Sierra Club Suit Puts Development Agreements to the Test

A Sierra Club lawsuit aimed at shrinking a massive Thousand Oaks housing project could help ensure that cities statewide do not bargain away their legal obligation to protect the environment, government and legal analysts say.

The suit, filed recently against Thousand Oaks, says that the city signed a deal allowing developers to build 2,350 homes on the rolling hills overlooking Newbury Park before it had fully considered the project’s potential for environmental damage.

Sierra Club attorneys argue that part of the 4,500-acre Dos Vientos Ranch development would seal off a critical wildlife corridor and could endanger dozens of plant and animal species in the surrounding Santa Monica Mountains.

If the environmental group prevails, the ruling would force Thousand Oaks--and perhaps all California cities--to perform more comprehensive environmental reviews before signing development agreements, government analysts say.

In addition, it would demand that cities enforce, as part of their deals with developers, contract provisions that say a project’s size can be reduced if it threatens residents or the environment.

“The state law says you need to look before you leap,� said Stephan Volker, a Sierra Club attorney. “I think the risk inherent in the development agreement process is that the city will grant approvals before they have all the facts. That’s what happened in Thousand Oaks.�

Development agreements--contracts between government and builders--have been legal in California for 15 years. Thousand Oaks city officials say they are valuable tools, since they guarantee builders that when local political winds change, the requirements for their projects will not.

“There were several cases where developers sank millions of dollars into a project, they received tentative approvals from the city, and a couple years down the line, a new council came along and said no,� Thousand Oaks City Atty. Mark Sellers said.

“Developers wanted a way to be certain that once they started down the road, they would not be forced to turn back,� he said.

In exchange for the guarantees, the developers typically offer cities lucrative packages that include cash, land and promises to build schools, parks and other public amenities.

In 1990, Thousand Oaks agreed to allow construction of the Dos Vientos development in exchange for $12 million, 1,000 acres of open space and a host of other public improvements.

But enticements create the risk that cities such as Thousand Oaks will rush to sign the deals without thoroughly examining the potential for violating state environmental laws, the Sierra Club’s Volker argued.

Because of that risk, he said, the public needs stronger assurances that the environment will be protected.

Thousand Oaks officials said that the lucrative Dos Vientos deal in no way kept them from performing proper reviews.

“This was not building for dollars,� said Mike Sangster, city deputy planning director. “The environmental concerns were thoroughly examined well before we signed the agreement.� In fact, the city and the public reviewed the project well before the development agreement was signed, he said.

Purchased in 1982 by Pasadena-based Operating Engineers, the developer first wanted to build 3,900 homes. Six years later, after dozens of public hearings and a two-volume environmental analysis, the City Council conceptually approved 2,350 homes.

Since the final compromise agreement was signed in 1990, construction of about 400 homes in two other Dos Vientos subdivisions has begun.

In April, however, the city issued a new environmental report on a third Dos Vientos subdivision, because the original analysis was more than five years old. The report identified several new problems with the 220-house project.

The report said some of the new houses would be too close to an earthquake fault and to power poles, findings disputed by the developer as baseless. It also said the project would have a greater impact than previously thought on noise, traffic and native plants and animals.

After reviewing the report, council members agreed to take some steps to reduce risks from the earthquake fault and power poles but decided not to cut the number of homes.

“The reason that was not proposed is because, under the agreement, the city is legally obligated to allow that density,� Sellers said. “We can do a number of things to help mitigate problems with the development, but we can’t go back and change the major points of the agreement.�

Sierra Club attorneys say Sellers is wrong. They argue that the city is required by state environmental law to consider all possible solutions, including density reduction.

The problem, explained Ventura planning analyst William Fulton, is that state laws allowing development agreements and state laws designed to protect the environment appear to conflict.

“It really is a sticky situation,� Fulton said. “If you go back and adjust the density, you would lose the certainty that the developer received by signing the agreement.�

“The question then becomes, which one of these conflicting laws is more important,� Fulton said.

Los Angeles attorney Carla Ryhal, who specializes in development agreements, said their intent is to provide certainty that the city will not sway from its original contract.

A 1993 amendment to state environmental law includes a section permitting use of a “master environmental impact report,� so developers and the city can evaluate a project at the outset, rather than years into it.

“That amendment confirms the legislation’s intent that a development agreement is meant to provide the global framework to allow developers to take those next steps without risk,� Ryhal said.

“Clearly, they are saying they want developers to be able to evaluate the entire project at the point of the development, not in pieces as a project proceeds,� she said.

But other attorneys said the issue is not clear-cut.

“It is fairly common that an initial (environmental impact report) will fail to raise important environmental issues,� said Jim Moose, a Sacramento attorney who specializes in environmental law.

“There should be some element in a development agreement which will allow environmental issues to be addressed later on,� he said. There is such a provision in Thousand Oaks’ Dos Vientos agreement, but the city and Sierra Club disagree on whether it could legally have been invoked.

What this lawsuit may clarify, Fulton said, is exactly what a city can and cannot do to enforce laws after they have signed a development agreement.

Several times in recent years, cities around the state have grappled with the issue, Volker said. But until now no one has brought it before a judge, he said.

That is because cities and developers have been pleased with the arrangement created by the contracts, said Fulton, who publishes a statewide newsletter that tracks trends in planning law.

“These are popular and are frequently used because both sides get something they want,� he said. “The cities get things they never could ask for without an agreement, and the developer gets the assurance his money won’t go down the drain.�

In addition, a lawyer for the Dos Vientos developer said he has always believed such prearranged deals help the environment.

“I believe development agreements have been supported by environmental groups for years,� attorney Wayne Jett said. “These agreements provide the mechanics for greater certainty that mitigation, which is often extensive and expensive, will be performed.�

Volker said he does not want the Thousand Oaks case to end use of development agreements, but the Sierra Club is fighting now because such a contract has been misused.

“All we’re asking is that the developers be confident that all the environmental variables have been fleshed out before the contract is signed,� Volker said, “so that they don’t find out later that something like a major wildlife corridor is on the land.�

“If they did that,� he said, “the process would hold little risk.�