Determined to maintain its identity as a "nice valley town," the City of Reedley has adopted a specific plan that contains many of the precepts of traditional neighborhood design. The plan, adopted in January, covers Reedley's future growth areas — about 1,200 acres outside the city limits but inside the sphere of influence. The Ahwahnee Principles, something of a bible for New Urbanists, provides a basis for the plan, as does a 1999 report called Landscape of Choice. The latter report, adopted by a huge variety of Fresno County interest groups, urged more compact development to spare farmland. The Reedley Specific Plan is heavy on principles of efficient development. It permits single-family lots as small as 5,000 square feet and requires new projects to be within 660 feet of existing or already approved development. Annexation for residential development is allowed only when at least 80% of residential land inside the city limits is already built. As for design, the plan calls for development around neighborhood "activity nodes" that offer stores, offices and public spaces. Houses can be set back from the sidewalk as little as 10 feet if they have front porches. Garages should be recessed or detached. Commercial buildings should have parking in the rear and no large, blank walls. Reedley is a Fresno County town of 22,000 people surrounded by fruit orchards. Although it lies about 12 miles east of Highway 99, the area has experienced growth pressures, especially as people who work in Fresno look for homes outside the city. Applying the concepts of New Urbanism, which are mostly targeted to denser metropolitan areas, to a city like Reedley provides an interesting test. And city officials have tailored the concepts to their town by allowing builders to bypass some density and design standards. The plan was written with three goals in mind: to preserve farmland while accommodating urban growth; to preserve air quality; and to encourage urban design that creates a strong sense of community while respecting the town's historic design. Building consensus for such a plan, however, was not easy in a town where recent development has been characterized by low-density, ranch-style homes on cul-de-sacs. "It was a very big educational process to get our citizens committee to understand how these concepts work and why these concepts are preferable to what we had been doing in the past," said Michael Olmos, assistant city manager. "Getting that buy-in was really important." Olmos, who was community developer director at the time, other staff members and consultant Karl Schoettler, of Visalia's Collins & Schoettler, spent months educating the Specific Plan Committee, which had an open membership. Schoettler showed countless slides to make abstract concepts more tangible. "We tried to keep it real visual and unbureaucratic and unplanning-like. I think that paid off," Schoettler said. Planners also arranged a bus tour to traditional neighborhood developments in San Jose, Mountain View, Suisun City, Davis and Sacramento. The tour allowed people to walk around recent development projects based on New Urbanist principles. Showing some of the naysayers these successful developments helped diffuse opposition, Schoettler said. The months spent educating committee members, planning commissioners and city councilmembers was time well spent, said Olmos, who was already convinced of the need to overhaul land use practices. "I didn't realize early on how hard it would be to change what we had been doing," Olmos said. "You have to show people — present them with information and present them with the studies. … If you just go in and hit them cold with it, their first reaction is that it doesn't look like what we've been doing in the past, and, therefore, there must be something wrong with it." In the end, much of the debate was over housing density and street widths. City officials sought a minimum of five homes per acre to conserve farmland and because that density is less expensive for the city to serve than recent developments of about three units per acre, Olmos said. Representatives of the development and real estate communities pushed for measuring all developed combined by the five-units-per-acre goal, rather than requiring individual developments to meet the minimum. The City Council decided to require every project to have at least five units per acre, but also to allow developers of less dense projects to pay an in-lieu fee for preserving open space or farmland. The amount of the fee remains undetermined. The streets issue centered on safety and emergency vehicle access. Planners proposed reducing typical residential street width from 40 feet (curb to curb) to 32 feet to slow traffic, reduce asphalt, allow room for planting strips, and bring houses closer together. The City Council settled on 35 feet and accepted the concept of planting strips. The city is now in the implementation mode. Officials are preparing amendments to the city's general plan, zoning ordinance and subdivision regulations to reflect the specific plan. The city has also begun reviewing the first project within the specific plan area — a 236-unit, single-family-home subdivision on the east side of town. Developer Robert Wood of CSE Homes has proposed a project of about 4 units per acre on a grid pattern. "It's going to be a hybrid that looks like New Urbanism, but it's really not going to be more dense," he said. Homebuyers in the Central Valley expect decent sized lots and usable backyards, Wood said. And, because of sweltering summers, homebuyers dislike two-story houses that are expensive to cool. Whether the city eventually accepts Wood's proposal — and whether it charges him an in-lieu fee — is uncertain. Community Development Director Fred Brusuelas said city officials are sensitive to market demands because they want the first project in the specific plan area to be successful. "I think if the density were placed in a metropolitan area, say the Bay Area or Los Angeles, you would not have trouble selling the lots. But in the Reedley area, homeowners expect a little bigger lot," Brusuelas said. Wood said Reedley can take New Urbanist concepts only so far because the city is primarily a commuter town whose residents work 20 miles away in Fresno and there is no public transit. Thus, residents remain dependent on automobiles. Still, Wood indicated he could work with the new specific plan. "You have to reach out of the box a little bit in product design, which is expensive. I can't take what I would build in other valley towns to Reedley," Wood said. Steve Hoyt, San Joaquin Valley project manager for the Local Government Commission, said Reedley is taking New Urbanist principles farther than just about any other city in the region. The Local Government Commission, an independent entity whose members drafted the Ahwahnee Principles, helped steer a $35,000 federal air quality grant to Reedley for the specific plan process. "It's not all that common for small communities to do specific plans. Not all cities are as visionary as Reedley. And, really, specific plans are expensive," Hoyt said. The specific plan builds on existing assets: a downtown that is not as neglected as many others in the valley, a community college and the Kings River, which runs through town. A new rails-to-trails project has also provided a boon. The city recently completed conversion of the abandoned rail line to a multi-use trail and greenbelt. The 80-foot-wide right-of-way runs smack through the middle of town, providing access to the college, the high school and downtown. The trail has already proven so popular that officials are talking about extending it, Olmos said. While the specific plan has drawn the interest of many planners and has won an award from the local chapter of the American Planning Association, the most controversial development proposal in town lies outside the area — and the principles — of the specific plan. Wal-Mart has proposed a store for the western entrance to town. City planners expect to release an environmental impact report on the big box store this month, with a decision on the project likely this fall. Contacts: Michael Olmos and Fred Brusuelas, City of Reedley, (559) 637-4200. Karl Schoettler, Collins & Schoettler, (559) 734-8737. Robert Wood, CSE Homes, (559) 447-3080. Steve Hoyt, Local Government Commission, (916) 448-1198.

An appellate court has upheld a voters' decision on a City of Pleasanton referendum that effectively blocked an 89-unit subdivision. In upholding the election, the unanimous three-judge panel of the First District, Division One, rejected the developer's argument that the election resulted in zoning that was inconsistent with the city's general plan and, therefore, should be overturned. Instead, the court ruled that the election only maintained the status quo and was a valid exercise of the referendum authority. In January 1999, the Pleasanton City Council approved an ordinance "prezoning" the 46-acre site in question to "PUD: Low Density Residential." The site is just outside the city limits but within the Pleasanton sphere of influence. The city approved the DeSilva Group's plan for an 89-unit subdivision, as well as a $1 million "amenity fee" to be paid by the developer. Project opponents then collected enough signatures to force a referendum on the prezoning. In a June 1999 special election, Measure P failed by a 60-to-40 ratio (see CP&DR, July 1999). The vote overturned the City Council's prezoning decision, leaving the 46 acres with "unincorporated territory" zoning. The developer filed a lawsuit eight days after the election, arguing that the defeat of Measure P created an inconsistency with the city's general plan, which designated the site for low-density residential development. Alameda County Superior Court Judge Henry Needham ruled against the developer, and the appellate court upheld the decision. A city can enact zoning ordinances for property outside the city limits, but inside its sphere of influence, Justice William Stein wrote. The electorate has the same legislative authority, including "the decision to prezone — or the decision not to prezone." However, all zoning decisions, — whether made by the legislative body or by the electorate — must be consistent with the relevant general plan, he wrote. The PUD: Low Density Residential zoning was consistent with the Pleasanton general plan. "It does not follow, however, that failing to prezone the property PUD: Low Density Residential creates an inconsistency with the general plan," Stein wrote. Courts have held that when a property has been zoned for use that matches the general plan designation, the electorate cannot use a referendum to rezone the property to a use inconsistent with the general plan, Stein noted. He cited City of Irvine v. Irvine Citizens Against Overdevelopment, (1994) 25 Cal.App.4th 868 (see CP&DR Legal Digest, July 1994), and deBottari v. City Council, (1985) 171 Ca.App.3d, 1204. The Pleasanton developer argued that "restoring" the property's zoning as "unincorporated territory" conflicted with the general plan because it prevented housing development — much as the court-invalidated referendum in City of Irvine would have restored a property's zoning as "development reserve" and blocked a development project. The First District, however, said the cases are different. "In the present case," Stein wrote, "the city's general plan, while recognizing that at some point the property should be developed for low density residential usage, does not call for its immediate annexation and development. Unlike the properties at issue in City of Irvine and deBottari, the property never has been zoned in a manner that permits the usage contemplated by the general plan, and unlike the initiatives in those cases, the defeat of Measure P did not rezone the property to preclude low density residential housing." "As Measure P did nothing more than cause the property to continue as unincorporated territory, and as the city's general plan does not require annexation and prezoning of unincorporated territory, there is no inconsistency between Measure P and the city's general plan," Stein wrote. The court also rejected the argument that the referendum arbitrarily precluded a certain type of housing. The court said Measure P simply maintained the status quo. Finally, the court was not persuaded by the argument that the prezoning was not subject to referendum because it was an adjudicatory — not a legislative — decision that only carried out the general plan. " ur Supreme Court has held, without equivocation, that zoning ordinances are legislative acts," Stein wrote. The Case: James A. Merritt v. City of Pleasanton, No. A089834, 01 C.D.O.S. 4683. Filed May 11, 2001. Ordered published June 7, 2001. The Lawyers: For Merritt: David Lanferman, Sheppard, Mullin, Richter & Hampton, (415) 434-9100. For the city: Michael Roush, city attorney, (925) 931-5015.

Power plants of at least 300-megawatts approved by the California Energy Commission since 1999: o Sutter Power, 500 MW, Sutter County. Approved April 14, 1999. Scheduled on-line July 2001. o Los Medanos Energy Center, 559MW, Pittsburg. Approved August 17, 1999. Scheduled on-line July 2001. o La Paloma, 1,048 MW, McKittrick (Kern County). Approved October 6, 1999. Scheduled on-line December 2001. o Delta Energy Center, 880MW, Pittsburg. Approved February 9, 2000. Scheduled on-line April 2002. o Moss Landing, 1,060 MW, Monterey County. Approved October 25, 2000. Scheduled on-line June 2002. o Elk Hills, 500 MW, Kern County. Approved December 6, 2000. Scheduled on-line March 2002. o Sunrise Power, 320MW peaker, Fellows (Kern County). Approved December 6, 2000. Scheduled on-line August, 2001. o Pastoria, 750MW, Kern County. Approved December 20, 2000. Scheduled on-line January 2003. o Blythe Energy, 520MW, Blythe. Approved March 21, 2001. Scheduled on-line April 2003. o Midway-Sunset (Western), 500 MW, McKittrick. Approved March 21, 2001. Scheduled on-line March 2003. o Mountainview, 1,056 MW, San Bernardino County. Approved March 21, 2001. Scheduled on-line June 2003. o Otay Mesa, 510 MW, San Diego County. Approved April 18, 2001. Scheduled on-line July 2003. o High Desert, 720MW, Victorville. Approved May 3,2000. Scheduled on-line July 2003. o Huntington Beach Modernization, 450MW, Huntington Beach. Approved May 10, 2001. Scheduled on-line August 2001. o Three Mountain Power, 500 MW, Burney (Shasta County). Approved May 16, 2001. Scheduled on-line January 2004. o Contra Costa Repower, 530 MW, Antioch. Approved May 30, 2001. No scheduled completion date yet. Emergency Peaker Plants Approved by the California Energy Commission under 21-day review process: o Indigo, 135MW, Palm Springs. Approved April 4, 2001. Scheduled on-line July 5, 2001. o Larkspur, 90 MW, San Diego. Approved April 4, 2001. Scheduled on-line July 5, 2001. o Alliance Century, 40MW, Colton. Approved April 25, Scheduled on-line August 1, 2001. o Alliance Drews, 40MW, Colton. Approved April 25. Scheduled on-line August 1, 2001. o Calpine King City, 50MW, King City. Approved May 2, 2001. Scheduled on-line September 30, 2001. o Hanford Energy Park, 95MW, Hanford. Approved May 10, 2001. Scheduled on-line September 1, 2001. o Calpine Gilroy, 135 MW, Gilroy. Approved May 21, 2001. Scheduled on-line September 30, 2001. o Calpeak Escondido, 49.5 MW, Escondido. Approved June 6, 2001. Scheduled on-line September 30, 2001. o Pegasus Chino, 180MW, Chino. Approved June 6, 2001. Scheduled on-line September 30, 2001. o Chula Vista, 62.4MW, Chula Vista. Approved June 13, 2001. Scheduled on-line September 30, 2001. Projects before the Energy Commission as of June 25, 2001: o CalPeak Border, 49MW peaker, San Diego County. 21-day review. o East Altamont Energy Center, 1,100 MW, Alameda County. o El Segundo Modernization, 280MW net gain, El Segundo. o Lancaster Energy Facility No. 1, 240 MW peaker, Lancaster. 21-day review. o Magnolia Power Project 250MW, Burbank. o Metcalf Energy Center, 600MW, San Jose. o Modesto Irrigation Project, 80MW, Modesto. o Morrow Bay Replacement, 198MW net gain, Morro Bay. o Ocotillo Energy Project, Phase I, 456MW, Palm Springs. o Pastoria Expansion, 250 MW, Kern County. o Potrero Repower, 540MW, San Francisco. o Rio Linda/Elverta, 560MW, Sacramento County. o Russell City Energy Center, 600MW, Hayward. o United Golden Gate Power Plants, Phase II, 570MW, Millbrae. o Valero Cogeneration Project, 102MW, Benicia.

Sometimes it seems like California has been reforming redevelopment law longer than it took the original urban blight to be created. The first reform law was passed so long ago – 1977 – that it predates some of the neighborhoods that are now declared blighted by redevelopment agencies around the state. Every few years, a new round of reforms comes along. And the state's redevelopment establishment – not just the redevelopment agencies, but the lawyers, financial consultants, and investment bankers who swirl around the system – must decide whether or not to bite the bullet and accept some further constraints on their activities. Now California is on the verge of reforming redevelopment again. This time it looks like the redevelopment establishment is willing to take the hit. Senate Bill 211 by Sen. Tom Torlakson (D-Antioch) would allow redevelopment agencies to stay in business a while longer. But it would slap some new restrictions on the agencies, including a requirement that they figure out what parts of their longstanding redevelopment project areas are still blighted and that they spend their tax-increment money cleaning up those areas. Torlakson's bill passed the Senate in June and is now pending in an Assembly committee. The measure is likely to become law because the California Redevelopment Agency (CRA) appears willing to accept its terms. CRA's lobbyists and lawyers are working on the bill's concepts and language, and the association will likely not stand in the way of passage. The reason for CRA's acquiescence is that redevelopment agencies around the state are quickly running out of time. Under the terms of the last redevelopment reform bill, passed in 1993, many agencies will be required to stop issuing new bonds in 2004 and to go out of business altogether in 2009. (Even if they stop operating, they can continue to repay the bonds until 2019.) With the deadline looming, a few cities have sought individual extensions. Not surprisingly, San Francisco – whose mayor, Willie Brown, was the masterful Assembly speaker for 15 years – got in fast, getting a bill passed last year to permit the city's redevelopment agency to continue taking tax-increment dollars until 2044. (Brown agreed to limit future use of redevelopment money to housing projects only.) This year, Oakland and Sacramento turned up looking for similar treatment. But Torlakson cut them off by introducing a comprehensive bill that would cover all project areas created before 1984 – a list that includes about 60% of the projects in the state, controlling about 80% of the redevelopment tax money. It would affect many of the biggest and oldest redevelopment areas, such as the Los Angeles Bunker Hill project area (adopted in 1959) and the Sacramento downtown project area (adopted in 1966). Redevelopment is a big deal in California because practically everybody does it. Three-quarters of the cities and half the counties have active redevelopment agencies. There are more than 800 redevelopment project areas in the state. The flow of tax-increment dollars to redevelopment agencies in 1999-2000 totaled about $1.6 billion, or about 8% of all the property tax generated in the state. According to the most recent controller's report, redevelopment agencies in California have about $42 billion in outstanding debt. In many places it seems as if redevelopment has been going on forever. Some 150 localities have had redevelopment for at least 25 years, and in about 30 jurisdictions redevelopment has been in place since the 1950s. Of the more than 800 project areas, only about two dozen have ever been closed out. Many of San Francisco's project areas date back to the '40s, '50s, and '60s. With those projects now extended to 2044, Mayor Brown is apparently confident that his community can eradicate blight in less than a century. Admittedly, redevelopment – which is essentially a program to focus infrastructure and private real estate investment in a particular geographical area – is a long-term process based on long-term debt. Cities that undertake redevelopment typically float bonds almost immediately to make public infrastructure improvements, buy land, or provide other financial breaks to developers. But redevelopment is a unique power. It permits local governments to acquire land via eminent domain and then turn it over to private developers. And it allows local governments unilaterally to appropriate a big share of property tax revenues – a major enticement under Proposition 13, which restricts property tax rates and gives locals little control over how the revenue is divvied up. For a quarter-century, the state has gradually cleaned up redevelopment. In 1977, the state forced redevelopment agencies to start sharing tax revenue with other taxing entities and also to set aside some money for housing. And after an orgy of project area creation following the passage of Proposition 13 in 1978, the state adopted more reforms in 1993 to reduce further the property-tax share that agencies get and to tighten up the definition of "blight." Indeed, the question of what "urban blight" really is usually lies at the heart of debates over redevelopment reform. With such important powers and so much money at stake, cities and their consultants have always been highly motivated to find blight wherever they want. But the 1993 reforms, which the redevelopment establishment accepted as a way of avoiding more onerous change, reigned in the blight requirements a lot. Among other things, the blighted area must be predominantly urbanized; blight conditions must be prevalent and substantial; and the blight must be both a physical and an economic burden to the community. This last provision is intended to prevent cities from using lagging sales-tax revenue in an otherwise healthy and successful commercial project as the basis for a blight finding. The '93 blight reforms are especially important in the context of the current reform debate because what blight is and where it is found is likely to be a key issue. It is probably significant that a measure to loosen the blight standard, AB 1653 (Robert Pacheco), went nowhere this year. In working out the Torlakson bill with Senate staff members, the Redevelopment Association proposed something that sure seems like a good idea. In exchange for extending the life of the redevelopment projects, the agencies eoulf be required to spend redevelopment money only in those portions of the project area that are still blighted. This, however, raised the question yet again of what blight really is, because most of the old project areas that would be affected are grandfathered in under the old definition of blight. But the way the Torlakson bill currently reads, the agencies would have to assess remaining blight under the stricter 1993 definition. The implication is obvious: If you want to extend an old project area past 2009 – which is necessary almost immediately if you are going to issue new bonds – then you are going to have do a whole new blight finding in your old project areas based on a tighter definition. We will see what happens now that the bill is in the hands of Democratic Assemblyman Alan Lowenthal, chair of the Assembly Housing Committee and a former city councilman in Long Beach. But one thing is clear: It is often said that change in Sacramento is incremental, and probably no planning and development issue in the state proves that old saw more correctly than redevelopment. When the Legislature is contemplating another extension of the redevelopment law in 2025 or so, maybe we will be a little closer to figuring out what blight really is — and closer to wiping it out in less than a century.

The guiding goals of the Reedley Specific Plan: 1. New development (residential, commercial and public) in the planning area shall be designed in a way that creates fully integrated neighborhoods with a variety of land uses arranged so that access by walking or bicycling is possible and encouraged. 2. New development in the planning area shall be designed on a pedestrian scale, as opposed to the automobile scale. 3. Urban growth shall be planned and executed in a manner that minimizes impacts on agriculture and the consumption of agricultural land. 4. Development in the planning area shall occur in a fashion that protects and enhances air quality and water quality. 5. New development shall be designed to focus activity in the public realm of the street, as opposed to the private realm. 6. Public open space shall be made an integral part of new development in the planning area. 7. Development in the planing area shall be designed in a fashion that maximizes energy efficiency. 8. Development in the planning area shall follow the concepts presented in the Ahwahnee Principles and the Landscape of Choice document.

A report from the state controller's office lists 56 redevelopment agencies whose own audits found major violations of state law for the 1999-00 fiscal year. Only about half of the agencies have corrected their violations, according to the report. Redevelopment law requires an agency to present an annual report, including an independent financial audit, to its city council or board of supervisors. The audit must review the agency's activities for statutory compliance, and the legislative bodies are supposed to take actions to correct any deficiencies. Agencies also are required to file these reports with the state controller, who reported that four agencies failed to file the 1999-00 reports at all: the cities of Avenal, Imperial Beach and Isleton, and Yuba County. In fact, the controller's office said Isleton — a city of 1,000 in the southwest corner of Sacramento County — has not filed the report for three consecutive years. Other agencies failed to adopt a five-year implementation plan; did not file an audit report with its city council or board of supervisors; did not file a fiscal statement; sat on land purchased with housing funds for more than five years; failed to create a low and moderate income housing fund or did not deposit the required 20% into the fund; or set no, or improper, time limits for creating debt. The report is available at www.sco.ca.gov/ard/local/locrep/redevelop/99-00/ San Diego Zoo officials released a revised plan for zoo growth in May. The plan would allow the zoo to make better use of its existing 124-acre leasehold in Balboa Park by placing parking in an underground structure, and converting the existing surface parking lot to exhibit space. The plan contrasts greatly with a 1999 proposal, which called for expanding the zoo by 24 acres and razing the Veterans War Memorial Building to make room for a parking garage. Zoo officials withdrew that proposal after meeting stiff resistance from area residents and preservationists (see CP&DR Public Development, April 2000). The plan would nearly double the available parking for the zoo, which already needs more. However, the proposed underground garage for 4,700 vehicles could cost nearly $100 million. How the zoo would fund the development is unknown. Leaders of the zoo — which is owned by the city — hope to complete an environmental impact report and receive project approval next year. The revised budget released by the governor's office in May slashed proposed spending for housing programs. In January, Gov. Davis proposed spending about $300 million on housing programs, down from last year's record $570 million. However the "May revise" deleted all $200 million for the Jobs/Housing Balance Inventive Grant program, which would reward jurisdictions that approve new homes and job sites near the other. The City of Corona is suing Caltrans for allegedly creating a traffic jam on Highway 91. In a claim filed in early May with the California Board of Control, the city argues that Caltrans intentionally let the 91 Freeway become overloaded to create a market for 10 miles of privately operated toll lanes that run alongside the public highway. The lawsuit calls into question a 1995 agreement between Caltrans and California Private Transportation Corporation, which owns and operates the toll lanes. That agreement appears to give the private company veto power over Highway 91 upgrades (see CP&DR Public Development, February 2000). Corona contends that traffic on the notorious stretch of highway — which connects Riverside County residents with jobs in Orange and Los Angeles counties— is so bad that motorists clog city streets while trying to find alternate routes. The city alleges the situation has lowered property values and increased street maintenance costs by $10 million to $20 million during the last decade. The toll lanes along Highway 91 are already the subject of a lawsuit filed by Riverside County, which wants the state to take over the lanes. San Francisco's Crissy Field celebrated its grand opening in May as thousands of people tromped the former Army airstrip to see first-hand the renovated property. Located at the mouth of San Francisco Bay, near the Presidio, the public park boasts restored wetlands, meadows and sand dunes. The project, a joint effort by the National Park Service and the nonprofit Golden Gate National Parks Association, was largely funded by the Evelyn and Walter Haas Jr. Fund, which 15 years ago sponsored a restoration study and more recently donated an additional $18 million. Most of the remainder of the $32 million for the project was donated, so only $3 million of public money from the San Francisco airport's environmental mitigation program was used. For the renovation, developers recycled many materials already at the site. For instance, asphalt and concrete from the airfield was ground up and used as the foundation for the new walkways. Wood from demolished buildings was recycled, and soil was excavated to raise the meadow and to build contoured ground as a protective wind barrier. Visit Crissy Field online at http://www.crissyfield.org Blaming a slowing economy, developer Forest City Enterprises ended two-years of negotiations for of a "cybervillage" at the former Ford factory in Richmond. The city and the Cleveland, Ohio-based developer could not agree on a proposal for the shoreline property. The developer proposed two plans, both of which consisted of reusing the factory for housing (see CP&DR Places, July 1999). Meanwhile, The city is trying to retain $15.5 million in seismic retrofit funds from the Federal Emergency Management Agency to repair damage that the old factory sustained during the Loma Prieta earthquake. The city is facing a deadline to spend the money, but an extension may be possible as the city seeks a new developer. Gov. Davis in May signed legislation reauthorizing the use of redevelopment after disasters. Senate Bill 53's author, Sen. Tom Torlakson (D-Antioch), said the measure will allow communities to accelerate rebuilding after major disasters. The bill, which took affect immediately, repeals the sunset clause attached to the Community Redevelopment Disaster Project Law (AB 189) passed in 1995. During a 25-month period ending in mid-May, the California Energy Commission licensed 15 major power plants with total capacity of nearly 10,000 megawatts (See CP&DR, March 2001). Still under consideration are 12 more plants that could generate another 5,560 megawatts. The state also has licensed eight "peaker" plants, including one that was approved only 19 days after an application was filed. If all the projects are built, it would mark the largest power plant building spree in the state's history, according to the Energy Commission.

A few years ago, a field representative for Pacific Gas & Electric told me a startling story about how the now-bankrupt electric utility was treated by one of the county governments in his district. The county had approved a major residential subdivision in PG&E's service area that required PG&E to build an adjacent substation to provide the subdivision with electricity. But when PG&E went to the county to get approval for the substation, the county required the company to widen the adjacent arterial, build a sidewalk, and pay a traffic mitigation fee of something like $800,000. PG&E squawked. The company said that it was building infrastructure to support a project the county itself had approved and that the substation would generate one additional trip a week — the PG&E employee who would check on the substation's operations. But the county refused to back off. To the county, PG&E was not providing infrastructure; it was just another developer. That story came to mind recently for two reasons. The first is the simple fact that the electricity crisis has reminded everyone in California — for the first time in several years — that you cannot simply take the infrastructure associated with urban growth for granted. And the second is that a lot of people in Sacramento are now beginning to draw analogies between the crisis in electricity generation and the state's five-year-old effort to link land-use permits to the adequacy of water supplies. The common issue in each case is whether or not our state has enough infrastructure and urban services — whatever they are — to actually accommodate all the new urban growth we're getting. But the underlying problem is really about something different. All private, urban development must obtain permits from a land-use regulatory agency, which in California is usually a city or a county. But all growth also requires a wide variety of urban services, including roads, sewers, streetlights, schools, parks, police and fire protection, water, and electricity. Part of the point of land-use regulation, of course, is to ensure that urban growth will not be approved unless the urban services it requires are available. There's just one catch: Not all urban service providers are created equal. Some services required by urban development are provided by private companies, some are provided by single-function agencies, and some, such as electricity, are usually provided by private companies. Public Education is always provided by a single-purpose district. Water and sewer services are frequently provided by single-purpose special districts as well. And some services – such as roads as well as police and fire protection – are most frequently provided by the general-purpose local governments, i.e., cities and counties. It is the cities and counties, of course, that also get to issue land-use permits. So is it any wonder that the services which cities and counties must provide themselves are the ones that get the most attention in the permit approval process? In fact, there's a pretty clear pecking order as to which service providers get listened to when permits are processed. Cities and counties listen to themselves first. Then they listen to special districts, such as school districts and water districts — but not usually voluntarily. Cities and counties often wait until they are forced by lawsuit or by a state law to pay attention. And the last people cities and counties listen to are the private companies that provide services, such as the electric utility companies. Water has been the biggest battleground in the urban services war during the past few years. In 1995, the state passed SB 901, a bill that required analysis of water supply as part of the environmental review for large development projects. SB 901 was watered down in the approval process and often seems to require little more than consultation with water purveyors, which are accustomed to routinely issuing "will-serve" letters for new developments. A recent survey by Randele Kanouse – Sacramento lobbyist for the East Bay Municipal Utility District and the chief crusader for the SB 901 process – concluded that the law has not been strongly implemented. In fact, he argues, SB 910 requires considerably more than a will-serve letter, which he calls "a sham a hoax and a fraud." The law also requires real, identified sources of water and various assessments of what would happen in a drought. Kanouse's verdict: All but two of the 119 projects subject to SB 901 since 1996 "failed to do a thorough assessment of what happens to existing water customers during extended drought." Kanouse is using his survey to bolster the chances of SB 221, a bill by Sen. Sheila Kuehl (D-Santa Monica) that would strengthen the tie between land use and water by requiring water supplies be committed as part of project approval under the Subdivision Map Act. Kuehl's bill stalled last session, but may have a better shot at passing this year. Kanouse likes to focus on water, but the truth of the matter is that California school districts have been fighting the same battle for more than 15 years. In the wake of Proposition 13 it was very clear that they could not raise enough tax money to build all the new schools required in the state. So they began leaning on cities and counties to consider school adequacy in the project approval process. After years of contentious negotiation, the result is a deal in which developers, local school districts, and the state are all expected to come up with part of the money – and if they don't, it is possible to turn down projects. And in the wake of the electricity crisis, an increasing number of people have been wondering how California can routinely approve urban development that increases demand for electricity without considering energy in the permit approval process. You can see the pattern here. In times of crisis, organizations that must provide one specific urban service start to lean on the state to require that provision of the service be more seriously considered in the project approval process. And in response, the cities and counties that hold the permitting power resist the idea that they should take anybody else's concerns into account. But are cities and counties really so short-sighted that they don't care about services to their own residents if they don't provide them? If roads were provided by a separate road agency, would cities and counties really approve projects without worrying about whether the roads will be built? Well, yes. In fact, they already do that with regard to the state highway network operated by Caltrans. That agency is constantly complaining that local governments fail to consider the impact of their projects on state highways. The truth of the matter is that it makes no sense for one urban service provider to get the land-use permitting power while the others are shut out and must push their way in the door. It would make far more sense to separate land-use regulation entirely from service provision, and then require the regulators to consider provision of all urban services when making decisions. That is not going to happen at this late date in California, of course; cities and counties — and developers — have too much to lose. But if the state is going to force cities and counties to examine the question of urban services, it should consider a comprehensive approach. Water, schools, electricity — who knows what the next crisis in urban infrastructure is going to be? Lobbyists for single-purpose agencies should recognize that they have something in common, whether they work for East Bay MUD, a school district, or PG&E. And if cities and counties are going to have the power to approve projects, they ought to have the responsibility to ensure that all the services required by urban development can really be provided.

In a stunning trial court ruling, the California Coastal Commission was declared an unconstitutional agency. Sacramento County Superior Court Judge Charles Kobayashi ruled that the commission's composition violated the separation of powers doctrine because the Speaker of the Assembly and Senate Rules Committee appoint eight of the twelve commission members. The ruling surprised people on all sides of the coastal development debate and the Commission itself. Kobayashi issued the ruling in late April, but in May he stayed it pending the outcome of an appeal. Still, Ronald Zumbrun, a property right attorney who filed the case, said, "While awaiting the appeal process, there will be a legal cloud hanging over the Commission's activities." A frequent critic of the Coastal Commission, Zumbrun said the agency "for too long has been an oppressive agency answerable only to itself. The public's interest will be better served by a restructured Commission concentrating on coastal policy." Coastal Commission Executive Director Peter Douglas called the ruling "an aberration" that was unlikely to stand. He added, "At the same time, it's a major decision and a matter of great concern." Mark Massara, an attorney who heads the Sierra Club's California Coastal Program, called the decision dangerous. "It means that there are a couple hundred local judges who now have the power to call state agencies unconstitutional," Massara said. California voters passed the Coastal Act in 1972. The act created the Coastal Commission and granted the new body extraordinary control over land uses within the coastal zone, which typically extends about 1,000 feet inland. The Commission approves Local Coastal Plans, which are part of city and county general plans, and any amendments to LCPs. In jurisdictions without approved LCPs, such as the City of Malibu, the state Commission makes all land use decisions within the coastal zone. Plus, all coastal zone permitting decisions made by cities and counties can be appealed to the state Commission. The case at hand was brought by the Marine Forests Society, a nonprofit group that had been building artificial reefs out of old tires off the Newport Beach coast. The Coastal Commission last year issued and cease and desist order to the organization, which had no permits for the reef building. The organization contended it was creating new mussel and kelp habitat. But the Commission and environmentalists said that the project was doing more harm than good, and that Marine Forests Society needed Commission permits for its activities. Marine Forests Society then sued in Sacramento County Superior Court, arguing that the Coastal Commission is unconstitutional. The group said the Commission is a legislative body — not an executive or judicial entity — because two-thirds of its members are appointed by lawmakers. Yet members are not answerable to voters. The Commission argued that Marine Forests Society was raising only a hypothetical question because there was no proof that the Legislature has usurped the Commission's authority. The Commission further argued that a system of checks and balances is in place because the Senate Rules Committee, the Assembly speaker, and the governor each appoint four members, those members by law come from many coastal areas and must have certain qualifications, and some members are nominated locally. But Kobayashi was not persuaded. "The question is not hypothetical," he wrote. "The system of checks and balances does not give adequate protection. Nether the fact that the power is disbursed among the legislative branches nor the geographical diversity changes the fact that eight of its members are appointed and subject to at-will dismissal by the legislative branch of government." Kobayashi continued, "The Coastal Commission is effectively a legislative agency. Comity and pragmatism cannot save it. The judicial and executive powers that it exercises are not incidental to the lawmaking power. They are not properly under the jurisdiction of the Legislature." Zumbrun said that if the ruling is upheld, the ability to make and enforce land use decisions in the coastal zone will revert solely to cities and counties, whose elected leaders are accountable to voters. The Sierra Club's Massara predicted an appellate court would overturn the decision. If the ruling were to stand, he added, environmentalists would respond with a new — and probably far more strict — coastal initiative. The Case: Marine Forests Society v. California Coastal Commission, Sacramento County Superior Court No. 00AS00567. The Lawyers: For Marine Forests Society: Ronald Zumbrun, (916) 486-5900. For the Commission: Lisa Trankley, deputy attorney general, (916) 327-7877.

Charles Buki is the director of the Neighborhood Reinvestment Training Institute in Washington, D.C. The institute was created by Congress in 1978 to revitalize older, distressed communities through a network of local nonprofits. Buki is a former Loeb Fellow in advanced environmental studies at Harvard University. He has written and lectured widely on neighborhood revitalization and neighborhood dynamics, their interrelationship with the environment and implications for social equity. In May, Buki spoke during the Great Valley Center's annual conference about material wealth and cultural poverty. He defined "material wealth" as the ability to make choices, and "cultural poverty" as the opposite. Thus, the growth of wealthy suburban areas cannot occur without inner city problems. Buki said the tenor of a place is best measured by studying who moves in, and who moves out. Buki was sharply critical of development patterns in the Central Valley. Decrying the sameness of development across the United States, Buki urged people to show respect for the land and climate. CP&DR: During your presentation, you used the term "coast to coast placelessness." What do you mean? Buki: It's virtually impossible to find unique qualities anywhere you go that are not replicated elsewhere. As you sit here in this Radisson and look out at the lake, it's impossible to tell if you're in Sacramento or Denver or Dallas. In fact, I could drive all the way into Sacramento and never know that I'm in Sacramento and not in Denver. CP&DR: Why has this happened? Buki: It's economically efficient in the short run. Do you know what Applebee's is? Or Benigan's? They are restaurants that are all designed with the same footprint … because they want an economy of scale. Your burger is 79 cents because the McDonalds cost $179,000 to build, rather than $279,000 it would cost to design and build a unique building that would be much nicer. The conundrum is, is it worth the price? Would you be willing to pay $6 for a sandwich at Subway, instead of $5? Economics tells us the answer is probably not. CP&DR: How do we get beyond this approach? Buki: You have to be able to convince people that long-term prosperity has a different paradigm than short-term economic gain. Most folks in that audience probably agreed with what I had to say. But they are still going to eat at McDonalds in the next week. You have to live your values. If you eat steak, you have to understand that there are consequences. I choose to eat steak and I understand the effects of that decision. You might have a 22-year-old in Davis who is a vegetarian, but he still wears leather shoes. We have to require people to change how they live to reflect their values. CP&DR: You said you flew over the Valley in a small plane. What struck you about what you saw? Buki: There is a mistake that is being made. Your asset is land, but you are trading it for townhouses and subdivisions. You have a "servants quarters" mentality, providing houses for people with jobs in the Bay Area. If you are going to lose farmland, you should lose it to a use of better and higher value. CP&DR: You mean trade farmland for economic development? Buki: Right. There is a very limited value in townhouses. CP&DR: What choices do Valley leaders need to make? Buki: You have to have planning. It's obvious you have no planning. CP&DR: Is that a problem elsewhere in the country, too? Buki: Almost every place in the country is making the same mistakes. CP&DR: These are strong sentiments. I'm sure you give talks elsewhere. What are people's reactions? Buki: Planners and designers usually react badly to what I have to say. Most planners and designers believe you can plan your way out of problems. They don't recognize the costs that are associated with that approach. They want to be all-important and all-manipulating. CP&DR: Who is your most receptive audience? Buki: Residents. People wear different hats — fireman, police officer, employee. It's when they wear their hat as a family member that they are most receptive. Realtors make money on housing developments. But when they take off their realtor hat and put on their family hat, they find that everything they are doing conflicts with their values as family members. It's a longer lecture, and it pushes people more. I sensed this audience was not ready to be pushed that far. CP&DR: What does the Valley need most? Buki: Make the Valley competitive. Make it be able to compete for investments. Right now, it's a very weak economy. The Valley essentially attracts pawn shops, so it doesn't recycle its capital. The Valley needs to attract a different type of investor, which it won't do until it diversifies its economy from strictly ag, to ag plus technology. That means farmers will have to give up some of their land. But they are already giving it up to housing developments. They need to give it up for higher economic value. Managing Editor Paul Shigley interview Charles Buki during the Great Valley Center's annual conference in Sacramento.

Despite what Ralph Nader claimed, the differences between Al Gore and George W. Bush on environmental issues were stark. Those contrasts have become even more vivid during Bush's first few months in office. However, Bush appears likely to continue the Clinton Administration's support for Habitat Conservation Plans as a way of managing endangered species issues. In March, Bush began eating away at the Clinton environmental legacy. First, Bush announced the United States would not abide by an international agreement calling for reductions in carbon dioxide emissions. The same month, Environmental Protection Agency Administrator Christine Todd Whitman said she would revoke a Clinton administration plan to reduce the allowable level of arsenic in drinking water, and Interior Secretary Gale Norton revealed that she would reconsider a ban on snowmobiles in Yellowstone National Park. Also in March, regional directors for the National Marine Fisheries Service (NMFS) and the U.S. Fish and Wildlife Service (USFWS) announced they would stop obeying a Clinton order to decrease logging along salmon streams east of the Cascades in the Pacific Northwest, and the Justice Department said it would not defend a rule prohibiting road construction in 60 million acres of national forest — a rule blocked last month by a federal judge in Idaho. But habitat conservation plans (HCPs) provide a different case, because they embody the new president's clearly expressed faith in stakeholder involvement, respect for property rights and consensus-based policymaking. A previously ignored approach to endangered-species protection, HCPs took on new life under Clinton and his Interior secretary, Bruce Babbitt. California has an enormous stake in the administration's stance toward these controversial conservation tools; it has more HCPs in place than any other state, and they have become the crucial means by which urban growth is balanced against the needs of a lengthening roster of imperiled fish, plants and wildlife. Reliance on HCPs to reconcile potential conflicts between use of private property and protection of endangered species was a hallmark of the previous administration, particularly after Republicans took control of Congress in the 1994 midterm election. Republican legislators used their newfound control over key committees in the House and Senate to press for substantial changes in the Endangered Species Act (ESA), a lightning rod for criticism from political conservatives who view it as an impediment to business and an assault on property rights. Revision of the act was a key component of the party's "Contract With America," the sweeping set of policy objectives that had much to do with the GOP's success that year at ending decades of Democratic control over Congress. In 1995, Republican representatives and senators introduced bills to impose a moratorium on new listings of species as threatened or endangered, to cut off funding to federal agencies that enforce the act, to require reimbursement for landowners whose property values were decreased by ESA restrictions, and to abolish the ESA's protection of habitat. Those legislative efforts to revise the ESA (which has not be formally reauthorized since 1992) ultimately faltered in the face of rising public opposition, veto threats by Clinton, and defections by moderate Republicans representing suburban districts in the East, where the law remains popular and where few of its impacts are felt. The battle nevertheless had a significant affect on federal policy, indirectly prompting administrative changes in how the ESA was applied and enforced. Early in 1995, hoping to blunt congressional enthusiasm for rewriting the ESA, the administration proposed exempting some small landowners from regulation and toughening the scientific scrutiny of proposals to list species. It also began encouraging the use of HCPs, first authorized by Congress in 1982 but used only sparingly until that time. Before 1994, only 20 had been adopted. In the next two years, USFWS approved 196. There are now 341 in effect. Habitat Conservation Plans are voluntary agreements negotiated between the federal government and private landowners or states, allowing the "incidental take" of a listed species during the course of otherwise lawful activity. An HCP must accompany any application for an incidental take permit, spelling out how the effect of the permitted activity on a listed species will be minimized and mitigated. In theory, an HCP incorporates measures that actually improve a species' chances for survival — allowing destruction of a small amount of habitat in one place, for example, while requiring preservation of an even greater amount elsewhere. At the same time, HCPs also enable farmers to continue farming, loggers to continue logging, and builders to keep building. It is still a bit early to fully gauge the Bush administration's enthusiasm for HCPs. The USFWS does not even have a new director yet, and many policy positions in the Department of Interior remain unfilled. A spokesman for USFWS said the rationale underlying the HCPs program appears to mesh comfortably with the administration's emphasis on local participation in regulatory decisions and balancing conservation with protection of private economic activities. He stressed, however, that no formal pronouncements had come from the Interior secretary's office. California alone has more than a quarter of all the HCPs approved by the federal government and, therefore, has a huge stake in the administration's eventual position. Despite their popularity among large landowners and businesses, HCPs remain controversial and are particularly unpopular among national environmental organizations. Perhaps the best example of the pitfalls liable to trip up an HCP is provided by the Natomas basin, a vast swath of farmland and open space on the northwest side of Sacramento. The area around the state capital is booming, and local planners and elected officials view Natomas — with its convenient access to downtown Sacramento, an airport and two freeways, and its proximity to existing urban services — as a logical place to channel urban growth. The 83-square-mile basin, which reaches into Sutter County, also is home to several endangered and threatened species, including the giant garter snake and the Swainson's hawk. The presence of those creatures led four years ago to negotiation of an HCP among local landowners, the city of Sacramento and USFWS. About a quarter of the basin is within city limits; planners project that acreage could eventually be home to 62,000 people. The HCP allowed builders to proceed on the condition that they pay into a fund that land conservancies would use to purchase wildlife habitat elsewhere within the basin. With the HCP approved and an incidental take permit in hand, builders ago began bulldozing home sites two years ago. Environmentalists sued. Although they lost in Sacramento County Superior Court, they prevailed last year in federal court when a judge ruled the HCP inadequate. The judge noted that the HCP purported to address wildlife needs through the entire basin, even though the other major parties that would have to be involved to make the plan work — two counties, a water company and a reclamation district — had not agreed to participate. By itself, the habitat acquisition program undertaken within city limits could not guarantee survival of the snake and hawk, the judge said. In May, parties to the lawsuit agreed to a settlement allowing limited development in Natomas to move forward in exchange for a more aggressive habitat-acquisition program — one that includes the possibility that the city might condemn land and purchase it from unwilling owners. The HCP for the basin is also being revised. Condemnation of private property to benefit wildlife is probably not a strategy the Bush administration would endorse. But the essence of the plan, and even the resolution of the dispute surrounding it, includes bedrock Republican objectives: local involvement, and a balancing of environmental and economic needs. Created during a Republican administration, raised to prominence under pressure from a Republican Congress, the HCP process seems well adapted to survive the new political climate in Washington. Contacts: Department of Interior: 202-208-3171 USFWS information about HCPs: http://endangered.fws.gov/hcp/index.html

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

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