Panel OKs Bill to Close Subdivision Loophole

Over Republican complaints that they were being rushed, an Assembly committee passed legislation Wednesday designed to close a legal loophole that speculators have used to make millions by threatening to build on some of California’s most treasured coastal lands.

The 8-2 vote by the Local Government Committee will send the bill to the Assembly floor as early as Friday, where it could face determined opposition from real estate interests, including representatives of the Hearst family.

Assemblywoman Patricia Wiggins (D-Santa Rosa), head of the committee, said after the vote that legislators needed to act on a problem that has festered for years and only gotten worse with time. “In my neck of the woods, this needed to be fixed,” she said.

“Hopefully, this will help us get some control” over a problem that coastal communities say has played havoc with their ability to control bad development.

But some members complained that they knew little about the issue on which they were being asked to vote. “This is the worst kind of government,” said Assemblywoman Lynn Daucher (R-Brea).

Eileen Reynolds, a lobbyist for the California Assn. of Realtors, complained about being blindsided at the end of the legislative session. “We didn’t know about this until last night,” she said. The problem with closing loopholes for speculators, she said, is that you also close them for small property owners.

Supporters said that correcting the land use regulations would have no effect on homeowners, but would do a lot to stop a practice that has become a problem in areas trying to control growth and save natural resources. With a series of friendly court decisions, developers have been able to circumvent planning regulations to build in areas where they normally would not be allowed. In the alternative, they can hold the threat of development over the heads of government, nature conservancies or other prospective buyers to inflate the value of their land.

One real estate speculator earned a $20-million profit several months ago by threatening to develop property in Big Sur. The Hearst Corp. last week obtained 143 “certificates of compliance,” potentially opening up development on its 83,000-acre ranch in San Luis Obispo County, one of the last large swaths of untouched coastline left in California.

“The use and abuse” of the system “has been costing the state a great deal of money,” said Sara Wan, chairwoman of the California Coastal Commission and a California Coastal Conservancy board member.

Developers Use Complex Strategy

The three-step process that developers have used begins with a property owner finding old records showing that their land once contained a cabin or well site, anything that proves it was divided in generations past. Then they ask the county to confirm the division and certify the owner’s historic right to build on the site. The final step is to file property records amending the boundaries of the parcels, making it possible, for example, to move a lot from the side of a mountain to a beachfront.

The measure approved Wednesday amended a Senate-passed bill by state Sen. Byron Sher (D-Stanford). Primarily, it would limit the ability to shift parcels around like jigsaw puzzle pieces, thereby blocking the worst of the abuses, supporters say.

Although concerns center on the Hearst property, supporters of the legislation say the certificates issue is one of statewide importance. Alan Seltzer, chief assistant counsel for Santa Barbara County, said more parcels are created under certificates in his county than through more traditional maps.

Calling the loophole a “Frankenstein that left the lab,” Seltzer argued that the amended legislation would “in our opinion be a first step toward addressing the abuses.” Also in support was a representative from Sonoma County, another area where certificates have been widely used, along with representatives of the Sierra Club, the League for Coastal Protection and the Natural Resources Defense Council.

Key to final passage, however, could be the Assembly member whose district includes the Hearst ranch, Republican Abel Maldonado. Attempts to reach him for comment Wednesday were unsuccessful.

Impact Beyond Hearst Ranch

Stephen T. Hearst insists that the company has no plans to develop the San Simeon ranch. It simply wants to find out its value. It has proposed selling off its rights to develop the property in some public-private funding arrangement yet to be drawn. Sources have estimated the value of the rights at $300 million.

Even if Hearst chooses not to develop the land, obtaining the 143 certificates was a smart tactic. Just creating parcels causes the land’s value to soar. An additional 98 certificates are about to be issued, said San Luis Obispo County principal planner Pat Beck, and 37 remain under review. Only one was rejected.

Supporters of the legislation insist the issue is far broader than Hearst. The cumulative effect of back-door subdivisions can overload the infrastructure of rural areas, Wan said. Extra population living on lots created by certificates of compliance can clog roads, crowd schools, and overwhelm water supplies.

“This is not a Hearst issue. It goes way beyond Hearst,” Wan said.