The Federal Government has Become a Big Player in Local Land Planning

04.02.2001
Orange County Business Journal
By Daniel D. Williams

Forget about the county supervisors and city halls, Orange County land planning has a new sheriff—the federal government.

After decades of mostly unimpeded growth, Orange County still has another 20 years or so worth of developable land left. Only there’s a catch: much of it falls under some form of federal constraint or control.

From the northeast corner down to South County, nearly all of OC’s developable land is home to protected birds, reptiles and habitats. Some of them, such as the California gnatcatcher, are well known by now. Others, such as the Coachella Valley fringe toed lizard, are more exotic.

Nowhere has the government’s fingerprint been more visible locally than in a ruling last fall on the California gnatcatcher. The U.S. Department of Fish and Wildlife, the government’s oversight agency for critical habitat designation, set aside 513,000 acres for the gnatcatcher, including 73,500 acres in South County.

One of 286 California species listed as threatened or endangered, the gnatcatcher’s protection comes with a steep price tag. Maintaining the integrity of the bird’s critical habitat will have a $5.5 billion economic impact, according to Rob Thornton, an attorney with the Irvine office of Nossaman, Guthner, Knox & Elliott , a law firm specializing in land use and environmental issues.

And the gnatcatcher is merely the first big step. A report by the California Natural Resources Group said only about 20 of the 286 threatened or endangered species have received study with an eye toward figuring out their critical habitat zones. With another 266 species to go, this leaves no room left to grow, Thornton contends.

Thus far, critical habitat designations for 11 of the 286 listed species in California totals 7.75 million acres—nearly twice the size of Massachusetts.

For developers, the increasing federal oversight adds a new level of complexity to the planning process. To get projects approved in sensitive areas, developers will have to set aside large swaths of land as open space. They also may have to scale back the sizes and densities of their projects. All the while, the already-high price tag for development stands to rise with the extra effort.

Every piece of property warrants a full production, said Christine Diemer Iger, chief executive officer of the OC chapter of the Building Industry Association of Southern California. Whether you inherited land to build your dream house or you want to build a masterplanned community, you have to go through the full environmental mitigation process. There are so many agencies watching and waiting to see what will happen to that piece of dirt.

The effect could be felt most strongly on affordable housing, according to attorney Thornton.

Currently, we are satisfying only 65% of our housing needs, he said. And that was before the critical habitat designation. This will have a huge economic impact.

For years, Fish and Wildlife has kept a low profile. But after years of being taken to the legal woodshed by environmental activists, the agency has taken a stronger stance, observers say. The last months of the Clinton administration saw a flurry of activity, they say.

In the good old days, a developer bought land, received a permit from local officials and started building. Not anymore. Now, builders undergo a rigorous, multilevel process and often wait months to get the green light to develop.

The process becomes particularly sticky when local officials OK a project only to have federal agencies shut it down.

Richard Broming, vice president of planning and entitlement for Rancho Mission Viejo LLC, uses the example of a builder who wants to develop a residential area and agrees to add a school and a park. The builder gets a nod from the local agencies wanting to improve the viability of the community. But then the federal officials come in, take a look at plans and nix them. Either the school gets smaller or the park goes away, they might say.

The developer is stuck, Broming said. The local officials are banking on a park and a new school and won’t budge. And the builder can’t cut into the retail or business side—the money-generating part of the project. So it’s back to the drawing board, or, in some cases, the project gets scrapped.

The situation becomes just as prickly when different federal agencies, such as Fish and Wildlife and the U.S. Army Corps of Engineers, clash. In OC, the two agencies have butted heads over protecting coastal sage scrub. The rub? Fish and Wildlife has

sought to protect sage scrub, which thrives on a dry, treeless habitat. Wetlands, which are pushed by the Army Corps, are key for birds and other animals—but not sagebrush.

The federalization of land use planning in OC has forced developers to become proactive, according to Pamela Sapetto of the OC arm of the National Association of Industrial and Office Properties. Already, developers such as The Irvine Company and Rancho Mission Viejo have set aside or offered up large, open spaces in exchange for development rights, she said.

In Rancho Mission Viejo’s case, the company has been setting aside or selling land for preservation—land that became Caspers Regional Park, the Audubon Sanctuary and the Thomas Reilly Regional Park. Now, the company hopes to set aside more than 15,000 acres for preservation while allowing for limited use such as cattle ranching, citrus growing and farming.

We try to mitigate property before the federal government gets involved, Broming said.

Broming said it took more than a year to mitigate the Ladera Wetlands area, a project related to the company’s Ladera Ranch development. But taking action up front can save a developer in the long run by dealing with issues that could later delay projects—by years and even indefinitely.

To be sure, setting aside land and getting through the environmental maze is easier for bigger developers. Others aren’t so lucky, Sapetto said. Often, their survival depends on their ability to develop land as originally intended, she said.

Sapetto points to California’s Natural Community Conservation Planning Program as something big developers can take advantage of. The program, established by the legislature in 1991, looks to help developers and community officials plan projects and take in local, state, federal and environmentalist concerns. The goal: preserve habitats while maintaining economic activity.

Under the program, the Board of Supervisors in 1996 approved the creation of the 38,000-acre nature reserve stretching from Laguna Beach to the Saddleback Mountains. The Irvine Co. donated 21,000 acres with an additional 17,000 acres provided by other entities, including existing county and state parks.

But coming up with a spare 20,000 acres or so isn’t a luxury most developers have.

You really need a big property for the program, Broming said.

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