Bluff Development Background
PROTECTING THE BLUFF AT TOLEDO CANYON
The last pristine oceanfront space in San Clemente, other than the public beaches themselves, is the coastal bluff at the mouth of Toledo Canyon, just south of T-Street.
For decades that open bluff has served as an excellent, and frequently used, spot for the public not only to view the sun setting over the Pacific and the entire San Clemente coastline but also to access the Coastal Trail and the beach.
While the public’s longstanding use of the bluff has unquestionably created public rights to continued use, the bluff actually consists of seven privately owned lots. Until June 2018 those lots were owned by two separate interests. At that time they were sold to the same developer for $8,150,000 on representations that they were among the “only 4 Ocean Front lots left in all San Clemente” and that each lot was suitable to“build your own dream estate.” Recently, the neighbors have heard that the developer has submitted to the City plans to build seven estate sized houses on those lots.
The history and geology of those lots are utterly inconsistent with the notion that these lots can, or should, support any, much less seven, such estates. Indeed, that history and geology are why these lots were the “only” ocean front lots not developed in San Clemente. Any reasonable buyer, paying that much for the lots, should have actually known of the unique issues affecting the development of these lots and the development history relating to the lots. Even if the buyer did not have actual notice, the law will presume that he had constructive notice of the facts discussed below, which are in the public record.
The California legislature, most notably in the Coastal Act of 1976, has provided our elected and appointed officials with the power to preclude or substantially limit this threatened development. All we need is that these officials act in the public interest, not in the interests of the developer.
1. The 1966 Landslide and the Enactment of the Coastal Act
In the middle of the last century and prior to the enactment of the Coastal Act, several houses had foolishly been constructed on the bluff. In May of 1966 a large block slid on a clay seam in the bedrock (Capistrano Formation) fifty-two feet below the ground surface of the bluff. This substantial landslide destroyed all of these houses, as shown in the photographs on the website. Remnants of this ill-fated construction remain even today on the ocean-facing slope of the bluff. In 1998, a different landslide resulting from a rotational failure, said to be endemic to this bluff, damaged an already developed property, requiring the construction of the expensive and unsightly retention wall, which is shown in another photograph.
The staff of the California Coastal Commission (“CCC”), the agency created to enforce the Coastal Act, has repeatedly recognized that all seven of these lots are within the landslide area. The lots have remained vacant since 1966. The then single owner of all the lots for decades after the landslide valued them for tax purposes as unbuildable. Perhaps the best evidence that the lots were viewed by everyone as unbuildable was the fact that they remained vacant for almost thirty years, a period of substantial building in San Clemente on property that was buildable.
Starting in the 1970’s any building that did occur in the coastal zone of San Clemente faced the additional hurdle of obtaining a coastal development permit from the CCC. In deciding whether to issue a permit, the CCC must consider many protections provided by the Coastal Act, several of which should preclude development on the Toledo Canyon bluff.
First, and most significantly here, the CCC must consider geologic hazards. Indeed, Coastal Act section 30253 states “New development shall…(m)inimize risks to life and property in areas of high geologic…hazard,” and “(a)ssure stability and structural integrity” without “in any way requir(ing) the construction of protective devices that would substantially alter natural land forms along bluffs and cliffs.”
That section would have prevented building the houses destroyed in the 1966 landslide, as well as a few other pre-1976 buildings on our coastal bluffs now propped up with unsightly protective devices as shown in the attached pictures. In fact, as discussed later, the CCC staff in 2007 specifically found that “(t)here are significant geologic constraints upon [all of these very lots] and noted that “(it) is unclear at this time whether development of those other lots [referring to the seven lots discussed here]can be found consistent with the Coastal Act.”
In addition to its geologic instability, the bluff raises public access and public view issues under the Coastal Act. Sections 30210-30212 provide that the CCC must require that new development provide public access particularly where, as here, the public has acquired rights through historical use. The City of San Clemente’s Coastal Land Use Plan and California easement law also requires continued public access through these bluff lots. The CCC conducted a public survey showing that many people have used these properties for public access and based on that survey, plus other evidence such as the many visible pathways crisscrossing the lots, has already determined that these public uses have created a prescriptive easement. The historical public access has been across the top and down the bluff face, as well as from Boca del Canyon directly to the beach trail. In addition, section 30251 of the Coastal Act states that the “scenic and visual qualities of coastal areas shall be considered and protected as a resource of public importance.” This last, scenic bluff top with its panoramic views of the coastline and the ocean deserves that protection.
2. The Post-2000 Interest in Developing the Bluff Lots
As noted above, the owners valued these lots as unbuildable for decades after the landslide and the subsequent enactment of the Coastal Act. A few times, most recently in the late 1980’s, local citizens proposed to the City of San Clemente that it acquire the lots for use as a park. While the City expressed interest, it did not proceed for funding reasons.
Then in the early 2000’s two separate developer interests purchased these lots. Public records show that in January 2001, two of the lots located on the bluff top (the “Bluff Top lots”) were purchased for a total of $300,000, or $150,000 a lot—a price far below the then prevailing market value of buildable ocean-front property in San Clemente. (The average price in 2001 for all properties sold anywhere in San Clemente that year was $437,000.) Public records also show that in October 2002, just a year later, those lots were resold for $35,000 total. In June 2018, the Bluff Top lots were sold for $4,150,000.
Public records show that in January 2005, Boca Del Canon LLC (“BDC”) bought seven lots for around $6 million. As discussed below, the two of those lots not in the landslide area were sold in 2011, one with a house already built for $2.5 million and the other as a vacant lot for $650,000. Years after the CCC had failed to approve BDC’s proposed development, the other five lots (the “Portfolio Properties lots”) were sold for $4,500,000 by the company that foreclosed on BDC’s loan to the same developer who bought the Bluff Top lots.
3. The 2005-2011 Efforts to Develop the Portfolio Properties Lots
Shortly after it purchased the seven lots, BDC applied to the CCC for development permits. BDC’s s representatives told the CCC that each lot belonged to the individual investor in whom title was vested and that the requested development permit therefore would allow that person to build his own “dream house.” But, in fact, the public record shows that BDC had bought all seven lots to build seven sea-side mansions for sale to third-party buyers. Nothing made this more clear than the fact that a single Deed of Trust was secured by all properties as a group. This unity of development purpose was also obvious from the repeated transfers of title, the willingness to redraw lot lines to benefit one lot at the expense of others, and the use of single professionals (lawyers, architects, etc.) to represent all lots.
This strategy had modest success, when in 2007 the CCC issued development permits for the two BDC lots not in the landslide area and farthest from the ocean bluff. To obtain these permits, BDC, or its affiliates, transferred title to two individual couples, who each then applied for a development permit to build an enormous (almost 5000 square feet) house. One of those houses was constructed and in 2011 sold to a third party for $2.5 million. Needless to say the couple who had received the development permit on that lot never moved into their “dream house.” Later in 2011 the third party buyer of that lot purchased the adjacent lot for $650,000.00 and never used the development permit to build a second house.
As we discuss now, the record relating to the CCC’s granting of these two permits and its subsequent actions on these lots does not suggest any likelihood that the CCC would grant permits for the seven lots actually in the hazard zone (five Portfolio Properties lots and two Bluff Top lots). Rather, it suggests a long and difficult road ahead for those permits.
In December 2006 CCC staff initially recommended denial of permits even for the two lots not in the landslide area, citing all of the Coastal Act considerations discussed above: 1) interference with the public’s right of access, 2) geologic hazard (even though these properties were not in the hazard zone, staff noted that they could be affected by future development in that zone), and 3) interference with public views given the large size of the proposed houses. Almost a year later during which the proposals were substantially modified, including most significantly an agreement (“MOU”) with the CCC and binding on all of the BDC lots regarding public access and views, the CCC staff recommended approval and the CCC approved permits with special conditions. In the approval documents, the CCC expressly stated that its approval for these two lots was not setting a precedent for the lots in the hazard zone: “There are significant geological constraints upon the lots located seaward of (the two permitted lots). It is unclear at this time whether development of those other lots can be found consistent with the Coastal Act.” Even though the CCC gave such a dim assessment with respect to future development of these lots, the owners of the five lots agreed in the MOU that any further development that was approved under the Coastal Act would at the very least be subject to the public access and public use requirements stated in the MOU. These restrictions are binding on the developer who just bought the lots, and any subsequent purchaser, through 2029.
In the more than ten years since the MOU was signed and these two permits issued, there was only one public attempt to develop the lots in the landslide area. Its ultimate resolution by the CCC confirmed the dire assessment quoted above.
We understand that CCC staff told BDC that no house could be built on top of the bluff, which would have precluded building on one of the BDC lots—Lot 9, which is adjacent to the two Bluff Top lots. To solve this problem while still allowing BDC to build five houses, staff agreed to allow Lot 9 to be redrawn taking space from three other lots, so that Lot 9’s house (like the others) could be on the side of the bluff off of Boca del Canon rather than the top off of La Rambla.
BDC then submitted to the CCC permit applications for the construction of five houses ranging in size (house, decks, garage) from 3,754 to 6,846 square feet, and in height from 31 to 45 feet. In a Staff Report dated January 27, 2011, CCC staff recommended approval of that proposal with many conditions. Many of these conditions related to concessions regarding public access and public view that staff apparently thought were meaningful achievements they had won from the developers. Staff also apparently believed that the developer’s concession not to build a house on the bluff top was their most important accomplishment.
Moreover, because, as the Report noted, “all of these lots are underlain by a large landslide,” the most important conditions related to this geologic hazard. Indeed, the staff Report required that “(g)eologic stabilization measures to make Lots 7-11 safely buildable, as approved in this coastal development permit, shall be completed prior to construction of any residences on the subject sites.” And those stabilization measures were extensive—involving the use of a broad array of caissons to shore up the structure. Indeed, the Report recognized that “approximately 30 caissons are suppose to be located within 25 feet of the bluff edge,” even though the CCC typically requires a 25 foot bluff edge setback. The report also recognized that these caissons, while originally not visible, could become exposed through erosion and therefore visible from vantage points like the beach and coastal trail. Perhaps most cynically, the Report justified these caissons as not “protective devices,” which section 30253 of the Coastal Act precludes where needed for new development like this, because the “proposed caisson array is for purposes of bluff stabilization to minimize risk to life and property consistent with section 30253 (a), not for purposes of shoreline or bluff protection.” The staff report did not explain why “bluff stabilization “ was not “bluff protection”. Furthermore, the Report specifically noted that the proposed stabilization measures would not change the hazard conditions on lots that are affected by the landslide such as the Bluff Top lots, but that fact did not seem to matter to staff. Finally, the CCC staff conceded that building on these lots could be dangerous by demanding from BDC an indemnity to protect CCC from any liability for allowing this development to occur in a landslide zone.
Much to the developer’s consternation the Commission did not agree with its staff. At its February 8, 2011, hearing the members of the Commission vented their displeasure at the staff’s recommendation. The major criticism was directed to the extensive use of caissons to deal with the geologic hazard. A few commissioners even suggested that the caisson array itself was so extensive that it could be viewed as its own project (an “artificial landform”) requiring its own permit. Several other commissioners criticized the size of the proposed houses, given both the topography and the sizes of houses in the neighborhood. Faced with this criticism and certain Commission rejection, BDC withdrew its proposal. Thereafter, its lender foreclosed and then many years later sold the lots to the same developer who in the same month bought the Blue Top Lots. In spite of the CCC history with regard to these five lots just reviewed and the fact that the Bluff Top lots are even far less likely to ever obtain a development permit, we understand that developer plans to seek approval for development even more extensive, and geologically threatening, than that previously not permitted.
4. Why Then Should The Public Be Worried About This Threat?
In light of this history, why should the public worry that any fair application of the Coastal Act would ever allow the proposed houses to be built on these lots? Frankly, a fair application is not the real concern. Rather the concern is that the developer will threaten the permitting officials that they should bend the Coastal Act just because he paid more than $8 million for the lots. He will argue that if they do not permit the development he seeks they will need to compensate him for his utterly unreasonable gamble on these lots. There are many reasons why any such “takings” claim should fail, most significantly, that on the record just reviewed no purchaser could have had “reasonable, investment-based expectations” of receiving permits to build a sea-side “estate” on each of these lots. Constitutional law is clear that such reasonably based expectations are required for a takings claim.
So the real question is why would a developer believe that permitting officials would allow him to make a profit on his unreasonably high investment. Here are some possible reasons why it is important that the public remain vigilant.
The CCC and its staff for the most part has been an ardent defender of the California coast. However, even it sometimes has succumbed to developer pressure. The brief history recounted here illustrates the point. The staff’s initial report (December 2006) rejected permits even for the lots outside of the landslide area with strong language finding development inconsistent with three important Coastal Act policies. But a year later, staff recommended approval of those permits based on conditions that addressed some but not all of the issues in each of those areas. And, while both of those staff reports strongly suggested that the Coastal Act would not permit development of the lots in the landslide area, the staff four years later was willing to recommend permits. The members of the Commission then stepped up to stop development, voicing many concerns about the staff’s willingness to accept mitigation measures like the extensive caisson array that raised its own Coastal Act issues.
While the Commission strongly defended the Coastal Act in 2011, events over the next five years raised questions about its continued commitment to coastal protection in general. The culminating such event was its firing of Executive Director Charles Lester in February 2016. Steve Lopez, the award-winning columnist of the Los Angeles Times, wrote a series of columns criticizing the CCC for allowing ex parte contacts with developers and even favoring developer interests over the public interest. The resulting public outcry against the CCC, though, had an impact. Bad commissioners were replaced, and the newly constituted Commission appointed an outstanding new Executive Director, whom Lopez described as “a good bet to defend California’s beaches.” (February 16, 2017, Steve Lopez column attached hereto.) The real lesson for the public in all this is that they should always stay informed and be proactive to see that public good prevails.
