Something about the development agreement between Chiron Corporation and the City of Emeryville reminds me of the relationship between Paul Newman and George C. Scott in "The Hustler." In that movie, you recall, Newman was the young and talented pool shark, while Scott was the older, calculating gambler who backed up the bets of people like Newman, in hope of taking a considerable cut if he won. The movie is perhaps not the best analogy. There is nothing dark or underworldly, for example, in the relationship between Chiron Corporation and Emeryville, as there was between Newman and Scott. At the same time, there are parallels: Here, Chiron is in the Paul Newman role, as the rising young star with big earnings potential. The redevelopment agency, in the George C. Scott role, has agreed to reimburse Chiron some of the most expensive and uncertain costs associated with building the corporate headquarters in the city, most notably the remediation of contaminated soil under the project, which alone could cost $30 million. Not every city would be willing to take on that kind of risk exposure on a toxic clean-up job. Emeryville, however, has some compelling reasons to take the plunge. The Chiron headquarters is the kind of deal that city officials daydream about, if rarely achieve: a heavy industrial site, badly contaminated with the industries of previous generations, has been cleaned up and transformed into a stylish campus of a biotech firm with annual sales of $1 billion and growing. Where a Sherwin Williams paint factory, a former Pacific Gas & Electric storage yard and a Shell Oil petrochemical plant all formerly operated, elegant new buildings, designed by renowned Mexican architect Ricardo Legorreta, are rising. In the coming decades, up to 4,200 highly skilled workers will walk serenely through the courtyards and parks that will connect the ochre towers and yellow arcades of the Chiron Life Sciences Center. Besides the city's incentives, certain factors make the site attractive to Chiron. Large-scale sites suitable for corporate campuses are rare in the Bay Area, particularly in urban centers. And while the site is generally more expensive than sites in the suburban South Bay, Emeryville has the plus of being only a mile or so from a major research university. Further, Chiron is already entrenched on the site, occupying 750,000 square feet of new and existing buildings. Adding to a plan devised for the city by Keyser Marston Associates, the city would assist Chiron with "extraordinary" (that is, above-market) costs, including toxic remediation, off-site traffic improvements, mitigation requirements, off-site public utility improvements and demolition of existing structures on the site. In addition, the city would pay Chiron's annual municipal service fee for the property and provide up to $4.7 million for a future parking structure. The rationale for these reimbursements is that Emeryville is a comparatively costly place in which to build, and reimbursements from the redevelopment agency help keep the city competitive. According to Keyser Marston, developing in Emeryville could cost $47 to $67 per square foot, including the cost of land, mitigating EIR requirements and providing new roads and utilities. Those pre-construction costs add up to $22 million. This does not include the potential expense of remediation costs, which could run from $10 million to $30 million. Land-related costs on suburban sites, in contrast, run from $15 to $28 per square foot. Chiron has its own reasons for staying in Emeryville. In 1981, the company was founded by two former UC Berkeley professors in the East Bay city, which is close to the campus but was then a gritty pocket of industry. The company's current employees live in the area. And Emeryville's close proximity to UC Berkeley means that the company is close to a major research institution that can supply many of its future hires. The city's hope of gain depends largely on Chiron's agreement to stay put and grow. Eventually, the company wants to build 14 separate buildings on the campus, encompassing 2.2 million square feet, where 4,500 people may eventually work. The buildings are expected to generate $300 million in property taxes during the next 30 years. Earlier this year, the company completed construction on the first, 290,000-square-foot building of the $1 billion Chiron Life Sciences Center. The city has spent about $2 million in remediation costs on the former PG&E site. Patrick O'Keefe, director of the city's redevelopment agency, downplayed the significance of the Chiron deal as an innovation in the redevelopment of brownfield sites. Typically, he said, cities clean up old industrial sites first, and then afterwards look for a developer, who then looks for a tenant. In Emeryville's case, the city streamlined the process, by lining up a developer in the first place, (in this case, Chiron) and promising to reimburse the developer above an agreed upon amount. Can other cities follow Emeryville's lead? That's hard to say. Emeryville is the beneficiary of a unique set of forces, according to Walt Kieser, principal of Economic and Planning Systems, a Berkeley-based economic consultant. "The city has been blessed by geography and circumstance," he said. Emeryville, he explained, has a very large commercial base and a very small residential population-meaning that the small city is comparatively affluent and has the deep pockets to provide incentives to desirable tenants like Chiron. Further, Emeryville is in the sphere of the extraordinary, technology-oriented building boom centered on Silicon Valley. The city has been among the most aggressive in attracting new high-tech tenants to its former heavy industry sites, including Sybase and a number of major retailers. Kieser credits Emeryville for a number of creative deals that have turned brownfields into fields of gold. Still, "it's easy to be creative when you have a lot of money," Kieser said. Perhaps not many cities have the resources or the nerve to redevelop brownfield sites in the manner of Emeryville. Still, my gut sense is that the city has advanced the science of redeveloping contaminated industrial sites. Instead of waiting for a developer, the city acts like a developer, and cuts a deal that makes a brownfield site as safe to tenants, at least financially, as a virgin site in the suburbs. If you believe that the recycling of industrial areas is important, then Emeryville should be applauded for inventing or refining some techniques for a difficult job. We felt bad when George C. Scott made money on Paul Newman's victory over Minnesota Fats; we felt he was a parasite who didn't deserve the money. But if Emeryville makes a buck or two off the Chiron site, it's been a worthwhile gamble.

Disagreements both petty and profound continue to swirl around the proposed rebuilding of the Bay Bridge. The $1 billion proposal, which is intended to replace the eastern portion of the bridge damaged in the Loma Prieta quake, seems to please no one except officials of the Metropolitan Transportation Commission. San Francisco Mayor Willie Brown is vexed that the proposed design will cast a shadow some prime development sites on Yerba Buena-Treasure Island. In the East Bay, mayors of the cities of Berkeley, Emeryville and Oakland - including Oakland Mayor-elect Jerry Brown - are criticizing MTC's single-tower scheme as lacking in beauty and unbecoming as a civic symbol. Mayor-elect Brown has further alleged conflict of interest among the engineering firms that both consulted and competed to build the bridge. The conflict may not be resolved in November, when voters in four cities -Berkeley, Emeryville, Oakland and San Francisco - weigh in on an advisory measure whether the bridge should be re-designed to accommodate commuter rail. The MTC proposal is for vehicular traffic only. The process of rebuilding the bridge began in an orderly enough manner. In February 1997, MTC convened a panel of technical experts, including seismologists, structural engineers and geologists, to help decide the most appropriate bridge structure. These panels were drawn from the membership of the Bay Conservation and Development Commission and advisory groups put together by Caltrans. Informing the design was the deep silt on the Oakland side of the bridge, which necessitated deep piles. "Geologists on the panel drew our attention to the fact that soil conditions would determine what the bridge would look like above water," said Steve Heminger, MTC director of government relations and public affairs. Eventually, the MTC panel settled on an austere design with a single tower near Yerba Buena, terminating in a ribbon-like causeway in Oakland. Caltrans subsequently issued a request for proposal and selected T.Y. Lin International as the bridge contractor. Although Yerba Buena, which lies within the city boundaries of San Francisco, arguably got the most ornamental feature of an otherwise plain bridge - the tower - Willie Brown is displeased. In turning against the alignment, Brown has been swayed by Treasure Island project director Annemarie Conroy. "When Miss Conroy joined the Treasure Island project, she was shocked to find out the true facts, with respect to the impacts of the proposed span on the economic-development plans," said Brown spokesperson Joan Rummelsburg. What was so shocking? The proposed bridge would pass over the northern part of the island, and the placement of the footings, as well as other construction impacts, would necessitate much of the island to be recontoured or regraded, Rummelsburg said. MTC spokeswoman Marjorie Blackwell, however, pointed out that Willie Brown had in fact endorsed the northern alignment in writing 16 months before. Since that time, "MTC has spent 16 months on this design process," she said. "We feel we gave everyone adequate time to express (his or her) view. It's a little bit late to be coming in and saying that he doesn't like it." At this point in time, she said, "it will be difficult to change." In a June press conference, the mayor danced away from his earlier position because, at the time he endorsed the northern alignment, "there was no physical design actually done that showed where various anchorages would be placed on property we hoped to acquire from the Navy." A more southerly alignment, however, would not be easy to do: such an alignment would necessitate moving an East Bay sewage outfall. Additionally, the alternative alignment might interfere both with existing Coast Guard operations on Treasure Island and the proposed expansion of the Port of Oakland, according to the MTC spokesperson. On a different note, East Bay cities appear chagrined by the barrenness of the bridge design. Outgoing Oakland Mayor Elihu Harris, for example, has called the proposal a "freeway on stilts." Oakland deserves a "signature span," argued Marina Carlson, Harris' policy analyst on planning and public works. "The old bridge was an engineering feat in its day," she observed of the original structure built in 1934. In replacing the picturesque old bridge, "we are taking away something that Oakland had in the way of history. Oakland is asking for something to come back, for something beautiful on our side." She is unimpressed with the mud-is-destiny argument: "If they (i.e. the MTC consulting engineers) wanted to do an engineering feat again, they would have to figure out how to deal with the mud." Mayor-elect Jerry Brown, a man of arguably broader culture, argued powerfully for the value of the bridge as a civic symbol on his Website (www.jerrybrown.org). "As the Golden Gate symbolizes San Francisco, so the new east span of the Bay Bridge should identify Oakland as a city of the future," said Brown, who also went on to cite such civic monuments as the Eiffel Tower, the Sydney Opera House, and the new Guggenheim Museum in Bilbao. Beyond aesthetics, Mayor Harris is disappointed that Caltrans is building only a replacement bridge with exactly the same capacity as the 1934 structure, rather than designing a bridge that could handle more traffic. Jerry Brown agreed with his predecessor that a mere "replacement bridge" was inadequate for current transit needs. Unlike Harris, however, he advocated a train to cross the bridge, recalling the era when the Key trains shared the bridge with vehicular traffic. The proposal is popular enough to have gotten on the November ballot in four cities, as mentioned above. Berkeley Mayor Shirley Dean seemed less concerned with design issues. "Form follows function, I subscribe to that," she said. "I think they (i.e. bridge engineers) need to figure out how this bridge is going to serve us, and then design a bridge that does that." She is more concerned, however, about the bridge's carrying capacity. "The currently proposed bridge is designed for the next 150 years, and it does not carry more than it does today, and that is unacceptable." If the current design goes forward, she warned, the new Bay Bridge "is not a bridge into the future, it is a bridge of congestions and problems." During the era of the Key trains, in fact, "the bridge had a greater capacity that it does today," Dean said. Understandably, MTC's Heminger is not enthusiastic about redesigning the bridge for rail transit. For starters, "which train would run on the bridge?" He pointed at that BART already parallels the bridge, in an underwater tube that links Oakland with the Embarcadero district of San Francisco. More serious, perhaps, are Jerry Brown's allegations of conflict of interests among several of the engineering firms that both advised MTC on the bridge design and competed for the job when Caltrans issued the RFP. Brown further said that two members of a Caltrans advisory board submitted designs, and "that their two were the only designs chosen for serious consideration." MTC's Heminger said that the process has been open, and that firms that consulted with MTC and later competed for the Caltrans work publicly declared their intentions to do so. Further, he pointed out that the firm which had originally proposed the structural type which MTC selected did not win the Caltrans contract. Notwithstanding, Brown is hoping to scuttle the current bridge design, and create an "open process" by holding an international design competition for the structure. Berkeley Mayor Dean predicted that the advisory ballot measure would win easily in Berkeley. At the same time, she stressed the importance of any workable mass-transit solution, not simply rail. "I don't care if it is light rail or if it buses. If they (i.e. MTC) do a feasibility study and find that it is better to put buses on the bridge, that would be fine with me, as long as we have the capability to move efficiently over that bridge over the next 150 years. We've got to move people on mass transit." Contacts: Steve Heminger, manager of legislation and public affairs, Metropolitan Transportation Commission (510) 464-7810. Marina Carlson, spokeswoman, Oakland Mayor Elihu Harris, (510) 238-3612. Jerry Brown, Mayor-elect of Oakland, (510) 893-2684. Joan Rummelsburg, spokeswoman, San Francisco Mayor Willie Brown, (415) 554-6131. Marjorie Blackwell, spokeswoman, MTC, (510) 464-7884. Shirley Dean, Mayor, City of Berkeley, (510) 644-6484.

One of the last undeveloped regions of San Francisco Bay Area land - eastern Contra Costa County - is booming so much that a county supervisor has asked local cities to consider a temporary halt to residential growth. Eastern Contra Costa County, with its rich delta topsoil, is where the Central Valley meets the Bay Area. For years, agriculture was the main industry in this area east of Mount Diablo and south of the Sacramento River-San Joaquin River Delta. The region is made up of the local cities Pittsburg, Antioch, and Brentwood, as well as such unincorporated towns as Byron, Bethel Island, and Oakley. But few of the jobs and regional shopping centers are in the area, and commutes are long. The demand for affordable housing in the high-priced Bay Area market is one of the reasons behind the growth. "Homes are $200,000 less than in the central county or the San Ramon Valley," said Supervisor Joe Canciamilla, who recently proposed the moratorium and who represents the East County area. "A number of jurisdictions out there really want to grow," said John Landis, a professor of city and regional planning at the University of California, Berkeley. In addition, he said, cities like Antioch already have specific plans in place for growth, and large agricultural parcels in the area are attractive to developers. Growth figures tell the story in the East County. Brentwood, a town of 7,500 in 1980, has more than doubled in size since then. The city's general plan, adopted in 1993, calls for an eventual population of 79,000. Antioch grew from 42,683 to 74,900 between 1980 and 1995, a 75.5% increase. In contrast, Orinda, a slow-growth community in the western portion of the county, grew only 2.5% during that same period. In the east county, a total of 17,300 residential units have been approved but not built, and another 25,200 units are awaiting approval. The biggest development is Cowell Ranch, a 5,200-unit development proposed southwest of Brentwood, which may be annexed into the city if built. But the project appears to be on hold, according to Tom Mooers of the open space group Greenbelt Alliance. A vote on whether to incorporate the town of Oakley is on the November ballot. About 21,000 people currently live there, but the county's general plan called for the area to have a population of 50,000 by the year 2005. "People are really unsure what it (incorporation) means in terms of growth and development," Mooers said. But three developments in recent months could have long-term impacts on growth in the East County Region: o Supervisor Joe Canciamilla, who represents the East County, has called for a short-term moratorium on growth until a subregional plan is adopted. Traffic projections prepared by the Contra Costa Transportation Authority predict that within ten years, traffic congestion on Highway 4, the main traffic route in the East County, and other local arterial roads will exceed Level F, the lowest level of efficiency. The moratorium would probably last about a year. o In Byron, an unincorporated east county area north of Livermore, a Municipal Advisory Council recently released a master plan to deal with expected growth. The plan which identified 10,000 acres for residential development and 3,000 acres for commercial development, may never go into effect. That's because there is only five acres remaining within Byron's urban limit line, although growth may be allowed near the town's airport. o Preliminary discussions of an habitat conservation plan may preclude development on some East County land. The area is home to the San Joaquin kit fox, Alameda whip snake, California redlegged frog, California Tiger salamander, and vernal pool fairy shrimp. Only the kit fox is currently on the federal endangered species list. The other animals are either considered threatened or are candidate species for federal listing. Canciamilla said he envisions the subregional plan as working like a joint powers agreement. "It would have whatever force we agreed to," he said. The supervisor plans to meet with officials from each city to discuss his proposal, and hopes to produce a new plan by July 1999. The proposed moratorium would not affect commercial or industrial development, he said. The supervisor's plan meets with the approval of the county's Homebuilders Association. "In a sense, he's right," said Guy Bjerke, staff vice president. "Eastern Contra Costa needs to develop a strategic plan." Most large projects take over a year to win approval, Bjerke said, so it's hard to say if any projects would be affected by a slowdown. Only 1,700 housing units are built in the East County each year, he said, and 17,300 units have already been approved. Supervisor Canciamilla has also called for an update of the county's general plan. Among the items that need to be discussed, he said, are urban limit lines in the current plan that were adopted by voters in 1990. That same year, voters also agreed to a general plan that would urbanize only 35% of the county's unincorporated land. While a study is underway to determine how much of the county's unincorporated land is already urbanized, "potentially we're close to ," Canciamilla said. The supervisor said money doesn't exist for the traffic improvements needed for new developments in the East County. A subregional approach would force cities to look at the impacts of their decisions on a larger area. Canciamilla also has called for an agricultural and open space protection act to protect open space. Countywide, environmentalists have seen victories in recent months, which may translate to new policies for the East County. In one instance, developers withdrew plans for the 5,200-unit Tassajara Valley project proposed near Danville and San Ramon after public opposition. Because of the current anti-growth mood, county planners are advising developers not to invest in plans that the Board of Supervisors are likely to reject, according to the Contra Costa Times. Contacts: Supervisor Joe Canciamilla, (925) 427-8138. Winston Rhodes, associate planner for Brentwood, (925) 634-6905. Tom Mooers, East Bay Field Representative, Greenbelt Alliance, (925) 932-7776. Guy Bjerke, staff vice president, Homebuilders Association, (925) 820-7626. Bob Pine, senior fish and wildlife biologist, U.S. Fish and Wildlife Service, (916) 979-2728.

Seeking to improve local groundwater problems and possibly expand redevelopment activities as well, the City of San Bernardino has created a joint-powers authority with a water district and an economic development agency to pursue some kind of "water feature" near downtown San Bernardino. The project would cover some 300 acres in the Base Line area north of the current downtown and might involve condemning some 900 parcels of land at a cost of more than $100 million. The San Bernardino Municipal Water District first proposed creation of a large surface reservoir last year when a rising water table in the Bunker Hill groundwater basin under the city increased the risk of liquefaction. Judith Valles, the newly elected mayor, appears receptive to a combination water/redevelopment plan of some sort, which would be undertaken by the San Bernardino Regional Water Authority - a newly formed entity made up of the city, the water district, and the Inland Valley Development Agency. However, Valles opposes the "lake" concept. Local officials in the area are now discussing the possibility of a San Antonio Riverwalk-style project, which would include a series of canals and reservoirs. Architect Jon Jerde has been working on a proposed design, which may include a water connection to the struggling Carousel Mall area in downtown San Bernardino. If the project moves forward, it would be one of the most ambitious redevelopment projects undertaken in California in the last decade - and the latest in a long series of attempts to revitalize one of Southern California's most depressed cities. According to Patrick Milligan, a member of the water agency board and the project's leading advocate, the Base Line neighborhood is among the most economically depressed zip codes in California. Milligan said he hopes that, with the JPA in place, land acquisition and construction on the project will begin within 18 months. Arguing in favor of both quick action and a large project, he said: "This is one of those wonderful political moments....The larger the area we use, the bigger the redevelopment area we can affect." To meet such an ambitious timetable, however, Milligan and other supporters of the water project will have to overcome considerable local opposition - much of which surfaced after the water district released a concept drawing of the "lake" proposal late last year. Among other things, critics have charged that the water proposal is the brainchild of developers, eminent domain lawyers, and engineers seeking a large-scale project from which to profit. In particular, local church and community groups opposed the condemnation of their entire neighborhood. Lawyer Alan Bartleman, chairman of the local section of the Sierra Club, has opposed the lake vociferously, calling it "politically unviable - from a redevelopment point of view, nobody was going to take out that whole community and move all those people." Since local officials have backed off the idea of a single large lake, however, opposition has diminished. Bartleman, for example, said that while he opposed the lake he is not opposed to the idea of bringing some of San Bernardino's underground water to the surface. But he suggested that the real motivation for the project is to make San Bernardino's groundwater available for sale, thus permitting the water district to create a profit. "That's not a bad idea, as long as we don't sell too much of it and we do some decent planning," he said. But critics such as Bartleman also question whether a surface water project would alleviate the environmental problems associated with San Bernardino's underground water aquifer. San Bernardino has always faced high groundwater because of the area's unusual geology. The city sits lies atop fans at the base of the San Bernardino Mountains, while the San Jacinto Fault serves as a "dike" cutting off the underground connection between the city's groundwater and other groundwater sources. According to the city's general plan background documents, groundwater depths have risen from 50 to 100 feet under the city in 1960 to less than 10 feet in some parts of the city today. Flooding in basements and other low-lying areas has been an increasing problem, especially with the heavy rains of the last few years. The high groundwater has created two related problems as well. First is the potential for liquefaction - perhaps the problem most frequently cited by advocates of the water feature. Second is the need to improve the quality of the basin's water, which suffers from low-level contamination the form of perchloroethylene (PCE) and tricholoethyline (TCE). Water-feature advocates - who blame this problem largely on contamination from the area's military bases - argue that bringing the water to the surface will remediate these problems by ventilating the contaminants. But skeptics like Bartleman and James Mulvihill, an urban planning professor at Cal State San Bernardino, question whether ventilation will actually improve water quality. "That's a bunch of baloney," said Mulvihill. However, Milligan said the potential water-quality improvements will strengthen San Bernardino's attempts to obtain federal financial assistance in constructing the water project. The lake proposed by the water district last year would have consumed an entire 30-square-block area along Interstate 215 north of the civic center in San Bernardino. In addition to the land assembly issues, the lake also would have required a major berm or similar obstruction on the south side, adjacent to the downtown, because of the city's topography. "The problem with San Bernardino is it's on a slope," Mulvihill said. The vertical drop from Base Line Avenue to downtown - a distance of approximately six blocks - is about 40 feet, he said. Contacts: Peter Milligan, board member, San Bernardino Municipal Water Authority, (909) 888-5741. Alan Bartleman, Sierra Club activist, (909) 885-8388. James Mulvihill, Cal State San Bernardino planning professor, (909) 880-5522.

The Ninth U.S. Circuit Court of Appeals has upheld the federal government's decision to issue five broad-ranging "general permits" allowing the filling of wetlands as part of the Anchorage Wetlands Management Plan. The general permits had been challenged by several environmental groups in Alaska, which charged that they covered too diverse a range of activities and would not result in "minimal" disruption of the environment, as the federal government claimed. The five permits, which covered projects potentially dealing with 2,142 acres of wetlands, covered the following activities: o Residential site preparation and driveways. o Roads and other "linear development". o Commercial, institutional, and community development. o Industrial development. o Wetlands, habitat, and water quality enhancement projects. The U.S. Army Corps of Engineers, which proposed the permits, estimated that, while 2,142 acres could potentially be implicated, the permits would probably result in the destruction of only 360 acres of wetlands. The Corps has jurisdiction to issue wetlands fill permits under regulations associated with the federal Clean Water Act. The Alaska Center for the Environment and several other environmental groups sued. The environmentalists' major argument was that each individual permit covered activities too diverse to satisfy the requirement that general permits cover activities "similar in nature". For example, the environmentalists pointed out that under Anchorage's zoning ordinances, the residential permit could apply to single-family homes, two-family dwellings, row-houses, rooming houses, and other residential structures - which, the environmentalists argued, encompassed too broad a range of activities to fit under the federal regulations. But the Ninth Circuit rejected this argument. "The conditions stated above illustrate not only similarity in environmental effects, but also similarity in the nature of the projects," the court wrote. "While it may be true that the regulations do not specifically distinguish between such structures as 'single-family housing' and 'two-family dwellings', we are not persuaded that the general permitting process must necessarily require such fine distinctions." The environmentalists also argued that the Corps cannot make "a sufficient public-interest analysis" as required by law when such a broad range of activities is contained in the same permit, but the Ninth Circuit rejected that argument as well. "The permit evaluation shows that the Corps wished to provide predictability for property owners and reduce wetlands processing time while simultaneously protecting higher value wetlands," the court wrote. "Other portions of the evaluation list more specific considerations. For example, the evaluation notes the Corps' consideration of such human-use characteristics as benefits to the local economy, impacts on traffic, and community cohesion. These considerations were clearly guided by the voluminous restrictions placed on the general permits." The Ninth Circuit also rejected the environmentalists' argument that the overall impact - probably filling 360 acres of wetlands and potentially filling 2,100 acres of wetlands - would have more than a "minimal" environmental impact, as the Corps argued. The court noted that the wetlands management plan, with which the general permits conform, was created by the City of Anchorage in conjunction with four state and federal agencies and used an A-B-C rating system to value the quality of the wetlands. This rating system was then used to evaluate the likely environmental impact. For this reason, the court concluded, the Corps did not arbitrarily and capriciously in concluding wetland impact would be minimal. The Case: Alaska Center for the Environment v. West, No. 96-36190, 98 Daily Journal D.A.R. 9997 (issued September 16, 1998). The Lawyers: For Alaska Center for the Environment: Anthony N. Turrini, National Wildlife Federation, Anchorage. For Army Corps of Engineers: John T. Stahr, U.S. Department of Justice, Washington, D.C.

Nineteen ninety-eight will not go down in history as a year when the California Legislature made sweeping changes in California planning and development law. Instead - like most legislative sessions since the passage of term limits in 1990 - it was a year in which legislators who sought minor changes were more likely to succeed. In general, the Legislature passed a series of small bills that made changes on the margins of planning and development law. The big exception, of course, was SB 50, the $8 billion state school bond that will repeal the Mira school-fee doctrine if it is overturned. More typical is the passage of SB 1182, a "farmland security law" that expands Williamson Act-style protections for agricultural land, and SB 2005, which overturns an important but narrow California Supreme Court ruling on the Permit Streamlining Act. Perhaps the sleeper of the group is ACA 10, which would make it easier for adjacent cities to share sales-tax revenue. The constitutional amendment will appear on the November ballot - and may be the first step toward ending some of the retail wars that have afflicted most of the state. Here's a complete rundown: School Bonds/Development Fees SB 50 (Proposition 1A) California voters will decide in November whether to approve some $8 billion in state school bonds - and in the process they will also decide whether to repeal existing case law covering the fees that school districts may impose on developers. Under the proposed reforms, local school districts would have to cover half the cost of new schools, and the state would suspend the ability of cities and counties to levy school fees in excess of state-mandated limits - a power granted by a series of appellate court decisions collectively known as the Mira doctrine. With the Mira powers gone, a statewide cap on school fees of $1.93 per square-foot for housing and 31 cents per square-foot for commercial and industrial construction would be back in force. Local school boards could impose higher fees in order to meet their 50% match requirement if one of the following conditions are met: (1) Attempted a local school bond in the last four years that received at least 50% of the vote but short of the required two-thirds majority; (2) Have passed bonds equal to 15% of bonding capacity; (3) Have 30% of students on a multi-track year-round calendar, or (4) Have 20% of students housed in portable classrooms. After January 1, 2000, districts must meet at least two of those conditions in order to levy fees above the statewide cap. For more details, see CP&DR, September 1998. Sales-Tax Sharing ACA 10 (Proposition 11 When the Legislature re-opened the November ballot, it created an opportunity to move up an election on ACA 10, which probably otherwise would have taken place in 2000. Introduced by Assemblyman George Runner, R-Lancaster, ACA 10 would make it easier for cities to share sales-tax revenues. Under current law, cities cannot share sales-tax revenues without approval from voters in both cities. ACA 10 would permit such sales-tax sharing with approval of a super-majority of the city councils from both cities - thus eliminating the need for a vote. Runner's constitutional amendment is an attempt to remove one roadblock from sales-tax sharing agreements that might help resolve land-use disputes over retailers in adjacent cities. The notion of eliminating the voter-approval requirement has been kicking around Sacramento for a decade at least, but Runner was the first legislator to navigate the idea through the Legislature. Runner promoted the idea as a result of his own experience as mayor of Lancaster, which engaged in many sales-tax wars with the neighboring city of Palmdale. Farmland Preservation SB 1182 (Chapter 353, Statutes of 1998) Under a variation on the Williamson Act signed by Gov. Wilson, some agricultural landowners will be able to receive tax breaks on their property for 20 years at a time rather than just 10. The Williamson Act permits farmers to enter into contracts with the Department of Conservation that commit them to maintaining their property in agriculture for 10 years at a time. In return, county assessors are required to tax their land on the agricultural value, rather than the speculative value, and the state provides the counties with partial reimbursement of the value lost. Under SB 1182, which Gov. Wilson has already signed into law, agricultural landowners will be able to switch from traditional Williamson Act contracts to "Farmland Security Zone" agreements. The Farmland Security Zone idea, which was promoted by Sen. Jim Costa, D-Fresno, will work in the following fashion: o Farmland Security Contracts will cover 20 years rather than just 10. o To qualify, land would have to be identified by the state as prime farmland. o Local Agency Formation Commissions (LAFCOs) will be prohibited from annexing any land in a Farmland Security Zone if it is not connected to infrastructure or if the landowner objects. o School districts are prohibited from annexing any land in a Farmland Security Zone. Permit Streamlining Act SB 2005 (Chapter 283, Statutes of 1998) The Legislature passed Sen. Quentin Kopp's SB 2005, which overturns Bickel v. City of Piedmont (1997), 16 Cal.4th 1040. In that ruling - which emerged from a somewhat muddled set of "facts" about a project pending before the Piedmont Planning Commission - the California Supreme Court concluded that an applicant could unilaterally waive the deadlines imposed by state law under the Permit Streamlining Act. Under SB 2005, the only permissible extension is a one-time 90-day extension agreed in writing by both the applicant and the public agency. Housing Elements SB 256 (Chapter 819, Statutes of 1998.) Costa's SB 256 extends yet again the deadline for cities and counties to revise their housing elements. This deadline has been extended for several years, largely because the state has not provided funds to regional councils of governments to update the fair-share housing "targets" on which local housing elements must be based. This year, however, Gov. Wilson retained the necessary funds. Under SB 256, the deadlines will be: o 2000 and 2005 for cities and counties in the Southern California Association of Governments region. o 2001 and 2006 for cities and counties within the Association of Bay Area Governments region. o 2002 and 2007 for Fresno, Kern, Sacramento, and Monterey Counties. o 1999 and 2004 for San Diego. o 2003 and 2008 for all other areas. AB 438 (Chapter 796, Statutes of 1998) This bill, introduced by Assemblyman Tom Torlakson, permits local governments to meet up to 25% of their regional housing need through rehab of existing units if long-term affordability is assured or through the long-term extension of federally subsidized units in danger of losing their subsidies. Redevelopment AB 1342 (Chapter 635, Statutes of 1998) This bill, introduced by Assemblywoman Grace Napolitano, D-Norwalk, loosens the "sunset clause" on older redevelopment project areas that was contained in the major redevelopment reform bill of 1993, commonly known as SB 1290. As signed by Gov. Wilson, this bill permits older redevelopment agencies to extend the life of older project areas without making a finding of blight. The bill was promoted by the City of Cerritos, which has one of the most successful older redevelopment project areas. In its original incarnation, the Napolitano bill contained somewhat broader loosening of the 1993 reforms as they applied to older project areas. Marks-Roos Bonds SB 147 (Chapter 35, Statutes of 1998) Last summer, Wilson signed SB 147, a bill introduced by Sen. Quentin Kopp, I-San Francisco, which appears to be the first piece of what could be larger reform of the Marks-Roos bond pooling law. The law requires projects financed by Marks-Roos bonds to be located in the jurisdiction of at least one of the local agencies that are issuing the bonds. (Marks-Roos bonds are issued by joint-powers authorities). The bill was intended to correct a perceived abuse of Marks-Roos bonds. Marks-Roos bonds are meant to create a pool of funds available to finance infrastructure for new real estate development projects in the community issuing the bonds, but in many cases municipalities have been using their bonding authority to finance speculative real estate projects that are hundreds of miles away. Metropolitan Water District SB 1875 (Awaiting Governor's Action) SB 1885 (Chapter 781, Statutes of 1998) The MWD was engaged in a high-profile debate over whether San Diego should be permitted to buy water from the Imperial Valley (CP&DR September 1998). However, this issue overshadowed other legislative concerns about MWD - most of which are also related to the somewhat rocky internal situation at the giant Southern California water agency. The San Diego situation has highlighted the power struggles among the agency's 27 member agencies. In hopes of resolving these disputes, the Legislature considered several proposals this year to reorganize the MWD's governance structure, which currently consists of 51 directors from the 27 agencies voting on a weighted basis. The Legislature passed AB 1885 (Ayala), a bill to cut the number of directors to 38 without altering the weighted voting system. The Legislature also passed SB 1875 (Hayden), which would ban MWD from funding personal investigations, create an Office of Ethics, and declare water conservation a higher priority.

The Fifth District Court of Appeal has concluded that Fresno County did have the right to pursue eminent domain proceedings in order to obtain an easement across private land required to prevent another property from being rendered landlocked by another condemnation proceeding. The case began when the county constructed a wastewater treatment facility on land adjacent to property owned by the Donleavey family. The Donleaveys filed an inverse condemnation action. In a proposed settlement agreement, the county agreed to purchase part of the Donleavey property - and also to convey to the Donleaveys a road and utility easement across a third party's private property so that their remaining property would not become landlocked. Under the settlement agreement, the county agreed to let the Donleaveys resume her inverse condemnation suit if the county did not convey the easement to them in a timely manner. In order to obtain the easement, the county filed an eminent domain action against owners of an adjacent property, including the Kriegbaum family and Bernadynne Shelton. But at this point, the county got caught up in a Catch-22. The Kriegbaums and Ms. Shelton argued that the county lacked standing to bring such a condemnation proceeding until it had completed the condemnation of the Donleavey property for public use. But under the settlement agreement with the Donleaveys, the county could not obtain title to the Donleavey property until it had obtained the easement from the Kriegbaums and Shelton. The county responded by arguing that under Code of Civil Procedure §1240.350, which covers eminent domain, it had to show only that the purchase was "underway" - not that it was complete. Fresno County Superior Court Judge Stephen J. Kane ruled in favor of the Kriegbaums and Shelton and also ordered the county to pay their attorneys' fees. While an appeal was pending, the county reached a settlement agreement with the Kriegbaums and Shelton and obtained the Donleavey property. Fresno County asked the Fifth District to move forward with a ruling even though the issue was apparently moot, arguing that the situation was likely to recur and clarity was needed. The county also wanted the Fifth District to revisit the attorneys' fees issue. On appeal, the Fifth District ruled in favor of the county, with the issue turning on how the word "acquire" is used in the Code of Civil Procedure. The court ruled that Judge Kane had improperly "omitted the word 'acquires' from the statute and replaced it with the past tense 'acquired'." In so doing, the Fifth District said, Judge Kane had "not taken into account section 1235.050's legislative mandate that the statutes found in Title 7 of the Eminent Domain Law, of which section 1240.350 is a part, be construed so that the 'present tense includes the past and future tenses; and the future, the present." The court also found that the Code of Civil Procedure "clearly authorized the county to initiate this eminent domain proceding against the parcel owned by Ms. Shelton." The Case: County of Fresno v. Bernadynne B. Shelton, No. F023910, 98 Daily Journal D.A.R. 9783 (issued September 9, 1998). The Lawyers: For Fresno County: Philip J. Norgaard, Deputy County Counsel, (925) 335-1830. For Shelton: Jon Wallace Upton, Kimball, MacMichael & Upton, (209) 435-5500.

The federal government's review of potential impacts of a new public clubhouse at the Presidio Golf Course was adequate under both federal environmental and historic preservation laws, the Ninth U.S. Circuit Court of Appeals has ruled. The federal analysis had been challenged by the Presidio Golf Club, a century-old private golf club which owns an historic clubhouse adjacent to the Presidio. A predecessor to the Presidio Golf Club built the golf course on the grounds of the Presidio in 1895, as well as a private clubhouse on land adjacent to the Presidio. For many years, military officers were permitted to join the club at discounted rates and use its facilities, but in the 1950s the Army built its own clubhouse facilities on Presidio land near the private clubhouse. Military personnel and Presidio Golf Club members enjoyed exclusive use of the golf course until the Presidio was de-commissioned in 1994. After the Presidio was transferred to the National Park Service in 1995, the Park Service contracted with Arnold Palmer Golf Management Co. to manage the course and open it to the public. Among other things, Presidio Golf Club members lost their preferential tee times, which apparently reduced the value of club membership. In 1996, the Park Service issued an environmental assessment on a proposal to demolish the Army golf course facilities and replace them with a new 6,000-square-foot public clubhouse. The Presidio Golf Club sued, claiming that that the EA did not adequately consider the potential impact of the new public clubhouse on the old private clubhouse, and that the Park Service did not comply with the National Historic Preservation Act by failing to consider whether the construction of the new clubhouse would lead to neglect and destruction of the old private clubhouse. The club's lawyers asserted that the club had already lost half of its membership because of the new public use rules and that the club's ability to remain financially viable is questionable. While conceding that the old private clubhouse is eligible for inclusion on the National Register of Historic Places, the Ninth Circuit concluded that analysis of environmental impact and impact on historic resources was adequate. In a lengthy section of the opinion, the three-judge panel concluded that Presidio Golf Club does have standing to bring the lawsuit because "while it is a close question, the injury asserted by the Club is fairly traceable to the building of the public clubhouse," and because the club's interest is "arguably within the zone of interests to be protected under NEPA and NHPA". However, the court found the federal government's environmental assessment to be adequate. Among other things, the club argued that the EA was inadequate because it did not consider the possibility of cooperative use of the old clubhouse. The Ninth Circuit bought the Park Service's argument that the private clubhouse would likely be too small to accommodate additional demand and also noted that the because the club had long expressed a wish to remain private the Park Service could reasonably expect that the club would not be receptive to cooperative use. The Ninth Circuit also rejected a long series of complaints by the club claiming that the EA was inadequate, including the allegation that the Park Service failed to take into account "reasonably foreseeable effects" of the new clubhouse. The EA noted that the new clubhouse would not compete with the old clubhouse because "it would not duplicate the private PGC clubhouse in function. Indeed, its function would be the polar opposite" - meaning it would be public rather than private. Concluded the Ninth Circuit: "While we have found an adequate string of causation necessary to confer standing, it does not necessarily follow that such a highly attenuated chain of causation as the Club alleges would lead to injuries cognizable under NEPA." Regarding NHPA, the court concluded that the Park Service was required to take the views of interested parties into account but nothing more. Thus, the court accepted as adequate the Park Service's conclusion that because the two clubhouses would not compete the historic clubhouse would not be endangered. The Case: Presidio Golf Course v. National Park Service, No. 97-16703, 98 Daily Journal D.A.R. 10104 (filed September 21, 1998). The Lawyers: Nicholas C. Yost, Sonnenschein, Nash & Rosenthal, (415) 882-2440. Ronald M. Spritzer, U.S. Department of Justice, Washington, D.C.

In the latest skirmish in a longrunning battle, an appellate court has overturned a trial judge's decision to strike down the City of Watsonville's decision to "pre-zone" and annex 216 acres of land in a disputed agricultural and coastal area west of Highway 1. If it is eventually published, the court ruling could be an important step in establishing the credibility of "tiered" environmental impact reports. The unpublished ruling by the Sixth District Court of Appeal in San Jose gives Watsonville a leg up - at least for now - over environmentalists who are seeking to stop the city from expanding across Highway 1 toward the coast. The so-called Riverside property, which would be the site of a new industrial park, is one of two parcels west of Highway 1 that the city is seeking to promote for development. The city is also promoting residential development on the 600-acre Tai property nearby, while environmentalists are also disputing a decision by the Pajaro Unified School District to locate a new high school in the same area. (See CP&DR Local Watch, December 1997, and CP&DR School Watch, August 1997.) In the court case, the Sixth District overturned a trial judge's ruling that Watsonville could not "tier" its environmental review based on the city's previously existing general plan environmental impact report. "It would be unfortunate if agencies abandoned the use of program EIRs when adopting or amending general plans in anticipation of carrying out a later series of activities pursuant to the plan or plan amendments," the court wrote. "The program EIR is tailor-made for such situations ... Accordingly, we hold that a program EIR could be and was used as the General Plan EIR in this case." Watsonville "pre-zoned" the Riverside property and adjacent property west of Highway 1 for industrial development in August of 1996. The city issued a draft EIR for the Tai property, but concluded that it could rely on the general plan EIR for the Riverside property. Although the general plan had not taken account of potential development of the Tai property, it did contemplate industrial development of the Riverside property. The city then pursued annexation, but was caught up in a major dispute at the Santa Cruz County Local Agency Formation Commission. In late 1997, the LAFCO laid down strict rules by which Watsonville could annex property and added part of the Riverside property to the city's sphere of influence. Meanwhile, however, local environmentalists sued Watsonville over the pre-zoning, arguing that the city had not addressed the environmental impacts of the decision. Among other things, the environmentalists argued that an SEIR should have been done for the Riverside property and also claimed that the city's environmental review did not cover all the environmental impacts, especially the cumulative impact when combined with the Tai project. The trial judge ruled in favor of the environmentalists, ordering the city to withdraw certification of environmental review and approval of the prezoning until the city examined the environmental impact of annexing property in the area. The city rescinded the prezoning and annexation, certified the final supplemental EIR, and then approved the prezoning and annexation again. The environmentalists claimed these actions rendered the appeal moot but the appellate court disagreed and ordered that the appeal move forward. On appeal, the city asked the appellate court to overturn the trial judge's ruling by arguing that the city did appropriately rely on the general plan EIR in prezoning and seeking annexation for the Riverside property - even though the general plan EIR had not contemplated development of the Tai property. The environmentalists continued to argue that development of the Tai property altered the overall development pattern of the area in a way that was not contemplated by the general plan EIR, and this altered impact should have been taken into account in the environmental analysis for the Riverside Drive prezoning and annexation. The appellate court agreed with the city. The environmental analysis on the Riverside property, the court said, "concluded that the General Plan EIR had previously identified the loss of agricultural land as the only significant and unavoidable impact of implementing the General Plan. Since the study revealed no new information that would alter the EIR's conclusions, the EIR adequately evaluated the anticipated annexation of the Riverside Drive site." The appellate court also concluded that, if development of the Tai property had cumulative environmental impacts, they should have been addressed in the city's supplemental EIR for inclusion of the Tai property inside the city's sphere of influence. "It had no effect on the prezoning and annexation of the Riverside Drive site, an impact considered in the General Plan EIR," the court wrote. To continue to create new environmental documents with every altered situation, the court added, "would produce a never-ending cycle of redundant EIRs anytime a city wished to issue an SEIR." The appellate court also reversed the trial judge's decision because the environmentalists had not raised all issues during administrative hearings, and because the appellate court found "substantial evidence" that all potential impacts of development on the Riverside Drive site were raised in the general plan EIR. Perhaps most important, the appellate court concluded that the general plan EIR was, in fact a "program" EIR and therefore the city appropriately used "tiering" for environmental analysis on the Riverside Drive site. The environmentalists argued that the general plan EIR was a "first-tier EIR" - thus implicitly requiring a second-tier EIR at the project level - because a general plan EIR is mandatory under the CEQA Guidelines, whereas a program EIR is optional. The court disagreed. The Case: South County Coalition for Intelligent Planning v. City of Watsonville, No. H016569 (unpublished Sixth District, issued September 17, 1998). The Lawyers: For South County Coalition: For City of Watsonville: Steve Kostka, McCutchen Doyle, (510) 937-8000.

Santa Barbara County and its consultants had no duty to prepare an environmental impact report that was acceptable to a developer, an appellate court has ruled. A three-judge panel of the Second Appellate District, Division Six, unanimously turned down a challenge from the developer of Mission Oaks, a 3,877-acre residential project proposed near Buellton. The project called for 31 homes to be built on separate 100-acre parcels, with most of the land to remain in agricultural use for cattle grazing. A draft EIR had been prepared for the county by Envicom Corporation of Agoura Hills and other consultants. The draft EIR found, according to the opinion by Presiding Justice Steven Stone, "a multitude of significant, adverse, and unmitigable impacts." The developer of Mission Oaks, Stone wrote, "opines that the preparation of the DEIR was a sham, and that the conclusions in the DEIR are false." The developer hired its own consultant, who concluded there was no substantial evidence to support the DEIR's findings and conclusions. The Mission Oaks project was rejected by both the county's planning commission and its board of supervisors in 1995. A separate mandamus lawsuit was filed. The county won on the mandamus issue, although no ruling has been made yet on a cause of action in that case involving a taking issue. Mission Oaks, according to the appellate opinion, alleged that the county wanted to prevent development and generate excessive fees, so the county "falsely encouraged Mission Oaks to proceed with the EIR while knowingly having no intention of ever approving or recommending approval of the Project." Most of the Mission Oaks lawsuit that was the subject of the appeal was rejected at the Superior Court level, except for one Williamson Act claim that was later dropped. The appellate panel said that the suit was untimely, because it was not brought within the deadlines set for such actions. Statements at issue in the case are privileged under Civil Code Section 47, which prevents tort claims for preparation of an EIR, the court said. Additionally, the court said that the case was subject to Section 425.16 of the Code of Civil Procedure, the anti-SLAPP statute. The appellate court opinion said the only issue remaining was a breach of contract claim - that the EIR was not prepared under the requirements of CEQA and the fees charged to the developer were unreasonable. The county owed no duty to provide an EIR acceptable to Mission Oaks, according to Justice Stone's opinion, which was joined by Justices Arthur Gilbert and Kenneth Yegan. The fee agreement between the county and developer showed that the county had the sole discretion to determine the adequacy of the performance of the EIR consultant and the extent of payment. "The County owes no duty to assuage the desires of the potential developer," the court said. "The County did not abuse its discretion under the instant contracts or its duty under CEQA as to any of the consultant defendants or otherwise." Mission Oaks also argued that because the county was a third-party creditor beneficiary of the contract with EIR consultants, it owed Mission Oaks a duty to comply with CEQA. But the court said that the language of the county's contract with Envicom said Envicom's responsibility was to provide "a complete and accurate EIR" solely to the County, not to Mission Oaks " or to any other third-person or entity." "CEQA is designed to protect the public," the opinion said. "If courts permitted lawsuits against environmental consultants by project proponents regarding the findings stated in their reports, the independence of the professional experts and the objectivity of their specialized findings and conclusions would be undermined and jeopardized by fear of retaliatory action." The court also granted attorneys' fees to the county under the anti-SLAPP law. This is believed to be the first time a court has granted attorneys' fees to a local agency under the law. "Disgruntled developers should not be permitted to frivolously tie up the resources of government agencies and the judiciary by suing for damages over the denial of their map and permit applications," Justice Stone wrote. Mission Oaks attorney Kenneth S. Meyers said the appellate court opinion "grossly misstates Mission Oaks' position regarding what our claim was." One caption in the opinion, Meyers noted, read "County Owes No Duty to Provide EIR Acceptable to Mission Oaks." "We've never contended that the county had that duty," Meyers said. "Rather, our contention is that the county's duty was to cause the preparation of an EIR which complied with the objective standards of CEQA." Mission Oaks has filed a petition for review with the California Supreme Court. The Case: Mission Oaks Ranch, Ltd. v. County of Santa Barbara, No. B108463, 98 Daily Journal D.A.R. 7903 (issued June 18, 1998). The Lawyers: For Mission Oaks: Kenneth S. Meyers, Alschuler, Grossman & Pines, (310) 551-9142. For Santa Barbara County: Shane Stark, County Counsel, (805) 568-2950. For Envicom Corporation: Jan Chilton, Severson & Werson, (415) 398-3344.

McClellan Air Force Base near Sacramento appears likely to make a strong transition to private industrial use. Sacramento County has decided to purchase some 2,400 acres - about two-thirds of the base - for $90 million, or almost $40,000 per acre. At the same time, Lockheed Martin Corporation has submitted a bid for a giant Air Force contract that would employ thousands of people on the industrial part of the property that the county plans to buy. McClellan is scheduled to close in 2001. The county will purchase the airfield and the base's industrial area, which are considered its prime assets. Under the conveyance agreement, the county would make no payment for the first 10 years, and would subsequently pay $3 million for 30 years. The arrangement has been hailed as a bargain by local base reuse officials, who had negotiated for the $90 million amount for several years, according to base reuse spokeswoman Jill Estroff. (Last year, in fact, President Clinton promised that the federal government would sell McClellan to the county "at a significantly reduced price.") In December 1997, however, the Pentagon complicated negotiations by demanding an additional $25 million. The government later backed down on that demand, however. Sacramento lawyer Randall Yim led the negotiating team for the county, which is the designated local reuse agency. Yim was recently named Principal Deputy Assistant to the Secretary of the Army. McClellan is one of a handful of bases nationally that are undergoing a process known as "privatization." In this process, the Pentagon transfers the industrial functions or "workloads" at the base to private companies. Making a play for what is likely the largest single workload at the base, Lockheed Martin and AAI Engineering Support Incorporated submitted a bid for a variety of aircraft-maintenance tasks that are currently performed by 2,300 non-military workers at the base; the work is valued at $220 million a year. Hill Army Depot in Ogden, Utah, is competing for the same workload; Boeing is bidding on behalf of that base. A decision was originally expected in late September, but has been delayed, while the Pentagon evaluates a challenge from Precision Standard Inc. (Pemco), a Colorado-based aircraft-maintenance firm, which has questioned the legality of creating a giant workload that goes to a giant defense contractor in a winner-take-all contest. The Pentagon is currently in the midst of a 100-day adjudication process, scheduled to end September 25, on the Pemco matter. If Pemco prevails, it is conceivable that the giant workloads would be "unbundled" into smaller workloads, which would be the subject of competition for a larger number of companies. The decision is crucial to the future of McClellan: Lockheed and a second company, Euro United Corporation, a Canadian plastic company, would occupy much of the portion of McClellan that the county plans to buy. If Lockheed wins the bid, the two companies together are expected to employ between 5,000 and 6,000 people, according to county officials. Notwithstanding the uncertainties of the Lockheed bid, McClellan has a promising future as commercial real estate in a region that is running low on industrial land, according to Neil Smyth, managing director of CB Richard Ellis' Sacramento office. The base is "very well located on the I-80 corridor, and that whole corridor is a very good location" for warehousing and distribution. The local industrial market, which includes Sacramento County and portions of Placer, El Dorado and Yolo counties, currently has a very low vacancy rate of 4.8% out of a base of 130 million square feet, according to CB Richard Ellis.

A settlement has been reached in lawsuits between Sacramento County and the city of Citrus Heights over costs to be paid by the new city related to its incorporation. Citrus Heights incorporated in January 1997, and before incorporation had agreed to pay the county $5.6 million in installments for 25 years. That amount was the county's "profit" from taxes after paying for all services in the area during the period Citrus Heights was unincorporated. The new city was to pay a projected total of $140 million over 25 years (see CP&DR, April 1998). Under the terms of the settlement, Citrus Heights is to pay $2.2 million the first year, and a projected $80 million over the next 25 years. The money will come from property tax revenues. Since property tax revenue is first paid to the county, the money cannot be held up by the city. "Essentially, the city is giving up its property taxes," said Ruthann Ziegler, the city's attorney. The original $5.6 million figure was based on expected tax revenues from Sunrise Mall, which is no longer doing as well. New shopping areas outside the city limits are drawing shoppers away from the mall, and more competition from other shopping centers is expected. A Local Agency Formation Commission official who prepared the calculation later admitted it was wrong. A county analysis done in 1997 found that the correct figure should have been $5.1 million, said county supervisor Roger Dickinson. Citrus Heights officials refused to make the first payment after incorporation, and the county sued in November 1997. The city then countersued. Dickinson cast the lone vote on the Sacramento County Board of Supervisors against the settlement. He said it would set a bad precedent for negotiating with other areas of the county that want to incorporate. Almost two-thirds of the county's 1 million residents live in unincorporated areas. Dickinson also said that the settlement wasn't fair since Citrus Heights wasn't paying what it should. "People in Citrus Heights get an enhanced level of municipal services while other people in the county get a decline," he said. Dickinson also said that ballot language that voters agreed to when they voted to incorporate made it clear that it would cost the city $5.6 million a year. But Ziegler said the city seriously questioned the legality and constitutionality of the conditions imposed on its incorporation. The Citrus Heights lawsuits were significant because few cities have incorporated since 1992. That year, the Legislature enacted a revenue-neutrality law which requires cities to be fiscally viable to incorporate. Cities are prohibited from incorporating if the incorporation would have a negative fiscal effect on a county. The law has essentially stopped incorporations. The dispute, and the desire for other communities throughout the state to incorporate, led to the introduction of several bills in the legislature. One bill, AB 2147 by Assemblyman Bruce Thompson, R-Fallbrook, would repeal the revenue neutrality law. It passed the assembly, and was sent to the Senate Local Government Committee where no hearing datewas set. Several areas in Southern Orange County, near Thompson's district, are interested in incorporating. Under the Citrus Heights settlement agreement, the county was assured that the city would not use future redevelopment areas to siphon off property taxes that the county was expecting. Ziegler said that the agreement includes a "reopener clause" if there is a major shift in the way property taxes and city revenue are received by the city, such as if changes are made in the way revenue is distributed by the state government. Contacts: Supervisor Roger Dickinson, (916) 874-5485. Ruthann Ziegler, Kronick Moskovitz, (916)321-4500