Teachers Management & Inv. Corp. v. City of Santa Cruz

• Decision Date: 02 December 1976
• Citation: 134 Cal.Rptr. 523,64 Cal.App.3d 438
• Parties: TEACHERS MANAGEMENT & INVESTMENT CORP. etc., et al., Plaintiffs and Appellants, v. CITY OF SANTA CRUZ, etc., et al., Defendants and Respondents. Civ. 38200.
• Court: California Court of Appeals Court of Appeals

Page 523

134 Cal.Rptr. 523

64 Cal.App.3d 438

TEACHERS MANAGEMENT & INVESTMENT CORP. etc., et al., Plaintiffs and Appellants, v. CITY OF SANTA CRUZ, etc., et al., Defendants and Respondents.

Civ. 38200.

Court of Appeal, First District, Division 4, California.

Dec. 2, 1976.

Rehearing Denied Dec. 28, 1976.

Dennis J. Kehoe, Adams, Levin, Kehoe, Bosso & Sachs, Santa Cruz, for plaintiffs-appellants

Neal R. Anderson, Atchison, Haile & Haight Santa Cruz, for defendants-respondents.

CHRISTIAN, Associate Justice.

Teachers Management & Investment Corporation and Lighthouse Point, Ltd. (hereinafter collectively 'plaintiffs' or 'TMI') appeal from a judgment dismissing their complaint against the City of Santa Cruz. The complaint sought declaratory and injunctive relief on the theory that an initiative ordinance of the city was void. The judgment of dismissal was rendered after the court sustained without leave to amend, a general demurrer by the city.

It was alleged in the complaint that in 1967, the City Council of the City of Santa Cruz and the Board of Supervisors of Santa Cruz County established a Joint Convention Study Committee to determine whether a convention center project would be feasible for the area and, if so, to select the most appropriate site. The committee subsequently submitted a report supporting the project and recommending that the convention center facilities be located at Lighthouse Point (also known as Lighthouse Field) in the City of Santa Cruz.

Acting on the report, the city and the county entered into an agreement for the formation of the Santa Cruz City-County Community and Convention Center Authority, sometimes referred to as the 'Joint Powers Authority.' This agreement anticipated that the Joint Powers Authority would develop and construct convention center facilities which would then be leased to, and operated and maintained by, the City of Santa Cruz. Under the agreement, the city would bear 75 percent of the cost and the county would bear the remaining 25 percent. Sometime thereafter, the city acquired 4.597 acres from the owners of the property known as Lighthouse Point; these 4.597 acres were later to be conveyed by the city to the Joint Powers Authority to be used for the public portion of the convention center facilities.

Late in 1968, the City of Santa Cruz rezoned the Lighthouse Point area to the 'planned development' classification to permit development of a convention center and related facilities, including a hotel, a village, and other commercial and residential structures.

The Joint Powers Authority entered into an agreement with a private land developer whereby the Joint Powers Authority was to construct the convention center building and parking area and the developer was to develop the private facilities. The private and public development was to be concurrent.

TMI entered into negotiations with the owners of the remaining portions of Lighthouse Point for the purchase of that property and with the private developer who had contracted with the Joint Powers Authority for the development rights. Before the close of escrow, TMI obtained confirmations from the two governmental entities that Lighthouse Point would in fact be the location for the convention center project: the City Council of the City of Santa Cruz and the Board of Supervisors of the County of Santa Cruz adopted resolutions reaffirming Lighthouse Point as the convention center site and approving a proposed agreement between the Joint Powers Authority and TMI for the development of the site. On May 13, 1970, the Joint Powers Authority and TMI entered into a formal agreement whereby the Joint Powers Authority would construct the convention center building and appurtenances and TMI would develop the private facilities. TMI then acquired the bulk of the property in the Lighthouse Point area, as well as the development rights, at a cost in excess of $2 million. The Joint Powers Authority obtained from the federal government a commitment for a $1.64 million grant to aid the convention center project.

On June 4, 1974, the voters of the City of Santa Cruz approved Municipal Measure D, an initiative ordinance, which provided as follows:

'WHEREAS, Lighthouse Point and Lighthouse Field comprise a unique area within the City of Santa Cruz, and

WHEREAS, the neighborhood adjacent to Lighthouse Point and Lighthouse Field is now a stable, quiet, and peaceful residential area, and WHEREAS, the construction and development of a convention center facility at Lighthouse Point or on Lighthouse Field, would have a substantial detriment effect on the ecology and environment of Santa Cruz, and would have a substantial adverse effect on the residential areas adjacent to Lighthouse Point and Lighthouse Field, and

WHEREAS, Lighthouse Point and Lighthouse Field are inappropriate and unsuitable as a location for a convention center facility, and

WHEREAS, we determine that the City of Santa Cruz should not own, operate, lease, or maintain a convention center facility at Lighthouse Point, or on Lighthouse Field.

NOW THEREFORE

The people of the City of Santa Cruz do ordain as follows:

The City of Santa Cruz shall not own, lease, maintain, or operate a convention center facility on any real property located on the south half of Section 24, Township 11 South, Range 2 West, bounded by Pelton Avenue on the North and National Avenue on the West, and by the Pacific Ocean and Bay of Monterey, respectively, on the South and East, Assessor's Parcel Nos. 4--301--5, 9, 10, 11, 13 and 14, and 4--291--22 and 23, commonly known as Lighthouse Point, or Lighthouse Field.'

The trial court took judicial notice of the following facts which do not appear on the face of the complaint:

1. The agreement creating the Joint Powers Authority, which also required the city to lease, maintain, and operate the convention center after completion, contained a provision for termination should revenue bonds not be sold by September 1, 1971. That date was later extended to September 1, 1974.

2. The agreement between the Joint Powers Authority and TMI for concurrent development of the project contained a similar provision for termination should the revenue bonds be unsold, although no date was specified.

3. No bonds for the project were ever issued or sold.

4. On April 15, 1974, the Central Coast Regional Coastal Zone Conservation Commission denied the application of the Joint Powers Authority and TMI for a coastal development permit. Although the April 15 action was apparently not conclusive, a final denial was subsequently entered sometime after June 4, 1974, the date of the passage of Municipal Measure D.

5. On August 31, 1974, the federal government withdrew the grant that had been made to the Joint Powers Authority to aid in the construction of the convention center.

A complaint sufficient on its face may be subject to demurrer on the basis of facts judicially noticed. (Code Civ.Proc., § 430.30; Javor v. State Board of Equalization (1974) 12 Cal.3d 790, 796, 117 Cal.Rptr. 305, 527 P.2d 1153.) The city advanced, and the trial court adopted as an alternative ground of decision, the theory that facts judicially noticed in this case demonstrate that the cause is moot. The argument is that even if Municipal Measure D were declared invalid, plaintiffs will still be unable to develop Lighthouse Point as planned because the project has been disapproved by the Coastal Commission. It is also pointed out that the agreement creating the Joint Powers Authority has expired of its own terms by virtue of the failure to issue revenue bonds, and the city is no longer obligated to lease, maintain, or operate the proposed convention center. The agreement between the Joint Powers Authority and TMI has likewise expired and the United States has ended its participation in the project by withdrawing its grant.

An action for declaratory relief will be dismissed if it is shown that the controversy presented is or has become moot. (Burke v. City etc. of San Francisco (1968) 258 Cal.App.2d 32, 34, 65 Cal.Rptr. 539; Pittenger v. Home Savings & Loan Assn. (1958) 166 Cal.App.2d 32, 36, 332 P.2d 399.) The present case continued to present a substantial controversy; the decision of the Coastal Commission reflected a concern with issues and matters wholly apart from the controversy between the plaintiffs and the defendants: that decision reflects a determination of the convention center project's propriety under the California Coastal Zone Conservation Act of 1972. While the commission's action has obviously affected plaintiffs' ability to proceed with the construction of the convention center complex, the commission's decision is conceivably subject to modification by the commission. Plaintiffs should not be precluded from seeking a determination as to their rights with respect to these defendants merely because another controversy, albeit related to the present one, has been decided against them.

The expiration of the two Joint Powers Authority agreements does not render the case moot. Plaintiffs' cause of action is not dependent solely upon the continued existence of those contracts. As plaintiffs point out, 'Municipal Measure D prohibits . . . the acts stated therein without reference to a particular time frame or a particular Joint Powers Agreement.' (Cf. Paoli v. Cal. & Hawaiian Sugar etc. Corp. (1956) 140 Cal.App.2d 854, 856, 296 P.2d 31.)

But the demurrer was sustained on the additional ground that the complaint did not state a cause of action. Plaintiffs contend that Municipal Measure D should be construed as a land use measure which unlawfully attempts to regulate a single landowner through the initiative process. The argument is that the measure must be treated as a land use or zoning ordinance because it accomplishes a 'substantial interference' with the use of their property. (Citing People's Lobby, Inc. v. Board of Supervisors (1973) 30 Cal.App.3d 869, 873, 106...