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Yesterday the Senate Budget Subcommittee 4 heard testimony from cities and other supporters of redevelopment in opposition to a bill that could limit the number of former redevelopment projects that receive funding under Assembly Bill 1X 26.  Released last week, the bill would make changes to the redevelopment dissolution statutes that would reduce the discretion of local oversight boards and expand the power of the Department of Finance, including granting it the ability to divert local sales and property taxes when it determines successor agencies have "improperly" transferred funds to other agencies or private parties.  "It's designed to provide additional clarification in terms of some of the actions associated with the dissolution of redevelopment agencies," said DOF spokesperson H.D. Palmer.   The DOF's proposal would direct all remaining affordable housing and other funds to benefit the state and empower DOF and county auditor-controllers with authority to resolve all matters of dispute involving Recognized Obligation Payment Schedules and enforceable obligations in favor of the state without regard to priorities set by local oversight boards. Though many have expressed concerns about AB 1X 26, the League of California Cities is leading the opposition against this new bill, which, League officials say, makes the dissolution process even harder on cities.  Palmer said, though, that the bill includes provisions that could benefit successor agencies. Many successor agencies have been concerned about obligations that might not get funded by the deadline of June 1 but that are still under investigation by DOF. The bill would ensure that monies would be available even if deliberations extend beyond June 1.  "There's an opportunity to catch up or recoup this amount if after June 1 we review additional evidence that the successor agency has provided...and that additional information that it was in fact an enforceable obligation," said Palmer.   The bill may complicate the progress of other bills intended to supplement AB 1X 26 and provide cities with new tools for promoting economic development and affordable housing. Those bills include AB 1585 (Pérez), SB 986 (Dutton), SB 1335 (Pavley), SB 1151 (Steinberg) and SB 1156 (Steinberg).  The bill is part of the larger budget package, which is scheduled to be approved on or around the deadline of June 15.  To read the current bill language, please click here (pdf).  DOF is in the process of posting all of its letters concerning successor agencies' ROPS's; they can be found on the DOF website here .  This post will be updated as this issue develops.

Update: Yesterday, Sacramento Superior Court Judge Timothy M. Frawley ruled against a group of cities seeking a temporary restraining order that would have effectively set aside funds for former redevelopment obligations that are still under review by the Department of Finance. Though the loss is considered a blow to cities that are trying to cover bonds and pay for former redevelopment projects, it is expected to be only the first of many such lawsuits.  Call it the spawn of Matasantos vs. California Redevelopment Association . As expected, the Department of Finance's rejection of hundreds of items for which successor agencies had requested funding has spurred a legal action. The first of what could be many lawsuits was filed last Tuesday by a coalition of nine cities.  A hearing is set for May 30 in Sacramento Superior Court. The suit calls for a temporary restraining order that would prevent the state from disbursing tax increment funds to taxing entities and instead sequester those funds until the disputes are settled.  DOF has reportedly questioned a total of $350 million worth of payments towards projects and other obligations statewide in the recent rounds of ROPS requests. Those payments are just for this year; the total value of affected projects is much higher.  June 1 is the date on which the Department of Finance will release monies to cover successor agencies' approved obligations. The suit is intended to compel DOF to loosen its purse strings before that date rather than to effectively kill projects, in some cases, put successor agencies at risk of defaulting on bond payments. Many successor agency officials are anxious because, although they intend to re-submit their Recognized Obligations Payment Schedules, DOF's final decisions are still uncertain.   In City of Palmdale, et al vs. Ana Matosantos, et al, t he nine cities are asking a judge to issue a writ of mandate to require the June 1 payment to the successor agencies, a temporary restraining order prohibiting the distribution of the funds to the taxing entities while the amount of the payment to the successor agencies is in dispute, and declaratory relief resolving the disputed issues. "The City and the Successor Agency understand and want to fully comply with the obligations of the Successor Agency under the law. Based upon the continued uncertainty caused by the State Department of Finance's lack of clear guidance, the looming June 1, 2012 payment date and the critical importance of this issue, we felt we had no choice but to join the other similarly situated cities in taking this action," said Mayor Andrew Weissman, who also serves as chair of the Culver City Successor Agency, in a statement. DOF maintains that it is faithfully executing Assembly Bill 1X 26. He noted that the department sent letters to all successor agencies throughout the state on March 2 in order to give them notice of what the ROPS process would entail.  "I think the authority given to Finance under the law as affirmed by the Sup Court is fairly clear," said DOF spokesperson H.D. Palmer. "As for the issue of timing, we have been nothing if not forward-leaning in terms of providing as much early notification as possible." The far, the suit includes mainly Southern California cities: Pasadena, Glendale, Palmdale, Huntington Beach, Imperial Beach, Inglewood, National City, Hayward, and Culver City. Others, including Ojai, have indicated that they may join the suit.

Several weeks after I wrote what could be described as emotion-driven defenses of California's approach to smart growth (in response to separate commentaries by Wendell Cox and Joel Kotkin), I was heartened to read a  different, but complementary, perspective  from Christopher B. Leinberger in this weekend's  New York Times . It would appear that, when you run the numbers, smart growth might make sense after all.  Leinberger led a Brookings Institution study with the delightfully rock-n'-roll title  "Walk This Way: The Economic Promise of Walkable Places in Metropolitan Washington, D.C."  which compared changes in housing prices in walkable neighborhoods as compared to suburban neighborhoods. Setting aside the subjective nature of "walkable" and "suburban," Leinberger found  "real estate values increase as neighborhoods became more walkable, where everyday needs, including working, can be met by walking, transit or biking." Leinberger cites places like Columbus, Ohio's, Short North neighobrhood and Washington, DC's, West End, where real estate prices have risen 163% and 205%, respectively, since 1996. In the same time period, prices comparable suburban areas have risen only 69% in the DC study area and  negative  13% in the Columbus study area.  Lest these trends reflect residents' native incomes more than their lifestyle preferences, Leinberger notes that "People who live in more walkable places tend to earn more, but they also tend to pay a higher percentage of their income for housing." This means that the walkable areas are more dear--and, by extrapolation, more desirable--on both an absolute and relative scale.  As we all know, real estate economics is an inexact science. The consumer trends are invisible swells that rise from the abyssal plains of culture, demographics, and economics.  We can't just go to the house store and see which ones are flying off the shelves. Instead, we have to look at the prices of existing stock and infer that increases in prices correlate with increases in aggregate demand, and we need lots of data. Leinberger thinks that the data is reaching a critical mass.  "Walk this Way" offers the following conclusion, signaling nothing short of the biggest shift in urbanism since, arguably, the late 1940s:  "While U.S. home values dropped steadily between 2008 and 2011, distant suburbs experienced the starkest price decreases while more close-in neighborhoods either held steady or in some cases saw price increases. This distinction in housing proximity is particularly important since it appears that the United States may be at the beginning of a structural real estate market shift. Emerging evidence points to a preference for mixed-use, compact, amenity-rich, transit-accessible neighborhoods or walkable places." In other words, we have entered a new era.  Though the bulk of the Brookings study focused on the Washington, DC, metro area, Leinberger writes that "these findings appear to apply to much of the rest of the country." Could that mean California, too? I don't see why not.  This analysis means that, whatever your aesthetic objections to smart growth may be, it might actually turn out to be a good investment for California. If the Brookings results are right, then California's Sustainable Communities Strategies are directing growth towards the very places were demand is likely to be higher.  My visceral take on smart growth is that it's good for everybody. If you like dense urban living, then now you get more of it. If you enjoy the wide-open suburban lifestyle, then you're in luck too: growth is going to happen in the places were you aren't.  In defending SCS's against some recent criticism ( here and here ), I noted some contradictions and some leaps in logic, and I corrected some inaccuracies and what I considered to be willful disregard for facts. From all the articles I've written on the subject, I know firsthand that countless people have been working very hard on California's Sustainable Communities Strategies, from which tens of millions of us will--hopefully--benefit.  Critics can, and should, say what they want. But, while California's planners should take pride in being ahead of the curve, they should bear in mind one caveat, though: we can't let nonsensical critiques drown out those that might be legitimate. Of course the SCS's aren't perfect. No less an authority than the state attorney general has said so -- and CP&DR has  reported  accordingly. Critiques such as Harris' should set up sensible discussions about how to implement SCS's and address nuances. It's hard not be frustrated, however, by "us vs. them" rivalries based on what appeared to be visceral, aesthetic objections that do not advance the public discourse or make California a better place.  As California grows more dense, the Brookings study should remind planners and developers to pay attention not just to the difference between walkabilty and mere density. You have have dense slums and dense hotspots, and you can have friendly single-family home neighborhoods and indifferent multifamily neighborhoods. It's all in how you design them and in what mix of uses you include.  If we can all get behind smart growth and clamor for it to be done well--which isn't going away now that it's the law of the land--then we can make sure that the less convincing critiques become self-defeating prophecies.

VENICE, Italy — I felt a sense of dread the moment I stepped off the train: that imprisoning feeling of being in the wrong place, with nowhere else to go. Of the 17 million people who visit Venice every year, I needed only an instant to realize that I did not want to be one of them.  I first visited Phoenix probably 30 years ago. Now that I've been to Venice, I figure I've probably beheld the extremes of human cohabitation. It's just barely a coincidence that the latter will, one day, sink beneath the waves while the former will, probably around the same time, run dry and give itself up to the desert. The remaining shell of Venice can still reveal a great deal about what cities are and what they can turn into. Even as we digitize, reconstitute, and reproduce just about every other form of expression and commerce, a true, linear history can still be read in these old stones, from upstart to empire to backwater and now a tourist attraction. Venice floats in the Po delta like Miss Havisham among her jewels.  Venice is thrilling, of course. You can hardly stop walking because, with every turn, intersection, bridge, and partial view, you imagine what visual gem lurks around the next corner. One moment you're in a deserted alley that wouldn't fit a Mini Cooper. As an urbanist, visiting Venice is like dating a knockout with whom you are simply not in love. Behind the physical beauty – of the sort that professional planning could never yield in a million years – I see regret.  That the charms of density are on display here goes without saying. Venice has the strongest sense of place of any city on the planet. But distinctiveness does not equal placefulness. But it's not a functional density. Yes, the buildings are set close together and the avenues—for foot and paddle—are narrow. You can imagine the activity that would have coursed through them 700 years when Venetian commerce dominated the known world.  Venice too used to trade goods with the ends of the earth, and it had a good run. One of the best. It built ships like Pittsburgh used to produce steel. Its Arsenal was the original arsenal, forging cannons, shot, and rope.  Now it just sits here, watching the tides.  You can imagine the energy that must have coursed through its alleys and exploded in its piazzas. Each business deal was like a moonshot, hauling spice and metal back from unseen lands—or sending young men there in the name of holiness. Every moment offered a chance to make a deal and then to spend the proceeds on another bauble, be it a Rococo palace or some extra filigree for your balcony. In a city with no dry land to spare, the details matter.  But they're all gone now. Today's Venice is what happens when creative class stops being creative.  At night most of the windows are dark and tourist wander like ghosts through this quiet city. My best moment here was sitting at a coffee shop at 8am watching locals go by: elderly men in oversize sweaters and tweed, women with briefcases, kids going to school. They still build ships here, hidden from view. And yet, every single business that I have seen exists only to serve tourists. The restaurants all serve the same dishes. The trinket stores all sell the same trinkets. And there are hundreds of each of them: each an endearing copy of the others. I am the reason why they turn their ovens on each night.  I have my quarrels with Joel Kotkin , but I agree that becoming a "boutique city" is one of the worst things a city can become. California has its share of them: Santa Monica, San Francisco, Laguna Beach, and, arguably, Venice Beach rank among the most notable offenders. Venice, Italy, became one a long time ago. Some 200 years ago, following Napoleon's conquest, Venice's traditional merchant and solider-of-fortune economy was disrupted, leaving only the lavishness that those profits bought.  It's safe to trace Venice's official death to The Stones of Venice, in which John Ruskin ruminated on the connection between architecture and morality, finding in particular that Venice's slow evolution towards the Baroque presaged its downfall. That was, notably, at the time when England had invented industry—or, rather, reinvented it, long after the Venetians had come close to developing a the assembly line method for shipbuilding. How else to produce one galley per day? Today, Venice has not so much decayed as it has been frozen.  You can still visit a million cities and still believe that their best days are ahead of them. And you can believe that you can be a part of them. That goes as much for historical giants like Paris and London as it does for upstarts like Dubai and Bangalore. For all of the United States' challenges, it applies to nearly every American city.  Taken to extremes, the smart growth movement would have all cities resemble Venice. We know that's not going to happen. But, as American, and especially Californian, cities rebuilt themselves, it's important to bear in mind the relationship between density and vibrancy. We probably don't need any more office parks, but we don't want places that are too cute or too inflexible either.  Even when California gets me down, I drive to the ocean and look towards the horizon. There's nothing like the expanse of the Pacific to stir the soul. I know that Venice once felt the same way when it looked out at the world.  A version of this essay appeared on Next American City .

The trials of Sisyphus are apt metaphors for that moment in the California Environmental Quality Act review process wherein parties believe they have reached the summit but in fact discover themselves at the bottom of the hill, only to repeat their past efforts. A recent decision involving a determination of infeasibility by California State University at San Diego, which, after the Supreme Court issued its decision in City of Marina v. Board of Trustees of California State (2006) 39 Cal.4th 341 (see CP&DR Legal Digest August 2006 ), was directed to set aside an earlier environmental impact report and to revise it consistent with Marina.  The second time around, the university rejected offsite traffic mitigation on the basis that the legislature refused to appropriate money for that purpose. On the basis that the university was required to adopt all feasible mitigation measures, SDSU's rejection for lack of appropriation was held to be insufficient, thus sending the university back up the CEQA hill again. The case involves SDSU's adoption of a new master plan, which would provide for significant increase in student enrollment (from 25,000 full time students to 35,000, in addition to related facilities), and as a consequence, increased traffic and student use of transit. Following certification of the revised, post-Marina EIR, the City of San Diego, the Redevelopment Agency, and San Diego Metropolitan Transit System all filed petitions for writs of mandate challenging the approvals.  One of the key issues in the litigation was the university's finding of infeasibility as it related to offsite traffic impacts. The findings concluded that certain offsite facilities were the responsibility of the city and as no agreement had been reached with the city, CSU found that there was no certainty of mitigation. The EIR concluded that the impact would be significant and unavoidable. The approval documents also directed the university chancellor to seek additional funding from the state legislature for offsite traffic mitigation. The findings also concluded that as legislative funding was uncertain, that mitigation was not assured and that the impacts would remain significant and unavoidable.  The ensuing litigation centered on the effect and import of the California Supreme Court's decision in Marina , which recognized that, in certain circumstances, the ability of a state agency to implement a particular mitigation strategy may be subject to legislative appropriation. Ultimately, the appellate court in this case concluded that the matter of legislative appropriation was not the end of the analysis, as nothing precluded CSU from utilizing non-legislatively appropriated funds to fund the offsite mitigation ("For example, we presume a campus of CSU (e.g., SDSU) may receive revenues or other funds from a myriad of sources (e.g., tuition, student fees, revenue bonds, parking fees, and private donations).  Furthermore, in the context of the case, SDSU presumably will receive additional revenues from project-related sources (e.g., rent from Adobe Falls faculty and student housing, revenue from guests of the Alvarado hotel, fees charged to residents of the Project's new dormitories and/or other student housing, revenue from the new campus conference center, and revenue from the expanded and renovated student union)."  Thus, it would appear that, for publicly sponsored projects, this case stands to require a near-endless examination of funding options. The opponents also challenged the alternatives analysis, arguing that the lead agency should have evaluated onsite operational changes which could have reduced or avoided the unmitigated impacts. The appellate court agreed with this argument. It is noteworthy that the appellate court did not find that the range of alternatives studied in the EIR was not a "reasonable range" designed to promote informed decision-making, but the appellate court only concluded that one or more additional onsite alternatives should have been studied.  (Comment: As to this issue, it appears that the appellate court deviated from the accepted standard of review of EIR alternatives. Applying the substantial evidence test, the appellate court did agree that CSU did calculate the amount of the fair fee correctly.) The appellate court also agreed with the opponents that the EIR included improper deferred traffic mitigation. The text provided, ""SDSU shall develop a campus Transportation Demand Management ('TDM') program to be implemented not later than the commencement of the 2012/2013 academic year. The TDM program shall be developed in consultation with and and shall facilitate a balanced approach to mobility, with the ultimate goal of reducing vehicle trips to campus in favor of alternate modes of travel." (Italics in the original.)  The appellate court concluded that this language did not rise to the required commitment to mitigate found necessary in cases like Communities for a Better Environment v. City of Richmond  (see CP&DR Legal Digest May 2010 ) and Defend the Bay v. City of Irvine (see CP&DR Legal Digest Aug. 2004 ). The appellate court also agreed that the EIR failed to evaluate the impact of the project on transit system operations. The system operator submitted comments questioning the ability of the transit system to absorb the future student school trips assumed to be provided by the system without further transit system expansion. The fact that CEQA's Appendix G does not list transit does not mean that transit-related impacts are exempt from CEQA evaluation. The court further reminded lead agencies that the duty to investigate and analyze falls to the lead agency, not to the agency whose service capabilities may be adversely impacted.  The Case:  City of San Diego v. Board of Trustees of the California State University (2011) 201 Cal.App.4th 1134. Filed Dec. 13, 2011.  William W. Abbott is a partner in the Sacramento law firm of Abbott & Kindermann, LLP.

Muting one of the more burdensome requirements of the Subdivision Map Act, the First Appellate has ruled in favor of "multiple sequential adjustments" in Sierra Club v. Napa County Board of Supervisors. In 1991, the California Legislature amended the Subdivision Map Act to restrict the use of boundary line adjustments by limiting their use to four or fewer adjacent parcels. While intended to deal with the reconfiguration of large ranches without going through the subdivision process, the 1991 amendment made the process of making minor technical adjustments between contiguous parcels more cumbersome then what was necessary. Local governments and engineers developed different strategies for working around the amendments. One of those was processing multiple sequential adjustments. Napa County addressed this issue in 2009 when the Board of Supervisors adopted an amendment to its code permitting sequential processing of lot line adjustments where the same parcels were involved, in circumstances in which the prior adjustment was approved and recorded. The County also concluded that such adjustments would be categorically exempt from CEQA. The Sierra Club filed suit, alleging that this policy was inconsistent with the Subdivision Map Act and a violation of CEQA. As the litigation moved forward, the county agreed to an extension of the time period for the preparation of the administrative record. The county then filed a demurrer, arguing that the petitioner had failed to serve a summons within the 90 days required by the Subdivision Map Act. The trial court rejected the demurrer on the grounds that the county's grant of an extension constituted a general appearance. The trial court then ruled in favor of the county. The Sierra Club appealed. Addressing first the county's statute of limitations defense, the appellate court affirmed the lower court ruling that the lawsuit was filed in a timely manner, concluding that the general appearance satisfied the service of summons requirement.  Turning to the merits, the appellate court concluded that the multiple sequential processing was not an "end around" of the Map Act. Relying in part on the legislative history, the appellate court, in examining the adopted language, disagreed with the Sierra Club's argument that the legislature intended to ban later adjustments of the same parcels. The appellate court also affirmed the county's conclusion that such adjustments were ministerial, and therefore not subject to CEQA.  Building upon earlier cases, the court concluded that although the county may enjoy some elements of discretion when processing a lot line adjustment, the discretion which could be exercised to shape the proposal was not sufficiently meaningful to justify the application of CEQA. The Case:  Sierra Club v. Napa County Board of Supervisors (April 20, 2012, A130980) ___Cal.App.4th ___. The Attorneys:  For the Appellant Sierra Club: Block, DeVincenzi & Zelazny, Kevin P. Block  Counsel for Respondents Napa County:  Robert Westmeyer, County Counsel; Laura J. Anderson, Deputy County Counsel; Miller Starr Regalia, Arthur F. Coon

If urban planners in many California cities had their way, every street-level unit in their downtowns would house restaurants, bars, boutiques, and all sorts of other stores, all teeming with life. They might even have a pet store or two. Unfortunately for some cities, "how much is that banker in the window" doesn't have quite the same ring.  But, thanks to zoning changes that some cities are instituting, storefront bankers—not to mention accountants, lawyers, and internet startups—may soon feature more prominently in downtown streetscapes.  Several years ago the City of San Jose adopted an ordinance permitting only consumer-oriented businesses in its street-front units. They were to be the bricks-and-mortar establishments to complement Silicon Valley's internet-oriented economy.  But the recession has, needless to say, taken its toll on those businesses, and with the economy so has gone San Jose's downtown plan. The city reports street-level vacancies of around 30%. That means that one out of every three windows in the city's downtown is blank. Not exactly part of the city's recipe for a resurgent downtown.  "We're simply not seeing it at the street level and it creates a greater sense of blight and sense of lack of safety for folks who simply don't see the vitality on the sidewalk," said San Jose City Council Member Sam Liccardo.  Last month Liccardo introduced an ordinance designed, if not to reverse this trend, then at least to take advantage of it.  "The greatest enemy of urban revitalization is a vacant storefront," said Licardo. Facing demand from offices, Liccardo said he "came to the realization that if you can be with the one you love, love the one you're with." Liccardo said that successful retail requires a round-the-clock presence of both residents and workers. San Jose is pursuing a plan to add 10,000 residents to its downtown, but that plan is in its infancy.  The ordinance does not invite offices to move in en masse. San Jose's includes restrictions: offices cannot fill corner suites; extant tenants cannot be displaced by offices; and the amount of space given to offices will be limited on a per-block basis. Liccardo says that plenty of office-based businesses are eager to fill in some of those gaps.  Nearby Redwood City, itself a hearth for Silicon Valley tech businesses, is doing much the same. Its downtown has struggled to realize its downtown plan. But recent demand for office space there has caused the city council to reconsider its restrictions.  Officials in both cities stress that these ordinances are meant as temporary stopgap measures, meant to take advantage of unique economic times. With the tech industry booming, the office market appears to be strengthening while the consumer market remains soft.  Neither, however, wants to sell their cities soul simply to get the lights back on. Laurel Prevetti, San Jose's assistant director of Planning Building and Code Enforcement, said that she is eminently wary of the ways that different kinds of offices present themselves to the street. She cited the co-working office NextSpace as a model for an office that's almost as good as a retail store.  "They did something very different: they essentially opened their windows, used vibrant pink colors, and opened windows," said Prevetti. "It is outward-looking. It is very inviting. That's a great example where office is not a deterrent." Less appealing scenarios involve closed blinds and the sort of quietude that would cause passers-by to pick up their pace.  "We've had other offices like insurance companies and such where they essentially put their…back office stuff looking out on to the street: computer tables, the backs of desks," said Prevetti. "The worst case is when they completely put up blinds and have no attempt to …do anything that would add to the street life of the city." Redwood City is looking for the same types of businesses as San Jose is.  "We want transparency," said Redwood City Vice-Mayor Jeff Gee. "We don't want rows and rows of cubes. We want to make sure that the windows and storefronts look alive and are not all black." Whether or not the cities return to all-retail strategies, the demand that they are seeing may signal a new trend in the way that businesses approach their offices. They may find, in fact, that certain businesses will want to compete with retail establishments even when the rents rise.  Gee said that offices have taken interest in Redwood City because of the downtown's proximity to a Caltrain commuter rail station. The balance among downtown uses may therefore have as much do to with cultural shifts as with economic cycles.  "Today, right now there's a demand for office space from a lot of technology startups," said Gee. "That has been driven, of all things, by the train….the new generation of workers really don't want a car."  Prevetti said that this trend applies not only to youth-oriented internet startups but also to more venerable firms. She cited interest from corporate tenants, such as Oracle software and the accounting and consulting firm PricewaterhouseCoopers, who may be seeking office space that appeals to their new recruits.  "We're finding that as we attract more use and recent graduates from college, they want to be part of an active downtown," said Prevetti. "They want to be able to go out, grab a coffee, come back, have a collaborative space." For both San Jose and Redwood City, relaxing their downtown regulations represents small steps to combat the recession and institute creative, low-impact economic development strategies. Though neither city is responding directly to the loss of redevelopment, it is on city officials' minds.  "We recognize we're in an era of bold ideas about revitalization," said Liccardo. "Without money to incentivize (development), we need to think about how we provide some relief to restrictions that city government often impose on development." Before every city trades its dining tables for cubicles, the Silicon Valley officials cautioned that these strategies may not be for everyone, especially in places where office demand is weak or nonexistent.  "A lot of it is pretty fine-grained when you look at downtown revitalization," said Prevetti. "Other cities if they're interested in going down this course to do it very mindfully." Contacts:  Jeff Gee, Vice-Mayor of Redwood City, 650.780.7220 Sam Liccardo, San Jose City Council Member, 408.535.4903  Laurel Prevetti, Assistant Director, Planning Building and Code Enforcement at City of San Jose, 408.535.3555

The staff of the Strategic Growth Council has issued recommendations for the awarding of a total of $20.7 million for Urban Greening Grants to communities throughout the state. Funded by Proposition 84, the Urban Greening Grants complement the Sustainable Communities Planning Grants, which are also awarded by SGC. This is the second of three rounds of funding, to total $90 million.  SGC staff evaluated 270 proposals and have recommended funding for 67 projects and plans. Project funding would directly fund the implementation of greening projects, such as tree planting or park construction, whereas plan funding enables agencies and municipalities to draw up long-term strategic plans. Roughly 75% of the recommended funding goes to plans.  The Trust for Public Land will receive the largest grant, of $1 million, to acquire property for wetland restoration in Santa Barbara County. For a complete list of recommended awards, please click here (pdf).

With funding for planning growing ever more scarce around the state, some localities received a windfall last week from the Strategic Growth Council. SGC announced recommendations for its second round of Sustainable Communities Planning Grants. If the recommendations are adopted, a total of $24 million would be disbursed for 43 projects around the state.   SGC awarded $20 million in the first round of Sustainable Communities Planning Grants in December 2010 and expects to award the final round in 2013. The grants, which will total $65 million, are funded by the 2006 water protection act Proposition 84. For this round, SGC received 137 applications requesting a total of $73 million. Though SGC staff acknowledge that granting $24 in the second round leaves a relatively sparse sum of $13 million for third-round projects, the staff report contends that the number of high-quality proposals warranted a larger total award for the second round.  Not surprisingly, some of the largest awards are earmarked for the metropolitan planning organizations that are implementing of Senate Bill 375. SCG staff are recommending awards between $885,000 and $1 million each to the Sacramento Area Council of Governments, the Southern California Association of Governments, the San Diego Association of Governments, the Association of Bay Area Governments, and the Fresno Council of Governments. Numerous cities and counties also received grants for planning related to climate change. The biggest winner among cities was East Palo Alto, which may receive $1 million to revamp its general plan.  Applicants were scored on a 100-point scale. Proposals from Ventura County, the City of Gridley, and the City of Oakland top the list with scores of 96.33, 96.33, and 96.0, respectively.  For a complete list of recommended awardees, please click here ( pdf ).

Observers of the California Environmental Quality Act may find it refreshing when a court lays it on the line. And that is exactly what Division Eight of the Second Appellate District did in addressing CEQA's requirements for baseline selection for projects with future implementation dates.  Neighbors for Smart Rail v. Exposition Metro Line Construction  provides a counterweight to recent decisions from the Fifth and Sixth Appellate Districts, setting a stage for a possible California Supreme Court review. The case involves an EIR prepared for the second phase of a Los Angeles Metro light rail line extending from downtown Los Angeles to Santa Monica. While the EIR used existing physical conditions in a number of impact discussions, the lead agency used a future scenario to measure the project's impacts on traffic and air quality. The lead agency's rationale was that 2009 population and traffic numbers, as compared to forecasted numbers, were less reliable in assessing impacts for a project with a completion date of 2015, at its earliest. A group of residents in Cheviot Hills—a relatively upscale neighborhood of single-family homes—filed a CEQA challenge, asserting that the use of a future baseline scenario violated CEQA, pointing to the recent decisions of  Sunnyvale West Neighborhood Association v. City of Sunnyvale  (2010) 190 Cal.App.4th 1351 and  Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48. The appellate court in  Neighbors  critically reviewed not only  Sunnyvale  and  Madera,  but also the California Supreme Court decision in  Communities for a Better Environment v. South Coast Air Quality Management District  (2010) 48 Cal.4th 310, reaching several noteworthy conclusions. First, the  CBE  court dealt with baseline in a case involving an existing operation, looking at a hypothetical baseline of maximum permitted activity, a baseline which overstated actual current conditions. Second, the  Neighbors  court went on to say that to the extent that  Sunnyvale  and  Madera  stood for the proposition that CEQA precluded the use of a future baseline, "we disagree with those cases." The court went on to uphold the balance of the EIR challenges. However, the court ordered published only that portion of the decision pertaining to the baseline. Comment: In taking a different path to the baseline, the  Neighbors  court concurred in a critical point well known to planners: in the right set of circumstances, a CEQA evaluation of a project compared to existing physical conditions will lead to information which is less useful and reliable to the public and the decision-makers. Given that CEQA is intended to foster more informed decision making, rigid adherence to the use of existing physical conditions in every instance may miss the mark in terms generating meaningful analysis. Lead agencies, when following  CBE , would be well served to the follow the Metro's use of a variable baseline, utilizing existing conditions for many, if not most, of CEQA's impact discussions. The Case : Neighbors for Smart Rail v. Exposition Metro Line Construction  (April 17, 2012, B232655) 2012 Cal.App. LEXIS 434. The Attorneys: Elkins Kalt Weintraub Reuben Gartside: John M. Bowman and C.J. Laffer for Plaintiff and Appellant. Nossaman: Robert D. Thornton, John J. Flynn III, Robert C. Horton, Lauren C. Valk and Lloyd W. Pellman for Defendants and Respondents Exposition Metro Line Construction Authority and Exposition Metro Line Construction Authority Board William W. Abbott is a partner in the Sacramento law firm of Abbott & Kindermann, LLP.

Against all odds, redevelopment isn't quite history yet in California. Some projects continue. Most cities are engaged in a long wind-down process that is consuming considerable time and attention. And the state legislature is considering a variety of options to revive redevelopment, or at least get it back on life support. The current activity falls into four categories. First, there is the winding down of old redevelopment projects and disentanglement of municipal and RDA resources and staff. Second, there are the looming negotiations between the "successor agencies" (mostly the cities) and the "oversight committees" (controlled by schools and counties) over which projects can continue and how much property tax increment can be devoted to those activities. Third, some cities are attempting to cobble together alternative strategies to promote urban development. And finally, there are the surprisingly active attempts by the legislature to bring redevelopment back in some form. The wind-down of the old agencies has been painful for cities because redevelopment had become so deeply embedded in the structure and budget of almost every municipality in the state. Although redevelopment agencies were technically separate entities – and, in a few cases such as Los Angeles, operated as such – in the vast majority of cases, these agencies were a seamless part of the city government. The City Council served as the redevelopment board, the city manager served as executive director, and so forth. Although this integration made sense in terms of operational efficiency – especially for smaller cities – the real reason was financial. By integrating the RDA into the organizational structure, the city could use redevelopment funds to pay for personnel and activities that would otherwise have to come out of the general fund. Not only were redevelopment personnel paid for by redevelopment funds, so were many other staff. City managers and community development directors were often paid partly out of redevelopment funds. Public works engineers would charge their time to redevelopment projects. In Oakland, 17 police officers were being paid out of redevelopment funds. Thus, disentangling redevelopment from regular city operations has been difficult for many cities.  So too has the process of determining which activities can continue . At first, the redevelopment establishment assumed that all activities could continue so long as they were funded with bonds that had already been issued. But the California Department of Finance soon issued strict guidelines saying that just because the RDA had floated bonds, that didn't mean the activities could continue. In many cases, the Department of Finance suggested, design contracts should be terminated mid-stream and bonds should be "defeased" (backed by other city assets rather than RDA assets) or paid off. AB 1X 26 called upon the sponsorship entity to make a choice to designate itself as the successor agency to oversee the wind-down. Most cities did so, though a few – including Los Angeles – did not, meaning Governor Brown had to appoint a panel to serve as the successor agency. In most cases, successor agencies are currently trying to figure out how to persuade everybody else in the process to take a broad view of which obligations should be honored and, therefore, which redevelopment projects can continue to move forward. This process is likely to take two forms – negotiation and litigation.  On the one hand, successor agencies will likely press hard to persuade oversight committees that everybody will be better off financially in the long run if promising RDA projects are allowed to proceed. Even if the oversight committees buy this argument, however, the Department of Finance will be looking over everyone's shoulder and could reverse an oversight committee's decision. On the other hand, there is little question that California will see a raft of litigation over this issue in the next couple of years. Cities will argue that the county auditor and oversight committee didn't properly accept their list of enforceable obligations; they will also argue that they can't defease the bonds. It will be quite a while before all this gets sorted out in court. So redevelopment personnel may have been laid off, but redevelopment consultants and lawyers will do just fine. Meanwhile, cities are scrambling to find ways to keep doing redevelopment projects in the absence of the redevelopment law. First out of the gate was the inner-ring Los Angeles suburb of Alhambra , which adopted a local ordinance that gave the city many powers the redevelopment agency formerly held, including the power to buy and sell land for economic development purposes and provide financial assistance to developers. Many of Alhambra's ideas involve taking activities the city was already involved in – community development block grants and disposing of surplus property, for example – and using those activities in a focused way to continue redevelopment projects. Other cities are likely to follow suit, using sales-tax rebates more aggressively, donating city-owned land to projects, and so forth. Perhaps most surprising, however, has been the amount of activity in the legislature on the redevelopment front. Whether Governor Brown signs any bills is an open question, but both houses of the legislature have been actively pursuing redevelopment proposals.  Few legislators who voted on the redevelopment package in 2011 actually expected redevelopment to be killed. They thought they were voting on a complicated workaround to take more funds away from redevelopment agencies and still conform with Proposition 22, the 2010 ballot initiative sponsored by the cities and redevelopment agencies designed to create a firewall between the state and redevelopment funds. Still, the fact of the matter is that the RDAs had no friends in 2011 – and they do have some friends in 2012. Legislation has dealt with three issues. The first is affordable housing. When redevelopment was killed, there was $1.3 billion in uncommitted affordable housing money sitting in RDA accounts. It seems likely that the legislature will pass – and the governor will sign – legislation allowing cities to keep this money to use for affordable housing. (Update: The governor's May revise appropriates this funding.) The second issue is the other assets that were held by RDAs when they went out of business. RDAs had at least $2 billion in cash in the bank, plus – most likely – billions more in real estate assets. Many cities claim the real estate isn't very valuable, but it's hard to know for sure; the Los Angeles Community Redevelopment Agency had 400 properties in its portfolio. Darrell Steinberg, the head of the state senate, has proposed allowing cities to keep the assets as an endowment for future redevelopment activities. In theory this is a viable idea – after all, the fight in the legislature was over the ongoing flow of property tax revenue, not the assets – but either the legislature or the governor may well decide to lay claim to the money to balance the budget. The third issue is – believe it or not – bringing back the tax-increment financing system in some form. A variety of ideas have been floating, most notably allowing cities to do tax-increment financing with city and county property tax funds so long as counties agree to the idea. In theory, this too should be a viable idea, since it does not touch the property tax revenue that flows to schools. (The state must backfill property tax revenue lost to schools out of the general fund). Governor Brown has said that he would consider any redevelopment proposal that does not affect the state general fund, but it may be that 2012 is just to soon to bring back tax-increment financing. Brown may want to wait till the redevelopment carcass is colder. One thing is sure: government involvement in building urban infrastructure and subsidizing urban development is likely to return in California in some way. The state's entire policy apparatus, including the regional planning law Senate Bill 375 , points in that direction. And Governor Brown has been supportive of the policies. The question is whether – or how soon – bringing back some limited form of redevelopment will be politically acceptable.

Over the past month, California cities have been learning the fate of countless redevelopment projects—touching everything from graffiti-removal programs to nine-figure transit-oriented developments to billion-dollar stadiums. For many, the news is not good – especially now that the California Department of Finance has gotten into the act.  April 15 was the deadline for successor agencies to submit Revised Obligation Payment Schedules (ROPS)—essentially lists of projects and assets that they believe should continued to be funded from the Redevelopment Property Tax Trust Fund even while the state appropriates the remainder of agencies' former tax increments. ROPS replace Estimated Obligation Payment Schedules, which have prevailed since redevelopment agencies officially went out of business Feb. 1.  In an effort to harvest as much funding as possible for the state and other taxing agencies—and, therefore, prevent cities from appropriating more than their fair share of trust fund monies—ROPS's were to undergo several layers of scrutiny. By April 15 all ROPS's were to have been approved by each successor agency's seven-member Oversight Committee, made up of representatives from each respective RDAs' major taxing entities and audited by their respective county auditor-controllers.  The crucial step in the ROPS gauntlet is, however, the review by the Department of Finance. AB 1X 26 requires DOF, along with the state controller, to issue the final say on the validity of items on successor agencies' ROPSs.  DOF has taken a hard line on redevelopment since February – and, in dealing with the ROPS's, has not hesitated to call out items that, in its estimation, runs afoul of the dissolution legislation. DOF has denied tens of millions of dollars worth of projects in many cities; in some cases, denials have totaled in the hundreds of millions. DOF officials seem to be paying particular attention to the many asset transfers that occurred between cities and redevelopment agencies last year in anticipation of the end of redevelopment.  In many cases, DOF has refused to allow high-density or transit-oriented projects to go forward – a move that makes sense in financial terms but seems to run counter to the Brown administration's urban development policy goals. And in at least one case, DOF is asking a local government to kill projects funded by federal dollars. "We haven't done a metric in terms of this many were denied for this, this many were denied for that," said H.D. Palmer, DOF's deputy director for external affairs. But at one point last week, Palmer said that DOF had received 274 ROPS's. Of those, 46 were automatically denied over technicalities such as formatting. DOF issued letters for 164 of them and approved 29 free-and-clear. DOF has taken on extra staff in order to comply with the required three-day turnaround once a successor agency has submitted its ROPS (many did not meet the April 15 deadline and instead turned them in late).  DOF seems to be interpreting AB 1X 26 more conservatively than even successor agencies' oversight boards, which were expected to be conservative themselves insofar as oversight board members represent taxing entities that stand to gain from the freeing up of tax increment funds. As it turns out, many oversight boards have been sympathetic to the agendas of former redevelopment agencies.  "They were in accord on every issue," said David Gouin, director of housing and economic development for the City of Santa Rosa. "The oversight board saw everything as adding value to all taxing entities. They did not take much time to  conclude that they should adopt the ROPS and pass along a positive recommendation to the Department of Finance."  Those accords matter little, however, if DOF disagrees.  "We've heard from our members that DOF is kicking back a substantial number of ROPS submittals, including ones that have been signed off on by the oversight boards," said Patrick Whitnell, general counsel for the League of California Cities. The types of denials that DOF has issued defy easy categorization. Some automatic denials have been over paperwork problems, such as when Santa Rosa's successor agencies have listed multiple funding sources on one line of its spreadsheet. DOF has also questioned many successor agencies' administrative costs.  Most notable is the challenge of interpreting AB 1X 26. Though legislation clearly forbade the signing of new contracts following June 28, 2011, many of the state's 400 or so successor agencies find themselves in gray areas because their respective redevelopment agencies were involved in unique, complex deals that the statute does not explicitly allow or forbid.   Whitnell cautioned that the League has not conducted a formal survey of its members, but initially, many of DOF's objections fall into what he described as "ten different categories." Among them, the largest category is that of unexpended bond funds.  In some cases, DOF would like successor agencies to defease bonds by paying them off early or diverting funds to other projects – and therefore paying off the bonds with other funds. Whitnell noted that many bonds cannot be redeemed early. Therefore, successor agencies would have to pay them off by taking out loans at prohibitively high interest rates.  DOF has also questioned many agreements between cities and redevelopment agencies. AB 1X 26 forbade new agreements as if its effective date, June 28, 2011. These agreements, which often include transfers of assets, joint ventures between public agencies and private developers, and scores of variations thereof.  One major category of obligations that the legislation seems to have missed are those that encumber future property tax funds for deals that do not lend themselves to traditional contracts. On a relatively minute scale, Omar Dadabohy, director of community development for the City of Stanton, said that the Stanton's successor agency must pay for utilities for an affordable housing complex. That obligation is implied but not explicit enough for DOF.  "They're saying there's not going to be a contract in place," said Dadabohy. "Well, there's not going to be a contract in place. I don't have a contract with Southern California Edison. They're not being open or flexible."  Meanwhile, in Santa Rosa, the redevelopment agency is asking DOF to approve a $120 million for the redevelopment of New Railroad Square, a major transit oriented development focused on a commuter rail line scheduled to begin service next year. TIF monies were to be used to fund affordable housing at the site and to do toxic remediation.  "It creates just what the state, county, and city would like to have: higher density uses along a rail station," said Gouin.  DOF has thus far refused to fund that project.  In West Sacramento, the redevelopment of property previously owned by Sacramento-Yolo Port District is in a similar state of limbo.  That deal that has already gone through but, like many other deals across the state, it relies on future TIF funds to complete the deal through a "performance pass-through agreement." West Sacramento Public Finance Manager Paul Blumberg said that the contract does not specify exactly how much TIF monies would be needed because the deal involves multiple funding sources and therefore it was not advantageous to indicate specific dollar amounts in the original contract – especially because no one anticipated that redevelopment would soon cease to exist.  Blumberg said that DOF has rejected this deal because it claims that the city and port district are, effectively, one in the same, because the city appoints members to the port commission. Therefore, the deal is considered an impermissible city-agency agreement rather than a permissible third-party agreement.  Also in West Sacramento, the master planned Bridge District redevelopment was to rely on $144 million in redevelopment funds, as well as a combination of other funding sources, including Proposition 1C infrastructure bonds. While the deal was signed before the AB 1X 26 deadline, DOF is questioning whether it actually constitutes a contract.  "These agreements….didn't specify specific amounts going to each element because you've got a number of funding sources," said Blumberg. "All of the commitments have been made to this district that clearly describe the use of tax increment and firmly make that commitment."  DOF has even questioned agreements that including funding from the federal government. Bakersfield Economic Development Director Donna Kunz said that while DOF has unsurprisingly questioned $4.2 million in interagency loans, it is also asking the successor agency to eliminate projects funded by three loans from the Department of Housing and Urban Development. Kunz said that the city would be submitting additional documentation in the hopes of getting that item approved.  Generally, Whitnell said that DOF has erred on the side of questioning those requests that the legislation does not explicitly permit.  "Our take on it, based solely on reports that we've received from our membership…is that DOF seems to be very conservative in its interpretation of AB 1X 26 to the point where in certain instance," said Whitnell. "We're not entirely certain that they're interpreting it correctly." Some officials feel that DOF has been stretching its authority.  "In one respect we weren't surprised," said Stanton's Dadabohy, which got $218 million worth of obligations denied. "We expected that the state would try to challenge every item and take our local tax dollars. And we were surprised by the basis for some of the comments." Dadabohy said that part of his surprise stemmed from the fact that his staff had worked closely with DOF staff to ensure that the ROPS was prepared properly.  This approach, said Whitnell, could mean that the process of approving and denying obligations could effectively extend for years—and get far more contentious than it has been thus far.  "This could lead to some legal disputes down the road with respect to the position that DOF is taking," said Whitnell.  DOF that it is interpreting AB 1X 26 strictly and consistently.  "We're measuring every one of these submissions by the same yardstick, which is based upon what is in AB 26," said Palmer. "Does it fall within the definition of an enforceable obligation or does it not?"   Palmer said that successor agencies have had ample opportunity to understand what DOF's position would be on different types of obligations. As well, DOF staff members have been working directly with successor agencies on their ROPS's in an effort to avoid denials, resubmissions, and confusion.  "Understanding that this is a very complicated process, we have been very forward-leaning in trying to get as much information out there to help successor agencies and oversight boards understand that is permissible and not permissible under AB 26," said Palmer.  Successor agencies have been resubmitting their ROPS's to respond to DOF's comments, and they have been submitting documentation to support items that were questioned or unclear. In instances where it seems unlikely that DOF will approve an obligation, cities have been instructed to simply leave them off their revised ROPS's for the time being so that further discussions can take place.  Henceforth, successor agencies will be submitting further ROPS's every six months. It is assumed that each iteration will include fewer obligations as former redevelopment projects are paid off and wound down. Many successor agencies prepared both 2012 ROPS's simultaneously, as the next submission date is July 1.  For cities, each ROPS carries the fear that DOF may not approve projects that had been considered both permissible under AB 1X 26 and crucial to the city's well being.  "We're anxious about each and every one of them," said Gouin. "Each and every item is important."  Contacts:  Paul Blumberg, Public Finance Manager, City of West Sacramento, 916.617.4575 David Gouin, Director of Housing and Economic Development, City of Santa Rosa, 707.543-3200 Donna Kunz, Economic Development Director, City of Bakersfield, 661.326.3765 H.D. Palmer, Deputy Director for External Affairs, California Department of Finance, 916.445.3878 Patrick Whitnell, General Counsel, League of California Cities, 916.658.8200