El Dorado County Voters rejected a measure that would restrict housing density levels and force public referendums on three proposed major residential developments. Measure A: No, 54.5% Marin County City of Fairfax Voters turned down a proposal to rezone the site of the Marin Town and Country Club to allow the construction of 45 homes and the creation of a 14.5 acre park site. Measure C, No: 77.9 %. San Diego County City of San Diego Voters overwhelmingly approved a plan to finance a $216 million expansion of the city's Convention Center. Measure A: Yes, 62%. City and County of San Francisco Two ballot measures in San Francisco were seen as attempts to rein in Mayor Willie Brown's power. Measure F requires city employees to return to City Hall after it is refurbished; Measure K set rules on conflicts of interest and competitive bidding on the Treasure Island Development Authority, and would not allow casino or card gambling on the island. Measure F: yes, 59.3% Measure K: yes, 55.5% Santa Clara County City of Santa Clara Voters approved plans for Sun Microsystems to enter into an agreement with the city to develop the former Agnews Developmental Center into a high-tech campus. Measure D: Yes, 64%. Sonoma County City of Rohnert Park A move to widen the city's urban growth boundary was handily defeated. The measure would have allowed the development of an additional 1,520 acres, and would have given the city council the power to annex land outside the boundary for residential uses without voter approval. Measure A: No, 67.6 % Sutter County A 1/2 cent sales tax to finance additional levee repairs failed by a slim margin to garner a 2/3 majority vote. Measure ii: No, 34.8%

The June 1998 election featured only eight land use and environmental measures throughout the state, the lowest since 1986 according to a CP&DR analysis of election returns. Seven of the eight measures were on the ballot in Northern California cities and counties. In the only Southern California ballot measure, voters in San Diego overwhelmingly approved a measure to finance a $216 million expansion of the city's convention center. That expansion had been fought by opponents of downtown redevelopment, who had earlier brought a lawsuit to challenge a different financing plan proposed by the city (See CP&DR, February 1997). The lawsuit is currently pending before the California Supreme Court, which heard oral arguments on the case in June. In San Francisco, Mayor Willie Brown's plans to use City Hall after its remodeling and redevelop the former Naval facility at Treasure Island were reined in by voters. Brown had originally said he wanted to move only 700 of the 1,300 city employees back to City Hall when its earthquake renovations were completed, but voters disagreed. Later plans called for moving 1,100 employees back. Brown's plans for the redevelopment of Treasure Island are now affected by Measure K, which places rules on conflict of interest and competitive bidding on the project and prohibits casino and card club gambling on the site. The measures were sponsored by political consultant Clint Reilly and State Senator Quentin Kopp, both of whom are considered political challengers to Brown in 1999. In El Dorado County, which has seen fierce battles in recent years over development issues, a measure to limit housing density and give voters a chance to weigh in on three large projects was defeated. (See related story). One ballot measure in the Central Valley failed by the narrowest of margins. Measure ii in Sutter County would have raised the sales tax by a 1/2 cent to finance additional repairs of levees. The agricultural county was hard hit by floods during the winter of 1997, and the federal funding has not covered all the desired repairs. The measure needed 66.7% percent yes votes to pass, but garnered only 65.2%. A similar measure may be placed on the county's November ballot. Santa Clara city voters agreed with their city council and voted to allow Sun Microsystems to build on the site of a former state mental facility that contains historic buildings. Sun plans to restore four of the historic buildings of the Agnews Developmental Center, but opponents wanted more of the buildings preserved. The opponents are expected to continue with a legal challenge to stop the center. In Marin County, Fairfax voters turned down plans to build 45 homes on the site of a former country club. The developer had also promised to donate 14.5 acres of the site for a city park. The land is currently zoned for parkland, and is the only large undeveloped parcel in the city of 7,100. In Sonoma County, Rohnert Park voters refused to change the city's urban growth boundary, which was adopted for a four-year period by a narrow margin in 1996.

Overturning a trial judge in Idaho, the Ninth U.S. Circuit Court of Appeals has ruled that the U.S. Forest Service erred in not preparing an environmental impact statement for a proposed timber sale in Idaho. U.S. District Court Judge B. Lynn Winmill had ruled that the Forest Service's environmental assessment and subsequent findings of no significant impact were adequate. But a three-judge panel of the Ninth Circuit disagreed, saying that the Forest Service had not adequately examined the impact on water quality, fisheries, and the cumulative impact of the proposed sale and another, larger sale nearby that was proposed subsequently. The dispute arose over the Forest Service's proposal to permit the harvesting of 3.1 million board-feet of timber from two sub-watersheds in Idaho - the Miners Creek and West Camas Creek sub-watersheds. Both are inhabited by brook trout, which is considered a management indicator species in Targhee National Forest. In 1993, the Forest Service prepared an environmental assessment relying on water quality reporters from 1985 and 1990 and issued a Finding of No Significant Impact, or FONSI. The Idaho Sporting Congress and other outdoor and environmental groups appealed this decision to the Regional Forester, who upheld it. In 1996, the Forest Service proposed the sale of 7.2 million board-feet of timber in the Camas Creek watershed, of which the West Camas Creek sub-watershed is a part. Again the Forest Service prepared an EA, and it did not supplement the earlier EA to reflect the cumulative impact of this later timber sale. Idaho Sporting Congress and other groups sued, claiming that the Forest Service should have prepared an environmental impact statement under the National Environmental Policy Act and alleging violations under the National Forest Management Act and the Clean Water Act. After Judge Winmill ruled in favor of the Forest Service, the Idaho Sporting Congress appealed to the Ninth Circuit. The Ninth Circuit focused much of its attention on the 1985 and 1990 water quality reports. Idaho Sporting Congress had argued that the 1990 report did not contain the necessary analytical data required for any public challenge to the proposed sale. The Forest Service argued - and Judge Winmill agreed - that these defects could be remedied in the EA by referring to the 1985 water quality report, which had been prepared by the same hydrologist. The three-judge panel of the Ninth Circuit disagreed, however. Among other things, the Ninth Circuit found that the 1985 report did not cover the Miners Creek area, but only the West Camas Creek area. Second, the Ninth Circuit found that the two reports contained "factual differences". The panel also rejected the Forest Service's arguments that the impact on water quality will be minimized by mitigation measures. " ince the effects of the sale will not be known until the EIS is prepared," wrote Judge Betty Fletcher for the unanimous panel, "we cannot know whether the mitigation measures are sufficient." She added: "Without analytical data to support the proposed mitigation measures, we are not persuaded that they amount to anything more than a 'mere listing' of good management practices." The court also took the Forest Service to task on several other items, especially the cumulative impact of the subsequent proposed sale. While acknowledging that the Forest Service did do a "sparse" cumulative impact analysis in its 1993 environmental assessment, Judge Fletcher concluded that a more extensive analysis in the EIS is necessary. The court also addressed the Idaho Sporting Congress's claims under the Clean Water Act and the National Forest Management Act, but brought both those claims back to the EIS question. The Congress claimed that the Forest Service violated the State of Idaho's "anti-degradation" policy on water quality, which federal agencies are required to follow because it was prepared in conformance with the federal Clean Water Act. While suggesting sympathy with the Forest Service's contrary viewpoint, the Ninth Circuit stated that without an EIS "we lack sufficient facts" to determine whether the state statute had been violated. The NFMA claims focused on the Forest Service's obligation to monitor and report on changes in the trout population. The Ninth Circuit concluded that the Forest Service could properly use trout habitat as a substitute for trout populations in its analysis, but stated that the EIS should address the adequacy of the trout habitat. The Case: Idaho Sporting Congress v. Thomas, No. 97-35339, 98 Daily Journal D.A.R. 4999 (issued March 4, 1998; amended May 13, 1998).

The Ninth U.S. Circuit Court of Appeals has ruled that Seattle's tenant relocation ordinance does not constitute a taking even though it requires landlords to pay a portion of moving expenses for low-income residents. The court noted that the plaintiffs had stipulated that ordinance neither "physically invades their property, nor denies them all economically viable use of their property." The three-judge panel criticized the plaintiffs, a group of landlords, for failing to produce necessary economic evidence to support their claims. In an opinion by Judge Melvin Brunetti, the court said: "We have been forced to uphold Seattle's relocation assistance ordinance in large part because of the way plaintiffs have chosen to litigate this case. We do not uphold the ordinance because we find it a wise solution to a difficult problem." Brunetti was joined in his opinion by U.S. District Court Judge Spencer M. Williams, who was sitting by assignment. Ninth Circuit Judge Diarmuid F. O'Scannlain dissented on the taking questions. The ordinance was adopted in 1990 under the terms of the state's growth management act. Known as the Tenant Relocation Assistance Ordinance, or TRAO, it required landlords to pay $1,000 and the city to pay another $1,000 for relocation costs of low-income tenants displaced by various gentrification activities. Those figures were based on expenses for such things as moving, deposits on new units, and increased rents for the first year. No one spoke against the ordinance when the city council held a public hearing in June of 1990. Chief Presiding Judge Barbara J. Rothstein of the federal district court had granted Seattle's motion for summary judgment in the matter, while rejecting the plaintiffs' request for a similar ruling. The court found that TRAO was reasonably related to a legitimate state interest, and also rejected the plaintiffs' substantive due process claim. The appeal looked at the denial of the takings claim and the lower court's discovery orders compelling the plaintiffs to produce financial documents, and the sanctions that followed after they failed to produce them. The appellate panel upheld Judge Rothstein's decision. Judge Brunetti's opinion based its regulatory taking analysis on Agins v. City of Tiburon, 447 U.S. 255 (1980), where the court "must engage in an ad-hoc, factual inquiry to determine whether the governmental regulation goes too far." The court rejected the landlords' request that its taking analysis be based on Dolan v. City of Tigard, 512 U.S. 374 (1994), and Pollen v. California Coastal Commission, 483 U.S. 825 (1987). The court found that by refusing to share economic data about its property before and after enactment of TRAO, they had failed to show the type of "extreme circumstances" necessary to sustain a regulatory takings claim, citing United States v. Riverside Bayview Homes Inc., 474 U.S. 121, 126 (1985). "Plaintiffs have not met their burden of providing evidence that the enactment of TRAO effected a taking or harmed them at all," the court concluded. "We find the absence of any evidence of the economic impact of TRAO dispositive." The court said that it found no support for plaintiff's taking claim based on either the Dolan or Pollen cases. The court applied a three-part test from these two cases: whether government imposition of an exaction is a taking; whether the government has a legitimate purpose in demanding the exaction (the "essential nexus" test); and whether the exaction demand is roughly proportional to the government's legitimate interest (the "rough proportionality" test). The majority on the panel said the current case wasn't an "as-applied" challenge," so it didn't need to determine TRAO's effect on each parcel of land. "Because in a facial claim we do not analyze the exactions, Dolan's test for when the exaction costs too much does not apply," Judge Brunetti wrote. The court said that "neither Pollen nor Dolan" look at the question of whether imposing a $1,000 per-tenant fee is a taking. "It is this first step in the analysis that plaintiffs have entirely ignored in litigating this case." In the dissenting part of his decision, Justice O'Scannlain disagreed with the majority's dismissal of the claims under Pollen and Dolan analyses. He noted that $391 of the $1,000 went toward actual moving costs and utility hookups and deposits. " he landlords' $1,000 share of each payment is assuredly not 'related both in nature and extent to the impact of the proposed development.' Dolan, 512 U.S. at 391," he wrote. " he exactions in this case are impermissible because they are not roughly proportional to the harm caused by the landlords, regardless of the total amount of the exactions." Finally, Justice O'Scannlain argued that "because the TRAO is not a 'user fee', but rather a device for compelling landlords to bear a public burden, the TRAO cannot pass constitutional muster." The Case: Garneau v. City of Seattle, No. CV-94-00914-BJR, 98 Daily Journal D.A.R. 4562 (issued March 4, 1998). The Lawyers: For Garneau: Eric R. Hultman, (206) 223-0990. For Seattle: Sandra M. Watson, City Attorney's Office, (206) 684-8200.

Proposition 13's legacy to California cities has been a destructive one. One ill effect of the tax-revenue shortfall has been the construction of many unnecessary office buildings, hotels, and shopping malls - all intended by local governments as a means to recapture lost revenues. The result has been overbuilding, a weakening of the real estate market, and regional competition where there might otherwise have been cooperation. All this is well known. But if, by some imaginary power, we had the power to let the "good" projects go forward, and stop the "bad" projects in their tracks, how would be would be able to sort them out? In other words, how would we determine which projects are worthwhile, that is, those that are both economically viable and serve a public purpose, from those that are wasteful and redundant cash cows that are not worth building? Call it the Santa Rosa Problem. As it turns out, it's not that easily solved. The City of Santa Rosa is a city of 120,000 people in Sonoma County, best known to tourists as part of Wine Country. The city's sole redevelopment area is an eight-acre parcel that easily qualifies as blighted: the former location of a tannery and a brewery, the land is currently a city-owned parking lot, with a negative assessed value. For this site, Santa Rosa's redevelopment agency recently selected a developer to build the Vineyard Creek Hotel and Conference Center, a 156-room hotel, together with a 18,000-square-foot conference center intended for business meetings. Even by redevelopment standards, the Santa Rosa hotel proposal has been slow going. The city formed a redevelopment project area in 1984, and cleared the site five years later. From 1990 to 1996 the city decontaminated the site. In 1995, a consulting report from PKF Consulting said a stand-alone conference center was not feasible, and recommended construction of a full-service hotel. The city's visitor and convention bureau concurred, reporting local hotel occupancies in the high-70-percent range, which is considered strong. The City Council certified a supplemental environmental impact report for the project in 1996. In January 1996, the city granted an exclusive-right-to-negotiate to a developer, Innkeeper Associates Inc. In January, the city and the develop signed a pre-development agreement in January. The financial agreement between the city and developer is a sophisticated deal that seems to contain many safeguards for the city. The construction budget is $18.5 million. The city's contribution to the deal consists of up to $6 million for the parking structure, the conference center, and miscellaneous costs. The developer, for its part, will invest a sum equal to 40% of the city's share in the deal, or a maximum $2.4 million. The developer will operate the hotel and lease the hotel site for 55 years, for $250,000 a year, which escalates to $500,000 in the 10th year. The developer has the option to buy the land for $3.2 million. The city is entitled to rent participation when total gross revenues hit $9.5 million, starting at 0.5% in the first year and rising to 3% in the sixth year. The developer will repay the Agency's contribution at an interest rate of 7.01%, starting the year after hotel sales pass the $9.5 million mark. The hotel is supported by long-standing public policy that seeks to buttress Santa Rosa's primacy as the business center of Sonoma County, according to Jocelyn Lundgren, assistant director of the city's Housing and Redevelopment Agency. This project looks worthwhile to me. But just before we pose for the ground-breaking pictures, let's look at the project from a regional perspective. It's a little scary. At least three other cities in the county - including Petaluma, Healdsburg and Sonoma City - are also proposing hotels. For that reason the cities are in a four-way race for financing. According to Lundgren, the first facility to be built will capture the market. And despite the current hot demand by Wall Street-backed investors and REITs for hotels, nobody is beating a path to Sonoma County yet. The area is considered a "secondary market" by investors, according to Lundgren. And possibly to Santa Rosa's detriment, the conference center is disproportionately large for a hotel of 156 rooms, at least by standards of conventional lenders, and that variance may prove to be a hindrance to obtain a construction loan. The ultimate question, of course, is would the Santa Rosa hotel and conference center have been built without Proposition 13? Lundgren's answer is an unequivocal yes ``With or without Prop 13, there is still such a thing as blight," she says. More than that, with out without Prop 13, most center-city areas need public investment and public subsidies to survive and prosper. And that's the point where it gets hard to separate the "good" projects from the "bad". I have not researched the competing proposals in depth. But let us assume, for the sake of argument, that their need for development is as compelling as that of Santa Rosa's, or nearly so. If that is the case, we have four proposed hotels that make good sense from a local perspective, but do not make sense from a regional perspective, if all are built. True, it's not hard to find bad projects that seem unrealistic, have unqualified developers, or otherwise have little reason to exist. And it is undeniable that Prop 13 plays some role in the motivation of local governments to pursue these projects. But I suspect that a great many projects, perhaps a majority, are like the Santa Rosa hotel: carefully thought-out projects that represent investment in declining downtown areas-in other words, the things cities would, or should, do with or without Prop 13. I suppose the whole exercise of trying to figure which projects are worthwhile, and which are not, is fruitless. One city's redevelopment is another city's overbuilding. It's that simple and that complex. There are too many projects; some of them would not get built even if Proposition 13 did not exist, but perhaps not as many. If you can figure out how to discourage the unworthy projects - other than the obvious ones, like the power centers and the Wal-Marts - please write me a letter and let me know, because ,I can't figure it out. And if an ordinary citizen can't figure this out, what are all those former used car dealers in the California Legislature going to do? I'm going home and wrapping my head in a hot towel.

It is not too much of an overstatement to suggest that the California planning and development landscape as we know it today was created by Proposition 13 when it was passed by the voters 20 years ago this month. Prop. 13 didn't invent most of the impulses at work in California's communities today, of course. Fiscal zoning and competition between municipalities for tax revenue is nothing new. Neither is the vigorous political jockeying within any community over who pays for new growth, nor the slow-growth desire to "pull up the drawbridge", nor even the practice of requiring two-thirds voter approval for local school bonds. All these things existed before 1978. But all were accelerated by the passage of Proposition 13. And just as important, Proposition 13 created an intensified, crisis-oriented atmosphere among local governments - a kind of a hothouse - within which all these trends have baked together to create California's peculiar approach to building and financing communities. Part of Proposition 13's intent, of course, was to reduce the size of government by reducing the amount of tax revenue available. What Proposition 13's drafters couldn't predict, however, was that instead of reducing their size, government agencies - especially at the local level - would intensify their competition with one another for the revenue sources available. Proposition 13 created a "zero-sum culture" among government agencies. And because local government revenues sources are so closely tied to land and real estate development, the zero-sum culture was quickly translated into tangible changes on the urban landscape, many of which were tied to post-Proposition 13 revenue-raising strategies. The "auto mall" is now common throughout the United States, but it was invented in California - not by the auto industry trying to sell cars, but by local governments trying to capture sales taxes. The plethora of outlet malls, entertainment retail centers, and regional malls is also partly the result of Proposition 13. So is the boomlet in the creation of new cities in the last twenty years - because for the first time in history, a California community could incorporate by transferring money out of the county treasury rather than raising taxes. Many of California's sprawling regional development patterns are the result of Proposition 13 also. Well-located cities have been able to cherry-pick retail centers, high-end housing, and other tax "winners". Meanwhile, starter homes and other tax "losers" have been relegated to distant locations on the metropolitan fringe, often in unincorporated areas, where county leaders are desperate to generate any types of revenue they can get. As to the benefits of Proposition 13, they are unquestionable - even if local governments officials are rarely willing to admit it. By reducing property taxes and keeping them low, Proposition 13 reduced California's overall tax burden. Sales and income taxes are still high by national standards, but the low property tax means that overall California's tax burden falls somewhere in the middle nationally - rather than at the high end, as was the case prior to Proposition 13. This tax situation is especially important to property-intensive businesses, making California more competitive for businesses than it might otherwise be. Proposition 13 also made real estate a better investment for most Californians. Every dollar not used for property taxes was another dollar available to pay the mortgage. Thus, the average homebuyer could qualify for a higher mortgage - and this fact permitted real estate prices to continue going up even after the passage of Proposition 13. Perhaps most important, Proposition 13 eliminated the unpredictability of property taxes for millions of California homeowners. Traditionally, property owners had been vexed by two different types of unpredictability - the property assessment and the property tax rate. The assessment was traditional in the hands of the county assessor, while the tax rate was in the hands of myriad local government agencies with the power to levy property tax. Keeping property taxes down required taxpayers to fight a war on several fronts at once. With one stroke, Proposition 13 ended that war. "The lasting legacy for taxpayers," wrote Larry McCarthy of the California Taxpayers Association in a recent op-ed piece, "is the protection against surprise increases in assessed value. Taxpayers know what to expect in property taxes when they buy property and what they will owe 10 years down the road." The End of the Crooked Assessor A citizen initiative placed on the ballot by taxpayer activists Howard Jarvis and Paul Gann, Proposition 13 contains three critical provisions that have become political bedrock in California over the past two decades: o Property may be reassessed only when it is sold. o The total property tax rate may not exceed 1%. o New property-based taxes may be imposed only by a vote, with a majority vote required for "general" taxes and a two-thirds vote required for "special" taxes. To understand why Proposition 13 passed - and why it remains popular today - it is important to understand the problem that Proposition 13 was trying to address: a system of property assessment and taxation that was arcane and unpredictable at its best and scandalously corrupt at its worst. In his new book PARADISE LOST, a chronicle of the Proposition 13 era, author Peter Shrag points out that until the 1960s, California - like most other states - was rife with shady assessment practices that led to jail time for more than a few local assessors. California's first attempt to deal with the property assessment problem came in the 1960s, when a new law was passed that required all property to be reassessed every three years at 25% of market value. The irony, according to Shrag, was that even the crooked assessors had always been smart enough to assess residential property too low and business property too high. Such a skew was only good politics, because voters were far more likely to be homeowners than business owners. By standardizing assessment practices, however, the new law ended this favoritism and shifted the taxation burden away from businesses toward residences. Little wonder that in San Francisco and elsewhere a popular bumper-sticker of the time read: BRING BACK THE CROOKED ASSESSOR. When real estate prices skyrocketed in the 1970s, the tax burden on residential property only became more of a political target. Millions of middle-income homeowners saw their home values and their property assessments increase 30% per year or more. As a result, many property-tax bills doubled virtually overnight, quickly outstripping the ability of salaried workers and retired homeowners to pay them. It was this phenomenon - the portrait of the retired widow forced to sell her house to pay the property-tax bill - that captured the public's imagination. Proposition 13 was popular partly because of the salesmanship of its co-author Howard Jarvis, a longtime political activist who was himself 75 years old at the time. But the annual fight with the assessor was only half of the reason that property taxes were politically vulnerable, because the assessed value of any individual's house is only part of the equation that yields the final property tax bill. Just as important - though harder to combat for the average taxpayer- was the question of the property-tax rate, which was set every year by local officials. This was especially true in suburban areas - including most of California - where the typical homeowner might be subject to a separate property tax rate from the county, the city, the school district, the water district, the park district, the fire district, and three or four other taxing districts. Each government agency set its own rate, but no one was politically accountable for the "bottom line". Typically, no single agency imposed a property-tax rate of more than one-half of 1%, but the cumulative total could easily add up to 2.5% or 3% - on an assessment that, in the late 1970s, was rising dramatically every year. That's why the 1% cap on the property-tax rate was just as important as the reassessment provisions. During the run-up to the June 1978 election, Proposition 13 was opposed by almost every element in the state's political and business establishment - not just public unions and government officials, but also the state Chamber of Commerce and the California Taxpayers Association. (Most backed a competing ballot measure, Proposition 8, that would have permitted a split roll taxing owner-occupied residential property at a lower rate.) Nevertheless, Proposition 13 was approved by approximately 65% of the state's voters in the June 1978 election. Throughout the country, Proposition 13 is widely viewed as the bellwether event in what became a widespread and enduring nationwide revolt against high taxes. Ronald Reagan quickly picked up on Proposition 13's themes in shaping his successful presidential campaign in 1980. Most other states now have some form of property-tax limit. And the rhetoric of limited taxes and limited government is now a staple of American politics. The Zero-Sum Culture While Proposition 13 has become an icon of America's political culture, it has also become an important lesson in the politics of unintended consequences. Like most citizen initiatives, Proposition 13 was not finely crafted legislative surgery. It was a harsh blow with a blunt instrument. As such, it sent California government - and, by extension, California planning and development trends - spinning in unpredictable directions. The immediate impact of Proposition 13 was pretty much as predicted. All local government agencies had less money. But over time, the unintended consequences emerged, and they had a major impact on the distribution of political power and governmental resources. For the vantage point of planning and development, Proposition 13 had two major impacts that were not foreseen at the time of its passage. o First, it transferred a great deal of power from local governments to the state government in Sacramento. o And second, it led local governments on an endless quest for forms of revenue other than property tax - a quest that has benefited some local agencies (such as cities and redevelopment agencies) far more than others (such as counties and special districts dependent on property tax.) It is difficult to imagine that either Howard Jarvis or Paul Gann intended to remove power from local governments and give it to the state. Yet that is what Proposition 13 did. In placing a cap on the overall tax rate, the initiative raised the question of who should allocate the property-tax revenues. Proposition 13 answered that question with a single sentence delegating that responsibility to the state government. Coincidentally, Proposition 13 passed only two years after the second of the two Serrano v. Priest decisions, which required the state to "equalize" the operating budgets of school districts across the state. Prior to the Serrano cases, a school district with a large property tax base had more money per student than a school district with a small property tax base. After the court rulings, the state had to make up the difference. The net effect of Proposition 13 and Serrano together was to convert the property tax into a state revenue source. Under Serrano, the state was required to commingle its own funds with school property-tax revenue to reach a statewide equilibrium. Under Proposition 13, the state had the power to allocate property taxes among local agencies however it wished. In 1979, when the state was flush with cash, it allocated most of the property taxes to cities and counties and made up the difference by increasing state outlays to schools. So perhaps it was inevitable that when the state ran into financial trouble in the early 1990s, the legislature would reverse the trend. In the 1992-93 and '93-94 budget years, the state did just that - shifting approximately 25% of the funds away from cities and counties back to school districts in order to balance the state's own budget. In this kind of environment, it is not surprising that local governments have become active lobbying groups in Sacramento. Under Proposition 13, one of their major revenue source depends far more on their lobbying ability in Sacramento than on their relationship with their own local residents and taxpayers. By restricting property tax, Proposition 13 also changed the strategic importance of all revenue sources in local government. Sales tax became far more important - especially for cities - and development fees and property assessments emerged as critical revenue generators. All these trends had an impact on urban development patterns. Proposition 13 essentially rewarded cities and counties for developing retail land uses, which generated sales tax, and punished them for developing land uses that generated only property tax - essentially, all low- and moderate-income housing. This is one of the main reasons for today's "fiscalized" urban landscape, with its plethora of shopping centers and auto malls and its paucity of balanced housing developments. While retail developments were subsidized because of their tax attractiveness, housing developments were essentially charged a premium in the form of development fees, which were required to pay for new infrastructure no longer obtainable through the increased property tax flows. Among other things, these trends have made local government budgets subject to far more volatility. Retail sales transactions and real estate development activity fluctuate wildly depending on market conditions, while property assessments are traditionally more stable. Many of the revenue-raising measures that resulted from Proposition 13 created their own backlash. For example, after the 1992-93 property tax shift, counties and special districts turned to assessment districts as an important source of replacement revenue - especially since districts could be formed and assessments levied without a vote. This trend led directly to Proposition 218, the 1996 taxpayer initiative that required, in essence, two-thirds approval from property owners for new assessments. And all across the board, local governments have taken advantage of complicated legal loopholes to gain an advantage in the "zero-sum culture". When Proposition 13 passed, for example, most experts assumed that declining property taxes spelled the end of redevelopment in California - because redevelopment finance plans depended heavily in increased property-tax flows. But redevelopment enjoyed a scandalously successful renaissance in the 1980s because it was an important zero-sum tool: Clever cities could use it to capture property-tax dollars that would otherwise have to be shared with counties, school districts, and special districts. Widespread use of redevelopment as a zero-sum tool led directly to the redevelopment reforms of 1993. Similarly, Proposition 13 sparked a renaissance in new city incorporations because cityhood could also be used as a zero-sum tool. Incorporations had waned in the late '60s and '70s because of opposition from taxpayers, who assumed creation of a new city also meant higher taxes. But with property tax increases "outlawed" by Proposition 13, political resistance to incorporations lessened. And cityhood proponents realized that incorporation was a good way to take property and sales tax revenue from a distant county treasury and return it to their community. Not surprisingly, this trend produced its own backlash: The so-called "revenue neutrality" bill, passed in 1992 at the insistence of counties, which has stifled incorporations by requiring that counties be made financially whole by new cities. Returning to Equilibrium? Curiously, after two decades, the world of local planning and development may be reaching a strange kind of equilibrium. Calls to repeal Proposition 13 used to be common among liberals and local government leaders. Now they're so rare they seem anachronistic. For example, Bill Press, the former state Democratic Party chair and current CNN "Crossfire" host, made just such an appeal last fall at the California Chapter, American Planning Association, conference last fall. And while he received a hardy round of applause, the audience's appreciation seemed more nostalgic than realistic. Everyone appeared to recognize that Press was giving a 1970s speech in the 1990s. Most local government officials in California seem resigned to working within the basic tenets of Proposition 13: the 1% cap, the reassessment on sale, and the two-thirds vote requirement. This acceptance has forced them to try to achieve traditional goals within the more rigorous framework of public acceptance that Proposition 13 imposes - and, in the process, they have begun to restore the faith of at least some voters in at least some government activities. Local school bonds backed by increased property taxes were originally banned under Proposition 13. Now they are permitted with a two-thirds vote - the same requirement that existed prior to 1978. And even though the percentage of voters who are public school parents today is only half what it was in the 1960s (20% versus 40%), most school bonds are now winning. School districts have made the case that good school facilities help everyone in the community. And in the process, oddly enough, they have reinforced the assumptions contained in the Proposition 13 culture. Attempts to lower the vote requirement in Sacramento (to 60%, 58%, or a simple majority) are met with strong resistance. Why lower the rate when the bonds are already passing at two-thirds? The local school bond, however, represents a rare instance in the post-Proposition 13 world where local voters can engage in the traditional task of determining whether what they are getting is worth paying for. If there is one lingering problem that results from Proposition 13, it is that the process of raising government revenue has been severed from the process of spending it - which isn't doing much to restore faith in government. Property tax revenues are received more or less automatically by local governments as the result of political decisions in Sacramento. Other revenue comes, essentially, from taxing either newcomers (development fees) or outsiders (sales taxes). For these reasons, the revenue base is simply an assumption, and the only political discussion that occurs in most California communities is how to spend the money. For better or worse, in the old days, the political debate had to do with both revenue and expenditure and with the relationship between the two. As UC Davis Professor Alvin Sokolow has so eloquently pointed out, prior to Proposition 13 the typical local budget debate focused on how much property taxation was politically tolerable - and this was inevitably tied to the question of who would benefit from spending the proceeds. In other words, localities controlled the entire debate, instead of only half of it, and they were able to debate the question in terms of the value received for the political pain inflicted. These days, local officials, homebuilders, open-space advocates, school leaders, and others involved in planning and development in California frequently debate the question of what the ultimate "fix" for Proposition 13 should be. After the property-tax shift of 1992-93, many local officials advocate running some kind of initiative that would guarantee local governments a certain share of the property tax - similar to Proposition 98 for schools. Indeed, Assemblyman Fred Aguiar, R-Chino, recently introduced ACA 42, a bill sponsored by the League of California Cities, which calls for just such a solution. This solution may be the best political alternative; it is clearly in keeping with California's budgeting trends of the last two decades. But it doesn't address Professor Sokolow's basic point about the need to have the revenue debate at the same political level as the expenditure debate. In a certain way, it simply gives local governments more "free" money - free in the sense that they need not engage in difficult political debates over how much money should be raised, or from whom. If local governments don't get a Proposition 98-type solution, then California is at a crossroads on the question of how to finance local government. Either the expenditure decisions will have to up to the state level, where revenue is allocated, or the revenue allocation decisions will have to come down to the local level where the expenditure decisions are currently made. Indeed, this is the guts of the debate that has occurred in Sacramento over the last year: Should the state government provide more money to local governments - but dictate what it should be used for? Or should the Proposition 13 system be reformed so that local officials (cities, counties, schools, special districts) can decide for themselves how to divvy up the available tax revenue? At first glance, this question may seem to be a long way from the question of planning and development, but the experience of the last 20 years suggests that it is not. Local land-use decisions will always be driven to some extent by revenue concerns. And it is clear that the more tangled local government finance has become over the last 20 years, the more difficult it has been for California's communities to engage in rational land-use planning. Neither of the two solutions described above may be ideal. On the one hand, a Sacramento-driven solution may strip local governments of much of their remaining power; on the other hand, the locals may not be able to work together well enough to allocate their own resources. But any solution that breaks the grip of the zero-sum culture on California's communities is better than nothing.

The end of the decade-long battle between the City of Citrus Heights and Sacramento County may be soon approaching, if the city and the county can agree to a new formula under which the city will make annual payments to the county. The negotiations underscore the confusion and acrimony created by the 1992 law which requires cities to make tax revenue payments to counties under the doctrine of "revenue neutrality." In early 1996, Citrus Heights was scheduled to make the first of 25 annual payments of $5.6 million to the county. The arrangement was expected to end the bickering over revenue neutrality. But the city reneged on the payments, saying it could not afford them, in part because of the declining revenues at the city's regional mall. (Ironically, the profitability of that mall was part of the inducement for Citrus Heights to first seek cityhood in 1986). Most recently, on April 30, the Sacramento County Board of Supervisors voted 5-0 to withhold $2.2 million in property tax revenue generated in the Citrus Heights. Despite that saber rattling, however, city manager Mike Oliver said in May that the city was prepared to pay $2.3 million annually for the next 25 years - a sum that he described as the city's property tax revenues for the inclusive period. He predicted the case would be settled before the scheduled court date in July. "The status is we are continuing with the county and we're hoping that they will see the light," Oliver said. "We believe we are making progress and we will know more in the next 30 days for sure." Despite the projected loss of the city's property tax revenues, Oliver sounded confident that the city would be able to create a redevelopment agency, even though redevelopment projects are financed by tax increment, which is derived from property taxes. "That's part of what we will be negotiating over the next couple of weeks," he said. Although he is not a party to the negotiations, Walter Kieser, a fiscal expert with Economic & Planning Systems in Berkeley, said that it is possible to create a redevelopment agency, in which the county gives back enough property taxes to the city to pay for redevelopment projects, and that the City of Shasta Lake had a redevelopment agency of this kind. Shasta Lake is the only other city besides Citrus Heights to incorporate since the passage of the revenue-neutrality bill. According to Citrus Heights' Oliver, the legacy of litigation that has marked the first decade of Citrus Heights was a "tremendously high price to pay for cityhood," adding that "the state legislature needs to go back and address the issue. We have been left out in the cold." In a lighter moment, he referred to Citrus Heights as "the poster child of revenue neutrality." County Supervisor Illa Collin, however, defended a deal that would take most or all of the city's property taxes. While she said she wanted Citrus Heights to succeed, she also hinted that newly incorporating cities should not be encouraged in Sacramento County. She pointed out the necessity of preserving the tax base in a county where a majority of the population still lives in unincorporated areas. She also said that Citrus Heights would probably become the second-biggest user of the county's judicial and probation services, presumably in view of the city's slum areas. And she was incensed that Citrus Heights City Council had voted to increase the police service failing to pay the county. "Citrus Heights has been using our nickel to provide for increased services. They (city officials) have not wanted to tell their citizens the truth about where the money came from," she said. Collin added that the county was not trying to act punitively toward Citrus Heights. But neither did it seem did she want to send a message of permissiveness to other would-be cities in Sacramento. "The problem in this county is that we have so many others in the wing. They figure if there is a windfall to be had, just as Citrus Heights enriched (itself) by drawing a line around a sales-tax Generator, then they can do it, too." Meanwhile, two legislative attempts to reform Cortese-Knox, the "revenue-neutrality" statute, have moved forward in Sacramento. On May 14, AB 2147 (Thompson) won approval from the Assembly by 67-1. In its present form, the bill does little more than state that tax transfers under revenue-neutrality need a "rational" basis. On the same day, the state approved by a 37-0 vote, SB 1793 (Greene), which instructs local LAFCOs to inform counties which services new cities will assume on their own, and which will be contracted. A senate analysis describes the bill as "much ado about nothing," since LAFCOs already perform this role. A third reform bill, AB 2158 (Ortiz), died in assembly committee in late April. Possibly of greater significance are the ongoing talks between representatives of the California League of Cities and the California State Association of Counties on a new formula for revenue neutrality. If the parties reach a decision, the formula may be inserted into the Thompson bill. Contacts: Mike Oliver, city manager, City of Citrus Heights, (916) 725-2448 Walter Kieser, Economic & Planning Systems, (510) 841-9190 Illa Collin, Saramento County Supervisor (916) 874 5411

In an important decision on taking law, a divided California Supreme Court has ruled 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. The case is likely to be appealed to the U.S. Supreme Court. The property owner had argued 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 Luthe... In an important decision on taking law, a divided California Supreme Court has ruled 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. The case is likely to be appealed to the U.S. Supreme Court. The property owner had argued 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). But in the majority opinion, Justice Stanley Mosk noted that the U.S. high court said its holding did not extend to "the quite different questions that would arise in the case of normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like which are not before us." 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. "Such delay is an incident of property ownership and not a taking of property. The high court's decision overturned a decision by the Second District Court of Appeal, Division One. (See CP&DR Legal Digest, March 1997.) That panel found that a taking occurred because the property owner got caught in the crossfire of a dispute between the Coastal Commission and Los Angeles County over which agency had jurisdiction over lot-line adjustments. By insisting that the lot-line adjustment was illegal because they had not approved it, the Coastal Commissioners had put the property owner, Landgate Inc., "in a situation which was not of Landgate's own making and which Landgate could do nothing to cure," the Second District wrote. The court added that the commissioners, "with apparent indifference to the consequences of the applicant, denied the permit without the jurisdiction to do so." The Landgate project in Malibu was actually approved by the Coastal Commission in 1993. The lawsuit involved the question of whether a temporary taking had occurred between February 1991 and February 1993. The Landgate case began in 1989, when Los Angeles County approved the reconfiguration of two two-acre lots, each of which was zoned for a single-family home. The landowner agreed to grant a roadway easement to the property in exchange for reconfiguring the lots on either side of the road. The landowner did not seek Coastal Commission approval for the adjustments, and the commission did not challenge the county's approval. The question of which agency has jurisdiction over lot-line adjustments has long been a matter of dispute between the Coastal Commission and L.A. County. At the time, the commission had approved the Land Use Plan for Malibu, but had not approved the Local Coastal Program, so it continued to have jurisdiction over the issuance of coastal development permits in the area. Landgate purchased one of the lots in 1990, and began processing a proposal to build a 9,000-square-foot single-family home, a guest house, and a swimming pool. The developer planned to grade 8,500 cubic yards on the property. After negotiating with the commission staff, Landgate reduced the size of the proposed house by 1,500 square feet and also cut the amount of grading in half. But the commission rejected Landgate's application, finding, among other things, that the lot constituted an "impermissible" development because it had been created without the commission's approval, and also because the proposed house and other structures would produce excessive soil, grading, and visual degradation. At two meetings of the Coastal Commission, commissioners had expressed concern over the question of who had jurisdiction over the lot-line adjustment and indicated they would not have approved the adjustment if it had come before them. After Landgate sued, Superior Court Judge Richard Hubbell ordered the commission to reconsider the project. Instead, the commission appealed the judge's decision to the Second District. The appellate court affirmed the writ and concluded that the lot-line adjustment was not a new "development" within the meaning of the Coastal Act, and the commission had no jurisdiction to deny the permit on hat ground. The permit was then issued. In reviewing the appellate court's opinion in Landgate, the California Supreme Court noted that the court " ppeared to accept the Commission's assertion that reasonable mistakes made by a government agency in the development approval process do not necessarily constitute takings. But, as it stated: ' hat we cannot accept is the Commission's characterization of the treatment of Landgate here as the reasonable result of a 'mistake'. Nothing in the record suggests that a lot-line adjustment issue arose out of anything other than the Commission's ongoing jurisdictional spat with the County of Los Angeles combined with a desire to prevent Landgate from building on its parcel'." In the majority opinion, Mosk examined the case by reviewing case law about the impact of a regulatory mistake. "Virtually every court that has examined the issue has concluded, for various reasons and under various theories, that a regulatory mistake resulting in delay does NOT, by itself, amount to a taking of property," he wrote. In support of this view he cited, among others, a Massachusetts case, Steinbergh v. City of Cambridge, 604 N.E. 2d 1269 (Mass. 1992) and a California case, Littoral Development Co. v. San Francisco Bay Conservation Development Commission, 33 Cal.App.4th 211 (1994). Mosk wrote: "We substantially agree with the Supreme Judicial Council of Massachusetts, with our Court of Appeal, and with the other courts ... that an error by a governmental agency in the development approval process does not necessarily amount to a taking even if the error in some way diminishes the value of the subject property, any more than the commission of state law error during a criminal trial is an automatic violation of the due process clause." Mosk compared the situation to condemnation proceedings for land which stops the development process. He argued that the U.S. Supreme Court had upheld the California Supreme Court on just such a point in Agins v. Tiburon, 447 U.S. 255 (1980). In that case, Mosk wrote, the U.S. Supreme Court agreed "that we had 'correctly rejected the contention that the municipalities good-faith planning activities, which did not result in successful prosecution of an eminent domain claim, so burdened the appellants' enjoyment of their property as to constitute a taking." The California Supreme Court opinion in Landgate said that the appellate court "erred in its attempt to divine, through the statements of Commissioners and commission staff and through circumstantial evidence, the 'true', illegitimate motive for the Commission's decision to deny Landgate's development permit. Citing cases such as Nollan v. California Coastal Commission, 483 U.S. 825 (1987), the court said: "The proper inquiry is not into the subjective motive of the government agency, but whether there is, objectively, sufficient connection between the land use regulation in question and legitimate governmental purpose so that the latter may be said to substantially advance the former." The court said that cases such as Nollan and Ehrlich v. City of Culver City, 12 Cal.4th 854 (1996), "suggest that judicial review of governmental conditions imposed upon development will be more deferential when the conditions are simply restrictions on land use and not requirements that the property owner convey a portion of his property." The court said that the commission's denial of the Landgate permit in February 1991, including the portion of the denial based on an improper lot-line adjustment, appeared to "substantially advance legitimate governmental interests and to be supported by substantial evidence." The Mosk opinion said there was nothing in the record to show, as the Court of Appeal panel found, that the commission was motivated by a "jurisdictional spat" within Los Angeles County. Justice Mosk tried to distinguish the Landgate matter from First English. "Here," he wrote, "there was a postponement of development pending resolution of a threshold issue of the development approval process - whether the lot was legal - and not a final decision denying development. In First English, on the other hand, the Supreme Court assumed that the ordinance in question categorically denied all property owners within its purview the right to develop their property." Two dissenting opinions were filed: one by Justice Ming Chin and one by Justice Janice Brown. Justice Marvin Baxter concurred in both. In his dissent, Justice Chin said that he did not consider the delay to be a "normal delay" of the permit approval process. " argue that the Commission's total and final ban on all use of Landgate's property (which existed during the litigation delay) gave rise to the temporary taking," he wrote. The majority opinion, he wrote, used the same arguments for "normal delay" that were part of a dissenting opinion written at the U.S. Supreme Court in First English. In her dissent, Justice Brown wrote: "It is evident that the majority is unwilling to come to terms with the true meaning and operative effect of Lucas and First Lutheran." Benjamin Reznick, the attorney for Landgate, said he expects the case to be appealed to the U.S. Supreme Court but no final decision has been made. "It's a case of great importance and it's clearly a landmark case here in the state," he said. The Case: Landgate v. California Coastal Commission, No. S059847, 98 Daily Journal D.A.R. XXXX (May 1, 1998). The Lawyers: For Landgate: Benjamin Reznick, Jeffer, Mangels, Butler & Marmaro, (310) 201-3572. For Coastal Commission: Peter Kaufman, Deputy Attorney General, (619) 645-2020.

In 1998, for the first time in a generation, school bonds are building more schools in California than any other funding source. Voter-approved schools are back, as are other tax measures for school operations and special programs. This stands in sharp contrast to the first 15 years after Proposition 13. From 1978 to 1986, school bonds and taxes were not permitted on local ballots at all. After the Constitution was amended to once again allow school tax elections in 1986, school bonds and taxes began reappearing on the ballot - but most of them failed. Over time, both the number of school bonds and their frequency with which they pass has grown. In the April elections, about 50 measures appeared on local ballots, and more than half of them passed with a two-thirds vote. (Even most that failed got at least 60% of the vote.) Overall since 1986, approximately 500 bond and tax measures have appeared, and about 40% have passed. Every school superintendent knows that a bond is in his or her future. The question is no longer whether to pursue a bond, but rather when, how much, and for which projects. Like cities and counties, schools have become accustomed to a world dicated by certificates of approval, Mello-Roos bonds, developer fees, and capitalized redevelopment pass-throughs. School districts' capital needs have also brought them closer to cities and counties - because they often need the additional mitigation money available to them through local government planning processes. At the same time, however, they've also learned how to win local bond elections. School bonds have caught on mainly because the school facility problem couldn't be ignored any longer. With resistance growing to more fees and user charges, other public agencies are likely to step up their attempts to win voter approval for debt. Schools may simply have been first. And this raises a whole series of questions about the future relationship between school districts and local governments about infrastructure funding. Cities, counties, and special districts will inevitably start charting the waters of voter tolerance for higher taxes. But voters see taxes as a single bottom line, meaning bond and tax proposals compete with one another. What will this mean in the future: more cooperation, more competition - or simply greater reliance on state funding? Even 20 years after Proposition 13, California still lacks a coherent philosophy about public infrastructure needs. Communities are becoming aware of the imbalance between growth areas needing new infrastructure and older areas requiring more maintenance. This battle is just beginning to emerge on the local government front, but it has been fought on the school front for several years, as urban and suburban school districts battle over whether state bond funds will go for modernization or new schools. In the future, this competition will only intensify. Multiple agencies - cities, counties, school districts, park districts, water agencies, and others - may have to begin coordinating and balancing their competing needs. Poorer communities and areas with strong anti-tax voters may get left behind. Here again, all public agencies facing these choices will benefit from the school experience. Take the issue of proposed state bonds for infrastructure construction - an oft-cited idea that is politically attractive because state bonds require only a simple majority vote rather than two-thirds. In the wake of Proposition 13, schools became far more dependent on the state for their capital funds, benefiting from several billion dollars in voter-approved school bonds since 1982. But they have paid a price. The state has ceased to be the schools' partner and has, instead, become their regulator and auditor. School districts must adhere to strict state design and construction guidelines and therefore have little independence. At the local level, it seems that both developer and homebuyer tolerance for development fees has reached its maximum - for schools or anything else. This is especially true in the school arena, where it appears likely that the building industry's decade-long attempt to place a cap on school fees is likely to succeed in the near future. So more money will have to be raised from voter-approved bonds and parcel taxes. And it's unlikely that the state will lower the two-thirds requirement for any local debt issuance. Therefore, local governments, like their school counterparts, will have to learn to win bond campaigns that require two-thirds vote. This may well lead to a faddish, pork-barrel approach to local bonds. Every voting block has its price in the form of a special goodie on the bond list. And it may lead local governments to work together with schools in shaping a community infrastructure strategy and seeking joint voter approval. Cooperating with schools on the local ballot is probably far less risky than competing with them. After all, few community symbols are as powerful as schools. Not many of us feel the same emotional bond to all those pipes under the street.

Proposition 13 and its progency - the most recent being Propositon 218 - didn't just limit California's taxes. They also sent a message that some of California's citizens wanted to rein in government activity of all kinds - and one of the major areas affected has been spending for parks and open space. With the passage of the original initiative in 1978, parks and open space suddenly fell low on the spending list for both state and federal governments - far behind such needs as public safety, education, and health services. Over time, a new structure has emerged - one that relies more heavily on state bond funds, private foundation dollars, the work of entrepreneurial private land trusts, local tax increases that can survive a two-thirds vote requirement, and mitigation from private developers. While this new structure has helped plug the gap, it also tends to focus on land acquisition - often at the expense of maintenance and management of parks and open space. After Proposition 13 - and especially after Proposition 98, which earmarks some 40% of the state general fund for education - state budget priorities shifted away from parks and open space. According to the San Francisco Chronicle, state spending for new parks has dropped from $46 million 15 years ago to $7 million today. Though the recent economic boom has improved the state's fiscal condition for the moment, both the state Department of Parks & Recreation and other agencies that manage open space land, such as the Department of Fish & Game, struggle to maintain the property they now own. For a while, it appeared as though state bond funds might plug the gap. In the 1980s, lack of state spending motivated the Planning and Conservation League, a well-established environmental group, to qualify the first bond measure via initiative in the state's history. The result was Proposition 70 in 1988, which provided $770 million for parks and open space acquisition statewide. Working with land trusts and open space groups around the state, PCL later qualified and passed Proposition 117 in 1990, the so-called "mountain lion" initiative, which appropriates $30 million a year for certain types of open-space acquisition. PCL later ran into criticism, however, for its alleged "park barrel" tactics - supposedly enlisting local conservation organizations to gather signatures in exchange for listing their pet projects in the bonds. PCL never admitted to such tactics and they were never proven. However, the "park barrel" criticism, along with the recession, seemed to put a damper on the statewide bond initiatives. Proposition 180, a $2 billion bond initiative, was defeated by the voters in 1994. Local governments have also struggled to find ways to pay for parks and open space. In some cases - including Sonoma County and more recently Napa County - local voters have approved sales-tax increases for open space acquisition. More typical was the strategy of land conservation activists in Los Angeles County, who won voter approval for large property-assessment bond issues in both 1992 and 1996. Property assessments for park purposes, however, were the main cause of Proposition 218, an initiative supported by taxpayer groups that passed statewide in 1996. Prop. 218 was stimulated largely by the California Supreme Court's ruling in Knox v. Orland, 4 Cal.4th 132, which authorized expansive use of assessment districts for such purposes as park maintenance. Proposition 218 essentially requires two-thirds voter approval from property owners for increased property assessments. As the public money has dried up, private foundations and non-profit land conservation organization have attempted to step into the breach. While public budgets have withered, foundations have grown in wealth dramatically in the last 15 years because of the stock market boom. Several large foundations in California and elsewhere have made major commitments to parks and open space. Most notably, the Packard Foundation announced in March that it would provide $175 million over the next five years to protect open space, farmland, and wildlife habitat in the Central Valley, the Central Coast, and the Sierra Nevadas. The Lila Wallace Readers Digest Fund likewise helps fund urban parks. While initial reports made the Packard program sound like the grants alone would be sufficient to save much of the open space in these regions, the funds come with strings attached. Foundation money will provide only half the funds required to acquire a property. Local governments must match the grant with their own funds - which can come from other private organizations or from state or federal sources. Foundation money "shouldn't be an excuse for local or state governments not to do their fair share," said Michael Mantell, former undersecretary of the California Resources Agency and now a consultant to the Packard conservation program. Also plugging the gap are a variety of "mitigation" efforts, as well as the efforts of private conservation organizations such as The Nature Conservancy, the Trust for Public Land, and local land trusts up and down the state. In addition, a new breed of organization has emerged in recent years - private firms such as the Center for Natural Lands Management in Sacramento, which specialize in owning and/or maintaining land that has been set aside for open space or wildlife preservation. Local, state, and federal agencies often acquire open land as part of a "mitigation" package that permits some private development to occur on environmentally sensitive land. In addition, large landowners, such as The Irvine Co. and Newhall Land & Farming Co., often retain ownership to sensitive land but contract with The Nature Conservancy or the Center for Natural Lands Management to help meet mitigation requirements for other development projects. The result is a crazy-quilt of land ownership and management patterns. Some land is owned by the government - federal, state, and local. Some land is owned by non-profit organizations, and some land remains in the hands of private developers. Land is bought or traded with the help of public, non-profit, and private money. And, increasingly, these different groups and organizations work together. For example, the Orange County Natural Reserve created as part of the state's endangered-species preservation program is overseen by a board that includes public, private, and non-profit organizations. And in spite of everything else, the public bond may be on the way back. Currently, Sen. Mike Thompson, D-Napa, has proposed SB 2, which would place an $880 million park bond issue on the ballot in November. The bill is currently stuck in the Assembly, but if it goes on the ballot and passes it will be the first major park bond to pass statewide since Proposition 70 a decade ago.

Mike Gotch, who carried an important Local Agency Formation Commission bill as a member of the state Assembly, has signed on with the California Association of Local Agency Formation Commissions as executive officer. Gotch's hiring is viewed as an attempt by CALAFCO to regain lost clout. The organization has dwindled in membership in recent years. In addition, disgruntled participants in the LAFCO process - including developers and special districts - are increasingly "going around" their local LAFCOs to the Legislature in hopes of obtaing a better deal in Sacramento. Gotch, a former LAFCO staff member in San Diego, was the author of the important bill AB 1335, which gave LAFCOs the power to initiate special district consolidations but also permitted the addition of special district representatives on many LAFCO boards

It's the archetypal Hollywood tourist scene. Visitors compare their handprints with those of stars at the Chinese Theater. They gawk at a premiere at the El Capitan. They point to names lit up on neon marquees, and recite the names enshrined in terrazzo on the Hollywood Walk of Fame. Only one thing is wrong with this scene: It is occurring in Florida, on a replica of Hollywood Boulevard at Disney/MGM Studios Theme Park in Walt Disney World. It's the archetypal Hollywood tourist scene. Visitors compare their handprints with those of stars at the Chinese Theater. They gawk at a premiere at the El Capitan. They point to names lit up on neon marquees, and recite the names enshrined in terrazzo on the Hollywood Walk of Fame. Only one thing is wrong with this scene: It is occurring in Florida, on a replica of Hollywood Boulevard at Disney/MGM Studios Theme Park in Walt Disney World. The real Hollywood Boulevard, meanwhile, looks shabby by day and menacing by night. While Tinseltown still attracts millions of visitors, most react with disappointment at the lack of attractions and historical flavor. Tour groups pile off the buses to take a gander at the Chinese Theater, and then pile on again. There is nothing else to see, at least in the eyes of tour guides. When first announced in 1986, the Hollywood Redevelopment Project seemed an easy winner. Hollywood has an inexhaustible hold on the world's imagination, and the area has a pent-up tourist demand. If most of the film studios have left the area, Hollywood continues to be center of entertainment-related businesses. The commercial strips are filled with handsome buildings from the 1920s and '30s. "Hollywood has so many positive things going for it: a central location, the cultural history, a great collection of buildings, and some of the world's greatest housing nearby," says Los Angeles architect Barton Myers. But nearly five years later, the $1 billion Hollywood redevelopment is still largely an idea. With one exception, all major projects are dormant. And millions of dollars of tax increment designated for the project remained tied up in court Ironically, commercial developments with filmland themes have been popping up in Southern California and Florida in recent years. Much of the tourist trade destined for Hollywood is siphoned away by MCA-Universal Studio Tours. Some skeptics say that Hollywood has waited too long to stage a comeback, and that the real thing may have difficulty competing with glitzy imitations in more controlled environments. Why has redevelopment taken so long? Councilman Michael Woo, a professional planner who spearheaded the redevelopment project, points to the thoroughness of the planning process. A soft office market and the notorious "credit crunch" are other answers. Legal problems also took up time. One lawsuit resulted from the disbandment of the original Hollywood Project Area Committee, which had been set up to advise the CRA. The PAC had contained a number of outspoken opponents of redevelopment; they claimed their lack of cooperation caused their dismissal. (Woo and the CRA later set up another committee, Hollywood Community Advisory Council, that critics claim has been friendlier to redevelopment.) Former PAC members sued to be reinstated, and to have their powers enlarged. A Superior Court judge ruled against the group in February 1989, and an appeal failed. In a second and still unresolved case, a group of local residents, Save Hollywood Our Town (SHOT), sued the CRA, challenging the legality of the Hollywood Redevelopment Project. In particular, SHOT claimed the CRA had not properly notified property owners or held public meetings regarding the plan. A Superior Court judge dismissed the suit; SHOT is currently appealing the case. As a result of the suit, the tax increment from the Hollywood Area -- now about $10 million -- has been parked in an escrow account until the case is resolved. The case made it next to impossible for the agency to float bonds for Hollywood-area projects. But if the courts have delayed Hollywood, the time was arguably well spent in planning. After rejecting a prior plan prepared by consultants, Woo in 1987 created an advisory group, Hollywood Planning and Design Review Committee, headed by Hollywood-based architect Myers, to create policy for urban design and "built form." Woo and CRA staff also created a design "workshop" and invited public participation in numerous meetings that sometimes resembled the "charrette" or collective-design process favored by designers such as Andres Duany. For a city agency accustomed to dictating design criteria from on high, the workshops were a "unique" experience, says Cooke Sunoo, CRA project manager for Hollywood. The latest version of the plan is remarkable for its close attention to local conditions. The plan divides Hollywood into three overlapping areas: tourism and entertainment to the West, a "gateway" to Hollywood near on Hollywood and Vine, and residential-oriented retail to the east. Residential mixed use is a priority throughout. Design guidelines are also proposed. They include wider sidewalks and tree planting on Hollywood Boulevard. A 150-foot height limit is imposed on new construction, to conform to the standard of the 1920s. A continuous "streetwall" is to be maintained, while architectural styles are to complement Hollywood's combination of "Chateau, Moderne, and Spanish," according to Myers. The transition from planning to development has been frustrating, however. Only the Hollywood Galaxy, a 200,000-square-foot shopping center, is currently under construction. The Hollywood Promenade project, arguably the linchpin of Hollywood redevelopment, remains in limbo. The project, intended for a five-block area between Highland Avenue and the Chinese Theater, combines certain elements of shopping malls, office districts, and theme parks. It includes a high-rise office building, a major hotel, a shopping center, a Hollywood museum, and an American Cinematheque film center to screen classic Hollywood fare. But the developer, Melvin Simon & Associates, has been unable to obtain financing. After months of rumors that the project was all but dead, the CRA has offered "tens of millions" of dollars in incentives, according to CRA's Sunoo; he declines to identify them. Conceivably because of those incentives, the project in late October seemed close to getting financed at last. Other ambitious projects are also quiet. Little has been heard lately of a project of the Bass family of Fort Worth, Texas, to build 1,000 units of housing and 200,000 square feet of retail. Ditto for Alexander Haagen's plans to refurbish a former Sears location. The difficulty of moving projects forward in Hollywood has prompted skeptics to ask whether Hollywood has missed its moment -- and its market. Planning consultant Larry Kosmont is one of the doubters. "They lost the office market to the Burbank Media District and the tourist market to Universal Studio Tour," he says. "You tend to wonder whether people would be a lot more comfortable in a more contrived environment, such as Universal City, as opposed to the real grit of Hollywood." The idea makes Woo bristle. "It's a mistake to think that Hollywood needs nothing more than a new amusement park to turn it around. ... Hollywood has a number of unique attributes ... and a multi-ethnic constituency that makes for a genuine, dynamic urban district, as opposed to an entertainment park atmosphere." In making such comments, Woo is simply pointing out the critical difference between Universal City and Hollywood. Universal is an attraction, not a city. It has no housing and no jobs apart from the MCA payroll; it offers nothing of interest that does not cost money, and it closes at night. Hollywood, on the other hand, is a genuine urban environment. It partakes of the "disorder" that social critic Richard Sennett has identified as a needed element in an increasingly controlled world. The real Hollywood is bound to lose some of the tourist trade to its clean-cut imitators. Eventually, however, the middle class will return to Hollywood, as an antidote to oppressive orderliness. Despite what film studios say, life is more interesting than any amusement park. Maybe sooner or later the lenders will catch on, and the Hollywood redevelopment plan will start moving forward again.