Real Estate and Construction Law Blog

BIACC v. City of Patterson (2009) 171 Cal.App.4th 886

By David P. Lanferman

On June 17, 2009, the California Supreme Court denied the City of Patterson's petition for review of the Court of Appeals decision invalidating the City of Patterson's "affordable housing in lieu fees" and holding that the City violated a development agreement by demanding the new fees from the approved project. The Fifth Appellate District had initially issued its unanimous decision in January, holding that the City had failed to demonstrate that the amount of its new $22,000 per market-rate home fee was reasonably related to any deleterious impacts on the community's need for affordable housing. The appellate court later denied the City's petition for rehearing, slightly modified the text of its decision, and ordered the decision to be published in March. The Supreme Court's recent ruling means the decision now stands as "final" (at least as to the California judicial system).

California Oak Foundation v. County of Tehama et al. (Del Webb California Corp. et al.), ____ Cal. App. 4th ____ (June 11, 2009, No. CI58258)

By Katharine E. Allen

Four letters sent to the County of Tehama and the Tehama County Board of Supervisors (collectively “Tehama”) and disclosed to real parties in interest by a law firm retained as outside counsel for the purpose of providing advice on compliance with the California Environmental Quality Act (“CEQA”) maintained their privileged status under the attorney-client and work product privileges despite the disclosure and thus did not need to be included in the administrative record. In so holding, the Court of Appeal for the Third Appellate District relied on the common interest doctrine to maintain the privileged status of the letters. The court did, however, reverse the judgment of the Superior Court of Tehama County on a separate issue related to the investigation of the financial feasibility of certain mitigation fees, with directions that the superior court enter a judgment requiring Tehama to reconsider the standard used in determining the economic feasibility of the underlying project.

By Randolph C. Visser & Michael Cato

On April 23, 2009, the California Air Resources Board (CARB) approved the first low-carbon fuel standard (LCFS) in the nation. Designed to help meet the greenhouse gas emission (GHG) targets established by the Global Warming Solutions Act (AB 32), beginning in 2011, the regulation requires producers and importers of transportation fuel to reduce the average carbon content of fuel sold in California on an annual basis, with a total reduction of at least 10 percent by 2020.

By Judy V. Davidoff, Daniel P. Bane, & Rafael Muilenberg

The rules governing regional planning changed dramatically when Governor Schwarzenegger signed Senate Bill 375 (SB 375) into law last year. Whatever the ultimate outcome, interested parties throughout California—from regional transportation agencies to local governmental agencies to land developers—will need to work in this dramatically new world and make the best of it together. This article addresses some of the key elements of SB 375, discusses potential issues, and describes the opportunities presented to interested parties and stakeholders to get involved in the process to protect their interests at an early stage.

By Randolph C. Visser, Jeffrey W. Forrest, & Michael Hansen

On May 4, the U.S. Supreme Court handed down its 8 to 1 decision in the much anticipated case of Burlington Northern & Santa Fe Railway Co., et al v. United States et al. (556 U.S.___ (2009)), which challenged the traditional notion of joint and several liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund") and challenged a new, expansive notion of arranger liability under CERCLA. The Supreme Court overturned the Ninth Circuit Court of Appeals' broad interpretation of arranger liability and may have lowered the bar for how Potentially Responsible Parties ("PRPs") can demonstrate apportionment liability, therefore avoiding CERCLA's expansive joint and several liability scheme.

The Fifth Day, LLC v. James P. Bolotin, et al., ___ Cal.App.4th ___(March 27, 2009, No KC047712)

By Jon E. Maki & Bram Hanono

The California Court of Appeal for the Second Appellate District determined that an entity which provided construction management services to a private owner developing commercial real property was not required to be licensed as a contractor pursuant to the Contractors' State License Law ("CSLL") (opinion by Acting Presiding Justice Armstrong, concurrence by Justice Krieger). In a lengthy dissent, Justice Mosk disagreed, highlighting that the intent of the CSLL is to protect consumers from unqualified and unlicensed contractors and predicted that the decision on a case of first impression creates a loophole in the license requirements by allowing unlicensed contractors to call themselves "construction managers."

By Matthew Richardson

The IRS recently issued "safe harbor" guidance that home loans modified under the Home Affordable Modification Program (HAMP) will not adversely affect real estate mortgage investment conduits (REMICs). Without this guidance, payments from the US government to lenders and servicers of home loans under HAMP may have resulted in a 100% penalty tax and may have jeopardized the securitization vehicle's tax-advantaged classification as a REMIC.

Entergy Corp. v. Riverkeeper, Inc., 556 U.S. ____, No. 07-1355 (2009)

By Robert J. Uram, Ella Foley-Gannon and James Rusk

On April 1st, the Supreme Court held that the federal Clean Water Act (the “Act”) allows the Environmental Protection Agency (the “EPA”) to use cost-benefit analysis in setting the performance standards that power plants must meet to reduce the impact of cooling water intakes on aquatic organisms. Entergy Corp v. Riverkeeper, Inc., 556 U.S. ____ (2009), reverses a decision of the Second Circuit that held the EPA had unlawfully weighed the costs of environmental remediation measures against their benefits in setting “best technology available” standards for existing facilities. The opinion has major implications because the challenged regulations apply to facilities that account for more than half of the nation’s electricity generating capacity and may allow those facilities to avoid billions of dollars annually in increased compliance costs. The Court’s reasoning also may open the door to use of cost-benefit analysis under the Act in other contexts, such as storm water regulation, where it is not currently considered.

California Native Plant Society v. City of Rancho Cordova, ____ Cal. App. 4th _____ (March 24, 2009, No. C057018)

By Elizabeth S. Anderson

The California Court of Appeal for the Third Appellate District determined that the City of Rancho Cordova did not improperly defer mitigation under the California Environmental Quality Act ("CEQA") when it adopted a mitigation measure that required the applicant to develop (1) a habitat mitigation and monitoring plan for off site mitigation pursuant to standards which would ensure no net loss of habitat as a result of on site construction; and (2) a wetland avoidance/mitigation plan to address the potential impacts of any off-site creation activities contemplated in the habitat mitigation and monitoring plan. In reversing the trial court's holding on this point, the court found that the habitat mitigation and monitoring plan did not need to identify specific off-site locations for mitigation. The court did, however, affirm the trial court's holding that the City's approval of the entitlements was inconsistent with a General Plan policy that required the City to design mitigation "in coordination with" other public agencies because the City merely solicited, considered, and responded to the agencies' comments on the EIR. Although the holding on this latter issue may require public agencies that use this language in their general plan to "cooperate with" the specified agencies, the court upheld the principle that a project need not be in "perfect conformity" with every general plan policy. Rather, a project would be consistent with the general plan if it would "further the objectives and policies of the general plan and not obstruct their attainment."

By Neil A.F. Popović

As if legal efforts to address climate change weren’t complicated enough, a recently released study by the Peterson Institute for International Economics warns that U.S. Congressional efforts to reduce climate change could run afoul of international trade rules under the General Agreement on Tariffs and Trade (GATT), leading to years of legal disputes in the World Trade Organization.