An appellate court has ruled against a former San Diego Unified Port District commissioner who sued the district’s former attorney over faulty legal advice. In May 2003, ex-Commissioner David Malcolm pleaded guilty to a felony conflict-of-interest charge. While he was on the Port board, Malcolm was being paid $20,000 per month plus incentives by Duke Energy, a port tenant. Port attorney David Chapman advised Malcolm and the Port board that Malcolm’s disclosure of the contract and recusal from matters involving Duke was enough to satisfy conflict of interest laws. However, the district attorney undertook a criminal investigation of Malcolm, who eventually pleaded guilty to a conflict of interest. Malcolm then sued the Port and Chapman for damages. San Diego County Superior Court Judge John Meyer declined to grant summary judgment for the Port — but the Fourth District was willing to do so. Malcolm pleaded guilty to willfully violating Government Code § 1090, the court stated, so “allegations that Chapman’s negligent advice caused Malcolm to commit a crime and plead guilty are immaterial.” “Perhaps the wrongfulness of Malcolm’s conduct was not as apparent as lying under oath, but we believe the average person would readily regard it as improper notwithstanding Chapman’s inexplicable disclose and recuse advice,” the court ruled. The case is , No. D045374, 05 C.D.O.S. 5168, 2005 DJDAR 7040. It was filed June 15, 2005.

Four weeks after the U.S. Supreme Court upheld an expansive view of eminent domain by a 5-4 vote, President Bush went on national television to nominate D.C. Circuit Court Judge John G. Roberts Jr. to replace retiring justice Sandra Day O’Connor. O’Connor was in the minority on the eminent domain case, but she has been a key swing vote on many property rights cases. If Roberts is confirmed, will he move the court in a more conservative direction? Or will he maintain the moderate course of O’Connor? The question is an especially important one for the planning and development world. Even though most of the current Supreme Court justices were appointed by Republicans, government agencies have done well in most recent cases related to land use and property rights. The 5-4 ruling in supporting the use of eminent domain for private development is only the most recent example. Roberts has spent most of his career as a respected Supreme Court litigator and has a thin record after only two years on the bench. This, of course, is part of the Bush strategy – select a guy everybody in Washington knows and everybody respects, yet doesn’t have much of a record. So his critics are looking at his combined record as a judge and as a litigator. Litigators, of course, are hired guns – they try to win their clients’ cases – so it is difficult to know to what extent Roberts’ litigation career represents his personal views. The Roberts record is patchy, but the environment and property rights arena provides as much of a clue as anything else. Here are three important cases he was involved in: • In , 334 F.3d 1158 (D.C. Cir. 2003), an endangered species case, Roberts dissented from a D.C. Circuit Court decision not to re-hear the property owner’s arguments. This is his only significant property-related case as a judge. • As deputy solicitor general to Kenneth Starr in the administration of George H.W. Bush, he argued , 112 S. Ct. 2130 (see , July 1992) before the Supreme Court, and won a ruling in favor of mining on public lands. • Most perplexingly, as a lawyer in private practice he represented the Tahoe Regional Planning Agency before the Supreme Court in , 535 U.S. 302 (see , April 2002). He argued that a three-year moratorium on development in the Tahoe Basin during the 1980s was not a taking – and he won the case. There is no doubt that Roberts is a conservative. He worked in the Reagan White House and in the Solicitor General’s office under Starr. He was nominated to the D.C. Circuit by both Bushes. (The senior Bush left office in 1993 before Roberts’ confirmation hearings were scheduled.) And in private practice he has represented business interests and corporations on a regular basis. The question, of course, is how conservative. In this regard, his dissent in the case and his defense of government property regulation may provide useful – if sometimes conflicting – insights. In the dissent, Roberts disagreed with the D.C. Circuit’s ruling that the U.S. Fish & Wildlife Service’s regulation of private property in Southern California was permitted under the Commerce Clause of the Constitution. Echoing a Harvard Law Review article he wrote while in law school, he argued that federal regulation of a development project contained entirely within one state may not be a constitutional regulation of interstate commerce. In a phrase that has been often repeated in the last few weeks as evidence of his dry sense of humor, Roberts referred to the regulated species as “a hapless toad that, for reasons of its own, lives its entire life in California.” Whether the phrase is wry or not, environmentalists may think such language does not show much respect for the toad or its habitat. Then there is Roberts’ representation of TRPA in the case – a hard-fought case that went on for 20 years before it went to the Supreme Court. The State of California viewed the case as an extremely important one in maintaining the integrity of the strict regulatory system in the Tahoe Basin. Then a partner at the D.C. firm of Hogan & Hartson, Roberts came into the Tahoe case only to litigate in front of the U.S. Supreme Court. In so doing, he partnered with longtime San Francisco environmental lawyer Clement Shute and, in the oral argument, went up against longtime Los Angeles property rights lawyer Michael Berger, the winner of the landmark case before the Supreme Court in 1987. In the brief and at oral argument, Roberts focused mostly on the need to apply the three-prong legal test for a taking in , 438 U.S. 104 (1978), the first major property-rights taking case decided by the high court. He also argued that the moratorium did not lead to a taking because the regulation was only temporary. “ here is no dramatic effect on the economic value of the affected lots, because we’re talking about a temporary regulation for a limited time,” Roberts argued. He noted that most of the lots had been sold by the time the case came before the Supreme Court. This was a somewhat dangerous proposition before the Supreme Court, considering that Chief Justice Rehnquist had developed the concept of a “temporary taking” in the case. He also found a weakness in Berger’s case by arguing that Berger should not have made a facial challenge. “The facial claim is the mere enactment of this temporary moratorium taking effect,” he said. “Well, then don’t talk to me about what happened 15 years later, if the mere enactment of the temporary moratorium is your complaint. That’s a different case.” Roberts won the case 6-3, with Rehnquist and Justices Clarence Thomas and Antonin Scalia – the very justices that liberals fear Roberts will side with – writing a dissent disagreeing with his position. In a bemused speech before the Federalist Society a year later, Berger noted the had speculated that Roberts argued the case to help blunt anti-environmentalist criticism in case he was nominated for a federal judgeship again. There may be some truth to this. But Roberts’ role may also have something to do with his Hogan & Hartson partner Douglas P. Wheeler – who oversaw the Tahoe litigation for eight years as California’s Resources Secretary. Roberts’ position in the and cases contain no internal inconsistencies. After all, one has to do with whether a federal law arguably dealing with interstate commerce can interfere with a private development in an individual state; the other has to do with whether a moratorium by a regulatory agency established by an act of Congress went on too long. So here’s a guess: Roberts will push the Commerce Clause aspect of the Endangered Species Act – though he will not tip the scales. And on most other things, he’ll probably take things pretty much down the middle. The advantage to a stridently ideological president of picking a litigator is that you cannot tell what his record really is because he’s always representing his clients. The flip side is that a litigator knows how to make an argument on either side of an issue.

In commodity futures markets, investors agree to pay a price today for the unknown cost of goods some time in the future. The City of Beverly Hills does not play the futures market, at least to my knowledge. So it surprised officials of this affluent city of 35,000 people in the West Los Angeles area to realize they had inadvertently saved $20 million in a construction deal signed last year with a private developer to build a parking structure, a city-owned retail building and a public park next to a luxury hotel. Although the deal raised a furor and led to a ballot referendum, there is little doubt that Beverly Hills was the big winner in the end. And although many of the circumstances that surround this deal are unique to this fastidiously maintained city, there is at least one aspect of the deal that other cities may want to study closely. Beverly Hills is one of the rare California cities that does not have a redevelopment agency. Most of the time, the city seems largely unbothered by this deficiency, insofar as few, if any, of the city's neighborhoods could be described as blighted. One notable exception is a block of derelict buildings, several of them red-tagged since the 1994 Northridge earthquake, situated on a prominent corner of the Golden Triangle, the city's high-rent commercial district. The most visible is the old Beverly Theater, a lovable anachronism of the 1920s festooned with Taj Mahal domes. The 1994 earthquake was the proverbial final curtain call for the Beverly Theater and its neighbors, and all the buildings have been closed for more than 10 years. For 10 years, the property owner and the city studied a variety of different options to replace the empty buildings. The notion of a department store was shot down by local businesses as a traffic monger, while the city was unenthusiastic about the idea of an office building, which would add only $500,000 in property tax revenues to city coffers. For city fiscal purposes, the “highest-and-best” solution would be a luxury hotel, which could generate transient occupancy tax and other revenues in the $5 million-range annually. Beverly Hills is a community with a comparatively small inventory of luxury hotel rooms (defined here as renting for about $300 a night) and consultants, such as the Los Angeles office of PKF Consulting, state the city's high-end hospitality market has an unmet demand that the proposed 214-room Montage would not dilute. As it happens, the city owns about 48,000 square feet immediately north of the Montage site. In entitlement negotiations with the developer, the city decided the most efficient way to develop the city's parking lot into a park and a neighboring retail building would be to hire the developer to build it as part of the hotel project. The city tallied its own expenses at $32.27 million, including $15.50 million for the underground parking structure, $9.96 million for the park and related improvements and $6.63 million for the 20,000-square-foot retail building. In the final deal approved in November 2004, the developer agreed to build the improvements for the capped amount. The developer also agreed to convey the parking garage to the city upon completion. In addition, the developer agreed to an extra-ordinary 5% increase, on top of the city's existing rate of 14%, in the transient occupancy tax rate. That 5% overage would be applied directly to repaying the city for the cost of the garage construction. A February 2005 report from Keyser Marston Associates Inc. indicates that the Montage project would easily generate the money the city needed to pay off its part of construction. After the hotel income “stabilizes” in 2007, revenue from the parking garage is expected to be $1.03 million annually, while commercial rent from the retail building would be $506,000. The hotel's contribution toward the garage cost would be $1.14 million, and the net bed tax would be $1.79 million. Property tax, sales tax and other tax revenues would be $795,000. The total: $5.26 million per year, an income stream as rich as the flourless chocolate cake at Spago Beverly Hills. This deal infuriated some local businesses, especially the Peninsula Hotel, which accused the city of “subsidizing” a rival hotelier and raised enough signatures to force a referendum vote on the development agreement. The referendum failed by about 600 votes at the March election (see , April 2005). The city had yet a further victory. With the cost of steel and other construction materials rapidly escalating, the Montage developers now believe that the cost of building the city's improvements will run at least $20 million more than the city's capped contribution, and that amount continues to grow with time. “We had no idea we were going to do so well,” confessed Deputy City Manager David Lightner. With Beverly Hills' apparent success with the Montage, can other cities follow suit and remove blighted buildings without the aid of a redevelopment agency? Probably not. Beverly Hills is one of a very small number of cities where the resort market is strong enough to justify tying the financing of a major public project to a hotel that charges something in excess of $400 a night, plus another $80 a night in bed tax. One aspect of the deal that is replicable, however, is the use of a fixed bid. That is when the public sponsor of a project says, in effect, “We will contribute $32 million, and no more, to this project. What can you developers give us for that amount?” Although the deal between Beverly Hills and the Montage was not a fixed bid per se (there was no competitive bidding from other developers), the deal does show the advantages of capping one's expenses. The developer, who stands to gain the most financially, should shoulder the greatest risk, as well. Now, futures trading on the part of cities and other public agencies is a bad idea as a general rule. On the other hand, with the price of building materials steadily climbing, cities could do a lot worse than to a sign a deal for projects to be built tomorrow at today's costs. Just ask the people trying to build the new San Francisco-Oakland Bay Bridge.

The state Supreme Court has accepted for review a California Environmental Quality Act case involving the water supply for a huge project in Sacramento County. Opponents of the Sunrise Douglas community plan and a related specific plan are questioning whether the environmental impact report adequately addressed the issue of water supply by identifying potential water resources when those resources had not yet been dedicated to the project. Sacramento County - which approved the 6,000-acre, 22,500-unit community plan three years ago (see , August 2002) - approved the project based on water from the Sacramento River. However, the pipeline from the Sacramento River is years away from construction. In the meantime, the project, which is under development within the newly incorporated City of Rancho Cordova, is relying on groundwater. Project opponents argue that extensive groundwater pumping would lower the groundwater table and pull water away from the nearby Cosumnes River. In their appeal the state Supreme Court, project opponents also questioned whether the Third District Court of Appeal should have focused on the administrative record more than on how project opponents responded to the trial court's ruling. The Third District opinion contained harsh criticism of the opponents' legal strategy and statement of the facts (see , April 2005, March 2005). The case is , No. S132972.

The California Coastal Commission has survived one of most direct assaults on its existence since the Commission's establishment in 1976. Property owners, who have chafed for years at the Coastal Commission's land use restrictions, had hoped to have the Commission's makeup declared unconstitutional, but the California Supreme Court unanimously upheld the current system in a ruling issued June 23. The decision relieved environmentalists and coastal access advocates, many of whom were stunned 2 1/2 years ago when an appellate court ruled that the system for appointing Commission members was unconstitutional. That ruling, added to the state Supreme Court's decision to review the case, suggested that every land use decision the Commission has ever made might be on shaky legal ground. However, it appears that the Coastal Commission was saved in part by an urgency bill passed by the Legislature and signed by Gov. Gray Davis shortly after the appellate court ruling came down. The bill established fixed, four-year terms for the eight coastal commissioners appointed by the Assembly speaker and Senate Rules Committee. The 2003 legislation (AB X2 1, Jackson) eliminated the at-will provision for the Legislature's appointees to the commission, a provision that the appellate court said was a legislative intrusion into the executive branch of government that violated the separation of powers doctrine. In his 67-page opinion, state Supreme Court Chief Justice Ronald George said the pre-2003 appointment scheme posed "a much more serious separation of powers question than the current provisions." And in a concurring opinion, Justices Marvin Baxter and Janice Rogers Brown (who was recently appointed to the federal appellate court bench in Washington D.C.) called the earlier scheme "constitutionally flawed." However, the court based its decision in favor of the Commission on the appointment process adopted in 2003, which the court held was entirely proper under the state constitution. Because the lower court issued an injunction - which prohibits future action - what matters is the current law, the Supreme Court ruled. Environmentalists up and down the 1,100-mile coast praised the state high court's ruling. "It's a very significant decision for the coastal program, and for the ability to create these independent commissions and agencies," said Sacramento attorney Bill Yeates, who had filed a friend-of-the-court brief for environmental organizations. The court recognized that voters set up the basic structure of the Coastal Commission when they approved Proposition 20 in 1972, he said. That initiative was the precursor to the Coastal Act adopted by the Legislature in 1976. "This was set up by the voters for a particular reason," said Yeates. Voters did not want to place all power regarding coastal development in one branch of government, so they divided the appointments equally among the governor, the Senate and the Assembly. That approach ensures that neither the governor nor individual lawmakers can dominate the Coastal Commission, he said. Attorney General Bill Lockyer, who defended the Commission in the case, said the decision "affirms that the Coastal Commission's appointment structure reflects the will of the voters, who long ago declared that our coastal resources will best be preserved for future generations if planning decisions affecting the coast are made by an independent body comprised of members representing a variety of philosophical backgrounds." That independence, however, gripes property rights advocates. "What you have," said Pacific Legal Foundation attorney James Burling, "is a commission without any control. And I think that runs smack dab into conflict with a representative democracy and the separation of powers." Burling, who filed a friend-of-the-court brief in favor of upholding the appellate court decision, said the appointment system causes "the endemic problems that the Coastal Commission has, such as its arrogance, its abrogation of property rights, it's lack of accountability to voters." Burling said the move to fixed terms for the Legislature's appointees did not solve the problem because voters cannot choose the Assembly speaker or members of the Senate Rules Committee. Thus, voters have no ability to effect change at the Commission, he argued. Attorney Ronald Zumbrun, who represented the project proponent in the litigation, agreed that the 2003 legislature was not a cure-all. But Zumbrun added, "I felt that our client came out well in that he changed the law." Environmental attorney Yeates said the change was significant because it provided a unanimous vote at the Supreme Court. "I think the Third District Court of Appeal did us a favor," he said, because the ruling led to legislation that "eliminated any cloud of doubt." Although regulation of coastal land uses was at stake in the case, the court based its decision on an interpretation of state constitutional law. The litigation at hand was filed in 1999 by a nonprofit group called Marine Forests Society and its leader Rodolphe Streichenberger. During the early 1990s, Marine Forests Society built an artificial reef from old tires, plastic jugs, PVC pipe and concrete blocks on the ocean floor off Newport Beach to aid marine life. The group built the experimental reef without a coastal development permit. The Commission refused to grant an after-the-fact permit, and then issued a cease and desist order demanding removal of the reef. In its lawsuit, Marine Forests Society argued that the Commission did not have the authority to issue such an order because of the way the majority of commissioners was appointed. Sacramento County Superior Court Judge Charles Kobayashi agreed and ordered the Commission to stop taking action on permits or issuing cease and desist orders. The Third District Court of Appeal upheld Kobayashi's injunction (see , February 2003). Neither Kobayashi nor the Third District showed any desire to reopen previous Coastal Commission decisions. But, at the attorney general's urging, the state Supreme Court agreed to review not only the lower court ruling but also the question of what affect it would have on past and pending Coastal Commission decisions (see , May 2003). Advocates on either side began to wonder if the Supreme Court was willing to throw out nearly three decades of Coastal Commission decisions. The answer was no. In his opinion, Chief Justice George addresses at length the evolution of the California constitution and its differences with the federal constitution. Zumbrun and supporting attorneys based much of their argument on federal court decisions regarding the United States constitution. Those precedents did them little good here because the court found that the state's separation of powers doctrine is weaker than the federal constitution's. "In contrast to the federal constitution, there is nothing in the California constitution that grants the governor (or any other executive official) the exclusive or paramount authority to appoint all executive officials or that prohibits the Legislature from exercising such authority," George wrote. "Moreover," George continued, "the history of the California constitution and past judicial decisions make it abundantly clear that under the state's constitution, the Legislature posses authority not only to determine whether to create new executive offices, agencies, or commissions, but also to decide who is to appoint such executive officers and commissioners, including, at least as a general matter, the authority to provide for such appointment by the Legislature itself." George also reviewed the history of Proposition 20 and the Coastal Act of 1976, finding that the current appointment structure is similar to what voters backed when they approved a Coastal Zone Conservation Commission and six regional commissions in 1972. There are safeguards to the prevent lawmakers from meddling in the system, as opponents had contended could happen, George noted. He pointed out that the fixed four-year terms are the same length that the president and governor receive. The fact that three different entities make appointments is a safeguard, as are the provisions of the Coastal Act requiring fairness and transparency, and decisions that are based on substantial evidence in the record, George wrote. Although the pre-2003 appointment system was questionable because of lawmakers' ability to remove commissioners at any time, the court upheld all past Commission decisions based on the "de facto officer" doctrine. That principle holds that even if the Commission were not legally seated, the decisions stand because they were made by a lawfully established entity whose members followed guidelines, and whose decisions were relied upon by the public. Zumbrun and Burling entirely rejected the court's application of the de facto officer doctrine to this case. Zumbrun said the argument for overturning past decisions made by an illegally constituted Coastal Commission was strong. "I think our case was too much," Zumbrun said. "I think the court saw the world collapsing and chaos. And from a public policy standpoint, they had to shut us down." Burling said he had no desire to reopen tens of thousands of permits. But the court should have allowed property owners who filed timely lawsuits over the makeup of the Commission to press their claims, he said. Neither the Marine Forests Society litigation nor the larger battle over the Coastal Commission are over. The Marine Forests Society case now returns to Superior Court, where Zumbrun plans to argue that the Commission treated his client differently than it treated another entity that built marine habitat. Contacts: Ronald Zumbrun, attorney for Marine Forests Society, (916) 486-5900. James Burling, Pacific Legal Foundation, (916) 419-7111. Bill Yeates, environmental attorney, (916) 609-5000. , No. S113466, 05 C.D.O.S. 5501, 2005 DJDAR 7550.

Property owners who contend that the government has taken their property without just compensation must press their monetary claims in state court and might never get to argue in federal court. A unanimous U.S. Supreme Court ruled on June 20 that property owners who lose their takings claims in state court are not entitled to retry their claims in federal court, even if the federal court forced the property owners into the state court. California courts have been extremely reluctant to award damages in takings cases. In the process of making its decision, however, four members of the high court indicated that they would like to revisit one of the most important takings cases from the 1980. The decision in San Remo Hotel v. San Francisco , No. 04-340, was actually the second unanimous high court victory for regulators in one month. In Lingle v. Chevron USA, Inc. , No. 04-163, the court threw out a standard for pressing a taking claim that favors property owners - a standard that has been used to fight mobile home rent control in California. The San Remo decision concluded more than a decade of litigation, said attorney Paul Utrecht, who represented the hotel owners. "The Supreme Court wisely put to rest the attempt by the national developers' lobby to get something no other claimant receives: two bites at the litigation apple," said Timothy Dowling, chief counsel of Community Rights Counsel in Washington D.C. "The ruling will help level the playing field and allow local officials and planners to protect our communities through reasonable land use controls." Property rights advocates, meanwhile, shook their heads in frustration. "They took the wrong case," said Michael Berger of Manatt, Phelps & Phillips in Los Angeles, who filed an amicus brief for the hotel owners. The problem, he said, lies with the court's 1985 decision in Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City , 473 U.S. 172. Williamson County forces landowners to pursue takings cases in state court first. But after the state court rules, federal courts have generally refused to consider a case, saying that everything was decided in state court - meaning that landowners never get their day in federal court. "The language of the Williamson County opinion clearly leads people to believe that trying a case in state court will ripen it for federal court, and 'ripen' has to mean more than just getting thrown out," Berger said. In a concurring opinion, Supreme Court Chief Justice William Rehnquist and Justices Sandra Day O'Connor, Anthony Kennedy and Clarence Thomas said they want to reconsider Williamson County . However, Berger noted, owners of the San Remo Hotel did not directly attack Williamson County . The court decided the case based on the full faith and credit statute (28 U.S.C. § 1738), which requires courts in different jurisdictions to respect the decisions of other courts. "We have repeatedly held … that issues actually decided in valid state court judgments may well deprive plaintiffs of the 'right' to have their federal claims relitigated in federal court," Justice John Paul Stevens wrote for the court. "The relevant question in such cases is not whether the plaintiff has been afforded access to a federal forum; rather, the question is whether the state court actually decided an issue of fact or law that was necessary to its judgment." The owners of the San Remo Hotel have been feuding with the city for decades. In 1971, brothers Tom and Robert Fields purchased the three-story hotel in North Beach. Eight years later, the city instituted a moratorium on the conversion of residential hotels to tourist use, and in 1981 the city adopted the hotel conversion ordinance (HCO). The law, which the city strengthened in 1990, is intended to preserve affordable housing by requiring owners of converted rooms to provide replacement units or pay an in-lieu fee. During the 1980s, the city and the Fields disagreed over how many rooms in the San Remo were dedicated to residential use. In the end, all 62 rooms were classified residential. In 1990, the Fields applied for a conditional use permit to convert all rooms to tourist use. The city approved the use permit in 1993, and required the property owners to pay a $9,000 per-unit ($567,000 total) in-lieu fee. The Fields then filed takings lawsuits in both state and federal court. They pursued the federal court route first. The District Court ruled that the Fields' attack on the facial validity of the hotel conversion ordinance was filed too late. The court also ruled that their claim that the city's application of the ordinance was a taking was unripe because they had not pursued a remedy in state court. The case then moved to the Ninth U.S. Circuit Court of Appeals, which upheld the lower court's determination that the "as-applied" takings claim was unripe ( San Remo Hotel v. City and County of San Francisco , 145 F3d 1095; see CP&DR Legal Digest , July 1998). But the Ninth Circuit granted the property owners a " Pullman abstention" on the facial claim, a move that permitted the Fields to get a definitive ruling in state court before pressing their claim in federal court. The Fields then revived their dormant state court lawsuit. They got nowhere in San Francisco Superior Court but received some satisfaction from the First District Court of Appeal. The appellate panel ruled that the hotel conversion ordinance should be subject to the "heightened scrutiny" standard, which requires a close relationship between an exaction and a project's impact. The First District directed the Superior Court to try the case based on this standard. Instead, the city appealed to the state Supreme Court, which voted 4-3 to overturn the First District. The state's high court ruled that heightened scrutiny did not apply to a generally applicable ordinance such as the HCO. The court also rejected the property owner's as-applied and facial takings claims ( San Remo Hotel LP v. City and County of San Francisco , 27 Cal.4th 643; see CP&DR Legal Digest , April 2002). Back to federal court went the Fields. This time, the District Court ruled that not only was the facial takings claim too late, it was also barred by the rule of "issue preclusion" because the state Supreme Court had decided it. The Ninth Circuit agreed, saying, " he California Supreme Court decision was a final judgment on the merits" (see CP&DR Legal Digest , May 2004). The U.S. Supreme Court then agreed to review the "issue preclusion" determination. The high court apparently took the case because of a Circuit Court split. In Santini v. Connecticut Hazardous Waste Management Service , 342 F.3d 118 (2003), the Second Circuit ruled that parties who litigated involuntarily in state court pursuant to Williamson County cannot be precluded from having the same claims decided in federal court. In upholding the Ninth Circuit, the Supreme Court downplayed the importance of Williamson County . The property owners did not have to ripen their facial challenge in state court, Justice Stevens wrote. However, they chose to make both facial and as-applied arguments in state court, and under the full faith and credit statute, the Ninth Circuit properly declined to reconsider the state court's decision. In addition, wrote Stevens, "it was settled well before Williamson County " that as-applied takings claims must ripen in state court. " here is scant precedent for the litigation in federal court of claims that a state agency has taken property in violation of the Fifth Amendment's takings clause," Stevens wrote. He continued, "State courts are fully competent to adjudicate constitutional challenges to local land use decisions. Indeed, state courts undoubtedly have more experience than federal courts do in resolving the complex factual, technical and legal questions related to zoning and land use regulations." In his concurring opinion, Rehnquist questioned this final point. " he court has not explained why we should hand authority over federal takings claims to state courts, based simply on their relative familiarity with local land use decisions and proceedings, while allowing plaintiffs to proceed directly to federal court in cases involving, for example, challenges to municipal land use regulations based on the First Amendment." Rehnquist conceded that he joined the court's opinion in Williamson County 20 years ago. But, he wrote, that decision is having a "dramatic" impact on takings plaintiffs and should be reconsidered. Berger said the court inched toward overturning Williamson County . "I feel like we educated them. But I'd sure like to do more than that," he said. San Remo attorney Utrecht said repeal of Williamson County would give takings plaintiffs direct access to federal court for all their claims. Federal court is where Utrecht wanted his case all along. Attorneys on the other side, however, are not ready to give up on Williamson County . "I think the court is willing to look at it," said Timothy Coates, of Geines, Martin, Stein & Richland, who has represented government agencies on takings claims. "I'm not sure the court is willing to overturn it. Williamson County is based on a reading of the takings clause." In the Lingle case, the court ruled that the "substantially advances" test does not apply when a court is determining whether a regulation effects a taking. That test originated with Agins v. City of Tiburon , 447 U.S. 255 (1980), in which the court ruled that a government regulation amounts to a taking if it "does not substantially advance legitimate state interests." "Today we correct course," Justice O'Connor wrote in reference to Agins. "We hold that the 'substantially advances' formula is not a valid takings test, and indeed conclude that it has no proper place in our takings jurisprudence." Instead, a property owner must prove a takings under a different theory: a physical taking, a regulatory taking that denies all use, a Penn Central taking that interferes with investment-backed expectations, or an exaction that does not directly relate to, or is not roughly proportionate with, a project's impact. When Lingle was at the appellate level, the Ninth Circuit used the substantially advances test to rule that Hawaii's service station rent control scheme amounted to a taking. After that ruling, the Ninth Circuit used the same test to invalidate the City of Cotati's mobile home rent control law ( Cashman v. City of Cotati , 374 F. 3d 887, see CP&DR Insight , October 2004; CP&DR Legal Digest , September 2004). Although some property rights activists, including the National Association of Homebuilders, tried to spin the high court's Lingle decision in their favor, the ruling was a clear setback. In both San Remo and Lingle , said the Community Rights Counsel's Dowling, "the U.S. Supreme Court has unanimously rejected arguments from the so-called property rights movement calling for greater federal intrusion into the land use planning process." The Cases: San Remo Hotel, L.P. v. City and County of San Francisco , No. 04-340, 05 C.D.O.S. 5313, 2005 DJDAR 7265. Filed June 20, 2005. The Lawyers: For San Remo: Paul Utrecht, (415) 956-8100. For San Francisco: Andrew Schwartz, Shute, Mihaly & Weinberger, (415) 552-7272. Lingle v. Chevron USA, Inc ., No. 04-163, 2005 DJDAR 5868. Filed May 23, 2005. The Lawyers: For Lingle: Seth Waxman, Wilmer, Cutler, Pickering, Hale & Dorr, (202) 663-6000. For Chevron USA: Craig Stewart, Jones Day, (415) 626-3939.

The City of Los Angeles was correct to revoke a building permit even though the permit holder had spent more than $200,000 on real estate and construction as a result of the city's advice and permit, the Second District Court of Appeal has ruled. By getting a permit and spending money on improvements, the landowner had met the usual criteria to establish a vested right. But the court ruled against him because he acted in bad faith by failing to disclose the true nature of his business. That business, an autopsy service, is not a permitted use in the zoning district where the landowner purchased a building. In 1999, Autopsy/Post Services, Inc. (APS), purchased a commercial building on Foothill Boulevard, where APS founder and President Vidal Herrera planned to operate his commercial autopsy and tissue procurement enterprise. Herrera later said that he met with a Department of Building and Safety supervisor to discuss his plans and received “the OK” before purchasing the building. A contractor then received various building permits to convert the structure into a medical laboratory, a use allowed by right in the C2-1VL commercial zone. None of the permit applications, however, contained APS's name or indicated the true nature of the business. Not until Herrera applied for a sign permit with the name of the business (1-800-AUTOPSY) did the city become aware of what was really going on. In April 2000, Building and Safety issued a stop work order, said it intended to revoke the permit and directed Herrera to the Planning Department. Herrera applied for an exception to the Foothill Boulevard Corridor Specific Plan, which limits the commercial uses on Herrera's property. In January 2001, the North Valley Area Planning Commission determined that the proposed autopsy facility was equivalent to a morgue or mortuary - businesses that are restricted to industrial zones - and denied Herrera's application. Herrera appealed to the City Council, but lost there as well. In the meantime, Building and Safety revoked the building permit. He appealed to the Board of Building and Safety Commissioners, which upheld the revocation because “the autopsy use in the establishment was never made explicitly or implicitly clear.” While the Board of Building and Safety Commissions was considering the appeal, APS sued, contending that it had a vested right to complete the project. Los Angeles County Superior Court Judge David Yaffe ruled that APS had no vested right because it did not act in good faith, having “artfully concealed” its intention to perform autopsies. On appeal, a unanimous three-judge panel of the Second District, Division Eight, upheld Judge Yaffe. “The plans approved by Building and Safety made no reference to an autopsy facility,” Justice Paul Boland wrote for the court. “The building permit application did not reveal APS's name as owner or tenant, instead naming Herrera as the owner. The application for testing of the autopsy table - the only permit-related document that used the word “autopsy” - was filed in the name of 'Otreum Le Labatory' and product approvals were issued without reference to the location where the product would be installed.” Herrera also argued that his project complied with the specific plan because it does not expressly prohibit autopsy use and because his business is not like a morgue or mortuary. “Again, we disagree,” Boland wrote. “It is the mere presence, rather than the storage, of deceased bodies on the premises that informed the city's conclusion that the proposed use rendered it akin to morgues and mortuaries. Contrary to APS's assertion, the city did not abuse its discretion in reaching that conclusion, and the trial court properly upheld the city's determination.” The Case: , No. B179349, 2005 DJDAR 5674. Filed May 17, 2005. The Lawyers: For APS: Fred Gaines, Gaines & Stacey, (818) 593-6355. For the city: Michael Klekner, deputy city attorney, (213) 485-5420.

A proposed golf course and housing development amid the imperiled Monterey pines of Pebble Beach's Del Monte Forest has set up a confrontation between Monterey County and the California Coastal Commission. The Monterey County Board of Supervisors unanimously approved development plans for a golf resort, 33 luxury residences, worker housing, and other projects in March. While the plans have been branded as a balance of environmental protection and economic development, the Coastal Commission - backed by the Sierra Club and other environmental and citizen groups - is concerned about the impact on the pine forest. At stake are 17,000 Monterey pines and what remains of an already fragmented coastal habitat. Development proponents point out that the plans would clear only a small fraction of the region's pines, and that the project also includes protection of 800 acres elsewhere. However, Coastal Commission staff members and environmentalists contend that the coastal pine habitat is more sensitive, more diverse, and more threatened than pine woodlands farther inland. The coastal pine forest harbors many endangered species, such as the Yadon's piperia and red-legged frogs, not found in the inland forests. Although the county has recently given the thumbs up, the Coastal Commission has final say in the matter because the project requires a local coastal plan amendment and a change to a 1984 coastal development permit. Plus, at least 10 groups have appealed the county's decision to the state panel. Coastal Commission staff members say that the plans are in violation of the Coastal Act, the current local coastal plan, and the 1984 coastal development permit for a neighboring project. Yet environmentalists and other opponents fear that the coastal commissioners will approve the project anyway because commissioners overrode staff concerns recently while approving development at Bolsa Chica and the Dana Point Headlands in Orange County. In February of 2000, Clint Eastwood, Arnold Palmer, Peter Ueberroth, and other investors purchased the Pebble Beach Company - owners of four golf courses and several resorts, restaurants, and other tourist draws on the Monterey Peninsula - for $820 million. That November, the group backed a county-wide ballot initiative (Measure A) to alter the zoning in the Del Monte Forest for the group's development plans. Prior to the election, Eastwood appeared in ad campaigns asking the voters to support the initiative titled, "Del Monte Forest Plan: Forest Preservation and Development Limitations." Voters were told that the initiative would permanently protect several hundred acres of their beloved forests and substantially limit future development. Offering his vote of assurance, Ueberroth claimed, "We are not developers." The measure passed with nearly two-thirds of the vote, yet the subsequent development plans - despite being consistent with the measure - revealed more aggressive interests than many people anticipated. According to David Dilworth, President of Help Our Peninsula's Forests, few voters understood that Measure A would be opening the door to new development. "Most of the folks I've talked with felt they were voting on a purely forest preservation measure," he said. While a clever advertising campaign may have contributed to the measure's success, many voters and citizen groups, including the Concerned Citizens of Pebble Beach, were fully aware of Measure A's intent. Although developers did not file their plans with the county until July 2001, "Many of us knew about the plans, and we did our best to inform the voters,” said Ted Hunter, Concerned Citizens president. The Del Monte Land Use Plan - as approved by the Coastal Commission in 1984 - allows for the subdivision of 41 residential lots into a total of 890 parcels. In campaigning for Measure A, the Pebble Beach Company relied on the impression that they were saving the forest from the construction of almost all of those houses; however, it is unlikely that most of these houses would ever get built. Most of the lots lie on land currently designated by the Coastal Commission as environmentally sensitive habitat area (ESHA), which places severe restrictions on subdivision potential. Commission staff members say that a proper reading of the Coastal Act allows no more than 41 units. Thom McCue, senior planner with Monterey County, said that environmental overlays significantly reduce the development potential as well. McCue contended that while it is difficult to know how many units might be allowed, "it would certainly be significantly less than the theoretical potential." McCue also said that a new 18-hole golf course may be more intrusive on the forest than the homes would be because many residents would likely leave trees on their property standing. The Coastal Commission staff contends that the proposed golf course is impermissible under the Coastal Act because it would harm land protected as ESHA. The Pebble Beach Company's plan also designates roughly 800 acres of protected open space, 460 of which is in the Del Monte Forest. Environmentalists and the Coastal Commission contend that this land is already protected under the Coastal Act as ESHA. The county planning staff, which has admittedly interpreted the law more narrowly, disagrees. The county's interpretation of the law, consistent with the terms of the 1984 permit, provides for far greater development potential. Another issue involves the relocation of an old equestrian center to a new site known as Sawmill Gulch. In 1984, the 24 acre-Sawmill Gulch site was set aside in conservation easements as mitigation for the Spanish Bay golf resort development. The site was supposed to be reforested, but the effort failed and it remains largely barren. To create the new equestrian center, the conservation easements would have to be revoked by the county, according to McCue. While environmentalists bemoan the county's interpretation of "in perpetuity,” McCue points out that the number of acres the plan protects is many times greater than those lost at Sawmill Gulch. Dan Carl, a coastal planner in the Commission's Santa Cruz office, said that in order to allow the new equestrian center, the Commission would need to weaken the existing coastal development permit (CDP) for Spanish Bay. He said that the Commission is not allowed to weaken environmental restrictions on an existing CDP unless new information becomes available. "We don't believe any such information exists," he said. In an attempt to mitigate the effects of the current project, Pebble Beach Company has proposed dedicating 460 acres of protected land within the Del Monte Forest and pledged protection for about 340 acres of Monterey pines on privately owned land east of Highway 1. While the gesture adds a new layer of protection to these sites, environmentalists such as Rita Dalessio, chair of the Sierra Club's Ventana Chapter, say there is no indication that any real development potential exists at the inland locations. The sites are well into the hills and away from activity, it is not clear there are any water rights, and there are only a handful of legal lots. As for the 460 acres of the Del Monte forest designated as protected, Dalessio contends that what is left is merely scraps from the developer's plate and worries that, like the Sawmill Gulch, this land is safe only until developers want to build on it. The big question may be whether the Coastal Commissioners will choose to listen to county officials or their own staff. A decision may be rendered by the early fall. Mark Massara, attorney for the Sierra Club and director of its Coastal Programs campaign, said that while the commissioners do not always agree with their staff, the commissioners' decisions are vulnerable in court if they differ from the staff recommendation. He cited a case in Davenport, north of Santa Cruz, in which a San Francisco Superior Court judge recently found that commissioners erred by ignoring staff advice, and the judge overruled the Commission's decision to allow a development project. Contacts: Dan Carl, Coastal Commission, (831) 427-4863 Thom McCue, Monterey County, (831) 883-7528. Mark Massara, Sierra Club, (805) 895-0963. David Dilworth, Help Our Peninsula's Forests, (831) 624-6500. Ted Hunter, Concerned Citizens of Pebble Beach, (831) 624-3734.

The saga of public access to a beach adjacent to entertainment mogul David Geffen's house in Malibu has apparently concluded, with public access secure. In mid-April, Geffen agreed to drop a lawsuit against the Coastal Commission, the Coastal Conservancy and Access for All, a nonprofit entity formed to accept beach easements. Ten days later, a sharply divided three-judge panel of the Second District Court of Appeal refused to let Geffen's neighbor on Broad Beach intervene in the lawsuit. Finally, on May 30, an easement between the Pacific Coast Highway and Carbon Beach opened to the public. (Two days later, Broad Beach property owners engaged in a similar public access dispute started a massive grading project that piled up eight-foot-high sand dunes, leaving the public with little beach to visit. Whether the grading was legal is subject to debate.) As is so common in Malibu land use disputes, the controversy here has lasted for more than two decades. In 1983, Geffen applied for a permit from the Coastal Commission to build a beachfront house. The owners of a house next door, the Heidt family, opposed the application, but the Coastal Commission approved the permit. Among the permit conditions was a requirement that Geffen grant an “offer to dedicate” (OTD) a “vertical” easement between the highway and the beach. Geffen signed the OTD for an easement within an 18-foot-wide strip between his planned house and the Heidts' property. Under the Coastal Commission practice, however, a dedication does not occur until a public agency of some sort accepts the offer. Years passed without a public agency stepping forward to accept the easement on Geffen's property. Meanwhile, Geffen installed a locked gate. In January 2002, the Coastal Commission, the Coastal Conservancy and Access for All signed an agreement authorizing Access for All to manage the vertical easement, as well as three “lateral” easements along the beach that the Commission had required as part of other permits granted to Geffen in 1991 and 2000. Access for All then recorded a “certificate of acceptance” of the OTDs with the Los Angeles County recorder. Six months later, Geffen and the City of Malibu (which later dropped out of the litigation) sued the coastal agencies and Access for All, alleging that Access for All's acceptance of the OTD was illegal and unconstitutional for many reasons. In December 2002, the Heidts asked to intervene in the litigation. They argued that they had never applied for a coastal development permit, received no benefit from the permits granted to Geffen, and received no notice of Access for All's acceptance of the OTD. Their house, they said, is less than 20 feet from the public access. Los Angeles County Superior Court Judge David Yaffe, who issued numerous early rulings against Geffen, refused to let the Heidts intervene. They appealed but still were not allowed into the litigation. Shortly before the Second District issued its ruling upholding Yaffe, Geffen agreed to drop the lawsuit, open the locked gate and reimburse the state $300,000 in fees and costs. The Second District's split decision turned largely on interpretation of , (1987) 196 Cal.App.3d 1192. In , the court permitted Save-the-Redwoods League to intervene in a quiet title action filed by Simpson Redwood. The lumber company was arguing that it actually owned parcels within the boundaries of Prairie Creek Redwoods State Park. The court allowed the League into the legal proceedings because the League was instrumental in creating the park (it had donated some of the land), the League's reputation and integrity would suffer if Simpson gained control of the land it sought, and because the League's interests were different from the state, whose interest was largely financial. The Heidts pointed to the court's decision that a “substantial probability” of the League's interest being affected was enough to permit intervention. But the court majority looked at differently. “The League's interest was also 'direct and immediate' because if Simpson were to prevail on its claim of ownership, the loss of public parkland would immediately damage the reputation and integrity of the League as a conservation organization,” Justice Robert Mallano wrote for the court. “In contrast, if defendants prevail in this case and the public accessways are opened, there are no immediate consequences because the Heidts can only speculate that members of the public will trespass and litter on the portion of the beach that the Heidts own and thereby affect the quiet enjoyment of their property. … he possibility of what some ill-mannered citizens might do cannot create an entitlement for landowners up and down the Malibu coast to interject themselves into every dispute regarding the right of public access to the beach.” Somewhat ironically considering Geffen's dismissal of the lawsuit, Mallano continued, “ t may be readily gleaned from the record on appeal that Geffen has been an able advocate of his and the Heidts' position in attempting to prevent public use of Geffen's easements.” Mallano was joined in his opinion by Los Angeles County Superior Court Judge Steven Suzukawa, sitting by assignment on the Court of Appeal. In a dissent, Justice Miriam Vogel said that provided a basis for allowing the Heidts to intervene. The Heidts' interest in the use of Geffen's property and the OTD “is substantively indistinguishable from the League's interest in the dispute between Simpson and the state,” she wrote. Just as the state could not adequately protect Save-the-Redwoods League's interest, Geffen cannot protect the Heidts' interest, Vogel added, writing, “ he outcome of Geffen's lawsuit will determine whether and to what extent the Heidts' property is subjected to the burdens attendant to the OTDs given by Geffen, not by the Heidts. As the Heidts tried unsuccessfully to explain to the trial court and to my colleagues, it is this difference that compels rather than defeats intervention.” The Case: , No. B171650, 05 C.D.O.S. 3468, 2005 DJDAR 4723. Filed April 25, 2005. The Lawyers: For John and Mary Ann Heidt: Dean Dennis, Hill, Farrar & Burrill, (213) 620-0460. For the Commission: Daniel Olivas, deputy attorney general, (213) 897-2705.

For nearly seven years, the controversy over school impact fees has appeared to be an issue of the past. However, skirmishes have broken out in Merced County that could presage an end to the statewide peace regarding school fees. Since last year, city and school officials in Los Banos have forced developers to sign agreements calling for fees of about $14,000 per house - more than triple the “level one” fees permitted by a state law. Now, other districts in Merced County are demanding higher fees. At least two districts that did not get more money from developers have filed California Environmental Quality Act (CEQA) lawsuits that contend impacts to schools have not been mitigated. They are similar to lawsuits that were common during the 1980s and 1990s, but which a 1998 compromise sought to end. Still, development industry officials say the conflicts in Merced County, and especially in Los Banos, are exceptions. California Building Industry Association lobbyist Richard Lyon said that the SB50/Proposition 1A compromise from 1998 remains in full effect. Under the compromise, school backers accepted a statutory cap on local impact fees and a suspension of case law precedents favoring school districts in exchange for builders' support of statewide school bonds (see , September 1998). Lyon said Proposition 1A and two subsequent school bonds, combined with SB 50 school impact fees, have provided tens of billions of dollars for school construction. But some school districts complain that the fees allowed under SB 50 are inadequate to pay for new schools. The cap currently is $2.24 per square foot for new houses, unless school districts meet criteria to charge “level two” fees, which vary from district to district but average approximately $4 per square foot. “The school districts in Merced County do not embrace the statutory scheme in effect regarding schools fees,” said Steve Madison, executive vice president of the Building Industry Association of Central California. The Los Banos Unified School District has been at the forefront of the fight. With relatively inexpensive real estate and many greenfield development sites, Los Banos has become a relief valve for Bay Area growth pressure - even though the commute to Silicon Valley can take two hours. The population of Los Banos has more than doubled in 15 years to about 32,000, and numerous giant subdivisions are planned. Shortly after first winning office in 1994, Los Banos Mayor Michael Amabile helped put together an ordinance that required builders to get school district approval for new housing projects. Those sorts of “negotiations” were supposed to have ended with SB 50, but Amabile calls SB 50 an “inferior law.” “It's really been a heated issue for about three years now. In the last 18 months, there has been a lot of progress made toward implementing a fee that will mitigate the impacts to schools,” Amabile said. Amabile marks as progress the mitigation agreements that seven developers have signed with Los Banos Unified calling for extraordinary fees. Ranchwood Corp., for example, agreed to pay $14,000 per home for a 2,700-unit project. Anderson Homes agreed to pay $5.25 per square foot and to place its 1,800 planned houses in a community facilities district that will levy a $300-per-year tax for schools. “SB 50 doesn't really work for building schools,” said Los Banos Unified Superintendent Paul Alderete. The district's student population doubled during the 12 years from 1992 to 2004, and is projected to double again by 2020. Alderete contended that even level two fees are inadequate to meet the district's needs. The district's five elementary schools are already on a year-round calendar, the district has 165 portable classrooms, and the junior high is scheduled to go to year-round sessions in 2006-07. “What is boils down to is, who should pay?” Alderete said. “In this community, there's a feeling that growth should pay its own way.” However, ballot measures aimed at taxing growth have failed twice recently. In May, Measure A1 received about 66% of the vote - just short of the two-thirds required. The measure would have set up a Mello-Roos district for the entire 620-square-mile school district. Homebuilders would have had to pay about $13,600 per unit, and new homeowners would pay an additional $339 annually. Owners of existing homes would have paid a $50 annual tax. A similar measure lost in 2003. Alderete, who said building industry representatives were partly to blame for Measure A1's loss, said district officials are regrouping. “We're not going to build any faster unless we have more money. Until we can build schools to match the growth of the community, it will be harder to market new homes,” he said. Both Lyon and Madison argued that Los Banos Unified could build schools cheaper than it does. Madison said that developers have signed mitigation agreements with Los Banos Unified only because the city was willing to hold up project approvals. Amabile said the city never threatened to stop a project, but he noted that talk of a growth control initiative or moratorium has been in the background. “In the real world, those developers need us,” Amabile said. “It may not be just for the tentative map that's before us. They need us on their side.” Not every developer has been willing to pay extra, however. Industry giant KB Homes has not signed an agreement, and a much smaller developer who took over a 34-unit townhouse project in June called the district's demand for $15,000 per unit “extortion.” Demands for higher fees have spread elsewhere in Merced County. In June, Merced Union High School District and Merced City School District signed an agreement with Lakemont Homes regarding a 520-house project near the new University of California campus. Lakemont agreed to pay about $16,000 per unit to the districts. In Atwater, Merced Union High and Atwater Elementary school districts have sued the city over approval of a 1,600-unit project proposed by Florsheim Homes. The CEQA lawsuit contends that the approximately $3.25 per square foot that Florsheim would pay in level two fees would not mitigate the impact on schools. The district said fees of about $8 per square feet are needed, and rejected Florsheim's offer of $4.50 per square foot. However, $4.50 per square foot was the amount that Livingston Union Elementary School District accepted in negotiations with Del Valle Homes for a 500-unit divisions. Del Valle also agreed to give teachers priority for the affordable homes in the project. Contacts: Michael Amabile, mayor, Los Banos, (209) 827-7000, extension 30. Paul Alderete, Los Banos Unified School District, (209) 826-3801. Steve Madison, Building Industry Association of Central California, (209) 529-4531. Richard Lyon, California Building Industry Association, (916) 443-7933.

The Supreme Court's closely divided decision backing the use of eminent domain for economic development gives state and local governments a qualified boost in what property rights advocates promise to be continuing challenges to the practice in state courts. The Supreme Court's 5-4 ruling in refused to prohibit government from taking private property and transferring it to private companies or developers for commercial or industrial projects. Legislatures have “broad latitude in determining what public needs justify the use of the takings power,” Justice John Paul Stevens wrote for the majority in the June 23 decision. At the same time, property rights advocates and others saw evidence in all the justices' opinions - including a pivotal concurrence by Justice Anthony Kennedy - that municipalities should be more careful in the future in using government power to benefit private parties. Courts should block use of eminent domain when a taking benefits “particular, favored or private entities” or produces “only incidental or pretextual benefits,” Kennedy wrote. Despite Kennedy's caveat, dissenting justices warned that the decision leaves private property rights at the mercy of development-minded state and local governments. “Today nearly all real property is susceptible to condemnation on the court's theory,” Justice Sandra Day O'Connor wrote. The ruling in a development controversy from the midsized, economically depressed coastal city of New London, Conn., cheered municipal officials. Washington, D.C., Mayor Anthony Williams, current president of the National League of Cities, said the ruling “reaffirmed the continued use of eminent domain to bolster depressed economic neighborhoods,” which he said is “indispensable for revitalizing local economies, creating much-needed jobs, and generating revenue that enables cities to provide essential services.” But Columbia University law professor Thomas Merrill, who coauthored a friend-of-the-court brief for the American Planning Association, said the ruling gives municipalities a “flashing amber light.” “The message to state courts is: go ahead and use eminent domain for economic development, but please try to take property rights more seriously in the future,” Merrill said. The Institute for Justice, the Washington-based public interest law firm that represented New London homeowners, voiced disappointment, but also saw legal ammunition for future cases in the states. “The majority and the dissent both recognized that the action now turns to state supreme courts, where the public use battle will be fought out under state constitutions,” Chip Mellor, president of the institute, said. “Today's decision in no way binds those courts.” Tom Hart, deputy director of the California Redevelopment Association, said the ruling would have little effect in California - partly because a state law, cited in Stevens' majority opinion, prohibits use of eminent domain for economic development except in blighted areas. “Nothing has changed based upon the ruling,” Hart said. “We certainly agree with it. It will help communities.” Chris Norby, an Orange County supervisor and state chairman of Municipal Officials for Redevelopment Reform, called the ruling “a horrible decision.” Redevelopment agencies “will believe they can use eminent domain with impunity,” Norby said. But he said public opinion is turning against eminent domain because it has been abused and because it often is ineffective. In immediate effect, the decision rejected an effort by nine homeowners in a once-busy New London neighborhood to block seizure of their properties as part of a 90-acre tract being eyed for an ambitious waterfront development. City officials and a specially created quasi-governmental corporation say the planned commercial, residential and recreational development will create jobs, draw tourists and boost revenues. The city acquired most of the 115 parcels to be developed through voluntary sales, some of them after possible use of eminent domain had been publicly reported. Lead plaintiff Susette Kelo and eight other owners of a total of 15 parcels refused to sell - forcing the development corporation to file condemnation actions in November 2000. A state trial judge issued a mixed ruling upholding some seizures and rejecting others. On appeal, the Connecticut Supreme Court upheld all of the seizures by a 4-3 vote. The U.S. Supreme Court's decision to hear the homeowners' appeal attracted more than two dozen friend-of-the-court briefs on both sides. In the majority opinion, Stevens said that the court has no power to “second-guess” elected officials in determining what constitutes a “public use” under the constitution's Takings Clause. The clause - the final part of the Fifth Amendment _ states: “Nor shall private property be taken for public use, without just compensation.” Stevens said that Supreme Court cases dating to the late 19th century had broadly defined “public use” to be any public purpose. He said there was “no basis for exempting economic development” from that broad definition. In a similar vein, Stevens said the court has no power to second-guess the likely success of a planned development or officials' determinations about what parcels to take for the development. Looking specifically at the New London plan, he said it was “carefully formulated,” authorized by state statute, and adopted after “thorough deliberation.” Justices David Souter, Ruth Bader Ginsburg, and Stephen Breyer joined Stevens' opinion along with the swing-vote conservative Kennedy. In his concurrence, however, Kennedy qualified his support by urging courts to engage in “meaningful” review to prevent use of eminent domain for “impermissible favoritism.” Writing for the four dissenters, O'Connor said the effect of the ruling was “to delete the words 'for public use' from the Takings Clause.” She argued that the decision went beyond the court's previous rulings, including the controversial 1954 decision, , that upheld redevelopment of Washington, D.C., slums. Chief Justice William H. Rehnquist and Justices Antonin Scalia and Clarence Thomas joined O'Connor's opinion. Separately, Thomas argued for reconsidering the court's previous rulings and instituting a rule that property could be taken only if the government “actually uses or gives the public a legal right to use the property.” In their dissents, both O'Connor and Thomas argued that the use of eminent domain for economic development primarily benefits what O'Connor called “large corporations and development firms” at the expense of what Thomas called “powerless groups and individuals.” Stevens did not respond to those comments, but noted that states can establish stricter rules on use of eminent domain either through legislation or court action. Contacts: Tom Hart, California Redevelopment Association, (916) 448-8760. Chris Norby, Municipal Officials for Redevelopment Reform, (714) 834-3440. Chip Mellor, Institute for Justice, (202) 955-1300. , No. 04-108, 05 C.D.O.S. 5466, 2005 DJDAR 7453.

A land exchange between the State Lands Commission and the City of Long Beach to accommodate a retail development project has been thrown out by the Third District Court of Appeal. The court ruled that the state agency and the city violated the state law that permits the swapping of land covered by the tidelands public trust doctrine. The precise impact of the ruling is unclear, as the three acres in question have already been developed by Developers Diversified Realty, which appealed the decision to the state Supreme Court in June. The state high court has not decided whether to accept the case. A Developers Diversified attorney told the that the decision means little because the land entitlements remain in place. Project opponents, however, have hinted that they want a movie theater and arcade torn down. The land at issue is part of phase two of the Queensway Bay Development Plan, a long-term project to redevelop Long Beach's waterfront (see , March 2001; , August 1998). Phase two involves extensive retail development and a pedestrian bridge over busy Shoreline Drive. At issue in the litigation is three acres of tidelands that the city filled in the 1950s. The land had been transferred from the state to the city in 1911 and is subject to the public trust doctrine that protects public use of waterways. Nevertheless, four years ago, the city approved a multi-screen cinema, an arcade and other retail uses on the disputed property. Opponents of the project, called Pike at Rainbow Harbor, said some of the proposed land uses conflicted with the public trust doctrine. Members of the State Lands Commission, which oversees activities of tidelands trustees such as Long Beach, suggested that they agreed with opponents, so the Commission and the city put together a parcel exchange. Essentially, the Commission removed the three acres from the public trust and placed 10 acres along the Los Angeles River, near the 710 freeway's downtown Long Beach ramps, into the public trust. Opponents then honed in on the land swap, arguing that the city was sacrificing land that could be used for a public park, and was getting nothing in return because the 10 acres along the river were already designated parkland. So opponents, led by the group California Earth Corps, sued the city, the Commission and the developer, arguing that the trade violated state law and the California constitution, and had been improperly exempted from the California Environmental Quality Act. Sacramento County Superior Court Judge Gail Ohanesian ruled against the environmentalists. On appeal, a three-judge panel of the Third District overruled the lower court. The case turned on interpretation of Public Resources Code § 6307, which Long Beach and the Commission used to carry out the land exchange. As Third District Justice Vance Raye summarized in his opinion, “Section 6307 permits a land exchange only for the purposes of the improvement of navigation, aiding in reclamation, flood control protection, or of enhancing the configuration of the shoreline for the improvement of the water and upland on navigable rivers, sloughs, streams, lakes, bays, estuaries, inlets or straights.” The trial court found that the exchange “will allow improvements of the upland which will make greater use of the Queensway Bay parcels, will attract additional visitors to the shoreline and will improve the access to the shoreline and water.” Judge Ohanesian also noted that the parcels in dispute were paved over decades earlier and lie 550 feet from the harbor. But the Third District ruled that Ohanesian and the public agencies got it wrong. “Parking lot or not, the exchange of the Queensway Bay parcels must conform to the requirements of § 6307,” Raye wrote. “The Commission argues the Queensway Bay parcels have been virtually unused for over 20 years, providing no significant trust benefit to the public. To fill this void, the development plan 'is transforming the city's filled tidelands adjacent to its downtown area into an area that will attract people to the shoreline and provide for public use of this previously unused or minimally used area.' However, § 6307 does not permit exchanges to encourage or increase public use, nor does § 6307 exempt minimally used public trust land from its requirements.” The city and the developer contended the trade would “enhance the configuration of the shorelines,” as the statute requires. But the court said there was no proof. “ rearrangement of two parcels of land does not denote an enhancement of the configuration of the shoreline. The river parcels are not part of the shoreline, and the removal of the Queensway Bay parcels does not, in itself, enhance the shoreline,” Raye wrote. “Read in context, the goal of enhancing the shoreline requires a change of the physical geography of the shoreline or the construction of an improvement to the shoreline. The exchange at issue does neither,” Raye continued. In a concurring opinion, Justice Coleman Blease wrote that the exchange was not permissible under § 6307 because the Queensway Bay parcels were not on navigable waters. “For that reason, the proposed exchange cannot 'enhance the configuration of the shoreline.' There is no shoreline to be reconfigured,” Blease wrote. The Case: , No. 041603, 05 C.D.O.S. 3404, 2005 DJDAR 4590. Filed April 21, 2005. The Lawyers: For California Earth Corps: Jan Chatten-Brown, (310) 314-8040. For the State Lands Commission, Alan Hager, deputy attorney general, (213) 897-2701. For the City of Long Beach: Robert Bower, Rutan & Tucker, (714) 641-5100. For Developers Diversified Reality: Richard Dongell, Radcliff, Dongell, Lawrence, (213) 614-1990.