Silicon Valley's job boom has underscored gaps in the transit systems in the San Francisco Bay Area, and has renewed calls to extend BART, the costly regional transit system that was once supposed to ring San Francisco Bay. But while construction continues on a $1.5 billion extension of BART from northern San Mateo County to San Francisco International Airport, other plans to extend BART have received mixed receptions. A ballot initiative to extend BART south of the airport through San Mateo County surfaced and then was quickly pulled by supporters. And San Jose Mayor Ron Gonzales has recently said that he'd like to extend BART on the other side of the bay from Alameda County to his city. But funding for the estimated $3 billion extension is uncertain. BART currently runs from northern San Mateo County, through San Francisco and into Alameda and Contra Costa Counties. The extension to the airport is to be completed in December 2001, adding four new stations and bringing it 8.7 miles farther south into San Mateo County. The airport extension will include a connection in Millbrae with Caltrain, a train service that extends along the San Francisco Peninsula from San Francisco to Gilroy. Caltrain supporters, who have pushed to see their train system electrified at a cost of $376 million, are often critical of the billions spent on BART. The San Mateo County BART extension proposed for the March 2000 ballot would have run down the middle of Highway 101, a heavily congested north-south artery. Many of the Caltrain stations are already located a few blocks from Highway 101 in the same area, and they are being rebuilt and expanded. The San Mateo County proposal would have raised the sales tax by a half-cent. To extend BART 15 miles south from Millbrae to Menlo Park was estimated to cost between $1.5 billion and $2.5 billion. The measure was pulled after several members of BART's board of directors announced their opposition. A recent report by the Silicon Valley Manufacturing Group said that Silicon Valley already has worse freeway congestion than New York City when measured in time spent waiting in traffic. Plus, five million square feet of new office space is expected to be built in the region during the next five years, bringing about 15,000 more cars to already congested freeways and roads. But BART is not the only option for Bay Area commuters as traffic in the booming San Jose area has worsened. Other systems include: o Caltrain, which travels up and down the San Francisco Peninsula. o Light rail in Santa Clara County, which connects with Caltrain in San Jose. The light rail system will also connect with Caltrain in Mountain View when a new 7.1 mile leg of the system opens in December. The new leg, which brings the total light rail system to 28 miles, was built at a cost of $327 million. o Altamont Commuter Express trains, which run between Stockton and San Jose. This service has proven popular in its first year of operation. o Amtrak, which runs trains between Oakland and San Jose three times a day and has plans to increase its operation. o A new $90 million rail service approved by South Bay voters to run between San Jose and Union City's BART station in Alameda County. That service should begin within two or three years. BART, which started carrying passengers in 1972, has spent considerable money during the 1990s to upgrade its aging cars and stations, as well for seismic retrofits. Service has been extended to outlying regions in Contra Costa and Alameda County as well. The system currently has 95 miles of track and carries an average of 299,000 daily riders, accounting for about 8% or 9% of all Bay Area commuters. BART officials have also had a difficult time securing all the money for its expansion to the airport. The state legislature's failure to place a transportation bond on the next state ballot also hurt efforts to expand the system further. But many political observers expect transportation funding to be a top issue when the legislature reconvenes in January. BART was originally conceived as a regional transit system in the 1950s. But San Mateo County supervisors voted 3-2 against joining the system in the 1960s, and Marin County also dropped out. San Mateo County later changed its tune and had to spend $200 million to buy its way into BART when it joined in the 1980s. Buy-in costs for Santa Clara County have not been determined, but figures between $500 million and $1 billion have been suggested. "BART is the best Bay Area wide system right now," San Mateo County Supervisor Mike Nevin said. Nevin said that Caltrain's daily ridership of 27,000 riders a day is smaller than the total number of daily users at BART's Daly City station. If BART extends south, he said, "you can't afford not to use it." The BART airport connection will have departures every 15 minutes during peak hours. BART rides to downtown San Francisco will take about 30 minutes. (A people mover will carry passengers once they are at the airport.) The airport extension is expected to eliminate 10,000 car trips per day and boost BART ridership by 70,000 passengers a day. The airport connection is expensive, and project costs continue to grow. Originally, the extension was estimated to cost $1.1 billion; now the cost has jumped to $1.483 billion. The federal government pledged to pay $750 million of that cost in 1997, but Nevin said "they've shorted us several million dollars over the past several years." He blamed the lowered appropriations on a Republican Congress. "It's still a crisis in Washington to get the funding," he said. Funding for the airport extension comes from a variety of sources besides the feds: $26.5 million from the Metropolitan Transportation Commission, $171 million from Samtrans (San Mateo County's transit agency), $152 million from the state, $200 million from the airport, $143.7 million from BART itself, and $40 million in bond money. The BART airport connection will not be the first in the U.S. for a rapid transit system. Washington, D.C.'s Metro system takes passengers to Reagan National Airport while Chicago's trains carry passengers into O'Hare International Airport. BART spokesman Mike Healy said that even though BART tracks are not much more expensive than light rail lines, right-of-way acquisition costs and subways construction escalates the total cost of BART projects. The airport extension is almost entirely a subway because local communities demanded it, he said. Contacts: Supervisor Mike Nevin, (650) 363-4653. BART Spokesman Mike Healy, (510) 464-6000. Peninsula Rail 2000, a Caltrain support group, www.rail2000.org

Voters in Eureka have handed a setback to the Bentonville, Arkansas-based denizens of gray big boxes. In a late August election, Eureka voters rejected rezoning to allow a Wal-Mart near the waterfront. The election polarized the city, but officials pledged that economic development efforts would continue with or without Wal-Mart. The loss in the Humboldt County seat was a rare defeat for Wal-Mart — but probably not surprising considering that it occurred in an independent-minded North Coast town of 28,000 people just south of Humboldt State University. "Eureka is unique," voter Laura Reneau told the Associated Press. "Why put something as common as Wal-Mart on our coastline?" Another factor in the election was the number of empty retail stores in existing commercial districts — including about two dozen vacancies at the 11-year-old Bayshore Mall and more than a few vacant buildings downtown. Wal-Mart opponents said the big box would only increase vacancies. Wal-Mart proposed a store for 37 acres known as the Balloon Track, an abandoned railroad switching yard about 150 feet from the ocean. The city in 1997 amended its general plan to designate the property for general industrial uses, according to Kevin Hamblin, the city's community development director. The property, which Union Pacific still owns, is zoned for public utility use. In fall of 1998, the California Coastal Commission rejected Wal-Mart's proposal to designate the site for retail use. Bypassing the City Council, Wal-Mart then convinced local supporters to launch a petition drive to qualify a rezoning initiative for the Eureka ballot. What was a divisive issue in town only got worse during the campaign regarding Measure J, on which Wal-Mart spent more than $250,000, or nearly $20 per registered voter. Some Humboldt County supervisors came out against Wal-Mart's plan, and the Eureka City Council eventually voted 3-1 for a resolution against Wal-Mart. Mayor Nancy Fleming, a Wal-Mart proponent, became a lightening rod in town. An aggressive telemarketing campaign by Wal-Mart backfired and ended with Wal-Mart reportedly firing the telemarketing firm. In the late-August special election that had a 47 percent voter turnout, 61 percent of voters rejected Measure J. It may have been the first such electoral defeat in California for Wal-Mart, said Al Norman, a Massachusetts activist who recently wrote the book Slam-Dunking Wal-Mart — Hometown America Fights Back. Wal-Mart narrowly won a similar election in the Sonoma County city of Windsor two years ago, said Norman, who advised opponents in both Windsor and Eureka. "What was unusual about Eureka was that this vote was done at the insistence of Wal-Mart," Norman said. Also setting Eureka apart was Wal-Mart's inability to convince local elected and civic leaders, who are usually Wal-Mart's biggest cheerleaders, he said. "There were a fair number of leaders who were willing to say this makes no sense." In fact, a committee appointed by the Board of Supervisors came to that conclusion about one month before the election. The Humboldt County Ad Hoc Committee on Big Box Development released a report that echoed many arguments of Wal-Mart detractors. The report said Wal-Mart would essentially suck sales and jobs from existing stores in the region. "A new big box retail store would have negative fiscal impacts on surrounding municipal entities, not increase jobs or the quality of jobs, significantly harm and potentially bankrupt existing businesses and reduce the overall quality of life throughout the county," the report stated. Outright defeats of big boxes are rare, and Wal-Mart representatives (who did not return calls from CP&DR) have not stated whether they are giving up on Eureka. Elsewhere, local opposition forced Home Depot to change sites in Santa Rosa and Santa Maria, but Home Depot eventually built stores in both towns, according to Norman. San Francisco residents and merchants continue to battle Home Depot. Activists in an unincorporated part of Auburn thus far have successfully fought off Home Depot, Wal-Mart and Target. Interestingly, Wal-Mart would not be Eureka's first big box. Costco has been in town since 1993, and Kmart opened there about a decade ago, Hamblin said. People have talked of using Eureka's Balloon Track for port-related industrial activity. However, a study found an abundance of coastal-dependent industrial property already available, and there are concerns about the extent of pollution at the old railroad yard, Hamblin said. Plus, Eureka's isolated location and poor transportation connections — one north-south freeway, railroad tracks susceptible to bad weather and slides — argue against a major port, he said. But Hamblin's boss, Eureka City Manager Harvey Rose contended Eureka's deep-water port is a major economic asset. The city is lobbying federal officials to receive a "foreign trade zone" designation, which would reduce or eliminate tariffs on raw materials imported to the zone. The city now has a cut-flower producer that receives bulbs from New Zealand and The Netherlands. Also, an ice cream manufacturer that makes products for many different labels imports dried milk solids from New Zealand, Rose said. City officials believe the foreign trade zone would boost those businesses and attract other manufacturers. The city also will host the second Eureka International Trade, Investment and Tourism Conference on October 22. Representatives of Mexico, South Korea and New Zealand are on the agenda. While Eureka suffers from a remote location, its port is one day closer to Japan than is Long Beach's port, California's busiest, Rose said. Furthermore, truck drivers face no traffic congestion on the North Coast, as they do when traveling to and from urban ports, he boasted. Rose said Wal-Mart would have increased Eureka's sales tax base, but the city will move on. "In economic development, you don't typically go out and recruit retail. You recruit industry, and retail comes along when the numbers are right," Rose said. National retailers evidently see the right numbers. Walgreens, Office Depot and Office Max are all coming to town, and Target is reportedly looking for sites. Contacts: Kevin Hamblin, Eureka Community Development Department, (707) 441-4160. Harvey Rose, Eureka city manager, (707) 441-4100. Al Norman, Sprawl-Busters, (413) 772-6289.

An initiative to prevent hotel and resort development on 60 acres of city-owned land in Sonoma passed with 77 percent of the vote during a Sept. 21 special election that attracted 59% of registered voters. A Mexican investor had proposed an upscale, 100-room resort for the hillside above Sonoma Plaza. Project opponents said they wanted to preserve open space and a scenic view.

I need to start this column with some personal disclosures: I have never shot fish in a barrel. I deny ever having stolen candy from a baby. (Actually, it depends on how you define "stolen.") And I have never rolled off a log, at least not as an adult. So, I don't really know how easy all these things are. But then again, none of them could be easier than finding the flaws in the City of Murrieta's plan to provide about $115 million in bond financing for the RogersDale theme park to be built in the Riverside County city. Promotional materials for RogersDale, which is inspired by the later cowboy star Roy Rogers and his wife Dale Evans, describe the park as "celebrating and reliving the American West of yesteryear" through the means of "entertainment, retail and educational venues, restaurants, specialty shops, cinemas, museums, authentic architecture, a Western Sidekick Walk of Fame and a non-denominational chapel." An 8,000-seat auditorium is the centerpiece of RogersDale. Heading the project team is retail developer Zev Buffman and Roy "Dusty" Rogers Jr., the son of Roy Rogers and operator of the family museum in Victorville. In June, the Murrieta City Council unanimously approved the issuance of about $115 million in Marks-Roos bonds for the project. (Local newspapers reported the amount at $104 million, but City Finance Director Teri Ferro said the amount would be higher.) The bond proceeds will help pay for most of the $170 million RogersDale U.S.A. Western-themed entertainment-and-retail extravaganza. The bond issuer is a joint-powers authority comprised of the City of Murrieta and the city's own redevelopment agency. (Never mind that these two different agencies are virtually the same: As in many California cities, the city council does double-duty as the redevelopment board.) Under the terms of the bond deal, the city would be obliged to start repaying the 30-year bonds in the third year. Assuming an interest rate of about 6 percent on $115 million, annual interest payments come to $6.9 million. According to one analysis, the project needs to attract 1.1 million visitors and generate $49 million annually to make its debt service and contribute an additional $6 million of anticipated sales tax revenues to the city. To accomplish this task, RogersDale promoters must sell at least 4,000 seats to more than 630 events a year. No, you're not getting a cold. Everybody feels a chill when they hear those numbers — everybody except the Murrieta city council, underwriters Solomon Smith Barney and Miller & Schroeder, and bond counsel Fulbright & Jaworski and Harper & Burns. By the way, John Harper, a name partner in Harper & Burns, is also the contract city attorney of Murrieta. Readers will recall that in 1996, William E. Gnass, then contract city attorney for the City of Waterford, was arrested by state authorities for allegedly failing to disclose that he was both disclosure counsel and bond counsel for the same city. In contrast, Mr. Harper's role is totally legal. Unlike Gnass, Harper has disclosed the fact that he is both the city attorney and the city's bond counsel. To Murrieta's credit, at least 2,500 people in town objected to this deal, or at least wanted to put the bond measure on the ballot. Although the opponents of RogersDale had gathered the legal number of signatures for a referendum, the City Council ignored them. In a maneuver that belongs in every future textbook on California government, the Murrieta City Council outfoxed referendum supporters by repealing the language of the financing plan that was the target of the referendum. With the offending language gone, the referendum had nothing to reject. Later the same night, the council, wearing the hats of the redevelopment agency board, adopted a new measure containing a strikingly similar financing plan. I suspect that the City Council will someday regret not being able to blame the decision to finance RogersDale on somebody else. The first flaw is the use of Marks-Roos bonds — yet again — to finance a questionable and highly speculative real estate project. These bonds, and the poorly conceived projects that they have funded, have led to near-insolvency for the cities of Wasco and Lake Elsinore. An even deeper flaw is the city's belief that a single project, such as a flashy theme park, can be the magic bullet to achieve economic-development goals. A healthy local economy is based on many companies in different lines of business, not on a single monolith that must sell 4,000 concert tickets 600 times a year to make money. A second flaw is whether or not Buffman and Rogers have the resources to market RogersDale successfully. Even non-experts like myself are aware that theme parks like Disneyland, Six Flags Magic Mountain, Knott's Berry Farm and Universal Studios spend tens of millions of dollars apiece to promote their attractions. These same theme parks also must spend heavily to create new rides and new attractions every year to keep the crowds coming back. I have not yet seen evidence that Buffman, a self- described Broadway producer and football team co-founder, has either the management expertise or financial depth to keep a very complex and very capital-intensive business afloat. If Buffman is rich, then why doesn't he get a conventional construction loan or line of credit? Why is he relying on a house of cards like a Marks-Roos bond issue? I'm not saying that RogersDale will be a certain failure. Heaven could take pity on Murrieta, and send an experienced theme-park operator to the city. Otherwise, it looks like almost certain disaster. Even in the colorful annals of Marks Roos, this is a notably unwise project. Indeed, this is the worst deal entered into by a California city since Oakland agreed to a $150 million subsidy to lure back the Raiders football franchise. It's easy to find fault with the public financing for RogersDale. The hard part will be for Murrieta to get out of the way once the monster starts to fall.

Local government won one round and lost one round in separate, recent decisions over taxes levied without voter approval. The City of La Habra defended its utility users' tax from a lawsuit that claimed the tax violated a Proposition 62 requirement of voter approval. However, the City of Los Angeles lost a case in which an annual assessment on apartment owners was ruled a violation of Proposition 218, which also mandates voter-approval. Both cases — which appear to set important precedents regarding local government finance mechanisms — could wind up at the California Supreme Court. In the La Habra case, the Fourth District Court of Appeals, Division Three, ruled that the statute of limitations had elapsed for challenging the utility users' tax. The decision conflicts with a 1997 decision in a utility tax case by a different division of the same appellate district. The court in McBrearty v. City of Brawley, 59 Cal.App.4th 1441, interpreted the statute of limitations differently. Because of these conflicting opinions, the Howard Jarvis Taxpayers Association (HJTA), which sued La Habra, plans an appeal to the state Supreme Court. Even La Habra's attorney expects the high court will grant a hearing. In December of 1992, the City of La Habra adopted an ordinance establishing a utility users' tax to raise revenue for the general fund. The measure became operational May 1, 1993, when tax collection commenced. At the time, two appellate decisions held that Proposition 62 was unconstitutional. (See City of Woodland v. Logan (1991) 230 Cal.App.3d 1058, and City of Westminster v. County of Orange (1988) 204 Cal.App.3d 623.) Proposition 62, approved in November 1986, prohibited local governments from imposing a general tax without a majority vote in an election. Relying on these opinions, the City of La Habra did not submit its utility users' tax to voters. However, in September 1995, the California Supreme Court upheld the constitutionality of Proposition 62 in Santa Clara County Local Transportation Authority v. Guardino, (1995) 11 Cal.4th 220. In that case, the Supreme Court invalidated a tax imposed without voter consent. In March of 1996, the Jarvis group filed a lawsuit against La Habra and Orange County. The city demurred, in part because of the three-year statute of limitations. Orange County Superior Court Judge Ronald Kline ruled for the city. On appeal, Jarvis appeared to have McBrearty on its side. The McBrearty court concluded that an exception to the three-year statute of limitations was warranted to prevent an injustice. Application of the three-year statute "would have required to bring a lawsuit challenging the validity of the tax at a time when the legal landscape suggested her only chance of success would be upon review of the issue by the California Supreme Court. Short of such a Herculean effort, the City could at no time have been compelled to conduct an election for the tax in question," the McBrearty court wrote. "This would essentially thwart the intent of the electorate in passing Proposition 62, despite the confirmation of the validity of the initiative provisions in Guardino." But the court in the La Habra case called the McBrearty opinion "flawed, as it gave little recognition to the long-standing Supreme Court authority which we are bound to follow." The State Supreme Court in Monroe v. Trustees of the California State Colleges (1971) 6 Cal.3d 399, concluded that "the mere existence of a contrary precedent" does not alter the statute of limitations. To rule otherwise would allow litigation every time a precedent changed. Thus, the three-year statute must be upheld. "It is absurd for HJTA to suggest it was forestalled or intimidated by the prevailing case law from filing its suit at the time the City passed its utility tax ordinance," wrote Orange County Superior Court Judge Tully Seymour, sitting on assignment to the appellate bench. "HJTA was in fact the real party in interest in Guardino, a case it pursued in the face of the contrary appellate court cases for the express purpose of having them overruled." The court also dismissed Jarvis's claim that the statute of limitations was renewed every time the city collected the tax. Timothy Bittle, the lawyer for Jarvis, and Richard D. Jones, the city's attorney, agreed the case is significant because so many other cities and counties have imposed similar taxes without voter approval. Bittle said his group has sued Sacramento County over a similar levy. "There are probably in excess of 50 or 60 cities that would be impacted, and there are six or seven cities and counties involved in active litigation," Jones said. Bittle vowed to seek a state Supreme Court hearing to resolve the conflicting opinions from the same appellate district. Added Jones, "I would anticipate, given that we have two totally different decisions, that they may accept it." The Los Angeles apartment fee opinion was more straightforward. The Second District Court of Appeals, Division One, ruled that an annual assessment on residential rental properties with at least two dwelling units was subject to Proposition 218, the 1996 Right to Vote on Taxes Act. In July of 1998, the City Council approved an apartment inspection program intended to combat slum housing. To fund the program, the council levied a $12 annual fee on each of the city's approximately 750,000 apartments. Apartment owners sued but lost at the trial court level. Los Angeles County Superior Court Judge Charles McCoy Jr. ruled that although the assessment of a service fee appeared to fall within the parameters of Proposition 218, it was not "imposed by virtue of ownership per se" because it was levied only against owners of rental units. But a unanimous three-judge appellate court panel overturned McCoy's decision. "There is nothing is Proposition 218 that exempts regulatory fees imposed on residential rental properties," Justice Miriam Vogel wrote. The city argued that "it's a regulatory fee based on engaging in a business that happens to occur on real property," explained Miguel Dager, deputy city attorney. The tax was not based on property ownership, and, therefore, was exempt from Proposition 218, the city contended. But Vogel quoted from the City Council's own findings in approving the fee, which stated the inspection program was in the public interest of the people of Los Angeles, not simply owners of rental units. "Quite plainly, Proposition 218 applies to any ‘fee' or ‘charge,' both of which are defined to mean ‘any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for property related service,'" Vogel wrote. "However well intentioned the City's program to abolish slum housing may be, we find it impossible to say that a fee imposed upon the owners of rental units so the City can locate and eradicate substandard housing is anything other than a user fee or charge for property related service." Trevor Grimm, attorney for the apartment owners, said Proposition 218 was designed to get at the items on a property tax bill under the assessed value line. The decision "could effect any other sort of fees charged to property owners by cities," he said. "It opens up a whole raft of challenges." In this case, the fee was based on property ownership and was not related to the number of inspections a property owner received, he said. Dager, the city's lawyer, could not think of another fee within Los Angeles that would be affected by the ruling. But, he said, the decision could impact future fee proposals. The city will seek review at the state Supreme Court, which has not yet decided a Proposition 218 case. The Cases: Howard Jarvis Taxpayers Association v. City of La Habra, No. G020573, 99 C.D.O.S. 7133, 1999 Daily Journal D.A.R. 9003, filed August 27, 1999. Apartment Association of Los Angeles County, Inc., v. City of Los Angeles, No. B130243, 99 C.D.O.S. 7038, Daily Journal D.A.R. 8951, filed August 26, 1999. The Lawyers: For Jarvis: Timothy Bittle, (916) 444-9950. For La Habra: Richard D. Jones, (714) 529-9402. For Apartment Association of L.A. County: Trevor Grimm, Grimm & Kaplanis, (213) 380-0303. For City of L.A.: Miguel A. Dager, deputy city attorney, (213) 847-0165.

Four months after making a sweeping proposal to re-orient the state's infrastructure investments around "smart growth" principles, State Treasurer Phil Angelides — a former "New Urbanist" developer -— is moving forward with at least three different proposals to change the selection criteria in state bond and tax credit financing programs. "It's a new way of thinking for the state and the public finance community," Angelides said. "But it's not irresponsible and it is creditworthy." Angelides has already changed the criteria for doling out the state's low-income housing tax credits, and he contended that the smart growth criteria he has added is now playing an important role in determining which low-income housing projects receive the tax credits. He is moving forward with similar changes in the state's mortgage revenue bonds for both single-family and multi-family projects, which are administered by the California Debt Limit Advisory Committee. Finally, Angelides has proposed a dramatic shift in the proposed criteria for doling out $475 million in funds newly allocated to the state infrastructure bank to reflect smart growth principles as well as traditional job creation priorities. The bank's oversight committee — which is controlled by Gov. Gray Davis, not by Angelides — is scheduled to consider the Angelides changes at a meeting in October. Angelides also said he hopes to propose legislation next year that will embed smart growth principles in the state's five-year Capital Outlay Program, mandated under a bill passed this year by the Legislature. "Smart growth" is defined by its advocates as a series of policies that encourages new development in existing communities, preservation of farmland and other open space, and the creation of more transit- and pedestrian-friendly neighborhoods and business districts. Not surprisingly, smart growth activists in the state are enthusiastic about Angelides' initiative. The state treasurer began his smart growth push in June, with the release of a proposed "smart investments" strategy in his office's annual debt affordability report. Angelides, a veteran Democratic Party activist, said he wants to seize on political leaders' and voters' recognition that the state needs to invest more money in infrastructure. "I give the Chamber of Commerce and the California Business Roundtable credit for raising the issue," he said. "But there was a hole in the discussion. I began to think that it wasn't just about how much money. It's about how we want to grow." Before winning election last year, Angelides was best-known as the developer of Laguna West in suburban Sacramento — the first New Urbanist development actually built on the West Coast. His June report represented a radical departure from the approach of past state treasurers. In releasing the legally mandated "debt affordability report" — a sober recitation of the state's current bonding capacity — Angelides retitled the report "Smart Investments" and added a high-profile section calling for a dramatic shift in the state's approach to public infrastructure investment. Among other things, he said state investments should move beyond "‘magic' budget percentages and project laundry lists investments support livable communities, sustainable development, and sound environmental practices." "Smart Investments" was short on specifics, but Angelides quickly began to use his powers as treasurer — most of which were created during the '70s and '80s while former Assembly Speaker Jesse Unruh's was treasurer — to move the idea forward. Angelides first revised the criteria used by the California Tax Credit Allocation Committee to select recipients for low-income housing tax credits. The competition for tax credits is highly competitive, with four applications for every project selected. Angelides' predecessor, Matt Fong, selected the winners by lottery. Angelides replaced that system with a lengthy set of criteria in which project density, linkages with mass transit, and child-care programs are taken into account. He claims that the winners — which were announced in late September — included many projects that scored high on these "sustainability" criteria. He is now moving forward to embed smart growth principles in the selection criteria for a variety of state loan programs administered by the California Debt Limit Allocation Committee, especially housing mortgage revenue bonds. But Angelides biggest immediate challenge appears to be to win over the governor's staff in order to incorporate smart growth principles into the funding criteria for the state infrastructure bank. Established several years ago, the bank never received any state appropriations until the 1998-99 fiscal year, when it got $50 million. In the ‘99-2000 budget, however, Gov. Gray Davis and the Legislature gave the bank an additional $425 million — thus increasing the significance of its selection criteria. The bank was created partly to give a financial incentive to local governments to follow the state's own growth management priorities. However, when the criteria were first drafted in April — mostly by staff holdovers from the Wilson Administration — they reflected conventional economic development and public finance priorities. The most important criteria were job creation, leveraging of private funds, and whether the project was ready to proceed. Angelides, however, has proposed a dramatic revision in which environmental protection, land use, and efficient use of infrastructure would be the most significant measurement. Job creation and leveraging would be only half as important as under the staff proposal, while readiness would have no significance at all. (See chart.) It is hard to say whether Davis — who is always cautious and often mysterious — will embrace the Angelides proposal. The treasurer said he has "spoken briefly" to the governor. Smart growth advocate Steve Sanders of the California Futures Network said he has met with Finance Director Tim Gage and Trade & Commerce Secretary Lon Hatamiya to promote the infrastructure bank revisions and received positive feedback. Angelides has also pitched his "smart growth" ideas to Davis's infrastructure commission, which is co-chaired by Lt. Gov. Cruz Bustamante and Business, Transportation, and Housing Secretary Maria Contreras-Sweet. However, in its interim report, issued in August, the infrastructure commission did not specifically embrace "smart growth" principles. Indeed, in its proposed recommendations for bond criteria, the infrastructure commission proposed placing priority on need, impact on public health and safety, economic impact, and — the only item linked to Angelides agenda — impact on quality of life. The infrastructure commission's transportation subcommittee called for investment in multi-modal transportation systems and a high-speed rail network but did not specifically call out "smart growth" ideas. Two other parts of Angelides' proposal will have to wait until next year. The first is his idea to have the state's Capital Outlay Program support infrastructure projects only if they have been vetted through a regional planning process. Angelides has been discussing this topic with, among others, Assemblyman Tom Torlakson, D-Antioch, one of the Legislature's leading advocates of local governance reform. The second is a proposed ballot initiative that would eliminate the two-thirds voter approval requirement for local general obligation bond issues and allow for simple majority voter approval. Angelides has committed himself to raising $5 million in campaign funds for that initiative.

A lawsuit challenging the San Joaquin County Local Agency Formation Commission's approval of a large annexation has been reinstated by the California Supreme Court. The state's high court overturned a decision by the Third District Court of Appeals against the Sierra Club and the San Joaquin Valley Farm Bureau. The appellate court ruled that the environmentalists and farmers did not exhaust their administrative remedies because they had not requested a LAFCO rehearing. Thus, under the "Alexander rule," they did not have standing to sue, the court ruled. At the same time, two of the three justices on the appellate panel urged repeal of the 56-year-old Alexander rule. A unanimous state Supreme Court did just that, calling the Alexander rule unnecessary and often-overlooked. The controversy in this case started in 1996, when the San Joaquin LAFCO approved annexation of an island in the Sacramento-San Joaquin Delta to the City of Lathrop, about 10 miles south of Stockton. In certifying the EIR, LAFCO adopted a statement of overriding considerations. Califia Development Group sought annexation to accommodate the proposed Gold Rush City — a 5,800-acre project that includes two theme parks, nine "themed villages," a golf course, and a shopping district. The Lathrop City Council adopted both a specific plan and an EIR in February 1996 and annexed the land later that year. The project is nearly as big as the existing city. Project proponents contend Gold Rush City will attract up to 8 million visitors annually and create 15,000 to 20,000 new jobs in San Joaquin County. The Sierra Club, local farm bureau and others sued LAFCO. They alleged that substantial evidence to support the overriding considerations was lacking, and that LAFCO failed to follow statutory provisions for the annexation. The trial court granted a motion to dismiss because the project opponents had not sought a rehearing before LAFCO. An appellate court affirmed the decision based on the Alexander rule. The Alexander rule emerged from a personnel case in which two fired state employees sought a court hearing, rather than a rehearing before the State Personnel Board. The California Supreme Court ruled that where a rehearing is permitted under law, it is a necessary step in exhausting administrative remedies. Alexander v. State Personnel Bd. (1943) 22 Cal.2d 198. Writing for the unanimous court, Justice Kathryn Werdegar said the Alexander rule "serves little practical purpose and is inconsistent with procedure in parallel contexts." In cases where circumstances have not changed and there is neither new evidence nor new legal arguments, the requirement to seek rehearing is a waste of time, the court said. "The likelihood that an administrative body will reverse itself when presented with only the same facts and repetitive legal arguments is small. Indeed, no court would do so if presented with such a motion for reconsideration, since such filing is expressly barred by statute," Werdegar wrote. Furthermore, although the Legislature has never specifically repealed the Alexander rule, its continued applicability was unclear to many people, the court said. Some legal practice guides say the Alexander rule is no longer good law, or the mandate to seek rehearing is no longer commonly applied. " ven an alert legal practitioner could overlook the necessity of seeking rehearing as a condition of judicial review …," Werdegar wrote. The court rejected the LAFCO's argument that recent action by the state Legislature affirmed the Alexander rule. The court said there is not enough evidence to determine legislative approval, or disapproval, of the Alexander rule. "As best we can surmise, the considered public policy judgement of the Legislature is that the exhaustion of administrative remedies doctrine is adequately safeguarded by the requirement that the administrative proceedings must be completed before the right to judicial review arises," Werdegar wrote. Still, in cases where there is new evidence, changed circumstances or new legal arguments, parties should seek a re-hearing. Parties also should seek a new hearing to note "errors or omissions of fact or law in the administrative decision itself," the court ruled. The Case: Sierra Club v. San Joaquin Local Agency Formation Commission, No. S072212, 99 C.D.O.S. 6719, Daily Journal D.A.R. 8553, filed August 19, 1999. The Lawyers: For Sierra Club: Susan Brandt-Hawley, Brandt-Hawley & Zoia, (707) 938-3908. For LAFCO and Califia Development: Steven Herum and Thomas Terpstra, Herum, Crabtree, Dyer Zolezzi & Terpstra, (209) 472-7700.

Although Democrats took control of state government this year for the first time since the early 1980s, the legislative session did not produce a batch of liberal bills. In fact, with regards to land use, environmental regulation and local government finance, the session may have been most remarkable for what lawmakers did not do. The Legislature approved no major changes to the California Environmental Quality Act. Transportation and affordable housing bonds died. Proposals to reduce the voting requirement from two-thirds to majority for local transportation-related sales tax measures and local school bonds also failed to advance. However, the Legislature did place on the March 2000 ballot a $2.1 billion parks bond, a $2 billion water resources bond, and a$350 million library bond. Lawmakers also strengthened affordable housing laws, approved a measure intended to prevent local governments from competing for major retailers, and closed a loophole in Marks-Roos bond financing rules. Gov. Davis has until Oct. 10 to decide on the bills. Local Land Use Two of September's most interesting bills reduced local land use control, but one of them received a quick Davis veto. The governor rejected a last-minute measure to prevent cities and counties from approving big-box stores with grocery and pharmacy departments. He had not taken action on another bill that moved control of a large, unincorporated island from the City of Redlands to developer-friendly San Bernardino County. Wal-Mart and its big-box brethren were targets of legislators' gut-and-amend tactics. AB 84 by Assemblyman Brett Granlund (R-Yucaipa) originally addressed political committees. But only three days before the Legislature's September 10 deadline, Assembly Speaker Antonio Villaraigosa and Assemblyman Richard Floyd (D-Wilmington) removed the original text and inserted new language. As amended, the measure prohibits cities and counties from approving a retail store of more than 100,000 square feet that has more than 15% of floor space dedicated to nontaxable merchandise. The bill supposedly gives relief to local agencies that must provide expensive public safety and roads to such stores, prevents big box retailers from pitting communities against one another, and discourages development on the urban fringe. But the measure is aimed clearly at Wal-Marts with grocery sections, Sam's Club, and Costco. Those stores typically are larger than 100,000 square feet and have substantial portions dedicated to food and drugs, which are nontaxable. Organized labor and several large grocers, including Safeway, Ralph's and Stater Bros., backed the measure. Big boxes' employees are often nonunion, while most supermarket jobs are union. Traditional supermarkets have struggled to compete with the all-in-one discounters. (See also Local Watch, page 2.) Floyd told the Los Angeles Times that warehouse stores should be contained "before these bastards take over the whole country." In his veto message Davis conceded that "the fiscal arrangement between state and local governments" encourages cities and counties to choose retail development over manufacturing and housing. "But," Davis said, "matters largely involving local land-use and zoning decisions should not be preempted by the Legislature and Governor without thoughtful deliberation." The Redlands measure, AB 1553 by Thomas Calderon (D-Montebello), would preempt a local land-use and zoning decision. (See CP&DR Local Watch, November 1998; CP&DR Legal Digest, November 1997.) Majestic Realty, headed by influential developer Ed Roski Jr., wants to build a shopping mall and other retail outlets on a 1,200-acre unincorporated island known as "the doughnut hole." Under state law, Redlands, which wants to annex the territory, has the final say because the property lies within the city's sphere of influence. However, Redlands earlier tried to make a deal with a different developer, and Majestic has resisted annexation. The bill requires the San Bernardino Local Agency Formation Commission to remove the doughnut hole from Redlands' sphere of influence, and allows a county service area to provide water and sewer, even though Redlands has facilities nearby. This bill is not the Legislature's first foray into local LAFCO decision-making, as lawmakers have made several attempts this decade to adjust spheres of influence and special district boundaries. A Senate analysis stated, "AB 1553 invites the Legislature to intervene in a specific land use squabble, as if it were some Super-LAFCO." Bonds The largest bond measure to qualify for the next state ballot was Villaraigosa's AB 18, a $2.1 billion parks proposal, and Davis signed the bill. Villaraigosa's measure focuses on urban parks, with $826 million earmarked for local parks, zoos, playgrounds, trails and ball fields. The $1.97 billion water bond, AB 1584 by Assembly Mike Machado (D-Linden), contains money for a large mixture of programs, including aquifer storage, flood protection, watershed protection, water system repairs, conservation and river cleanup. The bond earmarks no funding for new reservoirs, although the measure's supporters say all the programs combined equal one moderate-sized dam. Senate President Pro Tempore John Burton's transportation bond package did not make the ballot. Burton initially proposed four $4 billion bonds spread over six years. He later condensed SB 3 to one $8 billion bond. The measure, which needed a two-thirds vote in both houses, passed the Senate 32-8, but Republicans blocked it in the Assembly. They argued for a pay-as-you-go approach. Lawmakers might revive a transportation bond when they reconvene in January. Housing Although housing bonds failed, SB 948 by Senator Richard Alarcon (D-Los Angeles) amends various state regulations, including the housing element law. Among other things, the measure: broadens the anti-NIMBY law by tightening the findings a city or county must make to deny an affordable housing project; lengthens rent-control provisions; requires local agencies to decide on an affordable housing project within 90 days of EIR certification; allows lawsuits challenging housing element adequacy at any time — not just shortly after adoption — so long as the local jurisdiction receives 60 days to correct deficiencies; clarifies density bonus requirements. Farmworker housing is the subject of AB 1505 by Assemblywoman Denise Ducheny (D-San Diego). The measure requires local general plans to identify adequate sites with public services for housing agricultural employees. The law also allows development of farmworker housing on Williamson Act parcels of no more than 5 acres, within certain requirements. Local Government Finance Lawmakers approved a small package of relief bills along with the budget in June. But a proposal to phase out the property tax shift from cities and counties to schools (ACA 17) became a two-year bill. A bill to eliminate competition among cities and counties for sales tax-producers did pass and received Davis's signature. AB 178 by Assemblyman Tom Torlakson (D-Antioch), prohibits local governments from offering incentives — such as tax rebates, discount real estate and low-interest loans — to a big box retailer relocating within a 25-mile radius, or to an auto dealer within 40-miles. Local governments may offer incentives only if the "winning" city or county agrees to share sales tax revenue with the "losing" jurisdiction. AB 1511 by Dean Florez (D-Shafter) closes a loophole that allows local agencies to issue Marks-Roos bonds for projects outside their jurisdiction. The measure prohibits a joint powers authority that includes a mutual water company from issuing the bonds. Florez pursued the bill after the cities of Waterford and San Joaquin created a JPA with a developer's water company for the purpose of issuing bonds for a San Bernardino County subdivision. Williamson Act Several bills made adjustments to the Williamson Act. AB 1480 limits mining on Williamson Act property and alters procedures for swapping Williamson Act land for conservation easements. SB 985 prohibits the building of artificial lakes created as subdivision amenities or as waterskiing facilities on Williamson Act land. The bill also forbids land swaps for property under the Super Williamson Act. AB47 guides Williamson Act cancellation fees to the Agricultural Land Stewardship Program Fund, rather than the state's general fund. Other Legislation o AB 1630 appropriates $320,000 to the Los Angeles LAFCO to study the feasibility of detaching San Pedro, Wilmington and Harbor City from the City of Los Angeles. o AB 1473 requires the governor, beginning in 2002, to submit annually a five-year capital improvement program and proposed funding sources. o AB 1555 expedites island annexations — except certain large islands, gated communities, Laguna Beach's Emerald Bay, and Redlands' doughnut hole. o AB 597 requires Caltrans to develop flexible highway design standards. The measure is aimed at highways that also serve as city streets. o SB 47 reenacts and modifies the state Superfund law. The measure establishes a mechanism for state cleanup funding, but provides no money, and it requires the state to pursue many responsible parties, not only those with deep pockets. o AB 497 lets the attorney general enforce violations of the Community Redevelopment Law. o SB 807 lets LAFCOs approve water service by cities and special districts outside their jurisdictions in response to threats to public health or safety. o SB 216 creates the San Gabriel and Lower Los Angeles Rivers and Mountains Conservancy to acquire and manage public lands. o SB 754 creates the Los Angeles River Conservation and Restoration Commission to prepare a conservation and restoration plan. o AB 1229 broadens the California Farmland Conservancy Program.

The Ninth Circuit U.S. Court of Appeals has rejected a takings claim and request for a jury trial filed by a property owner in Washington who disputed a zoning decision made under that state's Growth Management Act of 1990. It was the Ninth Circuit's first takings decision since the U.S. Supreme Court voted 5-4 to uphold a takings decision and jury award of damages in May. In City of Monterey v. Del Monte Dunes at Monterey Ltd., 119 S. Ct. 1624, the high court broke new ground by allowing an aggrieved landowner to plead his case in front of a jury, which issued a $1.45 million damages award. (See CP&DR Legal Digest June and July, 1999.) But the Ninth Circuit said Del Monte Dunes does not establish a right to a jury on every takings claim. The appellate court noted the "facts and procedural posture in Del Monte Dunes were extreme," and quite different from the case at hand. Still, writing for the Ninth Circuit's unanimous three-judge panel, Judge M. Margaret McKeown noted, "Frankly, we have some difficulty parsing the distinctions laid out by the Supreme Court concerning when a jury trial is required. We find ourselves in uncharted territory with a map for related but different waters." The Washington case was brought by the Buckles family, which owns 10 acres in unincorporated King County. The family purchased the property in 1974 and has occupied its single-family residence, guest house and barn since 1979. A salmon-spawning stream crosses the property. The land is in the midst of a large rural residential area, although some small commercial uses abut the Buckles' property and other neighboring properties were zoned industrial or commercial. When King County began widespread rezoning pursuant to the Growth Management Act (GMA) in 1994, it proposed changing the Buckles' zoning from Residential with a one-acre minimum lot size, to Residential with five-acre minimums. The Buckles lobbied the King County Council and had the zoning changed to Rural Neighborhood, which allows limited commercial uses. But the King County Comprehensive Plan was challenged on numerous grounds, including a claim that the Buckles' last-minute rezoning violated the GMA's public participation requirements. The Growth Management Hearings Board for Central Puget Sound, established by the GMA to decide appeals, ruled that the rezoning violated the public participation mandate. The hearings board sent the comprehensive plan back to the King County Council, which conducted public hearings and settled on the residential five-acre zoning for the Buckles' lot. The Buckles challenged that decision at the hearings board, but lost. They then filed substantive and procedural due process claims against King County and the hearings board members under the federal Civil Rights Act, 42 U.S.C. §1983. They later added a takings claim under the federal and state constitutions. Circuit Court Judge John Coughenour dismissed the suit against the hearing board members and issued summary judgement for King County. On appeal, the Buckles argued that changing the zoning from commercial to residential was an unfair downzoning, and placed greater restrictions on them than on neighboring property owners who have commercial uses. They argued that the King County rezoning did not advance a legitimate county interest, was a taking without just compensation, and that a jury should decide the dispute. But the Ninth Circuit said the Buckles ignored the facts. Their lot is part of a large tract zoned as residential and has never been used for commercial purposes, the court noted. Furthermore, the Rural Neighborhood zoning was never final and was the product of a GMA violation. "The county cannot ‘take' what the Buckles did not have. The zoning designation for limited business uses was never final and Buckles ended up exactly where they started — residential use," McKeown wrote. The court cited landmark cases to determine that a taking did not occur. "A land use regulation does not constitute a taking if the regulation does not deny a landowner all economically viable use of the property and if the regulation substantially advances a legitimate government interest," McKeown wrote. She cited Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987), and Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). The Buckles did not suffer a loss because even their own appraiser valued the property at three times its 1974 purchase price. Furthermore, the court concluded, drawing a line at existing commercial uses in a rural area is a legitimate governmental activity. As for a jury trial, the court said: "Under Del Monte Dunes, a plaintiff has the right to a jury trial on the ‘predominately factual question' of ‘whether a landowner has been deprived of all economically viable use of his property.'" Again, that was not at issue with the Buckles. The Del Monte Dunes case was dissimilar in that the City of Monterey five times rejected proposals that appeared to comply with city-approved zoning for the property. In this case, the Buckles argued that their zoning was inconsistent with zoning on surrounding properties, the court said. The court rejected the procedural and substantive due process takings claims and upheld the absolute immunity of hearings board members. "If Board members were not protected by absolute immunity, we predict that many losing parties would turn around and sue the Board members in a damages action instead of appealing the Board's substantive decision to the Superior Court. … Permitting suits against the quasi-judicial decision makers would discourage knowledgeable individuals from serving as Board members and thwart the orderly process of judicial review," McKeown wrote. The Case: Bruce Buckles v. King County, No. 98-35270, 99 C.D.O.S. 7504, 1999 Daily Journal D.A.R. 9542, filed September 10, 1999. The Lawyers: For Buckles: Richard M. Stephens, Groen & Stephens, Bellevue, Washington. For King County, H. Kevin Wright and Darren Carnell, King County Prosecuting Attorney's Office, Seattle.

It's no surprise that Ephrain Corona didn't have time to talk when I called. The immigrant owner of a five-store Mexican roasted chicken chain based in Oxnard was too busy growing his business. What Corona undoubtedly realizes is that the time is ripe to cash in on California's fastest growing consumer segment: foreign immigrants. Joining this growing group of entrepreneurs are a few developers and a handful of planning departments – mainly redevelopment agencies – all of whom may have found the best hope yet to juice inner city and small town revitalization efforts. On drawing boards in many California cities are a host of so-called "mercado" developments – shopping centers built on sites of abandoned or under-performing commercial properties in immigrant neighborhoods. Currently, plans for Latino-oriented shopping centers are being studied in Escondido, Oceanside, San Jose, and Long Beach, to name a few. And plenty of businesses want to fill these centers, including the likes of Corona's El Pollo Norteño. Considering the explosive growth of this immigrant-based economy, it's no wonder more organized developers with larger-scaled projects are entering the arena. According to Monique Nordholm, of Santa Barbara-based Hispanic Business magazine, Hispanic buying-power jumped 30% from 1992 to 1997, rising from $204 billion to $266 billion annually. Although the Latino community's growing middle-class accounted for much of this growth, immigrants represent an important piece. Latino centers have only recently become part of a formal shopping center inventory. Asian-oriented centers have thrived in Orange County and Los Angeles's near-east suburbs for years. Bridgecreek Development is one of the leaders. The 23-year-old, Westminster-based Bridgecreek is best known for developing the 300-store Asian Garden Mall in the heart of Orange County's Little Saigon. John Duong, one of Bridgecreek's vice presidents, says that the firm is retooling to expand into other underserved market segments — namely, the Latino market. Bridgecreek's first attempt at crossover made a big splash. On September 16, Duong hosted none other than Gov. Gray Davis, who attended the grand opening of the new San Pablo International Marketplace in the East Bay. Formerly the El Portal Shopping Center that once housed a Safeway, the 52-acre, 500,000-square-foot center in the East Bay is more than a symbol of the alternative immigrant economy's importance. It is perhaps the first attempt to service a spectrum of immigrant communities, and a test case of local government reorienting redevelopment efforts by tapping into the immigrant economy. The San Pablo Redevelopment Agency pitched $2.5 million into the project, which is a cornerstone for the aging community's downtown revitalization efforts. Anchoring the San Pablo center is the newest Asian-oriented Ranch 99 supermarket. Bridgecreek partnered in with Ranch 99 years ago in Orange County to open the first of the supermarket chain's 30 stores. At the other end of the San Pablo mall is the 16-screen Maya Cinema. Moctesuma Esparanza, an East Los Angeles cable television provider and movie producer joined in this cross-cultural retailing venture. Esparanza hopes to launch five Maya cineplexes per year, primarily in communities with large Latino populations. Meanwhile, Bridgecreek, anticipating the success of its recent expansion to the Bay Area from its Orange County base, has plans to go nationwide. That international mercados have arrived in California's inner city neighborhoods won't surprise urbanites, who are accustomed to multiculturalism. But it still may be difficult for most Californians to fathom the demographic change in California's farmbelt. From Brawley to Biggs, the shift from a traditional small-town American society to a Latino and/or Asian one has fundamentally changed the culture and economy. For instance, in Delano, a Kern County agricultural town that was ground zero for the United Farm Workers 30 years ago, the population is about 60% Latino, and 20% Filipino. And just as the flavor and language of the neighborhoods have changed, so has the business activity on Main Street. "We have no chain stores like Rexall or Woolworth," says Keri Cobb, city planner in Wasco. "Instead, we have many Hispanic-owned businesses, many of the 99-cent type. A new store opened recently that sells everything from wedding dresses to chickens." A market area ripe for international shopping centers? Maybe. But hungry as farmbelt towns are for new retail development, few have been approached by developers like John Duong. Nor are many of the towns actively pursuing such developers. Cobb, for example, says that most of Wasco's economic development efforts are geared towards traditional code enforcement and sign control issues. "We mainly work on educating local merchants on the importance of signage and color to retain an attractive downtown setting." Cultural preferences aside, it should not be long before immigrant-oriented developers like Bridgecreek begin knocking on doors of farming towns. Grocery chains like Los Angeles-based Tres Sierras or Bakersfield's three-store Mercado Latino are likely anchors for international centers in smaller agricultural towns. If they partner with a godfather like Bridgecreek, we just may see the latest in inner-city retail development coming home to the farm. And if Duong is lucky, he might get Ephrain Corona to slow down long enough to come to the phone. Stephen Svete, AICP, is a principal in the Ventura-based consulting firm of Rincon Consultants, Inc. Hispanic-owned businesses: U.S. total 1980: 263,720 2000: 2,017,803 2020: 3,341,801

Citizens and organizations with gripes about proposed developments are continuing to win more big lawsuits based on the California Environmental Quality Act than they are losing. According to a CP&DR analysis, petitioners — who these days range from environmentalists to public agencies in dispute with other public agencies — have won 14 of 25 significant, published CEQA cases since 1996. And that record appears to be just fine with the state Supreme Court, which shows no interest in CEQA these days. Nearly 30 years have passed since California lawmakers and then-Gov. Ronald Reagan approved the California Environmental Quality Act, the law that sets the ground rules for studying and offsetting development's effects. But the law still remains open to interpretation, and environmental groups continue to use CEQA to halt government approvals of development. Since CEQA's passage in 1970, scores of appellate court cases and several state Supreme Court decisions have interpreted the law. Planners, lawyers and scientists now have decades of experience. But, even counting a late-August ruling for the City and County of San Francisco (see Legal Digest, page 7), groups and citizens filing CEQA lawsuits have compiled a winning appellate court record in recent years. Those victories stem from the fact that only a few of CEQA's fundamentals — such as when to perform an environmental impact report and when to go with a lesser degree of scrutiny — are clear cut, say CEQA practitioners on either side of the issues. While environmentalists are winning more often than not, a California Supreme Court that ranks as conservative by most standards has shown almost no inclination in recent years to overturn rulings favorable to environmentalists. In fact, the state's high court has issued only one CEQA ruling in the last four years (a 1997 decision that said de-listing an endangered species is not subject to CEQA review) and there are no CEQA cases pending at the court. In the 1970s, the state Supreme Court issued a number of rulings to define the law. During the recession of the early 1990s, the Deukmejian-appointed high court took a few cases to stem the tide of environmental litigation. But CEQA evidently is not a high priority for the court these days. The practice of CEQA law has gone mainstream since the 1970s and early 1980s, when only true believers fought to protect the flora and fauna from residential and commercial development. Legal practitioners said they are not surprised that people filing the lawsuits are winning more big cases than they are losing. "It's tough to win, but there are lots of agencies that are still confused about CEQA," said Susan Brandt-Hawley, a Sonoma-based attorney who takes CEQA cases statewide. "There are lots of open issues in CEQA." James Moose, of Sacramento's Remy, Thomas & Moose, agreed that CEQA "remains an evolving area of the law." "Petitioners can still win because it's impossible to predict what courts will do," said Moose, whose firm often defends government agencies. He said he has lost cases he felt positive about, and won cases where he was less sure. That turn may seem odd considering the large number of former prosecutors sitting on appellate court benches in California. "I assumed that every appellate court judge under 60 is a conservative Republican, but some of them are greener than you might think," Moose said.. Michael Zischke, of Landels Ripley & Diamond in San Francisco and the author of a CEQA practitioner's guide, also said the law has "lots of gray areas." Many nooks and crannies of CEQA remain only partially explored. Zischke, who frequently defends developers, pointed to the use of master EIRs for development that occurs over a long period, the treatment of historic properties, and determining an "environmental baseline" as three areas that remain less than black and white. Moose said case law is unclear on what precisely is required in an alternatives analysis. Also, what CEQA means for projects that decrease habitat for endangered species is another area that remains lightly litigated. What has changed since the 1980s, said Brandt-Hawley, is that government agencies now recognize that environmental review of development is something they cannot avoid. In the 1980s, environmentalists were still using the courts to establish the need for serious scrutiny of a project's effects, she said. Still, Brandt-Hawley warned not to underestimate CEQA's complexity. "What continues to surprise me is that most cases that I handle, even if it looks straightforward at the beginning, it turns out to have twists that I never expected," she said. In fact, one of her cases has opened a whole new area of CEQA law. In Stanislaus Natural Heritage Project v. County of Stanislaus, (1996) 48 Cal.App.4th 186, the court tossed out an EIR that deferred analysis of where the Diablo Grande subdivision and golf resort would get its water, and how transferring water would affect the environment. In July, Brandt-Hawley's partner, Rose Zoia, won the first round of Diablo Grande II when a Stanislaus County superior court judge said a supplemental EIR still failed to adequately address water issues. Moose said Diablo Grande I was very significant because it has led to a trend of working water planning into EIRs. Previously, EIRs only said the local water district had, or did not have, adequate resources to serve a proposed development, but provided no further analysis. The muddy waters of CEQA likely mean that litigation will continue for the foreseeable future. Another factor is the ability of many attorneys to turn themselves into environmental practitioners to fight a project they personally dislike. A decade or two ago, a small cadre of lawyers gained most environmental victories. But of the 14 major victories for petitioners in recent years, only one lawyer, Brandt-Hawley, has more than one win. She has won three major cases since 1996— shutting down Diablo Grande, forcing Oakland to prepare on EIR before demolishing an historic industrial building, and getting an EIR for a Monterey County dam declared inadequate. This summer, Brandt-Hawley convinced San Diego County Superior Court Judge Judith McConnell to halt work on the Padres new stadium until the city completes an EIR. In August, Brandt-Hawley won a CEQA-related case on non-CEQA grounds at the state Supreme Court. (See Legal Digest, page 6.) The court ruled that parties challenging the overriding considerations adopted by a local agency formation commission need not seek a LAFCO rehearing before filing suit. Contacts: Susan Brandt-Hawley: (707) 938-3908. James Moose, (916) 443-2745. Michael Zischke, (415) 512-8700.

In the San Diego suburb of Santee, it's the old houses versus open space controversy — but with a twist. In November, Santee voters will decide the fate of a 2,988-lot subdivision already approved by the City Council. The twist comes in the form of an advisory measure on the same special election ballot that asks if the City Council should try to buy the property as permanent open space. The City Council approved the subdivision, golf course and hotel for the Fanita Ranch in May, but opponents of the development then qualified a referendum for the ballot. The referendum on the City Council's action is standard-issue, which could allow the advisory measure placed on the ballot by the City Council to steal voters' attention. The measure asks whether the City Council should pursue purchasing the Fanita Ranch as permanent open space if voters reject the proposed development. The advisory measure says the land purchase could result in a tax increase of up to $150 per residential parcel. The exact amount and style of assessment would have to be decided later. Neither the developer nor project opponents supported the advisory measure because both fear the measure will cloud the referendum. "This is certainly the largest project in the city's history, and the largest that we ever will experience," said City Development Services Director Doug Williford. The Fanita Ranch covers about one-quarter of the city and contains the majority of the remaining undeveloped property in the city of 57,000. The fate of the 2,589-acre Fanita Ranch has been a topic of discussion for decades, with development proposals coming and going. All the while, residents of this community about 15 miles east of downtown San Diego used the site's rugged hills for hiking, mountain biking and even camping trips. Now, the 19-year-old city is deeply divided. Robin Rierdan, of Preserve Wild Santee, the group behind the referendum, called the project "a betrayal of the general plan and a betrayal of the community." But developer Bill Meyer of Terrabrook contended the project will provide needed homes, fund park upgrades and provide money for Highway 52 widening. "It provides a mix of housing products, from single-family attached to estate lots, so it will provide housing for a wide variety of income levels," Meyer said. Williford characterized the homes as mostly upper-end models. But he pointed to the large number of concessions Terrabrook has made that benefit the city. The specific plan, general plan amendment and tentative map approved by the City Council calls for 2,604 single family homes on lots ranging from 2,500 square feet to one acre, plus 384 multi-family units. The project also calls for a golf course and 100-room inn, and a 15-acre neighborhood commercial center. Development would occur over an eight- to 12-year period, with much of the 1,400-unit central village coming on line in the early stages, Meyer said. Terrabrook would leave 1,259 acres — nearly half the site — as a habitat preserve with a public trail system, Williford explained. Also, the developer must: purchase 210 acres in the city of San Diego for additional habitat; pay a $22 million fee to Santee and provide $6 million worth of off-site park improvements before receiving building permits; and construct three parks, two elementary schools and a fire station. The city will use the $22 million for major projects, which potentially include additional lanes on Highway 52, park improvements, street upgrades and a new library, Williford said. Although growth has its opponents in Santee, voters in November 1998 rejected a proposition that would have limited Fanita Ranch development to 1,277 homes. Rierdan, a project opponent and initiative supporter blamed the defeat of the Santee Traffic Relief Act on being outspent 40-to-1 by development interests. Rierdan said many people had earlier assumed the Fanita Ranch would remain in its natural state because it was part of a Multi-Species Conservation Plan adopted about five years ago by the U.S. Fish & Wildlife Department. However, USF&W officials later approved a plan that allowed partial development of Fanita Ranch in exchange for preserving property elsewhere. An additional 3,000 homes would compound Santee's existing circulation problem, Rierdan said. "Traffic is a huge issue in our community. It takes people hours to get to work. It's a huge issue on our surface streets in town, and it's a huge issue on our freeways," she said. Meyer conceded that traffic is the biggest issue, but he contended that the project will ease highway congestion. A portion of the $22 million fee will leverage state funds and ensure a third lane is built on Highway 52 in each direction between Santee and Interstate 15, even though the Fanita Ranch will add only about 4 % more vehicles, he said. "The bulk of the existing streets in Santee were built assuming a Fanita Ranch of 3,500 to 5,000 units, despite what the opponents might say," Meyer added. Meyer said he appreciated the sentiment behind the advisory measure — a community must pay for its open space — but said he feared the measure could harm Fanita Ranch development at the polls. "The concern I have with it is that voters get confused or get mad when they see something like that and they just vote ‘no' on everything," Meyer said. Meyer said he is happy to have a special election in November for the referendum because he wants an answer as soon as possible. Contacts: Doug Williford, Santee Development Services Department, (619) 258-4100, ext. 170. Robin Rierdan, Save Wild Santee, (619) 448-1779. Bill Meyer, Terrabrook, (619) 455-1234.