In a ruling with potential implications for development projects impacting wetlands, streams and lakes subject to federal jurisdiction, the Ninth U.S. Circuit Court of Appeals has upheld an injunction against a development in suburban Phoenix that environmentalists challenged based on the Clean Water Act. Although the court did not rule on the merits, the court did indicate that the U.S. Army Corps of Engineers needed to consider more of the 600-acre subdivision than simply the 66 small locations, totaling 7.5 acres, where development would alter seasonal streams. The project at issue is a proposed 794-lot, single-family, gated subdivision on 608 acres of desert. The site is an alluvial fan with 31.3 acres of braided washes that run all across the land. Because the washes carry water during periods of heavy rain, the Corps of Engineers asserted its jurisdiction. The developer, 56th & Lone Mountain, LLC, applied for a § 404 permit under the Clean Water Act to permit the filling of 7.5 acres of waterways. The developer identified 66 sites that would be filled for road and utility crossings, building pads, flood control and other reasons. Despite the opposition of the Environmental Protection Agency (EPA) and the U.S. Fish and Wildlife Service (FWS), both of which said the site might provide habitat for the endangered ferruginous pygmy owl, the Corps of Engineers issued the permit. An environmental group called Save Our Sonoran (SOS) sued, alleging violations of the Clean Water Act and the National Environmental Policy Act. At the group’s request, District Court Judge Frederick Martone granted a temporary restraining order, and then a preliminary injunction to halt the project while litigation proceeded. Judge Martone concluded that SOS had raised serious questions. Although the washes amounted to only 5% of the development site, he likened them to capillaries. “It is difficult to deal with tissue without dealing with capillaries, and difficult to deal with capillaries without dealing with tissue,” Martone wrote. When 56th and Lone Mountain continued construction anyway, Martone made clear that development must cease until a hearing on the merits could be conducted. The developer then appealed the court orders, but a three-judge panel of the Ninth Circuit upheld Judge Martone. The test for a preliminary injunction includes a sliding scale “in which the required degree of irreparable harm increases as the probability of success decreases,” the court said, citing , 154 F3d 1097, 1100 (9th Circuit 1998). “ he district court made the determinations of hardship based on its factual findings and balanced the hardships appropriately,” the Ninth Circuit ruled. An appellate court will overturn a preliminary injunction only if it finds that the lower court abused its discretion. That was not the case here. “ he district court properly observed that once the desert is disturbed, it can never be restored. Thus, the court concluded, the plaintiffs had adequately demonstrated the possibility of irreparable harm,” Judge Sidney Thomas wrote for the Ninth Circuit. “The reasoning and conclusion are consistent with controlling precedent.” The developer argued that the district court erred by considering the 31.3 acres of washes, rather than only the 66 permit sites. But the Ninth Circuit ruled that a developer’s application does not determine the extent of the Corps of Engineers’ jurisdiction. “ t is the impact on jurisdictional waters that determines the scope of the Corps’ responsibility, not the constructs of the developer,” Thomas wrote. “Lone Mountain’s narrow jurisdictional interpretation would defeat the purpose of the mandate to regulate the pollutants that flow into the nation’s waterways.” “Specifically,” Thomas continued, “the district court concluded that there were serious questions as to whether the Corps had correctly confined its jurisdiction to the 7.5 acres that were the subject of the dredge and fill permit applications. It is significant at the onset to recall that two federal agencies, the EPA and the FWS — not the usual suspects in opposing the action of a federal agency — disagreed with the acreage limitations set forth in the permit applications and thus with the Corps’ interpretation of its jurisdiction.” Considering that the washes “run through the property like lines run through graph paper,” the Corps’ jurisdiction could be extensive, the court noted. Even the Corps’ own environmental assessment concluded that denial of the § 404 permit would prevent the proposed development. After upholding the injunction, the Ninth Circuit returned the case to the lower court for further proceedings. The Case: , No. 02-16156, 04 C.D.O.S. 7882, 2004 DJDAR 10664. Filed August 26, 2004. The Lawyers: For SOS: Myron Scott, (480) 968-2179. For the developer: Jay Shapiro, Fennemore Craig, (602) 916-5000.

An amendment to a local coastal plan is not subject to the California Environmental Quality Act, even if the local agency adopts an environmental impact report for the amendment, the Second District Court of Appeal has ruled. Adoption of, and amendments to, a local coastal plan (LCP) are exempt from CEQA because the Coastal Commission — which has ultimate authority over LCPs — has an environmental review process that is functionally equivalent to CEQA. The fact that Santa Barbara County adopted an EIR under CEQA for a proposed LCP amendment does not invalidate the statutory exemption, the court ruled. In 1982, the Coastal Commission certified Santa Barbara County’s LCP for territory in the coastal zone. Among other things, the plan called for discretionary approval of greenhouse developments of at least 20,000 square feet in the Carpinteria Valley, between Santa Barbara and Ventura. When it certified the LCP, the Coastal Commission directed the county to prepare a “master environmental impact assessment” to determine how much greenhouse development the valley could handle. The county never produced the assessment, so the Commission in 1998 again directed the county to complete the study and prepare an LCP amendment for regulating greenhouse developments in Carpinteria Valley. The Commission suggested it might not approve more greenhouses until the county completed the assignment. The county then spent three years working on the issue before certifying a final EIR and approving an LCP amendment in February 2002. The following month, the Santa Barbara County Flower and Nursery Growers Association sued the county over the adequacy of the EIR. In court, the county argued that the EIR was legally unnecessary. Santa Barbara County Superior Court Judge James Brown ruled for the county, finding that the LCP amendment was exempt from CEQA and concluding that the association’s lawsuit was premature because the Coastal Commission had not decided on the amendment. The association appealed, but a unanimous three-judge panel of the Second District, Division Six, upheld the lower court. The association argued that the exemption for LCPs in Public Resources Code § 21080.5 is discretionary. When the county prepared an EIR under the rules of CEQA — a procedure apparently blessed by the Coastal Commission — the county waived the exemption, the association argued. These arguments did not get far with the appellate court, which agreed with the trial court that the exemption did apply and that the suit was filed too early. “Nothing in CEQA or the Coastal Act gives local government the power to opt out of the Commission’s regulatory program and choose to be governed by CEQA’s regulatory scheme,” Justice Steven Perren wrote for the court. “To the contrary, the § 21080.5 exemption is necessary to facilitate the Commission’s legislative mandate under the Coastal Act to implement statewide policies for coastal zone development rather than local policies that would be critical to an EIR for a local project.” Besides, Perren wrote, “ udicial review would be premature because there has been no final Commission determination.” That review could still occur in the future. “ he county unnecessarily prepared an EIR and the association unnecessarily participated in the approval process applicable to EIRs,” Perren concluded. “The association understandably may have been dismayed that a significant administrative proceeding was conducted through error. Nevertheless, the court cannot provide a remedy to the association without interfering with the statutory authority and established regulatory process of the Commission. Furthermore, the association does not establish that it was prejudiced in any material respect. The association remains free to seek judicial review of any decision by the Commission regarding the county’s LCP amendment and to challenge the adequacy of the environmental assessment supporting that decision.” The Case: , No. B170027, 04 C.D.O.S. 7583, 2004 DJDAR 10166. Filed August 17, 2004. The Lawyers: For the association: David Hughes, Price, Postel & Parma, (805) 962-0011. For the county, Alan Seltzer, chief assistant county counsel, (805) 568-2950.

The Court of Appeal has again upheld a public agency’s dismissal of project alternatives as economically infeasible, even though the project’s environmental impact report did not include an economic analysis. The ruling is the third published decision in two years in which a court has said that an economic analysis does not have to be part of an EIR. The latest decision came in a case brought by the Sierra Club over a proposed winery at the entrance to the Napa Valley. “Sierra Club may be correct that the public was not part of the debate of the economic feasibility of the project,” the court ruled, “but as we read CEQA, it does not require the public to be a part of that debate, although it requires the public to be informed if its officials choose economic feasibility over environmental concerns in approving a project.” Two years ago, an appellate court ruled that San Francisco could rely on an in-house report regarding economic feasibility of project alternatives that was not included in an EIR. , 102 Cal.App.4th 652 (see , November 2002). Last year, a court ruled that Madera County could use a consultant’s analysis that was not included in an EIR to determine that a smaller project was economically infeasible. , 107 Cal.App.4th 1383 (see , June 2003). In both of those cases, courts held that it was permissible for officials to make a decision based on substantial evidence in the record, even if the environmental document did not contain the evidence. The latest decision from Napa County builds upon the San Francisco and Madera County rulings. In 1999, Beringer Wine Estates applied for a use permit to allow development on a 218-acre site near the Napa Airport. Beringer proposed 1.4 million square feet of development for warehousing and storage, winemaking, blending, bottling and office uses. Beringer also proposed a 115-acre vineyard to be irrigated with treated wastewater from the winemaking operation. Essentially, Beringer sought to consolidate its operations, which are spread out at various Napa Valley sites. The Napa County Conservation, Development and Planning Department certified an environmental impact report for the project in December 2001, and soon thereafter approved a conditional use permit. The EIR found that the project would have a significant and unavoidable impact on about half an acre of wetlands that provides habitat for endangered fairy shrimp. However, the department adopted findings of overriding considerations that cited the overall benefits of the project. The Sierra Club appealed to the Board of Supervisors, but the board approved the EIR and use permit. The environmental group then sued the county, arguing that the county violated CEQA and that the use permit was inconsistent with the Airport Industrial Area Specific Plan. Napa County Superior Court Judge Stephen Kroyer ruled for the county. The Sierra Club appealed, and a three-judge panel of the First District Court of Appeal, Division One, upheld the lower court. The pivotal issue was the absence in the EIR of the economic feasibility study of project alternatives that would avoid impacts of the wetlands. The EIR listed six alternatives, but dismissed three of those, all of which involved different locations, without environmental analysis. The other three alternatives — called “no project,” “wetlands preservation,” and “reduced development” — were studied but rejected as infeasible, at least partly because they would not meet Beringer’s stated business objectives. The Sierra Club argued in court that the absence of economic analysis in the EIR rendered the document legally inadequate, and that the Board of Supervisors should not have considered evidence that was not available to the public. For support, the environmental group pointed to the landmark case, , (1988) 47 Cal.3d 376 ( ). In that case, the state Supreme Court said that CEQA mandated a “meaningful analysis of alternatives in the EIR,” and that reasons for rejecting alternatives “must be discussed in the EIR in sufficient detail to enable meaningful participation and criticism by the public.” The First District, however, was not convinced. “Nothing in requires EIRs to analyze the economic feasibility of a particular alternative or limits the evidence an agency can consider in deciding issues of economic feasibility,” Justice William Stein wrote. “The court found only that an EIR cannot abstain from the process of identifying and analyzing alternatives by accepting, at face value, an official’s assertions that there are no feasible alternatives. , accordingly, stands for the proposition that the EIR must identify alternatives and analyze their impacts on the environment. The agency may or may not reject those alternatives as being infeasible, but the public must be informed of their existence. Here, the EIR did identify alternatives and analyze their impacts on the environment. requires no more.” The Sierra Club pointed out that the public did not have the chance to review the economic analysis that was the basis for the Board of Supervisors’ decision, as the public did in the San Francisco case. Apparently, supervisors based their findings at least partially on a last-minute letter provided by Beringer. No matter, said the court. “That the public in had access to a comprehensive analysis of economic feasibility does not mean that the public must have access to such a comprehensive analysis before a project may be approved,” Stein wrote. “It is of no matter that the evidence of economic infeasibility here was far less detailed than the evidence in ,” Stein continued. “The question is simply whether the agency’s finding was supported by substantial evidence. Moreover, as was true of the appellants in , Sierra Club neither introduced, nor can it cite to, evidence suggesting that some alternative was in fact fully feasible.” As for the project’s consistency with the specific plan, the court found no conflict. The specific plan requires protection of all wetland and stream habitat where feasible, the court noted. In this instance, the county found protection to be infeasible. The Case: , No. A101941, 04 C.D.O.S. 8146, 2004 DJDAR 10939. Filed August 6, 2004. Ordered published September 1, 2004. The Lawyers: For Sierra Club: Thomas Lippe, (415) 777-5600. For the county: Laura Jean Anderson, county counsel’s office, (707) 259-8252. For Beringer Wine Estates: David Meyer, Dickenson, Peatman & Fogarty, (707) 252-7122.

There is no more peculiar animal in California housing than the mobile home park. It’s a place where residents own their dwelling but rent the land on which the dwelling is located. The dwelling is theoretically moveable, but it’s not going anywhere. So the landlords and the residents are stuck with each other -- and in a constant struggle that involves government regulation, property rights and California's sticky affordable housing problem.There is no more peculiar animal in California housing than the mobile home park. It’s a place where residents own their dwelling but rent the land on which the dwelling is located. The dwelling is theoretically moveable, but it’s not going anywhere. So the landlords and the residents are stuck with each other. Residents can sell their dwellings on the open market, but buyers must pay month-to-month rent on the spaces. The landlords can charge rent for the “pads” but have no control over who owns the “coaches.” So it’s not surprising that the landlords and the residents are in a constant war. The residents – often older folks – use their political clout to get local governments to impose rent control on the “pad rents.” The landlords – politically outnumbered but economically powerful – use litigation aggressively in hopes of striking down rent control laws or squeezing local politicians to change them. For 20 years, the landlords have lost in court. Now, however, they’ve extracted an important, if tentative, ruling from one panel on the Ninth U.S. Circuit Court of Appeals. The split decision in Cashman v. City of Cotati found that any ordinance that potentially permits the mobile home residents to capture a premium when they sell their dwellings is unconstitutional on its face (see CP&DR Legal Digest , September 2004 ). And, for the moment at least, this ruling has called into question virtually all of the state’s 100 or so local mobile home rent control laws. All this would simply be an entertaining sidelight to the California housing crisis if mobile homes weren’t such an important source of low-cost housing. There are almost 600,000 mobile homes in California – about 4.5% of the housing stock. An increasing number of them are located on individual lots in rural mountain areas. But most are located in mobile home parks in communities with astronomical land prices. There are, for example, 610 mobile homes in Malibu, 380 in Redondo Beach, and 700 in Novato. There are 3,100 in Huntington Beach, 4,300 in Anaheim, and 3,400 in Oceanside. Many of the mobile home parks are age-restricted and provide a haven for senior citizens on modest incomes. The politics of mobile home rent control are not surprising. The land is immensely valuable and a market rent would be out of the reach of most residents. Mobile home residents represent hundreds if not thousands of votes in many communities, and they tend to be older residents who vote regularly. There are only a few mobile home park owners, and often they are absentee investors. (Full disclosure: When I ran for the Ventura City Council last year, I supported the city’s existing mobile home rent control ordinance and received the endorsement of the mobile home residents association. Ventura has 2,600 mobile homes, about 6% of the city’s housing stock, and virtually all of them are in a handful of parks.) Naturally, the park owners, like other political minorities, take to the courts. Like conventional apartment landlords, the park owners focus on “vacancy control,” which bars them from raising rents to the market value when one resident moves out and another moves in. For defenders of rent control – both conventional and the mobile home variety – vacancy control is the linchpin of affordability. Without it, all rentals would become unaffordable sooner or later. But mobile home park owners have a slightly different argument than apartment owners. Their tenants have something to sell when they move out – the mobile home itself. So, park owners claim, if the pad rent is cheaper, then the mobile home itself will become more expensive. In other words, they claim, vacancy control simply transfers equity from the land to the mobile home, and, hence, from the landlord to the mobile home resident. Park owners love to tell stories of ratty, rusty singlewides that sell for several hundred thousand dollars because they are sitting on a rent-controlled pad. This is the essence of the argument the Ninth Circuit panel bought in the Cotati case – that under these circumstances, a transfer of equity is almost inevitable. But the majority went one step further. Wrote Judge Robert Beezer for the two-judge majority: “A rent control ordinances that does not on its face provide for a mechanism to prevent the capture of a premium is unconstitutional as a matter of law, absent sufficient evidence of externalities rendering a premium unavailable.” In other words, Beezer concluded, if the possibility of an equity transfer exists, the rent control ordinance cannot, as a matter of law, serve a legitimate governmental purpose and therefore is unconstitutional. This ruling would seem to stand more than a century of economic regulation on its head. By its very definition, economic regulation seeks to prevent landowners and the owners of other economic assets – railroads, for example – from extracting the speculative value of those assets from tenants, customers, and others in the economic food chain. The relevant question is not really whether a rent control ordinance creates the possibility of an equity transfer. Rather, the relevant question is whether the legitimate governmental purpose of lower-cost mobile home housing is furthered by the ordinance. This was pretty much the argument of Judge William Fletcher, who wrote the minority opinion in the Cotati case. “After today’s decision, the possibility of capture of any part of a premium by a tenant renders a rent control ordinance unconstitutional,” he wrote, adding: “With all due respect to my colleagues, this simply cannot be the law.” And it may not be. Cotati and other cities have petitioned for an en banc hearing before the Ninth Circuit, and it would seem likely that more liberal judges on the court would have a hard time upholding such a fervent property rights ruling. Even if Cotati gets reversed, however, it shighlights the need for new strategies. The fundamental problem is the dual-tenure system that has built up around mobile homes in California: Investors own the land and residents own the dwellings. Strong economic regulation would be less necessary if it were possible to defuse the economic pressure that high land prices have created. There are two ways of doing this. Both ways demand compromise, requiring landowners to moderate their revenue expectations and residents to trust alternatives to the strong economic regulation currently in place. The first is long-term ground leases. Mixed-tenure situations are not unusual in the United States, but rarely do they involve month-to-month rentals. Most often, they involve a public agency or institutional entity willing to enter into a 99-year lease that for all practical purposes is a sale. In the mobile home context, landlords are unlikely to surrender long-term flexibility, while some residents may not trust the concept. (In some cases, landlords have sought to get around rent control by requiring longer-term leases with high rent increases.) The second is a buyout, either by the residents themselves or by a nonprofit housing corporation. Residents have purchased a few mobile home parks, often with local housing funds or with the assistance of a state program administered by the Department of Housing and Community Development. But these deals usually require a landlord with moderate revenue expectations and a very patient group of residents. Increasingly, nonprofit organizations have entered the buyout game. A nonprofit deal brings with it the possibility of a higher price – the organization may have access to more financial options than residents do – but the residents must be willing to surrender control of the park, and perhaps some of their own future equity, in the interest of keeping the mobile homes permanently affordable. With hundreds of parks sitting on extremely valuable land throughout California, the long-term lease and buyout process will be long and slow. But California land conservationists have shown us that, through diligent effort, it is possible gradually to buy our way out of a regulatory system that generates sticky property rights problems and lots of lawsuits. Maybe it’s possible to do the same with mobile homes.

Now that Gov. Arnold Schwarzenegger has received the California Performance Review, what will he do with it? This massive report is thousands of pages long and contains about 2,500 individual recommendations. Many are no-brainers, some are clearly from some interest group’s agenda, and a few conflict with each other. As with every similar performance effort back to President Reagan’s Grace Commission of 20 years ago, the prospective cost savings to taxpayers is rigorously calculated. It will be politically impossible for Schwarzenegger to move on all of the recommendations. Some of them require legislative support that is probably impossible to mobilize. But changes in the Legislature may give the governor an opening to use the Performance Review as a means of advancing some old ideas, especially those regarding streamlined review for housing and infrastructure development. Amid the thousands of pages and ideas, the Performance Review focuses on two major themes that could affect planning and development trends in California significantly: First is a reorganization of state agencies that would move water and energy out of the conservation-oriented Resources Agency to a new development-oriented Infrastructure Department. The second theme is a streamlining of environmental review processes to facilitate development. Neither of these ideas is exactly revolutionary. Both have been promoted in one form or another over the last decade. But they represent an opportunity for Schwarzenegger to promote a particular political agenda around planning and development – and probably to mix it up with Democrats in the Legislature. These ideas could be used to put all kinds of construction – especially construction of public infrastructure – on a fast track. From the point of view of planning and development policy, the state government reorganization comes down to one idea: collapsing all development-related enterprises into one agency and all resource conservation-related enterprises into another. The Business, Transportation, and Housing Agency (BTH) would be revamped into the Department of Infrastructure with the addition of most of the Department of Water Resources, the Energy Commission and other energy functions, and parts of the Governor’s Office of Planning and Research. Meanwhile, the Resources Agency would be revamped into the Department of Natural Resources, which would lose responsibility for many functions, including the State Water Project and water planning, energy planning and permitting, and the firefighting functions of the current Department of Forestry and Fire Protection. Among other things, Natural Resources would oversee the eight land conservancies, although all but the Tahoe, Santa Monica and Coastal conservancies would move to a more local governance. Natural Resources also would have the Coastal Commission (which would remain intact as an independent entity) and a new Water Rights Board that would take over the water rights responsibilities of the current Water Resources Control Board. That is a great deal of shuffling, but the message is clear: The resources folks should get out of the way of building and maintaining important public infrastructure facilities and focus instead on parks and wildlife. As the state has fallen further and further behind in building infrastructure, this idea has gained more currency even among a lot of moderate Democrats. During the Davis years, for example, Caltrans sent a similar message by moving the environmental review function from the planning division to the project delivery section. But the reorganization ideas are likely to get considerable resistance from environmentalists, who believe water and energy should be managed as natural resources and not as infrastructure. The ideas for streamlining environmental review have a similar theme, and one that is not especially new. Some of the CEQA ideas are good ones. One proposal calls for using online technology to speed up state agency review of local projects, while another calls for the creation of a state mitigation registry, an idea that was kicked around during the Davis administration but never went anywhere. Nevertheless, the phrase “streamline CEQA” appears any number of times in the Performance Review, especially in connection with promoting infill development and building state infrastructure projects. Again, the message is clear: Enviros and community activists who use CEQA to stall projects or hold them hostage should get out of the way. It will be interesting to see whether Schwarzenegger decides to pursue these ideas, which involve taking on the environmentalists and their Democratic allies in the Legislature. Although the governor is a moderate Republican who appears sympathetic to some environmental causes, he is also a businessman and a real estate investor himself, and his closest political ties are to Pete Wilson. These two ideas – reorganization of state government to favor infrastructure construction and streamlining CEQA – are essentially unfinished Wilson business. Operating in a tougher economic climate and at a time when the Democrats were not so dominant in the Legislature, Wilson could not get these things done. Still, things are different now. Home prices have doubled, and BTH Secretary Sunne McPeak – perhaps the strongest personality in the Cabinet – appears to be on a housing crusade. Traffic congestion remains a huge problem and Caltrans is under tremendous pressure to deliver, even as transportation funding sources are dwindling. Davis already streamlined power-plant permitting during the energy crisis of 2001. The old white environmentalists, notably CEQA defender Sen. Byron Sher (D-Palo Alto), are getting termed-out in the Legislature. The new Democratic majority is largely Latino and oriented toward labor, not the environment. They listen to the construction unions, and the core constituency of these Democrats is aspiring toward home ownership. Of course, Schwarzenegger is remarkably popular. He is a governor who believes, as Reagan did, that he can go around legislators to the voters when he desires in order to get things done. Schwarzenegger commissioned the California Performance Review because, like Reagan, he ran against the now-famous junta of “waste, fraud, and abuse” in government. Schwarzenegger has used the audit to identify possible actions. But, like his precedessors, Schwarzenegger will to use the recommendations selectively to promote his own political agenda. It seems likely that he will use the streamlining and reorganization recommendations toward the planning policy goal he appears to be moving toward as governor – removing impediments to both infrastructure development and housing construction he thinks the state needs.

What should a historic district look like? The question is a philosophical sand trap. For many people, the most appealing solution, and the most naïve, holds that a historic district should today look exactly as it did at some point in the distant past. This reverent treatment does not ensure that buildings will be true to history, however. Preservationists cringe at the mention of historic Williamsburg, Virginia, where the Rockefeller family prettified a colonial village far beyond anything our pre-revolutionary forefathers would have recognized. Another approach, equally questionable, is to fill in the empty gaps between genuine historic buildings with pseudo-historic stuff, with the end result of making both old and new look equally cheesy. Think of downtown Santa Barbara, with its absurd but rigorously enforced requirements for Mission-style buildings, as well as much of Philadelphia, where Colonial kitsch poses as patrician dignity. The other extreme, which I think preferable to either of the above, is to maximize the contrast between historic and modern with buildings that are aggressively modern — either the corporate steel-and-glass look or the crazy angles wrought by Frank Gehry’s followers. But purists consider this approach insensitive and out of place, even if some contemporary, curtain-wall buildings actually look pretty good amid the venerable brick piles of Cambridge, Massachusetts. With all these alternatives rejected, we find our choices limited and none too exciting. We are asked to design buildings that are neither too modern nor too historic. Not only should the buildings be attractive, but they should be modest, too, to give primacy to the historic buildings. Architect Robert Venturi suggested this during the 1960s, with his notion of “background buildings.” This was the quandary facing the Olson Company, a Seal Beach-based apartment and townhouse developer. In 2001, Olson proposed Harbor Walk, a residential mixed-use project in the downtown historic district of Benicia. This quiet town in Solano County has plenty of history, much of it dating from before the Civil War. The city briefly served as the state capital for a few years during the 1850s, and the old capitol, a handsome, red-brick building with a tall portal framed by Doric columns, is an appealing reminder of frontier democracy. The city’s heyday spanned the years from 1879 to 1930, when the Southern Pacific trains stopped at the water’s edge and passengers boarded boats to cross the strait. With much of the historic waterfront area intact, Benicia would make a pleasant stopover for tourists traveling north from San Francisco or San Jose to Napa or Sacramento. Instead of a single style, downtown Benicia is a mix of brick buildings from the 1880s, including the old rail depot, wooden commercial buildings, some ornate Victorian homes, and an art deco movie theater from 1918. But like most historic areas, downtown Benicia has plenty of “missing teeth,” and a successful commercial area needs to fill those gaps with new commercial buildings, hotels and housing. As the first residential mixed-use project in the city, Harbor Walk went through an exhaustive approval process. The developer spent more than a year conferring with local residents and historic preservation groups on the design. The city’s guidelines were strict: The city would allow nothing more than two stories, and nothing taller than 30 feet, even though Olson had initially proposed three- and four-story structures. To build a project with 8,000 square feet of retail space and 36 for-sale townhouses, Olson decided to divide the project into eight buildings, each just under 30 feet in height. The buildings are arranged on the block in a U-shape, with combination retail-and-residential buildings facing First Street and the other buildings, entirely devoted to residential units, standing immediately behind the street-front buildings, almost out of sight. A broad alleyway at the center of the block contains retail parking and a walkway. To respect the two-story height limit on First Street, the Olson Company designed buildings with two-story facades. These simple-looking buildings are complex on the inside, though, and can almost be described as two buildings of identical height. The first “building” has two levels — retail space below and residential space above — while the rear volume has three levels, with parking for homeowners at street level and a two-story townhouse above. (Inserting the parking directly beneath the housing is known in the home building trade as a “tuck under.”) The all-residential buildings are all three stories, again with parking “tucked under” two-story townhouses. Olson project manager Joe Bradford is pleased that the entire block will be filled with development upon completion in 2005. “Downtown Benicia will have critical mass,” he said, adding that the project will set the tone for pedestrian-oriented design. Perhaps that tone has already been set, as other developers are proposing a similar mixed-use project across the street. Then there is the uneasy question of architecture. In Olson’s first scheme, which was later scrapped, the developer had proposed buildings with wood detail that was somewhat reminiscent of the Old West. In the current version, the facades of the buildings borrow design motifs from surrounding buildings, including elements from a historic tannery and some nearby Victorian houses. If the result is a little too historical for my taste, the buildings are still clearly contemporary, and are not direct imitations of historic antecedents — unlike the example set by Los Angeles developer Rick Caruso, who used the form of a 19th Century railway station for an Abercrombie & Fitch outlet in The Grove, the wildly successful shopping environment in LA’s Fairfax district. As for the Benicia buildings, we will reserve final judgment until they have been up for a few years, and allowed to weather in the salt air. Maybe they will be fine for a touristy-but-tasteful downtown of small hotels, beds-and-breakfasts and brunch fare. Apparently, we have to sprinkle a little Williamsburg onto historic districts to make them attractive to visitors. This is a price we willingly pay to preserve old structures in a relentless real estate market. If history cannot be recaptured, neither need it be entirely lost.

A county has the authority to regulate the development of a private water storage reservoir, and that authority is not pre-empted by state water law, the Third District Court of Appeal has ruled. The court determined that San Joaquin County could require the developers of a proposed reservoir on two Sacramento-San Joaquin Delta islands to obtain a conditional use permit from the county. The court also ruled that the county’s adoption of the use permit requirement — which occurred after the reservoir developers obtained a water appropriation permit from the state — was not unfairly discriminatory. The controversy arose when a company called Delta Wetlands Properties started buying agricultural islands in the delta with the intent of creating shallow water-storage projects in San Joaquin and Contra Costa counties (see , April 2001). The company planned to sell the stored water on the open market. In February 2001, the state Water Resources Control Board approved a permit allowing Delta Wetlands to appropriate water for the project. In November of that year, the San Joaquin County Board of Supervisors adopted an urgency ordinance allowing water storage facilities only in agricultural zones and subject to a conditional use permit. The Delta Wetlands project site was zoned for agriculture. The ordinance specifically exempted projects within the state’s jurisdiction and water projects in the Delta above a certain height that would also be regulated by the state. By the middle of 2002, the county had adopted a permanent ordinance and completed an environmental review of the ordinance. Delta Wetlands never filed an application with the county. Instead, the company — an Illinois general partnership with a local office in Lafayette — sued the county. Delta Wetlands argued that the ordinance on its face conflicted with or was preempted by state law, discriminated against the company’s project, failed to consider regional interests and that the county’s environmental review was inadequate. San Joaquin County Superior Court Judge Bob McNatt ruled for the county. Delta Wetlands appealed, and a three-judge panel of the Third District upheld Judge McNatt. The appellate court published only two parts of its lengthy opinion — those dealing with the issues of preemption and discrimination. Delta Wetlands argued that the county ordinance conflicted with Government Code § 53091, which says that local zoning ordinances “shall not apply to the location or construction of facilities for the production, generation, storage, or transmission of water.” The statute applies to projects of local agencies and certain public utilities. Delta Wetlands argued that its project fell into the latter category, but the court disagreed. “Contrary to claims, courts have narrowly interpreted the exemptions from Government Code § 53091 to refer to local agencies,” Justice Coleman Blease wrote for the Third District. “Private parties are not the subject of this statutory scheme and it would have been at odds with it to include them.” Delta Wetlands tried an “implied preemption” argument, meaning that state law had occupied the entire subject to the exclusion of local regulation. The company also contended that the state water board’s permit preempted local action. Again, the court disagreed. Neither the water board’s statutory authority nor its permitting procedure prohibited the county from adopting the ordinance, the court ruled. Water Code § 6026 permits a city or county to regulate dams or reservoirs that are not within the state’s jurisdiction and are not subject to regulation by another public agency, the court noted. Moreover, the provisions of the Delta Protection Act of 1992 “manifestly do not preempt the county’s land use authority. If anything, they impose a duty to regulate land uses within the purview of the legislation,” the court ruled. The water board’s permit “specifically recognizes the jurisdiction and responsibility of San Joaquin and Contra Costa counties,” Blease continued. Because the project could impact fire and police protection, water supplies, sewage and waste disposal, and roads, the water board recommended that the counties adopt mitigation measures. “The county cannot require mitigation measures unless it has permitting authority to do so,” Blease wrote. The court then turned to the question of discrimination. Delta Wetlands argued that it had ascertained 10 years earlier that its project was consistent with the San Joaquin County general plan and did not require a use permit. Only after the company received its state water appropriation permit did the county amend its zoning ordinance — a move that Delta Wetlands said was specifically and illegally intended to frustrate the private water storage project. But the court said there was no evidence of discrimination. “The mere fact the water storage project was the impetus for the ordinance does not mean it unfairly discriminates against the project,” Blease wrote. “The evil sought to be remedied will often not come to the attention of authorities until a use is proposed or a permit application is made. This is particularly true here, where no private party (as opposed to government entity) had ever proposed to build a large-scale storage project of this nature in this area.” Additionally, the Delta Wetlands’ argument was difficult to prove because the company never applied for a county permit nor stated whether its project would be high enough to fall within the exception to the county ordinance, the court ruled. In the unpublished portion of the Third District’s opinion, the court said that Delta Wetlands failed to prove that the county ordinance impermissibly affected regional and state interests. Regarding the California Environmental Quality Act claims, the court upheld the county’s negative declaration because Delta Wetlands had not presented substantial evidence to support a fair argument that the ordinance would significantly impact the environment. The Case: , No. C043811, 04 C.D.O.S. 6894, 2004 DJDAR 9343. Filed July 29, 2004. The Lawyers: For Delta Wetlands: Anne Schneider, Ellison, Schneider & Harris, (916) 447-2166. For the county: Thomas Shephard, Neumiller & Beardslee, (209) 948-8200.

offers this list of land use bills that passed or failed in Sacramento during 2004. The governor has until the end of September to act on the legislation that passed. Brownfields • AB 389 (Montañez). Reduces liability for an innocent landowner and provides for greater public participation in state oversight plans. . • SB 493 (Cedillo). Tried to restart a de-funded program that loans local agencies money for cleanup-related work. The bill originally contained provisions that eventually became AB 389. . • SB 559 (Ortiz). Creates a pilot project to streamline and coordinate activities of local agencies, the Department of Toxic Substances Control and the state Water Resources Control Board for site cleanup and redevelopment. . • SB 805 (Escutia). Extends a program that targets small infill sites to urban sites of larger than 5 acres under the same ownership. . CEQA • AB 406 (Jackson). Would have prohibited confidentiality agreements between developers and consultants who prepare environmental documents. . • AB 1798 (Levine). Attempted to overturn a recent appellate court decision that found the Los Angeles Metropolitan Transportation Authority did not consider alternatives to a busway that is under construction in the San Fernando Valley. The bill said that the alternatives identified by the court should not be considered alternatives within the meaning of CEQA. . • AB 2814 (Simitian). Corrects an error in 2002 legislation that required all responsible and trustee agencies be named as potential parties in CEQA lawsuits. The bill requires that responsible agencies only be notified of lawsuits. . • AB 2902 (Hancock). Attempted to limit a public agency’s ability to shift the burden for mitigating the impacts of its own project to another public agency. The bill was in response to the City of Berkeley’s complaints about a University of California long-range development plan. . • AB 2922 (Laird). Permits broader use of master EIRs and also allows agencies to adopt mitigated negative declarations that tier off of master EIRs. . • AB 3034 (Yee). Directs the Office of Planning and Research (OPR) to analyze state and federal regulations regarding the development of biotechnology manufacturing plants, with the goal of streamlining development approval. . • AB 3090 (Jerome Horton). Requires OPR to revise the CEQA Guidelines to reflect a 2001 state Supreme Court decision that said a city-sponsored ballot measure is not exempt from CEQA. The bill initially sought to prohibit an initiative from deeming any part of a proposed project to be “ministerial” and, therefore, exempt from CEQA, as a failed Wal-Mart initiative in Inglewood did earlier this year. Those provisions were stripped from the bill. . • SB 1267 (Morrow). Would have provided a CEQA exemption for an aggressive fuel reduction program on state lands that was intended to reduce fire danger. . • SB 1334 (Kuehl). Requires counties that determine that a project would result in the loss of oak woodlands to consider certain alternatives or mitigation measures. The bill was watered down after receiving stiff opposition from developers, landowners and counties. . • SB 1486 (Hollingsworth). Would have exempted from CEQA the construction of any overpass proposed within an easement or right-of-way controlled by Caltrans, a local transportation agency, a city or a county. . Economic Development • AB 723 (Matthews). Proposed allowing the creation of infrastructure finance districts to fund projects in designated jobs-housing opportunities zones in a five-county region of Northern California. . • AB 1855 (Maze) Requires the Infrastructure and Economic Development Bank (I-Bank) to provide better notification when it changes criteria and guidelines for funding projects. . • AB 2212 (Runner). Would have allowed San Bernardino County to create a 100,000-acre infrastructure finance district at Harper Dry Lakebed outside of Barstow. . • SB 926 (Knight and Ashburn). Consolidates military base retention and conversion programs within one office of the Business, Transportation and Housing Agency. The bill also permits the office to request funding from the I-Bank for projects that enhance the mission of active bases. . • SB 1056 (Alarcon). Requires cities and counties to prepare economic impact reports for proposed retail stores of at least 130,000 square feet that devote at least 10% of sales space to nontaxable items. . Energy • AB 502 (Canciamilla). Requires public agencies to expedite applications for natural gas exploration or production permits. . • AB 2473 (Wolk). Revises the Solar Rights Act and continues to require that a city or county permit the installation of solar energy systems by right. . • SB 199 (Murray). Contained provisions for Gov. Schwarzenegger’s plan to install solar energy systems in 1 million homes. Among other things, the bill would have required builders in developments of at least 25 houses to offer buyers the option of a solar energy system. . • SB 1652 (Murray). Would have established a new solar energy program and requirements, including a mandate that 5% of new residences include solar energy systems. . • SB 1776 (Bowen). Reinstates the Energy Commission’s expedited process for reviewing new power plants. . General Plans • AB 2055 (Wolk). Renames the open space element the “agricultural and open space element” and recognizes agricultural land as a separate component of open space. . • AB 3065 (Kehoe). Expands the role of the state Board of Forestry and Fire Protection in reviewing safety elements in jurisdictions that have state responsibility areas and very high fire hazard severity zones. . • SB 18 (Burton). Adds concerns for Native American places, features and objects to OPR’s general plan guidelines, and requires local governments to consult with Indian tribes before adopting or amending a general plan. The bill is a compromise re-write of a more extensive measure that failed last year. . • SB 699 (Sher). Requires local governments to report how closely their general plans follow the general plan guidelines. . Housing • AB 1320 (Dutra). Makes it easier for a local government to designate a transit village development district. . • AB 1426 (Steinberg). Provides $1 million in incentives for local governments to participate in a Sacramento Area Council of Governments affordable housing development program. The bill also states an intent to create similar incentives in other regions. . • AB 1970 (Harmon). Proposed allowing cities of less than 25,000 people in the coastal zone that meet certain criteria to adopt housing elements that provide for no new housing units. . • AB 2158 (Lowenthal). Provides councils of government, cities and counties with a greater say in determining regional housing needs allocations. . • AB 2348 (Mullin). Provides revised criteria for the inventory of sites that can be developed for housing to accommodate a city's or county's share of the regional housing need. Both AB 2158 and AB 2348 were the result of a Housing Element Working Group (see CP&DR, June 2004). . • AB 2702 (Steinberg). Prohibits local governments from imposing certain unit and lot-size limits, occupancy requirements and parking conditions on the development of second units. . • AB 2836 (Maddox). Would have relaxed the definition of “moderate income.” . • AB 2980 (Salinas). A proposal from the Housing Element Working Group to let local governments that meet certain criteria self-certify their housing elements. . • SB 558 (Ducheny). Attempted to address local land and infrastructure supplies for new homes. The bill was supposed to become a vehicle for Schwarzenegger administration policies, but those never emerged. . • SB 744 (Dunn). Would have created a state board to consider appeals from affordable housing developers whose projects were denied or conditioned by a city or county. . • SB 898 (Burton). Extends to community college districts and eligible nonprofit organizations the authority to acquire property for development of housing units that would replace units destroyed by a school construction project. A plan by City College of San Francisco to build a Chinatown campus spurred the last-minute legislation. . • SB 1818 (Hollingsworth). Modifies the density bonus law to give greater bonuses for the inclusion of more units available to very low-, low- and moderate-income residents. The measure also requires cities and counties to provide other incentives to affordable-housing developers. . Indian Casinos • AB 382 (Correa). Makes tax-exempt bonds available to Indian tribes, which must complete environmental impact reports and consult with local governments about projects that would get funded with the bonds. . • AB 687 (Nuñez). Ratifies gambling compacts with five Indian tribes. The compacts require more revenue-sharing on the part of the tribes than the first round of compacts signed in 1999. . • SB 1117 (Burton). Ratifies Gov. Schwarzenegger’s recently signed gambling compacts with four Indian tribes, again with more revenue-sharing required. The bill did not include a compact with the Litton Band of Pomo Indians, whose proposal to build one of the country’s largest casinos in San Pablo spurred protests. . LAFCOs • SB 1266 (Torlakson). Expands from 75 acres to 150 acres the size of county islands that are eligible for expedited annexation by cities. The land cannot be prime farmland and must be designated for urban growth by the annexing city. . • SB 1607 (Machado). Would prohibit LAFCOs from placing territory located within the Delta’s primary protection zone into the sphere of influence or boundary of a city or special district that provides urban infrastructure. . • AB 2306 (Richman). Bars the Ventura County LAFCO from requiring the City of Simi Valley to annex county islands as part of a city expansion into undeveloped territory on its south side. . Natural Resources • AB 496 (Correa). Proposed the creation of a Santa Ana River Conservancy. . • AB 1983 (Wolk). Would have expanded the powers of the state Reclamation Board to include environmental protection and restoration, rather than only flood control. . • AB 2476 (Wolk). Expands the duties of the Delta Protection Commission, requires the Commission to update its existing resource management plan and authorizes the agency to facilitate combination flood control-wildlife habitat-farmland enhancement projects. . • AB 2600 (Leslie and Laird). Creates the Sierra Nevada Conservancy. . • SB 86 (Machado). Creates the Sacramento-San Joaquin Delta Conservancy Program within the state Coastal Conservancy, with the intent of restoring, preserving and enhancing agricultural, natural and recreational resources in the Delta. . • SB 754 (Perata). The Heritage Tree Preservation Act would have prohibited the logging of trees that were alive in 1850. . • SB 1319 (Burton). Creates the Ocean Protection Council, which, among other things, may examine activities occurring on land that affect the ocean’s health. . • SB 1447 (Kuehl). Would have required the state to regulate the dredging or filling of any wetlands, stream or pond not regulated by the federal Clean Water Act. . • SB 1477 (Sher). Attempted to expand the jurisdiction of the State Water Resources Control Board to isolated lakes and streams, wetlands and riparian areas that may no longer be protected by federal agencies. . Redevelopment • AB 269 (Mullin). Permits redevelopment agencies in San Mateo County to participate in a joint powers authority for the purpose of pooling low- and moderate-income housing funds. The bill lets agencies transfer up to 25% of their low/mod funds to the JPA, which is authorized to develop housing within a half-mile of the Caltrain right-of-way. . • AB 1358 (Simitian). Would have permitted small cities in San Mateo, Santa Clara and Santa Cruz counties to spend low/mod housing funds anywhere within five miles of a project area. . • AB 2805 (Ridley-Thomas). Allows Los Angeles to extend the life of a redevelopment project area around the Memorial Coliseum by 10 years. But the bill requires the city to get approval of the I- Bank for new projects. The bill is part of an effort to attract a professional football team to the Coliseum. . • SB 1404 (Soto). Permits the creation of multi-family improvement districts, similar to business improvement districts. With approval of two-thirds of property owners, the district could levy assessments to fund services and capital improvements to aid a struggling neighborhood. . • SB 1592 (Torlakson). Would have required cities and counties to adopt infill ordinances, identify potential infill development sites and provide at least five incentives for infill housing projects. . Transportation • AJR 63 (Maze). Requests that the president and Congress designate Highway 99 as an interstate freeway so that it is eligible for more federal funding. . • AB 2366 (Dutra). A stop-gap measure intended to keep the over-budget Bay Bridge seismic replacement project moving forward. The 11th-hour bill would have moved some administrative and financial oversight from Caltrans to the Bay Area Toll Authority. . Water • AB 1015 (Laird). Would have required that land use elements explain the source of existing and future water supplies. . • AB 2279 (Dymally). Proposed the repeal of a state law requirement that irrigation district board members be landowners. . • AB 2572 (Kehoe). Requires cities, water districts and other providers with at least 3,000 connections to install water meters by 2025. . Other • AB 955 (Wiggins). A bill backed by local governments and schools to reform the school siting process was gutted late in the session. • AB 1903 (Maddox). Would have required cities and counties to use a “no-less-favorable” standard when considering proposals affecting religious institutions. . • AB 1936 (Berg). Would have created a process for consolidating Del Norte County and Crescent City into a city-county. The bill died when the city withdrew its support. . • AB 2042 (Lowenthal). Prohibits the ports of Long Beach and Los Angeles from exceeding current levels of air pollution. . • SBs 701, 702, 703, 706 and 707 (Florez). The second-half of a 10-bill package that addressed Central Valley air quality went nowhere this year, after half of the bills passed last year. • SB 1369 (Kuehl). Requires property owners in state fire prevention and suppression areas or in severe fire hazard zones to create a 100-foot firebreak around structures. The bill follows up last year’s AB 1216 (Vargas), which prescribed more stringent building standards for structures in severe fire hazards zones. . • SB 1462 (Kuehl). Mandates that cities and counties notify the military of proposed development projects within 1,000 feet of a low-level flight path or military base. After earlier provisions to modify CEQA were removed, a number of development industry groups and local officials endorsed the bill. . • SBs 1750-1756 and SB 1758 (Battin and Denham). A package of bills that sought better inventories of state land, creation of a Commission on Asset Review and Divestiture and expedited disposal of certain properties. The only bills that passed were SB 1754, which tinkers with the administrative process for relocating state offices, and SB 1752, the annual surplus property bill. All other measures failed.

A ruling by the Ninth U.S. Circuit Court of Appeals appears to have thrown into doubt many of the approximately 100 mobile home rent control ordinances in effect in California cities and counties. A divided three-judge panel ruled that the City of Cotati’s mobile home rent control ordinance was unconstitutional because, under the ordinance, the possibility existed that tenants might receive what amounts to a transfer of equity from landowners when tenants sell their mobile homes. “Unlike ordinary rent control ordinances, an ordinance that permits incumbent tenants to capture a premium based on the present value of the reduced rent fails to substantially advance a state’s interest in creating or maintaining affordable housing,” Judge Robert Beezer wrote for the court. The court also appeared to shift the burden of proof from the mobile home park owners — who argued that the city’s ordinance was a regulatory taking — to the city. The park owners’ claim should be upheld “unless the city presents sufficient evidence of external factors that will prevent the existence of a premium altogether,” Beezer wrote. Attorney Henry Heater, who represented the city, said, “It looks like this panel has created a presumption of unconstitutionality that would be nearly impossible to rebut.” The city has requested a new hearing before a full panel of Ninth Circuit judges, a request that has the support of the state attorney general’s office, the League of California Cities, and two mobile home owners groups. One of those groups, California Mobilehome Resource and Action Association (CMRAA), put out a “red alert” after the Ninth Circuit issued its ruling. “The decision strikes at the very heart of affordable housing, and threatens the extinction of all mobile home rent control ordinances throughout California,” CMRAA Corporate Counsel Bruce Stanton warned. Pacific Legal Foundation attorney Meriem Hubbard, who represented the park owners, said the Ninth Circuit correctly applied takings law to the facts of the case. “If a city wants to have rent control, the cost must be borne by everyone, not by two or three property owners,” she said. “I don’t think the burden of proof has shifted,” Hubbard added. “The property owner has got to come in and show, on the face of the ordinance, that there is no way to enforce it without creating a premium.” Only after the property owner passes that test does the burden of proof move to the city, she said. In many mobile home parks, the resident owns the mobile home itself but rents a pad of land from the park owner. Mobile home rent control regulates the pad rent. Park owners often argue that residents obtain a higher price when selling their mobile home because rent control keeps the pad rents low. Residents argue that rent control is necessary because, with mobile homes not being very mobile, park owners could otherwise gouge mobile home owners. In 1979, Cotati adopted a mobile home rent control ordinance. When voters decided to repeal that ordinance in 1998, the City Council immediately adopted a replacement law. It permitted park owners to increase mobile home pad rentals by the lesser of 6% or the percentage change in the Consumer Price Index. Park owners may apply to the city for larger rent increases. Also, for the first time, the 1998 ordinance contained a “vacancy control” provision that prohibited park owners from charging a new base rent or increasing existing rent for a mobile home space when a mobile home is sold. Park owners Gene Cashman and Athena Sutsos sued the city, claiming that the ordinance violated the Fifth and Fourteenth Amendments. Finding that the ordinance was an illegal taking, District Court Judge Saundra Armstrong granted summary judgment for Cashman and Sutsos. After more proceedings, Armstrong vacated that judgment and eventually conducted a five-day bench trial. At the conclusion of the trial, she ruled for the city. The park owners appealed, and the Ninth Circuit, in a 2-1 decision, ordered the original judgment reinstated. The appellate panel based its decision largely on three earlier Ninth Circuit cases: , (1997) 124 F.3d 1150; , (2000) 224 F3d 1030 ( ), and , (2003) 363 F3d 846 ( ). concerned a Hawaii law that limited ground rents charged to the owners of condominiums. The Ninth Circuit struck down the law, ruling that the law’s lack of a provision to prevent condominium owners from selling their units for a premium failed to “substantially further” the law’s goal of creating affordable owner-occupied housing. had to do with limits on rent that oil companies could charge gas station operators. In Chevron I, the court ruled that the oil company had to show, by a preponderance of evidence, that the rent control was not reasonably related to the stated purpose of lowering fuel prices. In , the court struck down the law because it did not satisfy the “substantially advances” test. District Court Judge Armstrong, after conducting the trial, used as a basis to rule against the property owners. She found that the park owners failed to prove that the Cotati law would create a premium for mobile home owners, or that any such premium would interfere with the purpose of the ordinance. But the Ninth Circuit said that Armstrong misconstrued . That case holds that “conflicting expert evidence creates genuine issues of material fact” that must be resolved at trial, the appellate court explained. In this case there was no conflicting testimony, the court held. “Like , there is no dispute that does not on its face prevent mobile home tenants from capturing a premium,” Beezer wrote. Therefore, the burden of proof was on the city, and the only evidence the city submitted was an expert’s 1990 report on Sonoma County mobile homes, which the court deemed “insufficient” because it did not pertain to the “dominant impact of the ordinance.” Precisely how much evidence the city did present is in dispute. In his dissenting opinion, Judge William Fletcher said that the majority “mischaracterizes the evidence before the district court.” Fletcher pointed to the 1990 study, titled “Economic Impact of Rent Controls on Mobile Home Resale Prices in Sonoma County and Cotati,” as well as a second study about the effect of vacancy controls in mobile home parks in California. The author of the second study also testified at trial. Both studies concluded that mobile homes in rent-controlled parks do not sell for more than equivalent units in parks that are not rent-controlled. “But under today’s holding, what was the trigger for the ‘substantially advances’ test has itself become the test,” protested Fletcher, who contended the court was breaking new ground. “After today’s decision, the possibility of capture of any part of a premium by a tenant renders a rent control ordinance unconstitutional. Even if two qualified experts present evidence that there is, in actual fact, no premium, a plaintiff is entitled to summary judgment that the ordinance is unconstitutional. With all due respect to my colleagues, this simply cannot be the law.” Heater, the city’s lawyer, said the ruling could affect all land use laws because they all transfer wealth in some fashion. Hubbard, the landowners’ attorney, said she could not say what impact the ruling might have on other rent control laws. If a law does not create a premium that benefits tenants, it might pass muster, she said. Two years ago, the state Supreme Court ruled that Cotati’s validation lawsuit against mobile home park owners regarding the same rent control law was not a SLAPP (strategic lawsuit against public participation). ( , 29 Cal.4th 69; see , October 2002.) The city filed the suit in state court after the park owners filed their federal court lawsuit. The Case: , No. 0315066, 04 C.D.O.S. 6293, 2004 DJDAR 8588. Filed July 15, 2004. The Lawyers: For Cashman: Meriem Hubbard, Pacific Legal Foundation, (916) 419-7111. For the city: Henry Heater, Endeman, Lincoln, Turek & Heater, (619) 544-0123.

The state Supreme Court has sided with a landowner in a dispute over Santa Cruz County’s regulation of second dwelling units. But the state high court only cleared the way for the landowner to pursue his claims in court and did not rule on the merits of those claims. The court ruled that a landowner has 90 days to challenge permit conditions, even if the challenge calls into the question the ordinance underlying the conditions. The Sixth District Court of Appeal had ruled that this amounted to a “facial” challenge of the ordinance, and that the landowner should have sued at the time the county adopted the ordinance (see , September 2002). But the state Supreme Court ruled unanimously that a landowner has 90 days to sue over permit conditions, and such a suit is not “untimely merely because the theory of challenge is the facial invalidity of the ordinance upon which the permit or condition is based.” Property rights advocates said the state Supreme Court decision returned the ability of landowners to bring “as applied” challenges of regulations. This principle was not in question until the Sixth District’s ruling, said Pacific Legal Foundation attorney Harold Johnson, who represented Santa Cruz County property owners at the state high court. The Sixth District said that, because the statute of limitations for contesting the county’s adoption of the ordinance had expired, a landowner had to show that the county was treating his property differently than others that are regulated by the same ordinance. The state Supreme Court’s ruling, said Johnson, “rescued us from an appellate decision that would have been disastrous.” California Building Industry Association attorney Paul Campos, who filed an amicus brief in the case, agreed. The state Supreme Court decision “prevents a really radical change in the balance between finality for local governments and the ability of landowners to bring an as-applied challenge,” Campos said. If the Sixth District’s ruling had been allowed to stand, “it would have immunized a whole universe of land use regulation from judicial review after 90 days.” Attorneys on the other side said the state Supreme Court ruling creates new opportunities for landowners to contest regulations. But Santa Cruz Assistant County Counsel Dwight Herr said the court took a middle position that gave landowners less than they requested. The court even knocked one landowner out of the case. Plus, Herr noted, the only ruling that has ever been made on the merits of the litigation was at the trial court, which sided with the county. Land use law expert Daniel Curtin, of Bingham McCutchen, called the state Supreme Court’s ruling a “reasonable” one that cities and counties can live with — even if they would rather not. The League of California Cities and the state attorney general’s office had asked the state Supreme Court to uphold the lower court’s decision. At issue is a Santa Cruz County ordinance regulating second units, or “granny units.” The county first adopted an ordinance in 1981 and has amended the law several times since then, most recently in November 1997. The law restricts occupancy to low-income households, seniors or family members, and controls rent based on a sliding scale. In 1999, Steven Travis received a permit for a second unit on his property in the unincorporated community of Boulder Creek. He appealed the occupancy and rent conditions, but his appeal was denied on June 21, 1999. He and Stanley and Sonya Sokolow (who had received a second unit permit in 1998) then sued the county on September 7, 1999. Travis and the Sokolows argued that the second-unit ordinance was preempted by the Costa-Hawkins Rental Housing Act, was discriminatory, violated state planning and zoning law, was an unconstitutional taking and was invalid because the county lacked a certified housing element. Santa Cruz County Superior Court Judge Robert Yonts ruled that the landowners’ challenge of the ordinance itself was too late, as was the Sokolows’ challenge to their permit conditions. The judge determined that Travis’s constitutional challenge was timely, but that there had been no taking. After the landowners appealed, the Sixth District Court of Appeal in a 2-1 decision upheld the lower court on slightly different grounds. The Sixth District ruled that the statute of limitations in Government Code § 65009, subdivision (c), barred all of the challenges. That statute gives people 90 days to commence legal action over the adoption or amendment of zoning ordinances. The landowners had 90 days to file suit from the time the county last amended the second-unit law in 1997, the court held. The state Supreme Court saw things somewhat differently. The challenges to the individual permit conditions are governed by Government Code § 65009, subdivision (c)(1)(E), the court held. Paragraph (E) gives the landowner 90 days from the final administrative action to commence litigation. Travis met the 90-day statute, but the Sokolows did not, the court held. The court rejected the county’s contention — and the appellate court’s conclusion — that Travis was challenging permit conditions generally and that he should have sued within 90 days of the ordinance’s adoption. The county and the Sixth District relied heavily on , 8 Cal.4th 1 (see , September 1994), which holds landowners to strict statutes of limitations for challenging land use regulations. “But in ,” Justice Kathryn Werdergar wrote for the court, “we were not concerned with delineating the issues that could be raised in a challenge to a permit condition. … Indeed, elsewhere in the decision we explained that a claim of regulatory taking, arising from imposition of a ‘development restriction’ requires a showing that ‘the ordinance, regulation or administrative action is not lawful or constitutionally valid if no compensation is paid.’” “Having brought his action in a timely way after application of the ordinance to him, Travis may raise in that action a facial attack on the ordinance’s validity,” Werdegar wrote. “The Legislature intended § 65009 to provide certainty to local governments, but not, we think, at the expense of a fair and reasonable opportunity to challenge an invalid ordinance when it is enforced against one’s property,” Werdegar continued. The court then considered the landowners’ contention that the Costa-Hawkins Act preempts the county’s ordinance. In general, Costa-Hawkins prohibits rent control on housing units built since 1995. The court ruled that Code of Civil Procedure § 338 gave the landowners three years to challenge the county ordinance for being in violation of Costa-Hawkins. But that three-year period began with the effective date of Costa-Hawkins (January 1, 1996) and not the date of the county’s last ordinance amendment (November 1997). Thus, the landowners were too late here, the court ruled. The court also rejected the theory of “continuous accrual,” in which a new statute of limitations begins every time the county applies the ordinance. In a concurring and dissenting opinion, Justice Janice Rogers Brown said that there should be no statute of limitations for the type of challenges brought by Travis and the Sokolows, who have not sought monetary damages. The state Supreme Court returned the case to the Sixth District for further proceedings on the merits of Travis’s constitutional claims. The Case: , No. S109597, 04 C.D.O.S. 6822, 2004 DJDAR 9280. Filed July 29, 2004. The Lawyers: For Travis: Harold Johnson, Pacific Legal Foundation, (916) 419-7111. For the county: Dwight Herr, county counsel’s office, (831) 454-2040.

A ballot initiative that was adopted by a city council was not subject to review under the California Environmental Quality Act, even though the city deviated from state election law regarding ballot measures, the Fourth District Court of Appeal has ruled. The court held that the city’s process did not deviate from the Elections Code requirements enough to make the city’s action more than ministerial. Ministerial projects are exempt from CEQA. The ballot initiative in question was drafted in 2002 by Pueblo Serra LLC, which sought to develop a private, Catholic high school at Junipero Serra Road and Camino Capistrano in the City of San Juan Capistrano. Pueblo Serra has a high school in a converted office complex on one 9-acre parcel at the site. Operators of the for-profit school wanted to expand onto an adjacent 29-acre parcel, so they prepared a ballot initiative to change the general plan designation and zoning of the two parcels. The general plan designated the parcels for office research and planned community, respectively. The Pueblo Serra initiative proposed a public and institutional general plan designation, and correlated zoning. In September 2002, the Orange County Registrar of Voters certified that the initiative petition had enough signatures to qualify for the ballot. The initiative was then presented to the City Council, which negotiated an implementation agreement to mitigate certain impacts. The council adopted the initiative and implementation agreement on October 15, 2002. Members of the Juaneño Band of Mission Indians formed the Native American Sacred Site and Environmental Protection Association (NASSEPA) and sued the city, arguing that the City Council could not adopt the initiative without CEQA review. The tribe said that the 29-acre parcel was the site of the tribe’s ancient mother village and a burial ground. The tribe had sought to regain control of the land. Superior Court Judge Ronald Bauer ruled that the city did not have authority to adopt the initiative in conjunction with the implementation agreement because Elections Code § 9214 gives a city only two options: Adopt an initiative “without alteration” or schedule the measure for an election. In May 2003, the City Council rescinded its earlier action and adopted the initiative exactly as presented. NASSEPA returned to court, but this time Judge Bauer ruled for the city. The Indians appealed, and a unanimous three-judge panel of the Fourth District upheld the lower court. The Indians argued that the only way the city could adopt the initiative as a ministerial act — and, therefore, exempt from CEQA — was if the city did so within the 10-day period set out in the Election Code. Because the city acted months after being presented with the initiative, the City Council’s action was no longer ministerial, NASSEPA contended. But the appellate court rejected the argument. “A city’s duty to adopt a qualified voter-sponsored initiative, or place it on the ballot, is ministerial and mandatory,” Justice William Rylaarsdam wrote for the court. “This duty remains even when performance is beyond the statutory time frame.” “Other than passage of more than 10 days, nothing had changed since the time the initiative petition was first certified and presented to defendants,” Rylaarsdam continued. “Under plaintiff’s analysis, however, this lapse of time acted to invalidate defendants’ power to adopt the voter-sponsored initiative. Considering the intent of the section and the broader statutory and constitutional scheme of which it is a part, that is an absurd result we cannot countenance.” The Indians argued that the city could conduct a CEQA review of the project or Pueblo Serra could gather signatures on a new initiative. But the court ruled that neither of those alternatives was necessary. The city materially followed the procedures of the Election Code, “ nd it is plain that voter-sponsored initiatives are not subject to the procedural requirements that might be imposed on statutes or ordinances proposed and adopted by a legislative body, regardless of the substantive law that might be involved,” the court ruled. The Case: , No. G033198, 04 C.D.O.S. 6642, 2004 DJDAR 8947. Filed June 30, 2004. Ordered published July 22, 2004. The Lawyers: For NASSEPA: Susan Brandt-Hawley, Brandt-Hawley Law Group, (707) 938-3908. For the city: John R. Shaw, Woodruff, Spradlin & Smart, (714) 564-2603. For Pueblo Serra: Robert Bower, Rutan & Tucker, (714) 641-5100.

Every month when the news media reports the latest “record trade deficit,” what often goes unsaid is that this deficit means cargo handlers in Southern California are busier than ever. With the country’s ever-increasing reliance on imported materials and goods, the logistics industry appears to be thriving. But developing the warehouses and distribution centers has become an issue in many Southern California communities. Several factors are affecting Southern California’s warehouse development scene: An almost complete absence of vacant land near the largest ports, some local governments’ unease with the low jobs-per-square-foot ratio inherent in warehousing, and rising questions about air pollution from trucks that come and go from warehouses. Thus warehouse and distribution center development continues to move farther inland, where land is available and inexpensive, and where local governments are happy to approve almost any project that brings jobs. This move inland comes despite the total dominance of the coastal ports of entry. The Los Angeles-Long Beach port complex is the largest in the country and third largest in the world, and experts say the amount of cargo headed through the port complex will quadruple over a 25-year period. Los Angeles International Airport (LAX) handles more cargo than any other West Coast airport and, despite attempts by transportation planners to spread the wealth among other airports in the region, LAX continues to get most of the growth. By way of comparison, LAX handles about as much cargo in one week as the region’s second-busiest cargo airport, Ontario International, handles all year. But most warehouse and distribution center development is occurring 50 or more very congested miles from the seaport and LAX. Grubb & Ellis recently reported that about 10 million square feet of industrial space was under construction in Riverside and San Bernardino counties during the second quarter of 2004. Nearly all of this space was in the form of 500,000-square-foot or larger warehouses and distribution centers. “The place where the warehouse growth has been is the Inland Empire,” said Gary Painter, director of research at the University of Southern California’s Lusk Center for Real Estate. “It all has to do with the cost for the land.” Currently, the cheaper land offsets the cost of transporting things — usually by truck — to the outlying warehouses, Painter said. At some point, the balance will change, he said. But determining where that balance point lies is difficult. Unless there are some “radically different trends” in ground transportation costs, the inland movement of warehouses and distribution centers will continue, he said. However, officials in cities that have already become shipping hubs are ambivalent about further growth. “Warehouse and distribution centers just sort of happen by themselves,” said Ray Bragg, the City of Fontana’s redevelopment and special projects director. “We’ve got three interstate freeways traversing through the city, and we’ve got Union Pacific railroad going through the south end of the city.” Fontana provides incentives for distribution centers only if there is an additional component, such as sales or marketing. For example, an American Hotel Supply facility in Fontana serves as both a warehouse and as a sales outlet, providing the city with sales tax revenue. “Warehouses and distribution centers, unfortunately, are not high jobs producers, and they are not what you might call ‘living-wage’ jobs producers that allow people to live in the community,” Bragg said. Furthermore, truck-dependent warehouses generate enormous road maintenance costs for local government, he said. Neighboring Ontario has 84 million square feet of industrial space, about half of which is devoted to the logistics industry, said Mary Jane Olhasso, the city’s economic development director. The city encouraged this development by zoning large tracks of freeway-accessible farmland near the airport for industrial uses. The city also worked hard to process applications quickly. But, even with its airport, freeways and the UP rail line, Ontario’s days of warehouse growth are about over because, Olhasso said, the city is “virtually out of space for a big box. … If I’m a real estate developer, I’m not going to look at Ontario.” A 2002 study by airport consultants Leigh Fisher Associates found plenty of room for air cargo growth at Ontario airport. That is fine with the city, but Olhasso pointed to the fact that the number of passengers using Ontario is expected to quadruple by 2020. That passenger growth is going to boost the demand for office space, so Olhasso expects some existing distribution centers along Interstate 10 to become office buildings. “Over the next 10 years, you’re going to see a major change in Ontario jobs and in the skyline,” Olhasso predicted. Still, some inland localities remain enthusiastic about warehouse development, including cities along I-215 in western Riverside County and in San Bernardino County’s Victor Valley. Former military bases are also starting to get some significant projects. Community resistance, however, is rising in places. In Moreno Valley, for example, hundreds of people have protested the Planning Commission’s approval of a three-building, 1.5-million-square-foot warehouse center next to March Air Reserve Base — even though the site has been zoned for industrial development since 1989. The City Council is tentatively scheduled to decide the controversy this month, said Moreno Valley planner Edward Robertson. Residents’ concerns usually are focused on the noise, congestion and air pollution that comes with truck traffic. During the last two years, the Center for Community Action and Environmental Justice (CCAEJ) has successfully fought warehouses proposed for the unincorporated Riverside County town of Mira Loma, which has become a distribution center hub. Air pollution is the biggest concern. The South Coast Air Quality Management District has reported that diesel pollution — which causes cancer — is more intense in Mira Loma than anywhere else in Southern California. And researchers at USC found that children in Mira Loma have unusually low lung capacities. “Here we had local officials developing their economic strategies around this hugely polluting industry,” said CCAEJ Executive Director Penny Newman. “It makes absolutely no sense to bring in industry that is not labor-intensive, that is more automated all the time.” Meanwhile, the air district has begun circulating a draft of a recommended air quality element that cities and counties could incorporate into their general plans. The district suggests that cities and counties keep air polluting industries away from children, and elderly and sick people, and more seriously consider cumulative impacts. Contacts: Mary Jane Olhasso, City of Ontario, (909) 395-2010. Ray Bragg, City of Fontana, (909) 350-7697. Gary Painter, USC Lusk Center forReal Estate, (213) 740-8754. Penny Newman, Center for Community Action and Environmental Justice, (909) 360-8451.