December 2010

County’s Farmland Mitigation Program Requiring Purchase of Conservation Easement is Valid

Attorney Authors: 

In Building Industry Association of Central California (BIA) v. County of Stanislaus, the court of appeal rejected a challenge brought by the BIA against the county’s Farmland Mitigation Program (FMP). The FMP guidelines, to mitigate the loss of farmland, require each developer to acquire a conservation easement equal in size to the area of farmland to be converted to residential use.

Annoying Civic-Mindedness or Credible Threat of Violence?

Can a city restrict the conduct of a self-described civic-minded individual, with a history of flamboyant speech and dramatic behavior in his communications with the city, without running afoul of free speech rights? In City of San Jose v. William Garbett, filed on November 24, 2010, the Sixth Appellate District Court of Appeal says yes, when the conduct meets the conditions for an injunction under Code of Civil Procedure section 527.8.

Section 527.8, also known as the Workplace Violence Safety Act, allows any employer to seek a temporary restraining order and injunction on behalf of an employee who “has suffered unlawful violence or a credible threat of violence from any individual” at the workplace. For purposes of the statute, a city is an “employer.” (Code Civ. Proc. § 527.8(d).) “Unlawful violence” is defined as “any assault or battery, or stalking as prohibited in Section 646.9 of the Penal Code, …” (§ 527.8(b)(1).) “Credible threat of violence” is defined as “a knowing and willful statement or course of conduct that would place a reasonable person in fear for his or her safety, or the safety of his or her immediate family, and that serves no legitimate purpose.” (§ 527.8(b)(2).) To obtain an injunction, an employer must establish, by clear and convincing evidence, not only that the defendant engaged in unlawful conduct within the meaning of the statute, but also that great or irreparable harm would result to the employee if the injunction were not issued due to the reasonable probability unlawful violence will occur in the future. (Code Civ. Proc. § 527.8(f); Scripps Health v. Marin (1999) 72 Cal.App.4th 324, 335.)

In Garbett, the City of San Jose sought 14 injunctions (and temporary restraining orders) on behalf of the city’s deputy city clerk, the mayor and city council. The city submitted evidence that the appellant, William Garbett, age 70, had a long history of grievances with the city going back many years, and that the appellant made a “credible threat of violence” toward a deputy city clerk, and other city employees under section 527.8(b)(2). In addition to evidence that the appellant regularly visited the city clerk’s office and attended city council meetings, expressed fanciful ideas, appeared agitated or angry or resentful toward the city, and had inappropriate verbal or physical outbursts, there was additional evidence that this antagonism escalated. Specifically, there was evidence that the appellant threatened a deputy city clerk by stating that his only recourse to change policy in San Jose was to take action similar to that of one angry man in Kirkwood, Missouri, who a few months prior had shot and killed several people at Kirkwood City Hall. The deputy clerk, who understood the reference, reportedly felt threatened and feared for her safety and the safety of the mayor and city council. After she reported the event, the city searched the appellant when he attempted to enter council chambers and implemented extra monitoring procedures or security measures.

The trial judge granted the city’s initial requests for interim restraining orders. Following an evidentiary hearing – which included the testimony of several witnesses who had previous interactions with the appellant and two expert witnesses – the trial judge also issued 14 injunctions restricting the conduct of the appellant toward the deputy city clerk, mayor and council.

Each injunction included orders requiring the appellant to stay 300 yards from the protected individuals and City Hall. The injunction also included specified exceptions which would allow appellant to attend public City Council. Those exceptions included requiring appellant to enter City Hall through a specified entrance, be subject to a search before entering the City Council chambers, sit in a specific row, use a particular stairway during meetings, and communicate with the City Clerk’s office by mail or proxy.

Appellant sought review of the injunctions contending, in part, that the orders restricting his conduct and movements violated his rights to free speech under the First Amendment to the United States Constitution and the California Constitution, and represented the city’s attempt to “curtail what amounts to annoying behavior.”

The Court of Appeal affirmed all 14 injunctions including the restrictions on the appellant’s movements. The Court disagreed with the appellant’s First Amendment arguments, relying on California Supreme Court precedent establishing the right of the state to penalize willful threats to perform illegal acts, even those consisting of pure speech. In re M.S. (1995) 10 Cal.4th 698, 710.) The Court also found substantial evidence to support the court’s factual findings on the requisite elements of section 527.8, namely that the appellant had expressed a credible threat of violence toward city employees that was not constitutionally protected speech; that this conduct caused the city employees to experience fear; and a likelihood of future harm.

When the appellant protested that he did not intend to threaten anyone, the Court dismissed this argument, concluding that the defendant’s subjective intent is not required for the conduct to be deemed a credible threat under the current definition found in section 527.8(b)(2).

Appellant further challenged the injunctions on overbreadth grounds, taking issue with the limitations on his access to the City Hall building and his movements within the council chambers. The Court nevertheless upheld these restrictions, deferring to the trial judge’s view of the evidence and factual findings on the requisite elements of section 527.8, and the lower court’s considerable discretion to fashion orders aimed at preventing harm of the nature suggested by the threats.

The Garbett case establishes good law for public entities which seek to curtail repeat offenders or conduct that escalates or develops into what has been classified as more than merely annoying or unprotected speech.

Oral Change Order, By City Staff, Did Not Bind City

In a breach of contract action filed by P&D Consultants, Inc. and the City of Carlsbad, for services pertaining to a redesign of the City's municipal golf course, the California Court of Appeals reversed the trial court, and found that because there was no written change order, in violation of provisions of the contract and public contract law (Gov. Code section 40602), the demand for payment for the extra work could not stand.

The court noted that unlike private contracts, public contracts requiring written change orders cannot be modified orally or through the parties' conduct. Here, the contract itself included a clause that all change orders had to be in writing agreed to by both parties. Furthermore, the City's charter did not provide for execution of oral contracts by employees who do not have requisite authority. Thus, alleged oral statements by city staff were insufficient to bind the City.

The court reversed the judgment (monetary award) concerning the complaint.

For the full case see P&D Consultants, Inc. v. City of Carlsbad (2010), No. D045810, Forth Dist., Div. One, December 16, 2010.

Court Invalidates EIR’s Use of Post-Approval “Future” Baseline For Analysis of Project Impacts

The California Environmental Quality Act, or CEQA, requires agencies to compare the potentially significant impacts of proposed projects to an “environmental baseline” – which CEQA provides shall “normally” consist of environmental conditions as they exist when environmental review is commenced. The California Court of Appeal, Sixth District, has ruled that an Environmental Impact Report (“EIR”) may not compare impacts to a baseline consisting of projected future conditions when the project is expected to be complete. The ruling, in Sunnyvale West Neighborhood Assn. v. City of Sunnyvale City Council, is important, since comparison to a “future” baseline had become a widespread “industry practice,” particularly for analysis of traffic and circulation impacts.

The City of Sunnyvale prepared an EIR for the proposed Mary Avenue Extension, consisting of a new bridge to be constructed over two freeways and light rail tracks. The EIR compared traffic impacts of the project, and noise and air quality impacts associated with traffic, to a baseline consisting of forecasted traffic conditions -- without the project -- in the year 2020, the year in which the City expected the project to be complete and in use. The EIR’s baseline included future traffic levels based on build-out under the City general plan, along with numerous roadway improvements planned to be in place by 2020. In response to comments criticizing the traffic analysis, city staff reported that it had been prepared consistent with impact-analysis guidelines of the Santa Clara Valley Transportation Authority, as part of that Authority’s responsibilities under the state’s Congestion Management Law.

In court, the petitioners attacked use of a future baseline. The petitioners cited CEQA Guideline section 15125, which requires an EIR to describe physical environmental conditions in the vicinity of a project “as they exist at the time the notice of preparation [of the EIR] is published or . . . , at the time environmental analysis is commenced, . . .” and which further provides that “[t]his environmental setting will normally constitute the baseline physical conditions by which a lead agency determines whether an impact is significant.”

In defense of its future baseline, the City cited Save Our Peninsula Committee v. Monterey County Board of Supervisors (2001) 87 Cal.App.4th 99, which the City argued gave it discretion to use a future baseline. In Save Our Peninsula, the court had stated that “. . . where the issue involves an impact on traffic levels, the EIR might necessarily take into account the normal increase in traffic over time. Since the environmental review process can take a number of years, traffic levels as of the time the project is approved may be a more accurate representation of the existing baseline against which to measure the impact of the project.” (Id. at 125 – 126.) Some agencies and legal practitioners had interpreted Save Our Peninsula to allow an agency with knowledge that environmental conditions would either improve or degrade by the time a project is constructed to select a future baseline, so long as the agency was careful to summarize the evidence supporting its selection of the future baseline.

Sunnyvale West Neighborhood Assn significantly narrows that interpretation. The decision acknowledges that the California Supreme Court, in Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310, endorsed Save Our Peninsula’s holding. But Sunnyvale West Neighborhood Assn further notes that the Supreme Court “never sanctioned the use of predicted conditions on a date subsequent to EIR certification or project approval as the ‘baseline’ for assessing a project’s environmental consequences.” Therefore, Sunnyvale West Neighborhood Assn. invalidated the EIR’s use of a future baseline consisting of projected conditions in 2020 -- more than a decade after proposed project approval.

Sunnyvale West Neighborhood further holds that use of a post-approval future baseline is a “failure to proceed in a manner required by law,” and that agencies lack discretion to select such a baseline, regardless of whether they determine that a post-approval future baseline is supported by “substantial evidence.” The decision alternatively holds that, even if the City had possessed discretion to select a post-approval future baseline, the Santa Clara Valley Transportation Authority guidelines for traffic impact analysis under the Congestion Management Act would not provide an adequate basis for selecting a post-approval future baseline under CEQA. Finally, the court rejected an argument that the EIR’s use of a future baseline consisting of traffic conditions expected to be much worse than presently exist resulted in a “more conservative and realistic” impact assessment and was, therefore, not reversible “prejudicial” error. The court, after acknowledging that this argument had “some surface appeal,” held that use of a post-approval future baseline improperly “obscures the existence and severity of adverse impacts that would be attributable solely to the project under the existing conditions without the other assumed roadway improvements.”

Sunnyvale West Neighborhood does not rule out discussion of foreseeable changes and future conditions in an EIR, and notes that such discussion may be necessary to compliance with CEQA – for example, in discussion of cumulative impacts or the “no project” alternative. Nevertheless, the decision emphasizes the primacy of comparison to an “existing conditions” baseline. “Once a specific roadway project is proposed and becomes the subject of an EIR under CEQA, . . . a straightforward assessment of the impacts produced by the project alone on the existing environment is the foundational information of an EIR even where secondary analyses are included.”

Community Facilities District Financing Triggers Prevailing Wage Requirements For All Public Improvements of a Project

In Azusa Land Partners v. Department of Industrial Relations, the Second Appellate District Court of Appeal has upheld the California Director of Industrial Relations and the Superior Court of Los Angeles County in determining that use of Mello-Roos bonds to fund certain infrastructure required for a city’s approval of a mixed-use project requires payment of prevailing wages for the construction of all public facilities and infrastructure improvements required for the Project, and not just the public improvements funded by the bond proceeds.

In 2004 Monrovia Nursery entered into a Development Agreement with the City of Azusa (the City) for development of over 1,200 homes, 50,000 square feet of commercial construction, and public improvements and infrastructure, including a public school, park, sanitation district facilities, landscaping, and backbone infrastructure for the cities of Glendora and Azusa. The Nursery’s successor-in-interest, Azusa Land Partners (ALP) then entered into a Funding and Acquisition Agreement (Acquisition Agreement) with the City to provide partial funding of the required public facilities through establishment of a Community Facilities District to sell Mello-Roos tax bonds. The Acquisition Agreement initially referred to the eligible facilities simply as “Publicly Financed Facilities.” After the Mello-Roos bonds were issued, the City and ALP modified the Acquisition Agreement to identify specific, publicly financed facilities eligible for Mello-Roos funding.

The Acquisition Agreement required ALP to perform the public improvement work as a condition of approval of the project even if the actual cost exceeded the amount of bond funds. The bond proceeds funded a little less than half the actual cost of the public improvements, with the balance funded privately.

In 2007 the Director of Industrial Relations determined that the entire Project constituted a public work subject to prevailing wage requirements within the meaning of Labor Code Section 1720(a)(1). The Director also determined that the Project qualified for the partial prevailing wage exemption in Labor Code Section 1720(c)(2) under which only those public infrastructure improvements required as a condition of regulatory approval are subject to prevailing wage requirements, as long as the public funds contributed do not exceed the construction cost for the public improvements and the public entity does not retain a proprietary interest in the project. This determination was affirmed on administrative appeal in 2008.

ALP contended that only the public improvements actually funded by the Community Facilities District should be subject to prevailing wages and filed a petition for writ of mandate, which the trial court denied. The trial court found that Mello-Roos bond proceeds are public funds, the project is a “public work,” and that all public improvement work required as a condition of regulatory approval is subject to the prevailing wage law, regardless of the source of funding.

On appeal by ALP, the court of appeal stated that the entirety of Labor Code Section 1720 must be examined in analyzing prevailing wage issues, rather than focusing on select portions as ALP did. The statute should be liberally construed in keeping with the overall purpose of protecting employees on public works projects. The court addressed three specific arguments advanced by ALP.

First, the court rejected ALP’s contention that Section 1720(a)(2), defining public works as “[w]ork done for irrigation, utility, reclamation, and improvement districts…” limited application of prevailing wage requirements to work actually funded through the Community Facilities District. The court noted that the statute references “work done for” rather than “work paid for” by an improvement district, that all of the public improvement work was eligible for funding by the Community Facilities District and was required as a condition of regulatory approval, and that all work done for an improvement district is public work. Most important, the court found that the duty to pay prevailing wages on public works cannot be limited or eliminated by contract, such as specifying only certain public works that will be funded from Mello-Roos bond proceeds.

Next, the court determined that Mello-Roos bond funds “are public funds under the plain language of section 1720 and the Mello-Roos Act.” In so doing the court distinguished Mello-Roos bond financing from mere “conduit” financing where a public entity assigns its rights, including possession and control of the money, to a third party. The court also rejected ALP’s argument that Mello-Roos bond proceeds are akin to a government loan, the repayment of which is not contingent and is not at less than market rate interest.

Finally, the court held that use of the Mello-Roos bond proceeds to fund even a portion of the required public improvements triggered prevailing wage requirements for the entire project, subject to the Section 1720(c)(2) partial exemption. (The court also distinguished the analysis in Vineyard Creek Hotel & Conference Center, Redevelopment Agency, City of Santa Rosa (Oct. 16, 2000) Dept. Industrial Relations, PW 2000-016, which used a five-part test to determine whether “public” and “private” portions of a project were sufficiently integrated to impose prevailing wage requirements on the entire project, because the issue in Azusa was whether all public improvements should be subject to prevailing wages, and not the scope of the entire project. Following Azusa, it is unclear what effect the Vineyard Creek analysis may have in determining project scope outside the context of the Section 1720(c)(2) partial exemption.) The public improvements required for the project meet the test of the Section 1720(c)(2) partial exemption: The work was required as a condition of regulatory approval, the work cost more than the City’s contribution of public funds, and the City maintained no proprietary interest in the Project. The court found that applying ALP’s more narrow interpretation would result in developers being permitted to allocate lump sum public contributions to specific structures in order to minimize payment of prevailing wages and would thereby “render ineffectual” prevailing wage requirements for required public improvement work.