Urban Renewal Agency v. California Coastal Zone Conservation Com.

• Decision Date: 26 November 1975
• Docket Number: S.F. 23306
• Court: California Supreme Court
• Parties: , 542 P.2d 645 URBAN RENEWAL AGENCY OF the CITY OF MONTEREY et al., Plaintiffs and Respondents, v. CALIFORNIA COASTAL ZONE CONSERVATION COMMISSION et al., Defendants and Appellants.

Page 485

125 Cal.Rptr. 485

15 Cal.3d 577, 542 P.2d 645

URBAN RENEWAL AGENCY OF the CITY OF MONTEREY et al., Plaintiffs and Respondents, v. CALIFORNIA COASTAL ZONE CONSERVATION COMMISSION et al., Defendants and Appellants.

S.F. 23306.

Supreme Court of California,

In Bank.

Nov. 26, 1975.

As Modified Dec. 24, 1975.

William C. Marsh, City Atty., Richard C. Salladin, W. Reece Bader, Steven A. Brick and Orrick, Herrington, Rowley & Sutcliffe, San Francisco, for plaintiffs and respondents.

Evelle J. Younger, Atty. Gen., Carl Boronkay, Asst. Atty. Gen., Roderick Walston and Richard C. Jacobs, Deputy Attys. Gen., for defendants and appellants.

RICHARDSON, Justice.

This case presents questions regarding the availability of 'grandfather clause' exemptions for municipal corporations engaging in projects which otherwise would require a permit under the California Coastal Zone Conservation Act (Pub.Resources Code, § 27000 et seq.). We have concluded that municipal corporations may qualify for such an exemption since the act discloses a legislative intent to treat such entities no differently from any other 'person.' We further conclude, however, that although plaintiffs (city and agency) are exempt from the act's permit requirement, the exemption does not extend to building and construction activities to be undertaken by private developers purchasing land from plaintiffs within the project area.

1. Factual Background

Preliminarily, we review certain relevant history. Plaintiffs herein are the City of Monterey (a municipal corporation) and the Urban Renewal Agency of the City of Monterey (a public agency organized under the California Community Development Law, Health & Saf.Code, § 33000 et seq.). In 1959, plaintiffs commenced plans for the subject redevelopment project, involving 38 acres of land in the northerly section of downtown Monterey in the general vicinity of the Old Custom House and Fisherman's Wharf. The proposed plan originally contemplated replacement of existing 'blighted' structures (transient hotels, bars and residences) with a shopping center, hotel, parking and tourist facilities. In February 1972, the plan was substantially modified to provide, in lieu of a shopping center, for a 'cultural-conference center' which was to become the 'catalyst' for a major hotel and other tourist and commercial uses on the remainder of the project lands.

From its inception, the plan called for private development of the buildings to be constructed within the project area. The activities of plaintiffs have been, and are, limited to the acquisition of the subject real property, the repair or demolition and removal of existing structures, and the installation and construction of necessary public improvements such as streets, utilities and parking facilities. Thereafter, the plan provided that plaintiffs would sell various parcels to private developers for the construction of buildings compatible in type, size and use with the 'basic criteria' of the redevelopment plan. According to one of the trial court's findings, 'The basic criteria of said plan since inception has been and is the preservation, restoration and enhancement of historic buildings and areas and the compatibility of new structures with the City of Monterey's historical heritage, together with the renewal and development of a blighted and slum urban area.'

The project was formally adopted in 1961. In 1962, plaintiff agency entered into a loan agreement with the federal government whereby the sum of $6,600,000 in federal funds would be made available to assist in the project. In 1966, the loan agreement was amended to increase the loan to $13,362,000. During the period from 1962 to November 8, 1972, (the operative date under the act's 'grandfather clause') plaintiffs expended more than $11,000,000 in federal funds in furtherance of the project. Moreover, in reliance upon the federal loan and in contemplation of the proposed development project, plaintiffs prior to November 8, 1972, entered into various agreements with state and local agencies whereby lands and easements were obtained and additional funds secured. Plaintiff city paid approximately $300,000 from its general funds to acquire a parking site, and approximately $1,000,000 for various improvements to the project area. Plaintiff agency spent $3,120,000 in loan funds for the construction of a traffic tunnel and related street and utility relocation. In addition, the agency paid $20,000 on plans and designs for the cultural-conference center and hotel facility. According to the findings herein, '[a]pproximately eighty percent (80%) of the budgeted costs of the public improvements required under the . . . Plan had been expended by November 8, 1972.' The findings also state that, by reason of plaintiffs' repayment obligations under the federal loan agreement, plaintiffs face irreparable injury should the project not proceed.

On March 23, 1973, plaintiffs applied to defendant regional commission for an exemption from the permit requirement of the Coastal Zone Conservation Act (hereafter sometimes referred to as Coastal Act). Although its staff recommended granting the exemption, the commission denied the application. On June 20, 1973, defendant state commission denied plaintiffs' administrative appeal. Plaintiffs thereupon filed the present action in superior court, seeking judicial review by way of mandamus. (Code Civ.Proc., § 1094.5.) As previously indicated, the trial court found that by reason of plaintiffs' construction activities and expenditure of substantial funds in connection with the project prior to November 8, 1972, plaintiffs acquired a vested right to complete the redevelopment project without regard to the Coastal Act's permit requirement, and that this exemption extended as well to the construction and other activities of private developers in the project area. Defendant commissions appeal from the judgment.

2. The Coastal Zone Conservation Act

We review certain relevant provisions of the act which originated in an initiative measure, adopted at the November 7, 1972, general election. The act's stated purpose is to protect and restore the natural and scenic resources of this state's coastal areas. (Pub.Resources Code, § 27001.) It creates several regional commissions and a state commission, provides for the preparation of a coastal zone conservation plan (§ 27300), and requires certain coastal zone developers to obtain a permit from the regional commission (§ 27400). The permit requirement is contained in section 27400, which states that: 'On or after February 1, 1973, any person wishing to perform any development within the permit area shall obtain a permit authorizing such development from the regional commission . . ..'

We have recently construed the language of section 27400 as requiring a coastal permit for construction commenced after February 1, 1973, but as not requiring one for persons performing 'substantial lawful construction of their projects prior thereto.' (San Diego Coast Regional Com. v. See The Sea, Limited (1973) 9 Cal.3d 888, 890, 109 Cal.Rptr. 377, 378, 513 P.2d 129, 130.) Although, as we discuss below, the See The Sea case may afford plaintiffs herein an alternative ground for exemption from the permit requirement of the act (since plaintiffs' pre-Feb. 1, 1973, activities were found to be deemed 'substantial'), plaintiffs' primary contention relates to section 27404, the 'grandfather clause' exemption.

Section 27404 in pertinent part provides: 'If, prior to * * * November 8, 1972, any city or county has issued a building permit, no person who has obtained a vested right thereunder shall be required to secure a permit from the regional commission; providing that no substantial changes may be made in any such development, except in accordance with the provisions of this division. Any such person shall be deemed to have such vested rights if, prior to * * * November 8, 1972, he has in good faith and in reliance upon the building permit diligently commenced construction and performed substantial work on the development and incurred substantial liabilities for work and materials necessary therefor.' (Italics added.)

As we have previously indicated, the trial court found that plaintiffs had acquired vested rights under this section by reason of their pre-November 8, 1972, activities outlined above, and that accordingly plaintiffs and the private developers who will perform the actual construction of buildings in the project area were entitled to an exemption from the act's permit requirement. Defendants challenge the court's findings in this regard, making two separate contentions: (1) that municipal corporations cannot obtain vested property rights, and (2) that plaintiffs' redevelopment plan, and particularly that phase of it which contemplates private development, is not sufficiently defined and unified so as to constitute a single 'development' entitled to a blanket exemption extending to the private developers.

Preliminarily, we note that despite section 27404's requirement of a 'building permit,' defendants do not contend that plaintiffs should be denied an exemption solely by reason of their failure to secure such a permit. As public agencies, plaintiffs were not required to obtain a building permit, and defendants acknowledge 'that an exemption can be obtained apart from the rigid building permit requirements of section 27404 . . ..' (See also Aries Dev. Co. v. California Coastal Zone Conservation Com. (1975) 48 Cal.App.3d 534, 544, 122 Cal.Rptr. 315; Environmental Coalition of Orange County, Inc. v. AVCO Community Developers, Inc. (1974) 40 Cal.App.3d 513, 523, 115 Cal.Rptr. 59.)

3. Availability of 'Vested Rights' Exemption to Municipal Corporations

Prior to the enactment of the Coastal Act, there had evolved a general principle, used primarily in zoning cases, and most recently expressed in Aries Dev. Co. v. California Coastal Zone...