Arastra Limited Partnership v. City of Palo Alto

• Decision Date: 15 September 1975
• Docket Number: No. C-72-2305 RHS.,C-72-2305 RHS.
• Citation: 401 F. Supp. 962
• Court: U.S. District Court — Northern District of California
• Parties: ARASTRA LIMITED PARTNERSHIP, a limited partnership, Plaintiff, v. CITY OF PALO ALTO, a Municipal Corporation, Defendant.

401 F. Supp. 962

ARASTRA LIMITED PARTNERSHIP, a limited partnership, Plaintiff, v. CITY OF PALO ALTO, a Municipal Corporation, Defendant.

No. C-72-2305 RHS.

United States District Court, N. D. California.

September 15, 1975.

Marvin G. Burns, Fulop, Rolston, Burns & McKittrick, John Petrasich, Beverly Hills, Cal. Robert S. Webber, Burlingame, Cal., for plaintiff.

Robert K. Booth, Jr., City Atty., City of Palo Alto, Palo Alto, Cal., Fred Caploe, Atkinson, Farasyn, Smith & Caploe, Mountain View, Cal., William J. Turner, Jackson, Turner & Mulcare, Ronald Mulcare, Burlingame, Cal., for defendant.

DECISION

SCHNACKE, District Judge.

THE NATURE OF THE CASE

This is an action by Arastra Limited Partnership, a California limited partnership ("Plaintiff") against the City of Palo Alto ("Defendant"), for inverse condemnation of Plaintiff's real property by Defendant's actions over a period of time, culminating in Defendant's passage of Municipal Ordinances Nos. 2654 and 2671.

Plaintiff, in its First Amended Complaint for Inverse Condemnation, alleges that Defendant's Ordinance No. 2671 applying the City's Open Space Zoning District Regulations to its property, was the final act in bad faith of Defendant City and constitutes an acquisition, confiscation and taking of Plaintiff's real property located in the City of Palo Alto.

FINDINGS OF FACTS

Defendant is a municipal corporation, located in the County of Santa Clara, State of California, which possesses powers of eminent domain. Plaintiff is a limited partnership presently having Sunradero, Inc., a corporation, as its general partner, and PLT, Inc., a corporation, as its limited partner. Sunradero, Inc. acquired its partnership interest in the Plaintiff partnership in December of 1967, having purchased the same from Sunset International Petroleum Company. PLT, Inc. acquired its interest in the Plaintiff partnership, on or about March 27, 1969, having purchased the same from Trinell, a general partnership.

The land which is the subject of dispute herein ("Plaintiff's land" and/or "the subject property") lies within Defendant's political boundaries and consists of 515.3 acres of essentially unimproved land. The subject property is located in an area commonly known as "the Foothills" and more specifically in that portion of the Foothills known as "the lands below the park" and/or "the lower Foothills".

The Events Leading up to Defendant's Open Space Zoning:

The current partners of Plaintiff acquired their respective interests in the partnership (which they carry at a book cost of $7,461,610.00) after the subject property was rezoned from REA (1 acre residential lots) to P-C (Planned Community) and a development plan (the "1966 Plan") was approved for the development thereof (as well as for the development of certain adjacent parcels). The 1966 Plan contemplated a 10-acre commercial area and 597 residential lots, of varying sizes, on a total of 659 acres (covering Plaintiff's land and certain adjoining land). In addition, the 659 acres included a 40-acre piece of the subject property which had been set aside, as a part of the aforesaid plan, to be separately sold to the Palo Alto Unified School District and/or independently developed at a later date. As applied to Plaintiff's land, the 1966 Plan called for 553 residential units on approximately 460 residential acres.

After approval of the 1966 Plan and on February 27, 1967, Defendant approved and thereafter constructed an "outlook" in its Foothills Park which created a public vista over and across Plaintiff's land.

Sometime in early 1968, Plaintiff began working on the formulation of a new and different development plan for the subject property, involving more extensive development than that contemplated in the 1966 Plan and, from the time the new plan was first conceived until the date it was formally submitted, discussions were held concerning the same with representatives of Defendant.

In or about December of 1968, Defendant advised Plaintiff that it intended to undertake a study as to the manner in which the entire Foothills should be developed but that it would not create any moratorium upon development during the study.

On May 15, 1969, when Plaintiff's new development plan for the property was in its final stages of preparation, the right to commence construction under the 1966 Plan expired and, from May 15, 1969 to September 14, 1972, Plaintiff's property remained zoned P-C without a specific development plan having been approved. Under the provisions of Defendant's Planned Community District Regulations, land may be developed for any and all uses and to any density or intensity, subject to approval by Defendant's City Council. Prior to November 9, 1970, it was Defendant's policy and intent that the Foothills (exclusive of Foothills Park) be developed. Particularly, at all material times prior to November 9, 1970, it was Defendant's policy and intent that the subject property be developed in accordance with Defendant's Planned Community District Regulations.

On June 2, 1969, Defendant entered into a contract with Livingston & Blayney, for the purpose of conducting a study of the manner and extent to which the Foothills area should be developed.

On June 16, 1969, Defendant's City Council approved a Trails and Paths Plan for the Foothills area that contemplated the acquisition of public easements for hiking and riding trails through portions of Plaintiff's land.

On August 1, 1969, Plaintiff filed an application for approval of a development plan for the subject property (the "1776 Plan") contemplating a residential density of approximately 3.57 housing units per acre (1,776 housing units on 243 acres, a 150,000 square foot commercial site, a 200,000 square foot office-professional complex, an elementary school site and other related public facilities on 24 acres and approximately 250 acres of open space). The 1776 Plan was developed by Plaintiff at a cost in excess of $200,000.00.

On October 29, 1969, Livingston & Blayney delivered the first in a series of reports, pursuant to its aforesaid contract of June 2, 1969. The first Livingston & Blayney report indicated that lands within the Foothills area having average slopes of 15 percent or less were "eminently suitable for residential development"; that lands with average slopes of 16-30 percent were "generally appropriate for residential development, including both single-family and multi-family dwelling types"; that Plaintiff's land, and the lands of Stanford University, were the most suitable for development and that there were no seismic or other physical problems that would inhibit residential development.

On November 14, 1969, Livingston & Blayney rendered a special report to Defendant relating specifically to Plaintiff's 1776 Plan. In substance, Livingston & Blayney's evaluation was that Plaintiff's plan was not as aesthetically pleasing as it could have been but was, in general, a reasonable development proposal for the subject property.

On December 12, 1969, Livingston & Blayney rendered its second report which, again, spoke in encouraging terms for the development of Plaintiff's land.

On January 22, 1970, Plaintiff wrote a letter to Defendant's Planning Commission requesting a final determination on the 1776 Plan and objecting to any further delay in its consideration by Defendant.

On January 26, 1970, Defendant's City Council passed a motion to the effect that the Livingston & Blayney study should include study of "permanent open space on lands that should be acquired to protect the outlook from Foothills Park."

On February 4, 1970, Defendant's Planning Commission held a hearing relating to Plaintiff's 1776 Plan. At the hearing, Defendant's Planning Commission passed a motion requesting, in substance, Plaintiff's comments on the economics and design features that might be involved if the density of its plan were reduced from 1,776 dwelling units "to approximately 1,250 dwelling units or other density the applicant feels appropriate."

On Februray 18, 1970, Plaintiff responded to the aforesaid Planning Commission request by submitting a letter discussing development at a density of 1500-1550 units on the subject property.

On March 16, 1970, Defendant's City Council passed a motion to the effect that consideration of Plaintiff's 1776 Plan be continued until a date following the receipt of Livingston & Blayney's Third Report.

In June of 1970, Livingston & Blayney rendered its Third Report which, at pages 57-60, recommended:

(a) That the lands below the Park, including Plaintiff's land, be purchased by Defendant.

(b) That the City deny approval of all development proposals as to such lands, including Plaintiff's land;

(c) That the City be prepared to purchase the said lands, including Plaintiff's land, when necessary to prevent development;

(d) That the said lands, including Plaintiff's land, be rezoned so as to prohibit more than 1-dwelling unit per 5 acres in order to prevent development prior to acquisition by the City; and

(e) That further study be made on alternative means of acquiring said land and the cost thereof to the City.

Regarding the upper Foothills, Livingston & Blayney recommended that Defendant initiate the creation of a regional park district to acquire such lands for park purposes.

On October 27, 1970, Livingston & Blayney wrote a letter to Defendant suggesting that the aforesaid recommendations at pages 57-60 of its Third Report be accepted by Defendant and that a further study be conducted in the following areas: the results of public acquisition on City finances; the effects of alternative methods of acquisition on the City tax rates; alternative means of acquiring the area suggested for park expansion; alternative means of acquiring the area suggested for land banking purposes; the refinement of acquisition cost estimates; estimates for maintenance costs upon acquisition; the timing of acquisition...