa Chica in astounding numbers. "This section of the country along the coast between Long Beach and Newport Beach, south of Westminster, was one of the greatest natural habitats for wild life and game birds in the world," local historian T. B. Talbert wrote in his 1952 autobiography, My Sixty Years in California. "Wild ducks, geese, jack-snipe, coots, plover, doves, killdeer, egrets, herons, gulls, pelicans, land birds and waterfowl of every kind and description varied their flights from the ocean to swamp to grain fields, from grain fields to ocean again, to feast on seafood, grain, seeds, bugs, toads, worms, grasshoppers, and the like. I have seen birds by the thousands so thick in flight as to almost eclipse the sun. The hours-long flight of ducks patterned against a blazing sunset sky was most amazingly spectacular and beautiful" Not long after duck hunters discovered this game-bird paradise, oil was discovered beneath Bolsa Chica. More of the marsh was drained and filled, and a forest of drilling rigs sprouted. The property caught the eye of developers during the 1960s when the oil field began to play out. In 1970, Signal Corp. bought about 2,000 acres of Bolsa Chica's wetlands and drier upland from the gun club. Even in its degraded state, Bolsa Chica remained a magnet for waterfowl; with 90 percent of Southern California's coastal wetlands lost to farms and urban development, each remaining patch became more precious. The Audubon Society's annual winter bird count yields higher numbers and greater diversity of species at Bolsa Chica than at any other site in coastal Southern California, according to Fullerton College ecology professor Allan Schoenherr. Thanks in part to its popularity with birders, efforts to protect Bolsa Chica have been underway nearly as long as efforts to develop it. In 1973, the state purchased 300 acres of the wetlands and established the Bolsa Chica Ecological Preserve. In 1976, local activists formed Amigos de Bolsa Chica to battle development plans. Bolstered by numerous courtroom victories, preservationists, including the Bolsa Chica Land Trust, derailed one proposal after another. The most extravagant project, approved in 1985 by Orange County, would have resulted in 5,700 homes, a marina, shops and an oceanfront hotel (see CP&DR, November 1989). In 1997, the state acquired nearly 900 acres of Bolsa Chica property and began devising a restoration plan. The developer retreated to the adjoining mesa, planning 1,200 homes on 183 acres overlooking the patchwork of drilling pads and degraded marshland below. Even that retreat and the apparent victory of Bolsa Chica's defenders did not end the controversy. Local activists continue to argue that allowing development on the mesa will threaten the ecological integrity of the wetlands below, and call for protection of the entire property. The Coastal Commission handed the landowner a serious setback just over a year ago when it ruled that homes could be built only on a 65-acre portion of the mesa. The developer sued to overturn that decision; that case is still before the court. Despite the legal storm swirling around the mesa, plans to breathe life back into the lowland portion of Bolsa Chica cleared a key hurdle in November with the Coastal Commission's approval of the restoration plan proposed by the U.S. Fish and Wildlife Service. Nothing comparable has ever been tried in California. The heart of the plan is letting the ocean back into Bolsa Chica for the first time in more than a century. A 360-foot-wide channel will be cut through Bolsa Chica State Beach. (Four acres of beach will be lost as a result.) About 2.7 million cubic yards of material will be dredged to create a shallow tidal basin; other acreage will become ponds, sloughs and other types of habitat, including nesting islands for birds. When the project is completed — a process expected to commence in 2003 and take three years — Bolsa Chica will again be a patchwork of pickleweed, mud flats, grassland and open water. The $100 million overall price tag includes the cost of land acquisition (the state paid about $25 million for the wetland acreage). Most of the money — about $79 million — has come from the Ports of Long Beach and Los Angeles, which are paying to restore Bolsa Chica as mitigation for marine habitat lost to port expansion. Not all development opponents are pleased by the restoration plan. Local beachgoers rue the loss of public sand, and worry that the new channel will allow bacteria into local surf. Project planners have studied the possibility and discount it. Minor hurdles still remain. The project requires several more state and federal approvals, including key authorization from the Army Corps of Engineers and the Regional Waster Quality Control Board. Project supporters, however, regarded the notoriously protective Coastal Commission as the last significant hurdle standing in the way of Bolsa Chica's resurrection as a "beloved haven" for wildlife. Contacts: Jack Fancher, project manager, U.S. Fish & Wildlife Service, 760-431-9440. Coastal Commission staff report on restoration project, www.coastal.ca.gov/mtg-11mmi.html Amigos de Bolsa Chica: 714-840-1575, www.amigosdebolsachica.org/

The phenomenon of powerful neighborhood groups holding sway over the planning process makes me question the wisdom of mixing democracy and planning. In principal, democracy should be the preferred route for making decisions about the public realm. But democracy, in large part, is about making deals among competing interests, and not all interest groups — such as people who champion affordable housing, schools, open space and urban design — are sitting at the table when homeowners cut their deals with developers. Most often, neighborhood groups view projects through the lens of their perceived self-interest, and homeowners, especially those who do not have much background in planning, tend to define their interests very narrowly. One exception to this observation, and one that makes the public process look like the best route to good planning, is the University Park residential project in Palo Alto. Covering nine separate parcels just south of downtown, University Park is a new residential neighborhood currently being built next to a mature residential area. In this case, the neighbors were understandably concerned about preserving their neighborhood. What is pleasantly surprising is that they were also concerned about creating affordable housing and increasing housing density in a city that has one of the tightest and most expensive housing markets in California. The University Park area is a nondescript area of older houses, scattered commercial properties and apartment buildings. The area stretches between busy University Boulevard, the main shopping street of downtown Palo Alto, and a neighborhood of Craftsman bungalows known locally as Professorville, in honor of the Stanford University faculty who live there. While hardly blighted, the area might be described as an older, middle-class neighborhood that has been marked by an insensitive mixture of housing and tacky commercial development. The most conspicuous of these was a multi-story medical office building built in the 1950s that was both an eyesore and painfully out of scale with the neighborhood. When Palo Alto Medical Clinic proposed expanding this building, the neighborhood quickly organized to stop the effort. The neighborhood was also worried about an increasing trend of businesses setting up shop in single-family houses as affordable office space, which threatened to bring commercial levels of traffic to neighborhoods while thinning the precious housing stock. In 1999, the city set up a task force known as the South of Forest Study Area (SOFA) that created a list of recommendations for several residential neighborhoods south of downtown Palo Alto, including University Park. Those recommendations included an emphasis on home building over commercial development and limits on the size of homes, perhaps with the intent of discouraging affluent buyers from demolishing older homes and replacing them with "McMansions." (Recall that this was the late '90s, when the dot-com millionaires still stood tall in Silicon Valley.) The Palo Alto Medical Clinic, meanwhile, decided against the construction project in the face of community protest, and put the 8.5-acre property up for sale. This provided Palo Alto a rare opportunity in city making. A local builder, SummerHill Homes, bought the clinic property late last year. For some reason, the seller set an imposing task on the buyer: Put together a development plan and get entitlements in only six months. This requirement placed enormous pressure on both the developer and the city to complete a very large job of planning and design in a comparatively short amount of time. "We took the (SOFA) recommendations as our basic blueprint, and made some modifications to fit our needs," said Ric Denman, SummerHill senior vice president. In accordance with the recommendations, the University Park development agreement is almost entirely residential and codifies a stringent formula to keep houses small. (Technically, it is a floor-to-area ratio , limiting the amount of square footage that a developer is allowed to build on a lot of certain size. Here, the FAR limits floor space within a house to one-half the size of the lot.) The modifications included changing the site of a proposed park, and relocating five historic houses in University Park onto a single block; in conformance with neighborhood wishes, the developers also agreed to preserve and restore an historic African-American church and a commercial storefront known as the French Laundry on Channing Street. More impressively, the neighborhood demonstrated its sincerity for creating a new housing resource for the city. Activists supported several types of affordable housing, including what the developer calls "studio flats," which are "granny flats" that sit atop garages. Some neighborhood activists pushed to restrict the use of the studio flats to rental use only, guaranteeing that the units would be a housing resource to the larger community. Although that effort fell short, all the granny flats have separately metered utilities and off-street parking spaces so that all can be used as legal rental units. The same activists, not without opposition, further pushed for increases in the existing density of about seven to eight units per acre to about 10 units per acre in the single-family lots and about 25 units in the multi-family sites. The up-zoning caused one home owner to complain, in all innocence, of the coming "Manhattanization" of Palo Alto. In the final version of the plan currently being built, which was approved by the Palo Alto City Council earlier this year, SummerHill is building 72 condominiums, 22 single family houses, 19 of which have rental "studio flats," together with the historic properties mentioned above. On a separate block, the city's Housing Corporation is carrying out another part of master plan by building 53 affordable rental units. On an urban design level, the project promises to replace the tattered urban texture of University Park with a coherent residential neighborhood. Of course, Palo Alto residents were not that different in many ways from other neighborhood groups with property value concerns. But, possibly because they are part of a socially conscious university crowd, these residents were willing to buck Palo Alto's strident opposition to growth in general — and multi-family homes in particular — to increase the housing stock in a desirable area. That willingness makes the University Park process the most hopeful sign I have seen yet that democracy in planning can go beyond nay saying and NIMBYism and actually arrive at an enlightened solution for an entire community. Just don't try it in my neighborhood!

An assessment levied by Sacramento County on nonprofit organizations that conduct bingo games did not violate a 1994 initiative barring the imposition of a tax or fee on a nonprofit group's income, the Third District Court of Appeal has ruled. However, the appellate panel sent the case back to the trial court to determine whether the fees were closely related enough to county expenses to be legal. This is not the first time that bingo operators and Sacramento County have been to court. Last year, the Third District ruled in Arden Carmichael, Inc. v. County of Sacramento, (2000) 79 Cal.App. 4th 1070, that the county's 1% tax levied on bingo operators' gross receipts from June 1994 through December 1996 was illegal under Proposition 176. Voters approved that initiative, which amended article XIII, § 26 of the state constitution, in June 1994. Apparently recognizing problems with its assessment, the county changed its procedures in January 1997 so that the fee was based on a percentage of a bingo operator's prize payouts. The fee ranged from 1.15% to 1.225% of prize payouts depending on the three-month timeframe. The bingo operators sued, claiming that the new fee structure was still linked to gross receipts. They also argued that the fee violated Penal Code § 326.5, which permits fees for law enforcement and public safety activities that are directly related to bingo activities. Sacramento County Superior Court Judge John Lewis ruled for the county. In the published portion of its opinion, the Third District upheld Lewis's ruling on the fee's constitutionality vis-a-vis Proposition 174. But in the unpublished part of the decision, the court said Lewis should not have granted summary adjudication on the issue of whether the fees were adequately tied to the county's actual cost of providing service. In their appeal, the bingo operators argued that by taxing prize payouts, the county was indirectly doing what it could not — namely, taxing nonprofit organizations' gross receipts. The bingo operators pointed out that the county's revised formula collected almost exactly the same amount of revenue as the outlawed gross receipts tax. However, the court rejected this argument as beside the point. The issue, the court ruled, was the precise language used in Proposition 174 and by the county. The court held that Sacramento County's assessment was a tax on bingo operators' expenses, not on receipts. Such a tax is legal under Proposition 174, according to the court, which cited ABC Distributing Co. v. City and County of San Francisco, (1975) 15 Ca.3d 566. " he state Supreme Court distinguished a tax measured by an expense incurred by plaintiffs from one measured by their income," Justice Daniel Kolkey wrote for the Third District. "In response to plaintiffs' suggestion that a payroll expense tax was, in essence, an income tax because it was paid from plaintiffs' income — a suggestion similar to that of plaintiffs in this case — the state high court observed that ‘all taxes necessarily involve some reduction of and relationship to available revenues.'" The court also considered voters' intent by examining the Proposition 174 ballot arguments. The court held that the exemption from a gross receipts tax created by Proposition 174 "was intended to protect contributions and other categories of revenue from direct taxation." Sacramento County was taxing expenses, which would have a similar effect on nonprofit organizations' funding by encouraging them to reduce expenses, the court reasoned. In the unpublished part of its opinion, the court said that Sacramento County must prove its fees are tied to expenses. The county defended its practice of averaging costs and including numerous "indirect expenses." The court did not rule on Sacramento County's defense but made clear it was skeptical, saying that the county's estimated revenues and costs were an improper basis for fees. "The statutory standard is not whether the estimated revenues do not unreasonably exceed the estimated cost, but whether the actual revenue derived from the fee does not ‘exceed the actual cost incurred in providing the service,'" Kolkey wrote, citing the Penal Code. The Case: Arden Carmichael, Inc. v. County of Sacramento, No. C031367, 01 C.D.O.S. 9400, 2001 DJDAR 11693. Filed October 31, 2001. The Lawyers: For Arden Carmichael: H.L. Koelewyn, Hoseit & Koelewyn, (916) 922-8823. For the county: Elaine DiPietro, deputy county

One year ago, the water district that serves portions of Alameda and Contra Costa counties reached a tentative agreement with other local and federal agencies on a plan to divert water from the Sacramento River. Supporters of the plan said it would benefit many different parties. However, the memorandum of understanding among East Bay Municipal Utility District, Sacramento County, the City of Sacramento and the federal Bureau of Reclamation has many detractors. The MOU not only demonstrates how difficult it is to divide up California's water, it also eliminates any chance for unity among water providers. Two associations representing many of the state's major water purveyors, in addition to the Metropolitan Water District of Southern California, the Westlands Water District in the Central Valley, and the East Bay MUD neighbor Contra Costa Water District, have sued to halt the planned diversion. "We've got enough problems solving the fisheries issues and everything that we should not be squabbling within the water supply family," said John Coburn, general manager of the State Water Contractors, an association of 27 agencies that is part of the lawsuit. Environmentalists appear divided on the plan. Supporters of the American River — which East Bay MUD fought to tap for 30 years — have endorsed the plan. But advocates of a healthier San Francisco Bay and delta have raised questions about the water diversion's impact on water quality in the delta. How exactly East Bay MUD's plan fits into the larger Cal-Fed Bay Delta project is uncertain. East Bay MUD, which provides water to 1.3 million people, currently relies on reservoirs on the Mokelumne River in the Sierra Nevada foothills. But for 30 years, East Bay MUD officials have recognized that the Mokelumne has too many demands on it, so the district needs to augment its supply, said Charles Hardy, district spokesman. That is why the district fought for and won rights to American River water in 1970. However, when East Bay MUD attempted to exercise those rights by extracting American River water from Nimbus Dam or elsewhere in Sacramento County, the district met stiff opposition from local officials and environmentalists. They said East Bay MUD's proposed diversions would leave the river with an inadequate flow. Decades of political fighting and litigation ensured, and the two sides appeared at a stalemate until U.S. Sen. Dianne Feinstein brought everyone together in 2000. She helped broker a deal that appeared to satisfy most participants. The plan calls for East Bay MUD to take up to 133,000 acre feet of water — enough to serve at least 200,000 homes — from the Sacramento River near the community of Freeport, roughly 10 miles downstream from the point where the American feeds into the Sacramento. East Bay MUD would pump the water from the diversion point to its main pipelines that flow from the Mokelumne River. East Bay MUD said it would take water from the Sacramento River only during times of shortage, and not use the water to expand its service area. The plan calls for East Bay MUD to pay $400 million toward the project costs. Sacramento County, which could receive some of the water, would contribute $140 million to $200 million. The project could be completed as soon as 2005. "This is a giant step forward," Feinstein said in December 2000. "It is an example of two regions that have fought for 30 years over water finally saying we are going to work together. If we do it right, it's going to set an example for the rest of the state." But East Bay MUD's 133,000 acre feet would likely come at the expense of other Central Valley Project contractors. When those agencies failed to get assurances that they would not lose in a zero-sum game, they fought back. In July of this year, they filed a lawsuit, based primarily on the California Environmental Quality Act and the National Environmental Policy Act, that claimed East Bay MUD and the Bureau of Reclamation did not complete adequate environmental studies. However, Ron Stork, a longtime leader of Friends of the River, which fought East Bay MUD proposals for the American River, said that these water agencies have little on their side. He noted that the lawsuit attacks the process — which can be remedied — but not the merits of East Bay MUD's plan. "They don't have a legal case to suggest that EBMUD diverting water — and them diverting somewhat less — is against the law," Stork said. "It's not against the law. That's the way the Central Valley Project is structured." East Bay MUD spokesman Hardy said the district plans to complete an environmental impact report after it finalizes its agreement with the Bureau of Reclamation and Sacramento County. Thus far, the district has only compared alternative diversion sites, he said. District officials emphasize the "drought proofing" aspects of the project. They say the district would tap the Sacramento River only an average of once every three years, and even then the district would not necessarily take its entire allotment. "For us, this is crucial," Hardy said. "We're coming out of a dry year. Our reservoirs are down 100,000 acre feet. If we have another dry year, we'll be in a drought. We'll have to cut back residential customers by 65%." Stork, for one, believes East Bay MUD's promises. Water from the Sacramento River must be pumped uphill for miles to reach the district's pipelines, and pumping is too expensive for that water to be used as a luxury, he said. "Basically, our hope is that this is a reliability project that is underused so that the diversions that affect Delta flows are not very big," Stork said. But other environmentalists are not so sure. They fear East Bay MUD's diversions could raise salinity levels in the already-troubled delta — especially if the district pumps large quantities of water during a drought, when fresh-water flows to the delta are already low. This is a fear shared by other water agencies and their customers. Rising delta salinity could reduce the amount of water available for pumping south, they say. These East Bay MUD opponents call the project "piecemeal" and say it should properly be considered inside the Cal-Fed framework. This is not the first time East Bay MUD has acted as a maverick. Two decades ago, it was one of the few water districts not lined up in support of the Peripheral Canal. More recently, East Bay MUD headed the effort to forge a closer tie between land use planning and water availability, which led to this year's passage of a three-bill water package (see CP&DR November 2001, October 2001). Contacts: John Coburn, State Water Contractors, (916) 447-7357 Charles Hardy, East Bay Municipal Utility District, (510) 287-0141. Ron Stork, Friends of the River, (916) 442-3155

The California High-Speed Rail Authority finds itself living something of a double life these days. Created by the Legislature in 1996 to develop a plan for building, operating and financing an intercity, high-speed rail system, the authority has received great interest since the September 11 terrorist attacks. A month earlier, former Santa Clara Supervisor Rod Diridon, one of the state's loudest voices for rail transit, took over as head of the authority's board. Gov. Gray Davis appointed Diridon to the board in June. At the same time that momentum appears to be building, the authority is going broke. This fiscal year, it requested a budget of $14 million. It received only $1 million � not even enough to keep the agency's doors open for a full 12 months. The authority has grabbed a few million dollars from Caltrans and from earlier bond funds. But with the state facing a fiscal year 2002-03 deficit estimated at $12 billion, there is little reason to see a brighter budget future for the rail agency, which already has a December 2003 sunset date. Prior to the September 11 terrorist attacks, high-speed rail was something of a pipe dream for train buffs. The authority estimated that constructing a 700-mile-long system linking San Diego, Los Angeles, San Francisco and Sacramento would cost $25 billion � more than the cost of every serious California airport expansion project combined. But when the nation's airports closed for three days in mid-September, people learned how few travel options existed. "We're hamstrung when one element of our system breaks down," Diridon said. More than two months after the attack, the number of air passengers remains approximately 10% to 20% below pre-September 11 levels. Analysts are unsure if this drop is an aberration or a permanent shift in travel patterns. Geoffrey Gosling, a research engineer at the University of California, Berkeley, Institute of Transportation Studies, said data that become available this month and next should tell experts a great deal. Holiday air travel is not something that can be postponed to a more convenient time. So if those numbers are down, the decreased demand on what had been an overburdened air system could be considered permanent, he said. There is no doubt that interest in high-speed rail travel blossomed on September 12. The nation's lone high-speed line � Amtrak's Acera service between Boston and Washington D.C. � immediately attracted twice as many passengers as before. In Congress, Rep. Don Young (R-Alaska), the chairman of the House Transportation Committee, introduced a $71 billion national high-speed rail bill. "There has been a very noticeable increase in interest, not just from the media, but from the general public," said Dan Leavitt, deputy director of the California High-Speed Rail Authority. Since its creation five years ago, the authority has settled on approximate corridors for a train that could travel 200 mph. The train would run on dedicated rail lines through the Central Valley, while it would probably share existing, upgraded rails in urban areas, Leavitt said. Significant portions of the system could be complete in 10 years, with the entire system in place by 2020, Leavitt projected. The agency has accumulated a huge amount of data and is in the midst of preparing environmental impact reports for portions of the 700-mile-long route, Leavitt said. But the authority needs about $20 million more to complete the necessary planning and first tier environmental work. State Sen. Jim Costa (D-Fresno), who authored the bill creating the authority, has pushed to add funding. Diridon said he has received numerous inquiries from state and federal lawmakers who want to provide more money. "It's like the cavalry coming over the hill," Diridon said. "They are asking us why we are moving so slowly." So far, the authority has not picked up more funding. But Diridon, director of the Mineta Transportation Institute at San Jose State University, said he intends to use every trick he knows to get money flowing to the authority. Diridon, Leavitt, Costa and other believers say high-speed rail is vital for California. Because of population growth and limitations on increased automobile and air capacity, California is facing a future transportation crisis, Leavitt said. "We have the world's finest freeway system, and we have the world's finest air transport system. But with the exception of Northeast Corridor, we have not invested in intercity rail," Leavitt said. Every other western country has, or is building, a high-speed rail system. "I think we're catching up with the rest of the world," Diridon said. While train diehards are sure of high-speed rail's benefits, others are not sold. Marlon Boarnet, a professor at UC Irvine's Department of Urban and Regional Planning, concedes that he is not convinced. "Before September 11, I was quite skeptical about high-speed rail," Boarnet said. "Could it compete with high-frequency air shuttle service? I think one of the questions out there now is whether the economics of air travel have been permanently changed." A 1998 study by David Levinson, then with UC Berkeley's transportation institute and now a professor at University of Minnesota, found that the cost of air travel between San Francisco and Los Angeles is about half the cost of automobile or high-speed rail travel. The study accounted for infrastructure, fuel and vehicle costs, as well as social costs such as accidents, noise and air pollution. " he most cost effective high-speed rail configuration in California would be as an alternative to highway, rather than air, transportation," Levinson wrote. "Any new high-speed rail line should complement rather than compete with air transportation. Perhaps design alternatives that favor shorter distance markets (such as Los Angeles-San Diego or San Francisco-Sacramento) would be more advantageous." While those 100-mile trips would certainly be part of the system, high-speed rail backers emphasize the desire to provide 2 1/2-hour service between Los Angeles and San Francisco, and between Los Angeles and Sacramento. They argue that a 2 1/2-hour trip from downtown to downtown makes high-speed rail very competitive in the marketplace with air travel. But Boarnet, of UCI, wonders how many of the people traveling from the Bay Area to metropolitan Los Angeles really need to get from downtown San Francisco to Union Station in Los Angeles. Most people's trip would not be over, he said. Not surprisingly, supporters and skeptics also differ on whether a high-speed rail system could operate without a subsidy. Despite its lack of money and a staff that can be counted on one hand, the High-Speed Rail Authority continues to plug along. During its November meeting, the board settled on alignments and station locations for further investigation in four corridors: Bay Area to Merced, Bakersfield to Los Angeles, Los Angeles to San Diego via Riverside, and Los Angeles to San Diego via Orange County. The board could decide on preferred alignments and station locations for the Sacramento-to-Bakersfield line as soon as January. Importantly, the board in November also settled on a system where trains traverse steel tracks. The board dismissed a proposal for magnetic levitation trains, which have gone more than 300 mph in tests overseas but have not been put to wide use yet. Contacts: Dan Leavitt, California High-Speed Rail Authority, (916) 324-1541. Rod Diridon, High-Speed Rail Authority, and Mineta Transportation Institute, (408) 924-7560. Geoffrey Gosling, UC Berkeley Institute of Transportation Studies, (510) 642-9064. Marlon Boarnet, UC Irvine Department of Urban and Regional Planning, (949) 824-7695. High-Speed Rail Authority website: www.cahighspeedrail.ca.gov

The Ninth U.S. Circuit Court of Appeals has upheld the validity of a City of Lodi ordinance intended to force the cleanup of contaminated land and groundwater. Although it struck down a few provisions of Lodi's comprehensive law, the court ruled against insurance companies that contended federal and state "Superfund" laws prevented Lodi from imposing its own cleanup regulations. The unanimous three-judge panel held that the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, or the Superfund law) envisioned states approving and implementing complementary regulations. And in California, the court ruled, municipal ordinances such as Lodi's are equivalent to state laws. " e hold that CERCLA permits both states and their political subdivisions to enact hazardous waste regulations and pursue additional remedies at their own expense, " Judge Harry Pregerson wrote, as long as the remedies do not conflict with CERCLA. The battle between Lodi and three insurance companies — Fireman's Fund, Unigard Insurance, and Unigard Security Insurance — has been around since the mid-1990s and has already made its way to the state Supreme Court. Earlier this year, the state's high court upheld a provision in Lodi's ordinance allowing the City Council to issue legislative subpoenas as part of the city's investigation and cleanup process. Connecticut Indemnity Co. v. Superior Court, 98 Cal. Rptr. 2d 221 (2001). Now comes the federal court ruling that further supports a city's ability to take charge of contaminated sites within its boundaries. In 1989, Lodi first detected tetrachloroethylene — a dry cleaning agent and carcinogen often known as PCE — in the groundwater that supplies the town. A few years later, the state Department of Toxic Substances Control (DTSC) identified four small dry cleaning businesses as "potentially responsible parties" and listed the "Lodi Groundwater Site" as a state hazardous waste site. In 1997, the city signed an agreement with DTSC that called for the city and state to work cooperatively on investigating and remediating the PCE. The agreement designated Lodi as the lead enforcement agency. As required by the agreement, the city went on to adopt the Comprehensive Municipal Environmental Response and Liability Ordinance (MERLO), which allows the city to investigate and remediate contamination in the soil and groundwater. Lodi then began procedures against the dry cleaners and their insurance companies. The insurers quickly sued the city, claiming that CERLCA and the state's Carpenter-Presley-Tanner Hazardous Substances Account Act (HSAA) preempted the city's ordinance. A federal district court ruled against the insurers in two separate lawsuits, which were combined on appeal. The Ninth Circuit addressed the three types of preemption, which are similar for both federal and state: express preemption, field preemption, and conflict preemption. The court found that neither CERCLA nor HSAA expressly preempted local law. The court rejected the insurance companies' argument that CERCLA and HSAA together occupied the field of hazardous waste. Noting that CERCLA creates "a floor, not a ceiling," Pregerson wrote that CERCLA anticipates that states will enact supplemental environmental legislation. And the agreement between Lodi and DTSC proves that the state sanctioned Lodi's efforts. "Moreover, in California, municipal ordinances are state law and may be prosecuted in the name of the ‘people of the state of California,'" Pregerson wrote. The court's examination of how Lodi's ordinance could conflict with the federal and state laws was extensive. Essentially, the court held that there were only three conflicts: The Lodi ordinance improperly expanded the city's ability to sue insurers beyond what is permitted by state insurance law; the city ordinance improperly limited any liability the city itself might have (insurers have argued that the city itself is a potential responsible party because of its sewer system operations); and the city ordinance's burden of proof was superceded by HSAA. The court held those sections of Lodi's ordinance were "easily severable" and upheld the remainder of the ordinance. The Cases: Fireman's Fund Insurance Company v. City of Lodi, No. 99-15614, and Unigard Insurance Company v. City of Lodi, No. 99-15802, 01 C.D.O.S. 9308, 2001 DJDAR 11651. Filed October 30, 2001. The Lawyers: For Fireman's Fund: Terry Houlihan, McCutcheon, Doyle, Brown & Enerson, (415) 393-2000. For Unigard: Dennis Zaragoza, (415) 217-4757. For the city: Michael C. Donovan, assistant city attorney, (650) 372-5100.

In anticipation of another raid on local government revenues by the State of California, local government officials have taken a page from grass-roots planning advocates and filed for two versions of initiatives for the state's November 2002 ballot. The "Local Revenue Accountability Act" is spearheaded by the state's leading city, county, and special district advocacy organizations – whose members are the largest employers of urban planners in California. The strategy is a crapshoot for the future of publicly-funded planning. The initiative campaign might unintentionally push the public to focus further on the most essential services. And the campaign might further damage the already poor fiscal relationship between state and local government. The move is prompted by fear of a redoubling of the property tax shift implemented by the Wilson administration beginning in 1992. Those changes — the result of a recession that brought to bear the full wrath of Proposition 13 funding shortfalls — resulted in permanent shifts of $4 billion annually from local governments to school districts, resulting in a net gain in the state's own general fund by alleviating its school funding responsibilities. The state dubbed the action "ERAF," or the educational revenue augmentation fund. The name seized on public support for education spending. The victims were local government programs, including land use planning. The state's current budget problems are as dire as they were 10 years ago. According to the Legislative Analyst's Office, the state's budgeted expenditures for 2001-02 will exceed anticipated revenues by $4.5 billion, and the potential shortfall for 2002-03 is $12.4 billion. Therefore, a new raid on local property taxes, vehicle license fees and even sales taxes is likely. While local governments are mad as hell and not willing to take it anymore, things have changed in 10 years time. Among the important changes is the institutionalization of concern for public schools. For example, since ERAF, voters have approved a constitutional amendment making it easier for school bonds to pass. It is clear that education has moved near the top of everyone's "what I want the government to do with our money" list. Facing such sentiment, local government plans to pitch arguments for another service that is seen as essential: public safety. Of any local government-provided service, it is likely that police and fire protection — especially in the wake of the September 11 — could best compete with education in a ballot fight between competing government needs. The other trend that has solidified is the use of ballot-box planning itself. Ironically, a majority of public sector planners, the American Planning Association, and some academics have shunned ballot-box planning as a miscarriage of the process, seeing planning as a legitimate public interest best controlled by professionals and elected officials. Nevertheless, in many California jurisdictions, the ballot box has become a focal point for important planning decisions — a fact not lost on the local government associations. In crafting the ballot measures, cities and counties are acknowledging that if you can't beat ‘em, join ‘em. And the enlistment of public service unions will be an important part of the political strategy. Public planners have much at stake. Depending on the jurisdiction, the ERAF tax shifts resulted in serious revenue losses for planning departments. Then, as now, planning departments were not the highest priorities for most municipal finance directors and local government decision-makers. At the state level, the entire housing element update cycle was suspended and the push for regionalism evaporated. At the local level, it is unclear how many internal planning efforts were "defunded" by municipal money managers. But, clearly, planning staffs were furloughed across the state, with some jurisdictions eliminating one-third or more of their planners (see CP&DR, August 1992). Santa Maria City Manager Tim Ness said ERAF remains a burden for his central coast city. "In 1990, we adopted a budget with 351 employees. In 2000, we adopted a budget with the exact same number of employees – 351 – even though our population had grown from 61,000 to 80,000," he said. During the early 1990s, The city reduced expenses by requiring employees to take unpaid leave and by reopening contracts with unions. Because the ERAF diversions have never been restored, "the current annual shift represents a $1.1 million dollar hole in our revenue stream," Ness said. Ness sees any potential new raid focusing on Vehicle License Fees, or VLF. That concerns the city manager because — at $3.8 million — the fees represent Santa Maria's second largest source of revenue. During 1999 and 2000, the first two years of the 35% VLF cut enjoyed by vehicle owners, revenues lost to local governments were "backfilled" from the state's budget surplus. But now that black has turned to red in Sacramento, the state will probably discontinue the backfill. And the state may even decide to take another 30% of the VLF from locals because constitutionally, only one-third of the levy must be remitted to local government. In such a scenario, Santa Maria would be hit with a $2.5 million dollar loss, a blow Ness described as "unsustainable." Ness acknowledged that even if the VLF — or ERAF II — issues are resolved, "the fiscal relationship between state and local government is seriously broken." Ultimately, local governments' ballot-box tactics will likely result in some dialog between the state and its local governments. But the ultimate fate of local planning department funding remains a lingering question. The public may no longer expect to have its cake and eat it too. Ironically, in carrying fiscal issues to the voters, local governments may inadvertently end up making the case for the service seen as most essential: public safety. And that may leave other functions — like planning — more vulnerable than ever. Stephen Svete, AICP, is president of Rincon Consultants, Inc., a Ventura-based consulting firm.

The City of Industry has purchased a 2,400-acre Boy Scout camp in the hills outside of town. The acquisition and Industry's plans for the property have spurred a major fight between Industry and a collection of environmentalists and officials from neighboring jurisdictions. Industry Mayor David Perez said the Boy Scout camp will provide an open space buffer and floodplain below a reservoir the city intends to build on adjacent land, which the city purchased during the 1970s. But opponents of the project say Industry intends to build a reservoir complex on the Boy Scout camp — a site long desired by environmentalists for its habitat values. Perez said he thinks his city can work out a compromise that satisfies everyone. But at this point, the sides seem miles apart. Industry is not a typical city. Incorporated in 1957 as a municipality whose sole focus was serving private enterprise, Industry today is home to 3,200 businesses with approximately 80,000 employees. But only about 700 people reside inside the city limits. So a handful of major business interests — including Majestic Realty, one of Southern California's biggest commercial developers — closely hold the power in Industry. In 1978, Industry purchased the Tres Hermanos Ranch several miles east of town in San Bernardino County with the intent of developing a 165,000-acre-foot reservoir. For a variety of reasons, that project never went beyond the planning stage, although Industry leaders did not forget about it. The city needs an inexpensive, reliable water supply to continue thriving, Perez said. During the 1980s, the Los Angeles Area Council of the Boy Scouts of America began attempting to sell all or most of the 3,300-acre Firestone Scout Reservation, which the tire company had donated decades earlier. The Scouts had difficulty maintaining the camp and needed the money. But no sale was ever completed. In 1994, the cities of Brea, Diamond Bar, La Habra Heights and Whittier joined with the state parks department, the Department of Fish & Game, the Santa Monica Mountains Conservation Authority and Los Angeles County to form the Wildlife Corridor Conservation Authority (WCCA). The authority is intended to plan for the preservation of a stretch of undeveloped land that stretches from Whittier (in Los Angeles County) through the far southwestern corner of San Bernardino County to the Cleveland National Forest in Orange and Riverside counties. The authority also can purchase property. "This 31-mile corridor is one of the last long, connected habitat corridors in urban Southern California," explained Bob Henderson, a Whittier city councilman and member of the WCCA board. Shortly after WCCA's formation, its leaders began negotiating with Boy Scout officials regarding the Firestone Scout camp. The camp is in Tonner Canyon, which is classified as a "significant ecological area." The canyon contains riparian, valley grassland, coastal sage scrub and walnut woodland ecosystems, all of which are rare in the greater Los Angeles area. The Scout camp also lies in the migratory route of a number of species, including mule deer, coyote, bobcat and mountain lion. The acquisition process appeared to gain momentum with the passage of a 1996 Los Angeles County park bond measure, which provided $10 million for the purchase. Eventually, WCCA offered the Scouts as much as $14 million, but no deal was ever reached, according to Henderson. In 1999, the Wildlands Conservancy, a well-funded private organization, sought the Scout camp as a possible location for the conservancy's outdoor education programs. However, neither a joint WCCA-Wildlands Conservancy deal with the Scouts, nor a deal strictly between the conservancy and the scouts was ever signed. Henderson said that the two entities eventually offered $18 million for the property. In December 2000, the Scouts accepted $16.5 million from the City of Industry. Why the Scouts appeared to favor the city is unclear. Scout representatives did not return requests for comment. Henderson and others pointed out that a vice president of Majestic Realty is a member of the Scout board. The Wildlands Conservancy, WCCA, the Sierra Club, the Center for Biological Diversity and a collection of individuals have filed two suits against Industry and the Scouts over the purchase. The first suit challenges Industry's use of its redevelopment agency to purchase the property because the site is largely undeveloped and is not within a redevelopment project area — or even within the city limits. After initial court hearings on that suit, Industry altered its deal with the Scouts so that the city itself — not the redevelopment agency — purchased the land. A second suit challenges the acquisition on other grounds. Industry declared the acquisition categorically exempt from the California Environmental Quality Act, saying the city has no development intentions. But attorney Murray Kane, who represents the Tonner Canyon Wilderness Conservancy and individuals in the case, said Industry is trying to have it both ways. If the city purchased the property and intends to leave it untouched, then there was no municipal purpose for the acquisition. Kane and others say Industry has plans for a reservoir on the Scout property. The land acquisition is an early stage of the project, so it is subject to environmental review, he argued. Kane also said that Industry did not make general plan consistency findings, nor did Los Angeles and San Bernardino counties, where the land is located. Plus, he contended, the redevelopment issue is not dead because Industry intends to use redevelopment money for roads on the site. Brea Councilwoman Bev Perry, also complained about Industry's attempt to use its redevelopment agency to acquire the property. The Industry Urban Development Agency's attempt to purchase undeveloped, non-blighted property outside of the city limits gives a bad name to all redevelopment agencies, she said. Perry, who serves as chair of WCCA, noted that the dams would be within one mile of a major earthquake fault — and her city lies below the potential reservoirs. She said undeveloped land such as Tonner Canyon is rare in Southern California and it is an essential link in the wildlife corridor. "It's a very beautiful canyon that the Boy Scouts have had forever," Perry said. "We really want to see this land preserved, and a reservoir isn't going to do it." Henderson, who has served 20 years in two stints on the Whittier City Council, agreed. Under Industry plans that litigants have gained access to, Industry would construct a complex of three dams, he said. One reservoir and part of another lake would lie on the Boy Scout camp. "Every single bit of Tonner Canyon would be destroyed," Henderson said. Some opponents of the Industry project also believe that if the city does not build the reservoirs, it could approved thousands of houses on the hillsides — an charge that Industry officials reject. Industry Mayor Perez declined to discuss details of the lawsuits. He countered that opponents "are upset because we bought what they wanted." "We're not against their wildlife corridor," Perez added. "When the Boy Scouts property became available for sale, we decided to get it for open space and a flood plain." That allows Industry to build a larger, 250,000-acre-foot reservoir on its Tres Hermanos land, he explained. The reservoir will not fill Tonner Canyon from ridgeline to ridgeline, nor will it conflict with the wildlife corridor, he said. Moreover, a reservoir it could provide needed recreation for the Scouts and the general public, he added. Industry's agreement with the Scouts prevents the city from developing the site, Perez added. However, such restrictions do not exist on the Tres Hermanos land. The two sides are due to appear in court this month. Contacts: David Perez, City of Industry mayor, (626) 333-2211. Bob Henderson, Wildlife Corridor Conservation Authority, Whittier city councilman, (562) 945-8200. Bev Perry, WCCA, Brea city councilwoman, (714) 990-2258 Murray Kane, Kane, Ballmer & Berkman, (213) 617-048

Local governments that float Marks-Roos bonds have a fiduciary responsibility to the investors who hold the bonds – but not to the property owners who provide the revenue to make the bond payments, the Third District Court of Appeal has ruled. The issue was raised by prominent Sacramento-area developer Marvin L. "Buzz" Oates. He claimed that the City of Lincoln's decision to refinance eight bond issues under the Marks-Roos bond pooling law constituted an unconstitutional taking of his property. He claimed that the refinancing raised his assessments and increased the length of time he must pay. But the Third District ruled against him. Oates purchased property in 1989 in Lincoln's Nicolaus Road Assessment District, which had floated $5.8 million in bonds in 1986 to provide infrastructure to the area. At the time the bonds were issued, $580,000 – 10% of the proceeds – was placed in a reserve fund for the benefit of bondholders. Establishing this reserve fund is a customary practice in public finance. Upon his purchase, Oates began paying assessments that helped to retire the bonds, which were due to come to maturity this year. However, in 1994 the city combined eight different outstanding bond issues, including Nicolaus Road, into one comprehensive refinancing under the Marks-Roos bond pooling act. The city found that the Nicolaus Road reserve fund still contained $551,000, which was used to reduce the outstanding principle. After refinancing, the interest rate dropped. In conducting the refinancing, the city made three findings required by Streets & Highways Code § 9525: (1) that the estimated annual amount of repayment would be less; (2) that the number of years to maturity would remain unchanged; and (3) that the principal amount owed by each subdivision of land in the district was less after the refinancing. Oates sued, claiming constructive fraud and an unconstitutional taking and calling for an accounting of the reserve fund – apparently because he believed the reserve fund had not been used to pay down the principal before the refinancing. Placer County Superior Court Judge Frances Kearney ruled in favor of the city, concluding that evidence existed that the reserve fund had paid down the principal. Oates's appeal turned on the question of whether the city had a fiduciary responsibility to him as a property owner who pays assessments that are used to pay back the bonds. Oates's main piece of evidence came from expert witness Robert W. Doty, who concluded that "the local government holds the reserve fund not only for the benefit of bondowners (in the event private property owners fail to pay assessments) but also as the foundation for the credit to or reduction in assessments on the private parcels (in the event that private property owners do make payment of their assessments) … Thus, the local government holds the reserve fund if it is not needed to pay bondowners, specifically for the benefit of property owners." The city responded that the possibility of refund or credit to property owners such as Oates is contingent on Oates paying the entire assessment and never defaulting. The Third District agreed. "Unless and until the bondholders were satisfied, property owners possessed no interest in the reserve fund, only a possible future interest dependent on future events," wrote Justice Vance Raye. "Until satisfaction of this obligation to the bondholders, no interest resides in the property owners." Raye also rejected Oates's argument that interpreting the law in this way opens the city to self-dealing and manipulation. The court also rejected Oates's argument that the reserve fund was improperly used in the refinancing. "Oates's dissatisfaction with the costs of the refinance does not translate into noncompliance," Raye wrote. Finally, the court rejected Oates's argument that the refinancing amounted to constructive fraud against him because the city did not have a fiduciary responsibility to him. "Again, this argument overlooks the contingent quality of any interest that the property owners possess," Raye wrote. The Case: Oates v. City of Lincoln, No. C035975, 01 C.D.O.S. 9155. Issued October 24, 2001. The Lawyers: For Marvin L. Oates: Edward R. Brenner, (916) 925-3113. For City of Lincoln: G. Richard Brown, McDonough, Holland & Allen, (916) 444-3900