A settlement that Rohnert Park signed to resolve a lawsuit over the city’s general plan did not illegally abridge the city’s police power, the First District Court of Appeal has ruled.

Two development companies argued that the city surrendered its police power by approving a lawsuit settlement calling for the city to remove the developers’ land from the city’s sphere of influence. The First District disagreed, ruling that the settlement did not grant an outside party veto power over the general plan.

The developers, 108 Holdings, Ltd., and SC Forty Acres, Inc., in March asked the state Supreme Court to accept the case.

The appellate court’s ruling addresses what can be a tricky situation, said Susan Brandt-Hawley, an attorney for a citizens group that had sued Rohnert Park. Generally, all parties want to resolve land use litigation with settlements, she said. The tricky part is crafting a settlement that does not impinge on a local government’s land use authority. In this instance, the City Council considered the settlement agreement in open session, and the agreement does not limit future general plan amendments.

The First District ruling, Brandt-Hawley said, shows that it is acceptable for a government agency to settle a lawsuit with environmental groups, even if the settlement is a long-term agreement to protect the environment.

Rohnert Park adopted a new general plan in July 2000. The plan placed 137 acres of unincorporated land near the community of Penngrove within the city’s sphere of influence, and designated a portion of the land for industrial development. Later that year, voters approved a city-sponsored ballot measure establishing an urban growth boundary. About 100 acres of the property in question lies within the boundary. In March 2002, the Sonoma County Local Agency Formation Commission (LAFCO) approved the city’s application to expand its sphere of influence to take in the entire 137 acres.

Shortly after the city adopted the general plan, however, a group called South County Resource Preservation Committee (the real parties in interest in the case at hand) sued the city on a number of grounds. The group argued primarily that the general plan’s environmental impact report was inadequate.

In August 2002 — after LAFCO had approved an expanded sphere of influence — the City Council approved a settlement agreement and stipulated judgment, which the Superior Court accepted the following month. The settlement with the environmental group called for the city to apply to LAFCO for removal of the developers’ land from the city’s sphere of influence, and to interpret in certain ways general plan policies regarding groundwater conservation, the availability of water to serve new development, community design and traffic. Following the terms of the settlement, the city then approved a general plan amendment removing the developers’ property from the sphere of influence.

The developers sued, arguing that the city had delegated its police power. The developers also contended the settlement amounted to a general plan amendment that should have been subject to environmental review. The Sonoma County Superior Court ruled for the city, and the First District, Division Five, upheld the decision.

In the First District opinion, Justice Lawrence Stevens pointed out that a municipality may not contract away its legislative functions, and that adoption and amendment of a general plan are legislative acts. The developers argued that the city had negotiated away its legislative authority. They cited County Mobilehome Positive Action Com., Inc. v. County of San Diego, (1998) 62 Cal.App.4th, 727 (see CP&DR Legal Digest, May 1998), and Alameda County Land Use Assn. v. City of Hayward, (1995) 38 Cal.App.4th 1716 (see CP&DR Legal Digest, November 1995).

County Mobilehome concerned a San Diego County agreement for a 15-year moratorium on rent control legislation with respect to mobile home park owners who signed an accord with the county. The court threw out the agreement as an unlawful surrender of the police power. Alameda County concerned a memorandum of understanding (MOU) that Hayward, Pleasanton and Alameda County signed regarding a parcel of land that lay within all three jurisdictions. Under the MOU, there could be no further amendments to any of the three entities’ general plans for the parcel unless all three entities agreed. The court held the MOU was an unlawful surrender of the police power because it gave another jurisdiction veto power over a local government’s general plan amendments.

However, the First District found those cases different from the Rohnert Park case.

“In contrast to the MOU at issue in Alameda County, the settlement agreement and stipulated judgment do not grant real parties in interest (or anyone else) veto power over future general plan amendments,” Justice Stevens wrote. “To the contrary, the stipulated judgment places no restrictions on the city’s exercise of its police power in the future. There is simply no basis for concluding that, in entering into the settlement agreement and stipulated judgment, the city has sacrificed the ‘crucial control element’ that is the hallmark of an improper surrender of police power,” Stevens continued, citing County Mobilehome.

The court then considered the argument that the settlement amounted to a general plan amendment. The court conceded that changing the sphere of influence was a general plan amendment. The developers argued that action was “tainted” because it was “dictated entirely by the terms of a private contractual agreement.”

The court disagreed, noting that the city conducted the required administrative process. “[T]he city’s action is reviewable only by the electorate, not the courts,” Stevens wrote.

The developers further argued that the settlement was a general plan amendment because it requires the city to interpret the general plan in certain ways. The court again disagreed, finding “most of the provisions to which 108 Holdings object to be little more than restatements of policies that are already part of the general plan.”

The Case:
108 Holdings, Ltd. v. City of Rohnert Park, No. A108629, 06 C.D.O.S. 970, 2006 DJDAR 1304.
Filed January 31, 2006.

The Lawyers;
For 108 Holdings: Tracy Kirkham, Cooper & Kirkham, (415) 788-3030.
For the city: Michelle Marchetta Kenyon, McDonough, Holland & Allen, (510) 273-8780.
For South County Resource Preservation Committee: Susan Brandt-Hawley, (707) 938-3908.