Trial judges may use their discretion in determining whether to award attorney fees to SLAPP suit defendants if the plaintiff voluntarily dismisses the case while the anti-SLAPP motion to strike is pending, the Fourth District Court of Appeal has ruled. In making the ruling, Division 2 of the Fourth District rejected the argument that defendant's attorneys should be either automatically entitled to or automatically precluded from receiving such fees. The term "SLAPP" suit - the acronym stands for "strategic lawsuits against public participation" - is often used by citizen activists to refer to punitive lawsuits filed by developers and others to discourage citizen activism. (For background, see CP&DR, November 1990.) The law permits a special motion to strike a cause of action that is found by the court to be a SLAPP suit. Many SLAPP suits have a land-use connection - as when a developer sues a citizen or citizen group in retaliation for opposing a development project. In most cases, appellate courts have upheld broad use of the SLAPP motion to strike, which is contained in Code of Civil Procedure §425.16. Though attorneys fees to SLAPP defendants have been granted, appellate justices in another recent case awarded such fees for the first time to a public agency. (See related story on Mission Oaks Ranch, Ltd. v. County of Santa Barbara.) The current case had nothing to do with land use or real estate development. The case involved several tenants in the Victory Apartments in downtown Riverside, led by Kim Shewalter. The tenants claimed that the apartment complex was noisy, violent, and dangerous, and that these problems only increased after the apartment complex was taken over in 1995 by Darlene Coltrain and her son, Arthur. The murder of a reputed gang member and drug dealer in October of 1995 led tenants to move forward with a nuisance abatement action against the Coltrains in small claims court. In November of 1995, they made a demand for payment from the Coltrains in connection with specific incidents, a necessary pre-condition to going to small claims court. This action attracted the attention of the local newspaper, and several tenants, including Shewalter, complained about the situation. After the small claims action was filed in February of 1996, the Coltrains filed a lawsuit alleging trade libel and defamation - but only against the nine tenants who filed the small claims action, not against any other tenants. The Coltrains sought $250,000 in compensatory damages and $1 million in punitive damages. The tenants filed a motion to strike under the anti-SLAPP law, but the Coltrains voluntarily dismissed their complaint 10 days later. Subsequently, the tenants' attorneys, Mark Goldowitz and Jason Walsh, asked for attorney fees under the anti-SLAPP law totaling some $75,000. The trial court awarded attorneys fees of $73,000, and the Coltrains appealed, arguing that because the case had been voluntarily dismissed by the plaintiff, the defendant had not "prevailed" and therefore could not be awarded attorney fees. "Certainly," the appellate court wrote, " do not support defendants' contention that a voluntary dismissal while a special motion to strike is pending should automatically entitle a defendant to attorney's fees. Otherwise, SLAPP plaintiffs could achieve most of their objective with little risk - by filing a SLAPP suit, forcing the defendants to incur the effort and expense of preparing a special motion to strike, then dismissing the action without prejudice." At the same time, the court added, "these policies likewise do not support defendants contention that a voluntary dismissal while a special motion to strike is pending should automatically entitle a defendant to attorney's fees." "We conclude," the court added, "that where the plaintiff voluntarily dismisses an alleged SLAPP suit while a special motion to strike is pending, the trial court has discretion to determine whether the defendant is the prevailing party for the purposes of attorney's fees." In an unpublished portion of the ruling, the court rejected the Coltrains' claim that attorneys fees should not have been awarded because the tenants' statements did not deal with a public issue. The tenants' concerns, the court said, do involve a public issue. The Case: Coltrain v. Shewalter, No. E019258, 98 Daily Journal D.A.R. 8939 (filed August 17, 1998). The Lawyers: For Coltrain: David G. Moore, Reed & Hellyer, (909) 682-1771. For Shewalter: Mark Goldowitz, (510) 835-0850, and Jason Walsh, (909) 784-9310.

In a reversal of recent trends, ballot initiatives to restrict growth appear to be on the upswing - especially in Southern California, where few ballot measures have appeared in recent years. The hotbeds of controversy appear to be in Ventura and San Diego counties, which have historically had more "ballot-box zoning" than other parts of Southern California. In Ventura County, slow-growthers have mounted a coordinated November effort to pass urban growth boundaries in six cities as well as a voter approval requirement to convert agricultural and open space land to urban use in unincorporated areas. In San Diego County, slow-growthers have placed an initiative on the November ballot to downzone some 600,000 acres of rural land in the eastern part of the county. Both ballot efforts have caused considerable consternation among elected officials. In San Diego County, where the initiative has won the support of many city-level officials, the county supervisors representing the area went so far as to propose a state law prohibiting city residents from voting on initiatives that would affect unincorporated areas. In Ventura County, the Board of Supervisors placed an alternative advisory measure on the ballot that calls for studying urban growth boundaries and a new tax to pay for purchase of farmland development rights. Although San Diego and Ventura are the biggest hotspots, several other land-use ballot measures are pending throughout the state. They include: o An initiative to regulate the removal of oak trees in Santa Barbara County - a measure motivated by the clearing of some 1,800 oak trees in the last two years to make way for wine grapes. o A possible urban growth boundary vote in Petaluma, which adopted the state's first growth-control ordinance some 26 years ago. o At least two municipal initiatives in San Diego County. One would place limits on a development project in Santee; the other would require voter approval for any increase in general plan densities in the city of Escondido. All this activity is taking place following a light ballot in June, when only eight land-use-related measures appeared on local ballots - including only one in Southern California. The Ventura and San Diego ballot measures appear to be generating the most political controversy. Both Ventura's Save Open Space and Agricultural Resources and San Diego's Rural Heritage and Watershed Initiative are outgrowths of previous, smaller slow-growth efforts. The Ventura County initiative grew out of a similar measure that passed in the City of Ventura in 1995 and has apparently created a unified network of slow-growth activists throughout the county. The San Diego County effort emerged from a similar measure in 1993 that downzoned private in-holdings in Cleveland National Forest. Ventura County The Ventura County ballot effort, commonly known by the acronym SOAR, is actually a series of coordinated ballot measures designed to create urban growth boundaries around most of the county's cities and protect agricultural and open-space land in unincorporated territory. A measure will appear on the countywide ballot that would require voter approval for any conversion of land from agricultural or open space use to agricultural use. The measure is virtually identical to the Napa County initiative upheld by the California Supreme Court in DeVita v. County of Napa, 9 Cal.4th 763 (1995). SOAR activists gathered 70,000 signatures to place the measure on the November ballot. However, the SOAR activists sought to combine the DeVita-style measure on the county ballot with ballot measures in seven cities to create urban growth boundaries - making SOAR perhaps the most comprehensive and coordinated county-wide land-use initiative effort ever undertaken in California. According to former Ventura mayor Richard Francis, head of the SOAR effort, the intent in adding the municipal urban growth boundaries was to prevent the possibility of having open space and agricultural land simply annexed to cities in order to facilitate their development. (Ventura County has a long-standing policy of channeling almost all urban development into cities.) The SOAR forces ran into trouble, however, by making a mistake in drafting the signature petitions. By including the phrase "Address As Registered" as the top of the petitions, rather than asking signers for their current address, SOAR violated a long-standing legal requirement that signature petitions not invite fraud on the part of signers. Because of this blunder - brought to light in a lawsuit filed by the Libertarian Party - a judge removed the SOAR initiatives from the county ballot and from all seven city ballots. In response, the SOAR activists went to the county Board of Supervisors and all seven city councils and negotiated for those elected bodies to place the initiatives on the ballot instead. SOAR succeeded at the county and in six of the seven cities - though two of the city councils included a "poison pill" stating that the countywide measure must pass for their local measures to take effect. In July, the state Department of Housing and Community Development warned one of the cities - Thousand Oaks - that the urban growth boundary initiative could "unduly constraint housing development" in violation of the state housing element law. The only city where the council refused to place the measures on the ballot was Moorpark, a fast-growing city just west of Simi Valley, where the council has just approved a 3,000-home development project proposed by Messenger Investment of Orange County. SOAR subsequently re-gathered the necessary signatures in Moorpark and a special election will likely be called next year as a result. In late August, SOAR also began a separate referendum drive to place the Messenger project on the ballot. Meanwhile, the county Board of Supervisors has placed an alternative, advisory measure on the ballot - even while voting to place SOAR on the ballot as well. When SOAR began gathering signatures, the county convened a stakeholder group in hopes of reaching consensus on a farmland preservation strategy. In May, this stakeholder group proposed a countywide moratorium on urban expansion while the cities and the Local Agency Formation Commission devised a plan for permanent urban growth boundaries and greenbelts. However, even before the stakeholder group brought its recommendations to the Board of Supervisors, two supervisors held a press conference in which they announced their support of SOAR. After placing SOAR on the ballot, they also placed some of the stakeholder recommendations on the ballot as an advisory alternative - while adding some language about property rights and proposing study of an open-space district that might raise funds to buy land and development rights from farmers. SOAR's supporters say the advisory measure is compatible with their initiative and have not opposed it. Contacts: Richard Francis, SOAR, (805) 485-8888. Rex Laird, Ventura County Farm Bureau, (805) 656-3552. San Diego County Meanwhile, the proposed "Rural Heritage and Watershed Initiative" in San Diego County has created no less political turmoil. The initiative is the latest round in a longstanding battle over large-lot zoning in the mostly rural eastern third of San Diego County. Much of this area is divided into ranchette lots. In the past, slow-growth activists have failed in their attempts to persuade the county Board of Supervisors to downzone the area to 40- and 80-acre lots - though the county did downzone many lots from one and two acres to four and eight acres. The RHWI, as its supporters call it, seeks voter approval of downzoning some 600,000 acres of land to 40- and 80-acre lots. According to Duncan McFetridge, a Descanso artisan who chairs RHWI, the measure would not affect the "country towns," or unincorporated villages designated in the county's planning policies. It is supported by some municipal officials and several leading biologists. However, the initiative has created a major political controversy at the county Board of Supervisors. In February, Supervisors Diane Jacob and Greg Cox proposed a state constitutional amendment that would prohibit residents of incorporated cities from voting on issues that affect only unincorporated areas. However, this proposal met stiff opposition. Then, in April and May, another controversy erupted over the county staff's analysis of the impact of the proposed initiative. While acknowledging that the initiative would have some beneficial effects, such as improved air quality, the county staff suggested that the measure would not help agriculture, while leading to leapfrog development and increasing housing costs. Most significantly, the staff report concluded that the initiative would not eliminate population growth but merely move it around by shifting 54,000 housing units from the unincorporated areas into other parts of the county. Contacts: Duncan McFetridge, (619) 462-7032.

A deal permitting the San Diego County Water Authority to move forward with the purchase of 200,000 acre-feet of water per year from the Imperial Valley appears likely to move forward. On August 31, the last day of the session, the legislature appropriated $235 million in state funds to help the Metropolitan Water District of Southern California obtain additional water for itself- a necessary pre-condition that MWD had demanded for the San Diego deal to go through. The $235 million would be used mostly to line canals in the Imperial and Coachella valleys. The canal linings would conserve 97,000 acre-feet of water, which would then be transferred to the MWD. The appropriation was included in a hastily put-together bill that also included some $210 million to buy the Headwaters Forest in Humboldt County, after a $1.7 billion water bond issue failed on Friday, August 28. It was supported by most Southern California legislators, though opposed by some environmentalists and some fiscal conservatives. Under the terms of the deal, which is being called a water exchange agreement, the Imperial Irrigation District will sell 200,000 acre-feet per year to the Metropolitan Water District, which will then sell it to the San Diego County Water Authority. The Imperial Irrigation District receives 3 million acre-feet (almost a trillion gallons) of water from the Colorado River each year. The 200,000 acre-feet should be enough for San Diego County's growth for next 30 years. The transfer is significant because it will be the largest farm-to-city water transfer in state history, and the largest water conservation project as well, according to the Metropolitan Water District, the giant water agency which supplies much of the water to urban users in Southern California. San Diego got the ball rolling in April when it signed a 45-year deal with the Imperial Irrigation District that sets up a voluntary conservation effort among local farmers to conserve 200,000 acre-feet a year. One way the water will be conserved is by installation of pumpback systems that can capture runoff from fields. Currently, much of that water goes to the Salton Sea. The Water Authority is expected to buy water at a discounted rate for the first ten years of the agreement, and to pay market rates after that. Farmers will be compensated at a rate of $250 per acre-foot of water that is saved. That program needs to win several regulatory approvals before it begins, according to Paul Cunningham, a manager at the Imperial Irrigation District. The district is hoping to begin an initial transfer of 20,000 acre-feet sometime in 1999. MWD has resisted the San Diego deal in the past, largely by demanding that San Diego pay more than $200 per acre-foot to transport the water through the Colorado Aqueduct. Yet the additional water for MWD itself appeared to mute the agency's opposition. The MWD board approved the deal in August with only one vote against - Bonnie Harman of Los Angeles. Her sentiments were echoed by an analyst for the Environmental Defense Fund, Spreck Rosekrans, who told the Los Angeles Times that his group believes the canal lining should be paid for by MWD customers, not by the state. Under a previous water-trading agreement between MWD and Imperial - which was first proposed by EDF - the MWD itself provided the cost. The water bond was intended to help placate various constituencies, but it also touched on numerous controversial issues. For example, the bond was expected to contain language on water transfers through the Sacramento-San Joaquin River delta, always a charged issue in state politics. Northern California voters voted down a proposed peripheral canal in 1982. The canal would have transferred water from the delta for use in Southern California. A draft EIR for delta restoration issued this spring by the CALFED program includes a peripheral canal, or "open channel isolated facility," as one of the options for restoring the delta. Environmentalists have charged that is the preferred option, although the Wilson administration has denied that it is (See CP&DR, April 1998). The new bond measure would have prohibited creation of a peripheral canal. The bond deal failed late in the session, apparently because Republicans and Democrats disagreed over whether to move forward with studies for additional reservoirs in the Central Valley. The MWD touted the San Diego water exchange agreement as a boon for the delta, and contended that the agreement could reduce its reliance on water supplies in Northern California. If the MWD-San Diego deal holds, it will provide San Diego with more control over its water supply. San Diego County gets about 80% of its water from the MWD, and for years locals have worried that the L.A.-based MWD would not share the water in the event of a crisis. San Diego County, which has grown to a population of 2.5 million people, has no alternative source of water. The MWD provides 60% of the water to urban Southern California, and for 70 years has been a powerful player in state water politics. San Diego County's water authority is one of 27 member cities and water agencies in the MWD. The deal follows years of maneuvering by San Diego to secure more water and to assert itself on the MWD board. Several years ago, San Diego demanded 400,000 acre-feet of water, higher quality water, and greater representation on the MWD board. At one point, the San Diego water maneuvers included Texans Sid and Lee Bass, who have been involved in a variety of speculative ventures and corporate takeover attempts. The Bass Brothers' Western Farms company bought over 10% of Imperial Valley farmland between 1995 and 1997. They immediately began seeking urban buyers for the water. But Western Farms swapped its land in the valley for stock in a company called U.S. Filters, and the Basses are now out of the picture. Of the $235 million in state bond money slated to pay for the water accord, $200 million would be used to concrete-line the All American canal and its Coachella branch. That would save 97,000 acre-feet of water, for use by the MWD. Another $35 million would be used for groundwater storage projects along the Colorado River. The federal government and six other Colorado River basin states are insisting the California reduce its reliance on Colorado River water. The Golden State has an entitlement of 4.4 million acre-feet a year, but has been using about 5.2 million acre-feet. U.S. Secretary of the Interior Bruce Babbitt has warned California that it needs to reduce its draw of river water. Contacts: Bob Gomperz, spokesman, Metropolitan Water District, (213) 217-6000. Paul Cunningham, Manager for External Affairs, Imperial Irrigation District (760) 339-9416. Alan Ames, media relations representative, San Diego County Water Authority, (619) 682-4181.

The cities of East Palo Alto and Los Angeles are among 16 cities nationally that have been named Brownfields Showcase Communities. At least 15 federal agencies, including the Environmental Protection Agency and the Department of Housing and Urban Development, took part in selecting the projects. The designation recognizes problem-solving on the part of local government, and entitles the projects to additional federal funding and/or in-lieu services. In addition to funding and in-lieu services, the designation also entitles each community to a full-time "Community Builder" on the HUD payroll. In East Palo Alto, an impoverished community in otherwise affluent San Mateo County, city officials won the designation for efforts to remediate and redevelop a 130-acre redevelopment site. In a statement, federal officials praised East Palo Alto for "showing how a small community can successfully leverage resources through partnerships." "This program takes an economically marginalized and contaminated site, and makes it into a master-planned, R&D business park that could assist the city in job creation," said city manager Michael Bethke. "Otherwise, he added, "We have practically no options right now for (new) jobs in the city." Formerly the site of a pesticide plant, the Ravenswood site is contaminated with arsenic and requires remediation at a cost of $3 million to $5 million. Bethke said city officials hope to attract high-tech businesses to the redevelopment area. The Showcase Communities designation entitles the city to $1.6 million in funding and in-lieu services, including funds to pay the salary of the EPA staffer. Other services to the city include consultations with other federal agencies and assistance in grant writing. The City of Los Angeles won Showcase status for its proposal to remediate and develop two brownfield sites along the edges of the Alameda Corridor. A proposed 20-mile rail line between the harbor area and container yards southeast of downtown Los Angeles, the Alameda Corridor is intended to ease traffic congestion on major arteries serving the ports of Long Beach and Los Angeles. Los Angeles has identified two sites: the 20-acre "Prison Site," named for now-abandoned plans to build a state prison there, and a 208-acre "Goodyear" site, also known as South Central Renaissance Industrial Park. For the latter project, the city has received $400,000 in EPA funds and has applied for a $1.7 million HUD Brownfields Economic Development Initiative, according to Lillian Kawasaki, General Manager of the City of Los Angeles Environmental Affairs Department.

Local governments in Nevada do have the standing to intervene in a lawsuit against the Interior Department, challenging the environmental impact process on a proposed water rights acquisition program, the Ninth U.S. Circuit Court of Appeals has ruled. The case involves the Interior Department's attempt to implement a water rights acquisition program designed to settle complex and longstanding water rights issues associated with the Newlands Reclamation Project in western Nevada. Under Section 206 of the Fallon Paiute Shoshone Tribes Water Rights Settlement Act of 1990, the Interior Department is supposed to acquire enough water rights to increase and permanently sustain approximately 25,000 acres of wetlands in the Lahontan Valley. This required Interior to draw up a plan to buy 55,000 acre-feet of water from the Carson Division of the Newlands project, as well as 33,000 acre-feet of water through other methods. Interior prepared an environmental impact statement on the water rights acquisition plan but not a programmatic EIS on the combined impact of this plan and other federal programs. Churchill County and the City of Fallon, which stood to lose water under the acquisition plan, sued to force the programmatic EIS, as did Sierra Pacific Power County. The Ninth Circuit ruled that the city and the county have standing to sue but the power company does not. Churchill County v. Babbitt, No. 97-15508, 98 Daily Journal D.A.R. 7735 (filed July 15, 1998).

The current system of regulating municipal securities, including Mello Roos and Marks Roos bonds, is "inadequate" and "encourages non-compliance", according to a new report a state task force. Noting the alarming rate of defaults among land-based securities, the report recommends creation of a new municipal bond law-enforcement division within the state's department of justice. The findings and recommendations have been praised by both government officials and some industry observers, although at least one prominent bond counsel objected strongly to what he described as the negative portrayal of bond professionals in the report. As if to underscore the urgency of the report, a grand jury in July returned a criminal indictment of the city attorney of the City of Waterford relating to his activities as a bond disclosure counsel in several Marks-Roos deals, while an allegation has been made that $70 million of the city's Marks Roos bonds may be illegal. The "Report of the Interagency Municipal Securities Task Force" was issued by the California Debt and Investment Advisory Commission - the result a two-year investigation conducted by a task force appointed by State Treasurer Matt Fong, in response to the rising rate of defaults on land-based bonds. (The default rate in 1997 for land-based bonds exceeded $200 million, nearly three times the level of the previous year.) According to the report, the default rate for Mello-Roos bonds alone is at least 5%, which is "extremely high relative to the capital market or any sector of the municipal market." The "key question facing state policy makers," the report goes on to say, "is whether the regulatory framework for municipal securities has kept pace with the changes described above and affords adequate protections for investors and issuers. Ill-advised borrowing decisions have already brought certain small communities through the state to the brink of bankruptcy and put at risk the delivery of essential public services." Part of the blame lies with the bond industry, according to the report: "In these cases (of default), municipal bond industry professionals actively promoted fraudulent transactions to earn high fees. In other cases, professionals are opening flaunting both the letter and intent of the law." Among the task force's findings: o The lack of enforcement of state bond laws encourages non-compliance; o The concern that land-based bond defaults may pose serious risks to local agencies who issue them; and o The fact that underwriters and bond traders are targeting "unsophisticated" investors, "through mass advertising, and other techniques, as customers for some of the most speculative municipal securities in the market today," according to the report. The central recommendation of the task-force report is the creation of a Municipal Bond Law Enforcement program to remedy the lack of enforcement of the state's existing municipal-bond laws. Specifically, the task force recommends that the legislature "direct the Department of Justice to initiate a program to review municipal bond offerings, focusing primarily on Marks-Roos bond and other types of debt with a high potential for abuse. Peter W. Schaafsma, executive director of the debt advisory commission, says response so far to the task-force report has been positive. "We have received several letters from investors who like the idea" of a bond law-enforcement program, he said. One government official who said he is "enthusiastic about those recommendations" was Sen. Quentin Kopp, I-San Francisco, a leader in Marks-Roos reform. In May, Governor Pete Wilson signed into a law sponsored by Kopp, SB 147, which 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, in which of local municipalities using their bonding authority to finance speculative real estate projects that are hundreds of miles away. "I am particularly desirous for a specific unit in the Department of Justice to monitor municipal bond transactions, such as those issued by the Pacific Genesis firm in San Francisco," said Kopp, referring to the bond underwriter that has been associated with several issues that either defaulted or drew on reserves in the cities of Wasco, Waterford, and elsewhere. (Pacific Genesis officials said in interviews that all those defaults have been cured.) He described the practice of issuing Marks-Roos bonds by some cities as an indication of "greed and desperation by local officials." Local agencies are often able to generate a high "administrative fee" for issuing for re-financing the bonds, which is seen as an incentive for those agencies to issue land-based securities. Kopp complained about the practice of underwriters who "pay (cities) a fee to borrow their name" for the purpose of issuing securities, describing it as an "invidious practice." Kopp said that he would be willing to sponsor legislation to create the proposed bond law-enforcement program, but would be unable to do so, because of he will soon leave the Senate under term-limits.. A different response, however, came from some bond lawyers, according to Schaafsma. "I have heard from some of the bond lawyers that they dislike the report, but support the recommendation," he said. One lawyer who was incensed by the report is Roger Davis, who heads the municipal bond practice group in the San Francisco office of Orrick Herrington & Sutcliffe. He criticized the fact that the report suggests there are widespread problems in the issuance of Marks Roos bonds, when in actuality the problems are "all coming from a single firm," which he did not name. He also was critical of the report's correlation of bond failure and a lack of due care by bond professionals. Most of the Mello-Roos defaults, he observed, were the result of the real estate recession of the early 1990s, not substandard underwriting or legal work. The report, he concluded, is "an insult to the entire bond profession." Notwithstanding that rebuke, alleged mishandling of Marks-Roos bonds is creating legal problems for at least one lawyer. Waterford City Attorney William E. Gnass surrendered to a Stanislaus County Judge on July 20 to answer charges of 11 separate violations of the California Government Code. He pled innocent to all charges. Since 1996, the city has issued $76 million in Marks Roos bonds. Gnass was both disclosure counsel and city attorney at the time the deals were executed. In 1996, a Stanislaus County grand jury investigation concluded that Gnass had properly disclosed his dual role at the time of the transactions. Separately, in late June, State Attorney General Dan Lungren issued a formal opinion that nearly $70 million of Marks-Roos bonds issued by the City of San Joaquin in Fresno County are technically illegal, because they were issued by an illegal agency - that is, an agency that does not exist in the eyes of the law. Specifically, Lungren ruled on two questions: (1) Can a joint-powers agency, such as one that issues Marks-Roos bonds, legally consist a city and a non-profit public benefit corporation created by that city? And (2) Can a joint powers agency consisting of those two entities impose development fees on property outside their geographic boundaries, for the purpose of paying off the bonds? Lungren's opinion on both questions was no. About $62 million of the San Joaquin bond proceeds went to finance the River Ranch project in Madera County. Contacts: Roger Davis, partner, Orrick Herrington & Sutcliffe, (415) 392-1122. Peter Schaafsma, executive director, California Debt and Investment Advisory Commission (916) 654-7440. Sen. Quentin Kopp, (916) 445-0503

For twenty years, water planning on the Monterey Peninsula has been in a stalemate, as local voters have turned down proposals to increase the water supply in the region. Now, a bill moving through the legislature may finally bring resolution to the matter - or complicate things further. The bill, AB 1182, by Assemblyman Fred Keeley, D-Santa Cruz, would require a special election to choose between either building a dam on the Carmel River or moving forward with a plan developed by the Public Utilities Commission to develop water resources without building a dam. The original bill - which has since been amended numerous times - would require the election in November 2000, although that date may change in the final bill. While the rest of California enjoys a respite from the drought, water conservation measures are currently in effect in the Monterey area, with outdoor watering limited to two days a week. A local water company is seeking a moratorium on building from the PUC and also approval for a mandatory rationing plan if it's needed. The problem is not a lack of water, but a lack of storage facilities for the water. The Carmel River, which runs through the region, provides three times the amount of water the region needs, according to Fran Farina, former chair of the Monterey Peninsula Water Management District, a special district created by the state in 1978 to manage water issues. But voters turned down the proposed 24,000-acre foot-New Los Padres Dam on the river in November 1995, with 57% casting no votes. They also gave a thumbs down to building a desalination plant in 1993. It was a turnaround from the height of the drought in 1987, when voters in the district had approved an advisory measure to build a dam by a 2-1 ratio, Fuerst said. The district is made up of the cities of Seaside, Sand City, Del Rey Oaks, Pacific Grove, Monterey, Carmel, and unincorporated areas of the peninsula, including Pebble Beach and Carmel Valley. It serves about 115,000 people in an area of 170 square miles. The district planned to finance the dam with bonds and then sell the water to the local water company, California-American Water Company, known as Cal-Am. But after the voters turned down the project and with the passage of Proposition 218, Cal-Am announced that it would build the new dam without public funding. The dam that Cal-Am currently is proposing would hold the same amount of water, but would not set aside 3,400-acre feet for new construction and remodeling as the earlier proposal did. Cal-Am has been scrambling for a secure water supply for several years. In July 1995, the State Water Resources Control Board ruled that Cal-Am did not have valid rights to 70% of the water it delivered to the area. Most of that water is taken from the Carmel River. Cal-Am is currently supposed to use 80% of its previous water allocation, but went over that amount in 1997, and was ordered to pay a fine of approximately $170,000. Two small dams already exist on the river, but both are old. Environmentalists, who oppose the new dam, have proposed dredging the older dams of silt, to create more storage capacity. "It kind of points out how dams don't work," said Gillian Taylor, chair of the local chapter of the Sierra Club. "They silt up." Taylor said other ideas for increasing the water supply are to inject stormwater runoff into an aquifer in Seaside, and to study desalination again. The district is currently in the middle of a pilot project to test the feasibility of using the Seaside aquifer, Fuerst said. Taylor said that dams harm fish runs and are growth-inducing. Cal-Am has promised that its new dam will be used for only drought protection and environmental protection, not for growth, Fuerst said. But Taylor said she doesn't believe that will happen once a supply of water is available. The water district argues that the Keeley bill would usurp local control, and would complicate and delay the Cal-Am dam project, whose supplemental EIR is due in October. The district is the lead agency for CEQA, and would have to review the EIR. If the EIR is approved, it would then be sent to the PUC for final approval. That process is supposed to be completed in the spring of 2000. Farina said the proposed law is about changing "how the game is played." "If they do it to this community, will they do it to your community?" she asked. But Cal Am's proposal to build a dam is something that the PUC ultimately decides, Keeley noted. "That's hardly local control," he said. And Taylor noted that voters opposed the dam in 1995, and Cal Am still resurrected it. "That's about as undemocratic as you can get," she said. In a letter that the district's board sent to the Senate's Local Government Committee in late June, the board also expressed legal concerns. "By not offering the voters a no-project choice, AB 1182 exposes the vote between the Cal-Am and PUC water supply proposals to potential legal challenges," the letter said. But Keeley said with Cal-Am under pressure to procure new water, "doing nothing is not a choice." The assemblyman called the water district "an utter failure," charging that it has spent $40 million over 20 years and "hasn't produced a drop of water." AB 1182 easily passed the full California Assembly in May on a 55-7 vote. Two days after the district voted to oppose the measure, it was approved in the Senate Local Government Committee on a 5-3 vote. The measure was then referred to the Senate Agriculture and Water Committee, where no vote had yet been scheduled in late July. Senator Jim Costa, D-Fresno, is chair of that committee, and voted against the bill when it was before the Local Government Committee. Keeley said in late July that he'd met with Costa three times since the vote, and that the bill continues to be amended. Representatives of local groups ranging from the chamber of commerce to the Sierra Club, have been meeting to try to reach consensus on the bill as well, he said. Taylor said the alternatives that are being proposed by environmentalists would provide solutions if taken as a whole. "You may be able to get 2,000 acre-feet from dredging, " she said. The conventional wisdom on dredging, she said, is that it's too expensive. But it's one of the options that deserves further study, she said. Contacts: Gillian Taylor, Sierra Club, (831) 659-0298. Darby Fuerst, General Manager, Monterey Peninsula Water Management District, (831) 649-4866. Fran Farina, (831) 625-5544. Assemblyman Fred Keeley, (916) 445-8496.

Four years is a long time in most life situations. In four years, a child can learn to walk, talk, and become a social being. A stand of bamboo can grow 20 feet. The governor of California can serve out a complete term, and a pair of flies can generate several billion offspring. But in the glacial pace of planning, four years is the blink of an eye. That's why the completion of the Long Beach Aquarium of the Pacific in the City of Long Beach is such a notable accomplishment. After a public investment of $185 million on construction and other improvements, the aquarium opened in June to large crowds, and is currently accommodating up to 10,000 people a day. The facility created permanent jobs for 200 people. More remarkably, everything seems to have gone according to plan, on time and slightly under budget. Even so, it is uncertain whether how much of the Long Beach experience, if any of it, can be replicated elsewhere. To understand the momentum behind the aquarium, one must first understand Long Beach, which is one of the most pro-growth, self-promoting cities in the state. The city, of course, is home to the nation's busiest harbor (when combined with the neighboring Port of Los Angeles). The city has invested heavily in its downtown area, and promoted a row of high-rise buildings on Ocean Avenue, the city's main street. And the city has tried repeatedly to soften the image of its rough-edged waterfront as a place of trucks, tankers, and broken-nosed sailors. In particular, the city has built (and expanded) a convention center on the water, while attempting to buttress that investment with lukewarm attractions, such as the Queen Mary cruise ship and the now-departed Spruce Goose aircraft display. After being turned down for a Disney theme park in 1992, the city decided in 1994 that it wanted an aquarium on Queensway Bay, and things began to move rapidly at that point. At first, the city courted corporations and at least one entertainment figure to make a private contribution toward the aquarium. A few months later, Kajima USA, the U.S. arm of the Japanese construction giant, arrived on the scene, and the project took a new direction. Kajima had just completed an aquarium in Tampa Bay, Fla., and wanted to do another project. (Kajima is currently pursuing at least three other aquarium projects.) The developer proposed an unorthodox arrangement, which the city eventually accepted: Kajima would build the project as a merchant developer. The executive architect would be Hellmuth Obata Kassabaum, the St. Louis-based firm in which Kajima has a 40% interest. (The San Francisco-based firm of Esherick, Homsey & Davis, designer of the much-admired Monterey Bay Aquarium was the design architect.) The construction would be done by a joint venture of Kajima and Turner Construction of Los Angeles. In other words, Kajima offered the city a "vertically integrated," design-build package. The city signed off on the deal in late 1994 and a 20-month construction schedule started in spring 1995. Motivating the speed, in part, was competition, recalls Paternoster, who pointed out that several communities - including neighboring San Pedro ( the harbor area of the City of Los Angeles), Ventura County and Santa Barbara - were all considering aquariums. (Santa Barbara is moving forward with its project.) To fund the project, the city created a non-profit corporation, known as Aquarium of the Pacific, which issued $117.5 million in tax-free revenue bonds. In addition, the city spent another $14 million in roadway improvements, including a $7.4 million ISTEA "demonstration project", $3.18 in state gas tax revenues, $1.1 million in SB 821 money and about $800,000 from the city's gas and water departments. The city obtained another $40 million from HUD Section 108 economic development loan guarantee. Long Beach used the HUD money to build the Rainbow Harbor and other waterfront improvements, including a 5.4-acre wetlands mitigation. The $13.4 million parking structure was financed by U.S. Economic Development Administration, the U.S. General Services Administration and the aquarium bond proceeds; while a $1.675 million boat launch was paid for by state DBAW funds and a portion of the Tidelands Fund, which is funded by the Port of Long Beach. Even though Long Beach did not put up hard money for the aquarium, the city did help back up the bonds. In the event of a revenue shortfall at the aquarium, the city agreed to make the bond payments from the a portion of the hotel tax revenues that normally go to pay off a $35 million debt to the Long Beach Harbor Commission. To help out, the harbor commission agreed to take second position on the debt. To make the Kajima's lucrative arrangement palatable to the city, the developer agreed to assume interest payments on the bonds, in the event that the construction went over budget. The "carrot," on the other hand, was a promise that any unspent construction money would be split between the aquarium and the developer, 60-40. (There was, in fact, a surplus, which helped pay for landscaping near the aquarium.) Overall, "Kajima came out very well," said Bob Paternoster, the director of the Queensway Bay project, in an interview. The Queensway Bay specific plan calls for waterfront-oriented retail. For a site directly across the street from the aquarium, the city is currently negotiating with a developer to build 500,000 square feet of restaurants and a 16-screen multiplex (we should have seen that coming). City officials hope that the sales tax from the new construction will throw off about $4 million annually in sales tax, possessary-interest tax and ground-lease revenues - enough to offset anticipated $3 million in interest that the city needs to pay on the $40 million Section 108 loan. Given the high interest in aquariums among California communities, a number of California cities are probably watching Long Beach closely. Yet Paternoster suggests that the city's experience in aquarium-building "may not be easily duplicated elsewhere." Long Beach had a number of advantages, including an existing site with supporting uses and a specific plan already in place. In addition, not every city would have been willing to cut such a sweeping deal with a developer, without going through a conventional RFP and multiple-bid process. Still, that unusual move bought Long Beach a lot of time, in terms of process and in construction, and enabled the city to take the lead in the regional aquarium race. Other communities did little more than stare at the drawing board, in the time it took Long Beach to blink its eyes.

The city of San Diego did not prosecute the owner of a sex club maliciously or selectively even though the city made a series of mistakes in granting him zoning approvals and then prosecuting him, the Ninth U.S. Circuit Court of Appeals has ruled. Reversing a district court jury's decision, the three-judge panel concluded that the city did not violate Elbert Poppell's civil rights and that Zoning Administrator Sharren Carr should not be held personally liable because she was acting in a professional capacity and did not act with malice. "This case does no more than describe the complications that arise from our form of government that separates various functions and then requires them to work together as they implement the rule of law," wrote Justice Stephen S. Trott for the unanimous panel. "The meshing of these gears is not always perfect, but the usual play in the criminal justice system does not suggest, without more, malice or foul play on the part of the various actors." The Ninth Circuit ruling is the latest in a long and complicated series of legal maneuvers arising from a dispute between Poppell and the City of San Diego over his sex club, which has operated in various locations in the city. The friction with the city began in 1988, when Carr concluded that Poppell's location on Monroe Street constituted a zoning violation because his club was operating within 1,000 feet of a residential neighborhood. Poppell was criminally prosecuted and placed on three years' probation. In 1990, Poppell moved his club to an industrial zone on Sunrise Street, where he stated - on an application to transfer his business tax certificate - that he would use the location to interview potential club members, not for sexual encounters themselves. Carr inspected the location and erroneously concluded that Poppell's operation conformed to city zoning ordinances. He operated without incident for a year, and later acknowledged that he would not have been able to operate legally without the mistakenly issued business tax certificate. When his landlord sold his building, Poppell moved to a residence on E Street in the same industrial zone and the city again approved the transfer of his business tax certificate based on his earlier misstatement of the nature of his operation. Late in 1991, a residential neighbor on E Street complained to the police and to the Bob Filner, the local city council member, that Poppell's operation was disruptive because a variety of sexual acts were taking place in the vicinity. Filner responded with a letter to the resident assuring her that various departments of the city would work together to develop a plan to close down Poppell's club. Over the next few months, Poppell was the subject of intense interest by city officials. He was cited for a fire-code violation by the fire marshal, and the city police frequently cited club members for parking violations and related small incidents. During this period, the city's code enforcement officials and the city attorney's office concluded that Poppell was violating the zoning ordinance, based on the city's erroneous approval of his business tax certificate transfer when he moved to the Sunrise Street location. After an inspection, Poppell was charged with four criminal zoning violations - two for operating an adult entertainment business within 1,000 feet of a residential zone, and two for operating in an improper zone. He was also accused of 90 building code violations, of which 26 remained at trial. He was convicted of operating in an improper zone, as well as 24 of the building code violations, and acquitted of violating the 1,000-foot rule. (The reason for the acquittal was that the city had miscalculated the distance between his sex club and a residential neighborhood, apparently because of a freeway in between the two.) He was sentenced to six months in jail and three years' probation. Poppell appealed these convictions in California state court. He argued that he should have been able to use the city's erroneous approval of his location as a defense against the charges, but that the trial judge ruled the erroneous approval inadmissible. He lost all of his appeals in California state court, then filed a writ of habeas corpus in federal court. He argued that the lack of admissibility of the erroneous approval had robbed him of his only possible defense. But Judge John Rhoades did not rule that Poppell had to be retried; instead, he simply ruled that the city a limited period to decide whether to retry him. The city declined, and Poppell then filed a federal lawsuit against the city and against Zoning Administrator Carr, claiming both malicious and selective prosecution. Carr moved for judgment as a matter of law based on a claim of qualified immunity because she was functioning in her role as zoning administrator. Judge Rhoades rejected this claim, arguing that if Poppell could prove malicious intent, then she would not have been acting reasonably or in good faith. A federal jury then found that the city had engaged in a systematic attempt to drive Poppell out of business. The city appealed and the Ninth Circuit panel reversed. "Although we have taken great care to respect the prerogatives of the jury, we reverse its decision and hold that there is no substantial evidence ," Trott wrote. "On close examination, Poppell's case against Carr is a case of theories and suppositions without evidentiary support. Speculation was allowed to do duty for probative facts as there was no evidence of malice: Carr merely did what was required of her by virtue of her job." Continued Trott: "in this case, the record contains no direct evidence of malice, and no substantial evidence that the acquittals were the result of anything other than a mistaken calculation of distance having to do with the existence of a freeway between the two relevant points of measurement." Poppell also argued that Filner's letter showed there was a conspiracy to put him out of business, but the Ninth Circuit also nixed that argument, saying that the letter "does not speak of driving Poppell out of business, only of closing his club." On the selective prosecution allegation - which took the form of an equal protection claim - the Ninth Circuit ruled that there was no evidence that any other repeat zoning offenders had been treated differently from Poppell, and in any event concluded: " he class of repeat code violators is not a suspect or a quasi-suspect classification and thus, minimal security is appropriate." The Case: Poppell v. City of San Diego, No. 96-56844, 98 Daily Journal D.A.R. 7587 (July 13, 1998). The Lawyers: For Poppell: Michael R. Marrinan, Adler & Marrinan, (619) xxx-xxxx. For City of San Diego: Michael R. McGuinness, Deputy City Attorney, (xxx) xxx-xxxx.

In this time of widespread prosperity and record consumer confidence, it's hard to swallow the notion that, as a society, we may be on the wrong track. But that's exactly the thesis that a report by the new National Commission on Civic Renewal supports. Sure, crime rates are down from the early 1990s, and school test scores have edged upward from their nadir in the mid-1980s. But a far-reaching statistical evaluation presented in the Commission's recent report "A Nation of Spectators" suggests that as a functional, civil society, America is in serious trouble. The national epidemic of civic ENNUI has begun to alarm some heavy hitters in our cultural landscape. In response, former education secretary William Bennett and a consortium of Washington political and academic intelligentsia formed the commission with the purpose of reinvigorating citizen participation in social institutions. Civic renewalists believe that democracy "is neither a consumer good, nor a spectator sport, but rather the work of citizens engaged in shared civic enterprises." Their mission is critical, and the stakes are high. If unsuccessful in turning around citizenship trends, the renewalists say that our very democracy itself will ultimately fail to live to its promise. The study, taking a cue from the environmental sustainability indicators movement, is dubbed Indicators of National Civic Health, or INCH. It employs statistically weighted data in 12 issue areas to establish trend lines in five categories: political activity, trust in government, membership in social and civic organizations, crime, and family. The measurement targets a 25-year spread of data - enough to track a generation. The Commission acknowledges that there have been isolated improvements in crime, school achievement, and out-of-wedlock birth trends, but warns that the overall inclination for each of the five categories is down, particularly since 1974. The index is calibrated to 100 for the year 1972, and drops to 83 by 1996. The most sustained plunge occurs after 1984, a year marked by Ronald Reagan's re-election. The plunge wasn't interrupted until 1991, a year before the Clinton administration took power. Some indicators show dramatic swings, others moderate gradient changes. The percentage of Americans who trust in government wanes from 54% in 1970 to 25% in 1980, then rebounds. On the other hand, participation in local government exhibits a slow steady decline from 14% of the population in 1974 to 8% in 1994. As with the environmental sustainability indicators projects, the renewalists have designed their database to work as an evolving index to gauge overall improvement or decline in civic health. In the meantime, they will pursue their agenda of support of a range of civic health endeavors. In another insightful parallel with the sustainability movement, the group suggests that government is neither the entire cause nor the entire solution to problems related to civic health. Government has had and will have a role in both. But the solution emphasis lies in the hundreds of things done by millions of people for a sustained period. The commission encourages government toward activities be redirected to supporting and fostering community-based movements. The commission has picked a thornier topic than their environmentally oriented counterparts. In tackling what are fundamentally social and moral issues, they slog bravely into the swamp of special interest, value-loaded politics. Unflinchingly, it recommends national school testing, civic education and participation by youth, restraint in content choices by the entertainment and news media, and a fundamental rethinking by adults about the tradeoffs between personal satisfaction versus the-good-of-the-whole. For urbanists, the focus on civic health may signal a welcome return to the inquiry of sociology, as well as a shift in cultural perspective. This ought to be heartening in our postmodern era, which has directed focus on the physical community, often to the exclusion of social concerns. In "A Nation of Spectators", the commission unflinchingly states that their data-supported decline in civic life is our own fault. Their red-flag report suggests that in this time of unprecedented economic wealth in America, it is important to distinguish consumer satisfaction from civic health. And in a note of particular relevance to planners - who could clearly take a lead in facilitating civic revivalism - renewalists state that citizens need no "special preparation, advanced education, or bureaucratic permits to get involved."

The California Supreme Court has remanded one takings case against the Coastal Commission to the Second District Court of Appeal, in Los Angeles, to be reconsidered in light of the high court's decision in another takings case against the Coastal Commission. In Coastal Commission v. Buckley, No. B081544, the Second District reversed a $2.1 million takings award against the California Coastal Commission, saying that the evidence on the record does not establish that the Commission's actions against a single-family property owner in Malibu constitutes a regulatory taking. The court also ruled that the Coastal Commission did not have jurisdiction over the project because it was located in a single-family zone, meaning jurisdiction lies with the Los Angeles County Regional Planning Commission. (CP&DR Legal Digest, December 1997.) However, in May, the California Supreme Court ruled in a different that a temporary taking did not occur when an erroneous decision by the California Coastal Commission delayed a property owner's plans to build a house in Malibu In Landgate Inc. v. California Coastal Commission, 17 Cal.4th 1006, the Coastal Commission rejected the property owner's argument that a temporary taking should have been found under the temporary taking doctrine contained in the U.S. Supreme Court's ruling in First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987). The court ruled in favor of the Coastal Commission by a 4-3 vote. "We conclude that the present case falls squarely into the category of a normal delay rather than a temporary taking," Mosk said in an opinion that was joined by Chief Justice Ronald George and Justices Joyce Kennard and Kathryn Werdegar. (CP&DR, June 1998.)

The City of Murrieta's was wrong to declare 3,500 acres of land blighted in order to create a redevelopment project area, the Fourth District Court of Appeal has ruled. In a lawsuit brought by the Riverside County government, the Fourth District found that the property is not "predominantly urban" nor is "blighted," both of which are required in order to create a redevelopment area. With the exception of 200 acres of vacant county land that was withdrawn, the area in question "has been depicted as a rural and formerly rural area beginning to be developed in spite of some minor deficiencies in the infrastructure. No problems with crime and no significant other problems have been demonstrated," the court said. The appellate court upheld Riverside County Superior Court Judge Stephen Cunnison's ruling that the property was not blighted. The original proposed redevelopment area included some 3,700 acres, 81% of which Murrieta claimed was "urban", Only agricultural and vacant lands were classified as non-urban. However, Judge Cunnison noted that about 600 acres of the land were defined in the city's general plan as rural-residential (2.5-acre minimum lots) and equestrian-residential (0.5-acre minimum lots). Both categories allow livestock and agriculture. Judge Cunnison concluded that this property should not be viewed as urban -thus decreasing the total percentage of land used for urban purposes to about 66%. Even if the 200 acres of vacant land is eliminated, the urban land total is only about 70% of the entire project area. Cunnison ruled that this does not fit the definition of "a predominantly urbanized area" and the appellate court agreed. In affirming Cunnison's interpretation, the appellate court relied heavily on Honey Springs Homeowners Assn. v. Board of Supervisors, 157 Cal.App.3d 1122 (1984). In Honey Springs, the Court of Appeal recognized that the term urban "has no fixed, objective, and easily ascertainable meaning". However, the case laid out a lengthy list of factors to take into consideration, including existing public facilities, on-sight sewage capacity, proximity of employment centers, the size of signs, and other factors. The Honey Springs court also cautioned that urban may not have the same meaning in the different locations. Without laying down a fixed definition of "urban", the court in the Murrieta case said: "Even if we defer to the definitions employed by the City's land use categories, there is a paucity of evidence in the administrative record to support a determination that the project area is predominantly urbanized." The appellate court also affirmed the trial court's ruling that blighted conditions did not exist in the project area. The city's blight report found that 41 of the existing 1,100 structures were identified as unsafe or unhealthy. A smattering of other deficiencies were also found, such as incompatible, nonstandard, and nonconforming uses. The city report also noted that traffic and flooding problems had been exacerbated by the construction of the junction of Interstate 15 and Interstate 215. " fter sifting through the general commentary that describes much of the redevelopment report, we discover there is little substantive material to be gleaned," the court wrote. "Although the report speaks in the statutory language used to define blight, the report offers little concrete evidence of actual conditions of blight." The court also took the city to task for employing the jargon of redevelopment and blight without identifying anything unusual or unique to the project area. For example, the report talked about "functional obsolescence" of buildings - meaning that older buildings tend to be less valuable. But, the court concluded, "the foregoing does not show the existence of blight in the City of Murrieta. The report makes little attempt to describe specific problems caused by older buildings or estimate the cost of repairing those problems." The court also chastised the city for not quantifying the loss of property value due to blight - but, rather, emphasized low retail sales rates and claimed they were a condition of blight. In addition, "The bald claim of inadequate parking is also not supported." The Case: County of Riverside v. City of Murrieta, No. E020294, 98 Daily Journal D.A.R. 7759 (filed Juily 15, 1998). The Lawyers: For Riverside County: George L. Hampton IV, McDermott Will & Emery, (xxx) xxx-xxxx. For City of Murrieta: John R. Harper, Harper & Burns, (xxx) xxx-xxxx.