“California law does not recognize potential water use as a compensable property right.”
How later courts described this case
- “California law does not recognize potential water use as a compensable property right.”
Written by the judges who cited it.
The opinion
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 1 of 26 Page ID #:7354
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
MICHAEL WINDELER, et al., CV 19-6325 DSF (JEMx)
Plaintiffs,
FINDINGS OF FACT AND
v. CONCLUSIONS OF LAW
CAMBRIA COMMUNITY
SERVICES DISTRICT, et al.,
Defendants.
This matter came was tried before the Court from November 9, 2021
to November 18, 2021. After examining the evidence, hearing the
testimony of witnesses, and considering the arguments of counsel, the
Court finds as follows:
I. Findings of Fact1
A. Plaintiffs’ Properties
1. Plaintiff Joy Salerni, a resident of Texas, owned2 a lot (APN 023-
066-010) on Drake Street in the unincorporated community of
Cambria, in the County of San Luis Obispo (Salerni Property).
The Salerni Property is 9,735 square feet with a 16% slope. Ms.
Salerni inherited her property in 1968; her cost basis is $4,500.
1 Any finding of fact deemed to be a conclusion of law is incorporated into the
conclusions of law. Any conclusion of law deemed to be a finding of fact is
incorporated into the findings of fact.
2 Nina Dodgen, Executor of the Estate of Joy Salerni, was substituted for Joy
Salerni on August 10, 2022.
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 2 of 26 Page ID #:7355
The Salerni Property has never had water or sewer service.
Declaration of Joy Salerni (Salerni Decl.); Declaration of Frances
Mason (F. Mason Decl.), ¶ 21.3
2. Barbara and Kent Knight, residents of Nevada, own a lot (APN
023-391-053) in Cambria on Haddon Drive (Knight Property).
The Knight Property is 6,750 square feet with a 19% slope.
Barbara Knight purchased the property in 1971 for $5,600,
although that price included property that later sold for $50,000.
The Knight Property has never had water or sewer service.
Declaration of Barbara Knight (Knight Decl.); F. Mason Decl. ¶
23; Trial Transcript (Tr.) 143:19, 144:1-5, 146:12-147:14.
3. Plaintiffs Jeff and Edna Schneider, residents of Florida, own a lot
(APN 024-062-043) in Cambria on Spencer Street (Schneider
Property). The Schneider Property is 6,258 SF in size with a 22%
slope. The Schneiders purchased their property in 1975 for
$3,650. The Schneider Property has never had water or sewer
service. Declaration of Jeff Schneider (Schneider Decl.); F.
Mason Decl. ¶ 22; Tr. 266:6-7.
4. Plaintiffs Michael and Karen Windeler, residents of Alabama,
own a lot (APN 023-202-018) in Cambria (Windeler Property).
The Windeler Property is 4,000 SF in size with a 38% slope. The
Windelers purchased their property in 1988 for $13,000. The
Windeler Property has never had water or sewer service.
Declaration of Karen Windeler (Windeler Decl.); F. Mason Decl. ¶
20; Tr. 74:15-16.
5. Plaintiffs Bruce and Terri DePaola, residents of Washington, own
a lot (APN 023-423-002) in Cambria on Pine Court (DePaola
Property). The DePaola Property is 5,850 SF in size with a 46%
slope. The DePaolas purchased their property in 1989 for
$27,500. The DePaola Property has never had water or sewer
3 Direct testimony was provided by declaration.
2
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 3 of 26 Page ID #:7356
service. Corrected Declaration of Bruce DePaola (DePaola Decl.);
F. Mason Decl. ¶ 24; Tr. 173:25-174:2.
6. Plaintiffs’ vacant lots are zoned Residential Single-Family and
are located in the Coastal Zone of the unincorporated County. F.
Mason Decl. ¶¶ 20-24.
7. Plaintiffs’ lots are all well under a half-acre in size, and several of
their lots are at a very steep grade and serviced by narrow
hillside roads, unpaved in some cases, and located in an area of
the County that is high fire risk and rural in nature, with limited
ingress and ingress. Id.; Declaration of William Hollingsworth
(Hollingsworth Decl.) ¶¶ 11, 27.
8. Plaintiffs presented no evidence that: (1) there is water beneath
their lots, (2) there is any company that would provide trucked-in
potable water to Cambria (at an economically sensible price or
otherwise), or (3) that drilling a well or installing a water tank on
their undersized lots could be achieved without violating state
and local codes.
9. Plaintiffs did not have any concrete plans to build on their lots
when they acquired them between 1968 and 1989 or at any time
in the next few decades thereafter. See generally Pls. Trial
Testimony.
10. Most of the Plaintiffs took no steps to market their lots for sale or
pursue inquiries by potential buyers, except for the Knights who
sold a portion of their property for $50,000 in the 1980s. Tr.
147:6-8, 11-14.
11. Plaintiffs have admitted that their vacant lots have value.
Declaration of D. Michael Mason (D. Mason Decl.) ¶ 27.
12. On December 8, 2015, a vacant Cambria lot at 2180 Andover
Place with an active water meter connection sold for $265,000.
Ex. 143 at 26. According to Plaintiffs’ expert appraiser D.
Michael Mason, “(t)his was the best indicator of value of what a
3
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 4 of 26 Page ID #:7357
parcel of land with a water meter is worth” on the June 20, 2021
valuation date. Id.
13. On August 5, 2020, the Windelers received an unsolicited offer
from Vacant Land Now LLC to buy their property for $27,770.35.
Tr. 108:20-109:10. The Windelers did not respond to this offer. Id.
B. Background and History of Water and Sewer Hookup
Limits
14. Defendant Cambria Community Services District (CCSD) is a
special district organized and existing under the laws of the State
of California. Decl. of Michelle Bland (Bland Decl.) ¶ 16. CCSD
provides water, wastewater treatment (sewer), solid waste
disposal, fire protection services, and other public services to the
unincorporated coastal town of Cambria. Id.
15. Defendant County of San Luis Obispo is a political subdivision of
the State of California and is located within the Central District
of California.
16. Cambria is a relatively remote coastal town located in the
California state Coastal Zone. Decl. of Airlin Singewald
(Singewald Decl.) ¶ 9. As a result, it falls within the jurisdiction
of the California Coastal Commission (Commission), a state
agency, and is subject to the regulations imposed by the Coastal
Act of 1976, Cal. Public Resources Code (PRC) Sections 30000 et
seq. Id. ¶¶ 9, 24. Cambria has limited access between the town
and the rest of the County. Id. ¶ 9.
17. Cambria suffers from chronic drought conditions and a historical
shortage of water dating back decades. See Bland Decl. ¶¶ 27,
43-53; Ex. 863 at 011; Ex. 954; Ex. 1211; Ex. 1212.
18. Cambria is also designated as a High Fire Severity Zone as of
2004, with some Very High Fire Hazard Severity Zones to the
northeast of the village, which remain in effect today.
Hollingsworth Decl. ¶ 11; Bland Decl. ¶ 23.
4
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 5 of 26 Page ID #:7358
19. In the 1970s, the County approved two bond issues for sewer
assessments in Cambria – Cambria Assessment District No. 1 in
1971 and Cambria Assessment District No. 2 in 1976. Exs. 1323
& 1324. The bonds were used to construct sewer infrastructure
in Cambria. Id.
20. These bond issues were paid off, respectively, by 1996 and 2001.
Decl. of Justin Cooley (Cooley Decl.) ¶ 18. Since 2001, none of the
Plaintiffs’ lots has ever been subject to any County sewer
assessment and no Plaintiff has ever paid any County sewer
assessments in the past 20 years. Id. ¶ 20. None of the
Plaintiffs’ lots has ever been subject to any County water
assessment and no Plaintiff has ever paid any County water
assessments. Id. at ¶ 17.
21. In February 1986, CCSD’s Board of Directors adopted Ordinance
No. 2-86, which implemented a wait list (Wait List) for new water
and sewer hookups, on findings of limited water resources, to
“ensure that demand for water shall not exceed available supply
and that the pace of allocating the available water supply to new
users is reasonable and orderly.” Ex. 362.
22. By joining the Wait List, property owners were eligible to receive
intent to serve letters from CCSD to connect to the CCSD water
and sewer systems. Id.
23. Effective December 31, 1990, the CCSD Wait List was closed.
Exs. 805, 1261 at 12.
24. Plaintiffs were all specifically aware of the existence of the Wait
List prior to its closure. Tr. at 89:15-90:5 (Windeler); 157:20-
159:9 (Knight);4 174:25-175:6, 176:12-177:1 (DePaola); 210:4-
211:4 (Salerni); 273:9-15 (Schneider).
4 Barbara Knight’s testimony was ambiguous. She denied knowledge of the
Wait List before the last five years, but also testified both at deposition and
trial that she had at least “hearsay” knowledge of the possible existence of
such a wait list. At the very least, the Knights had notice of the possibility of
5
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 6 of 26 Page ID #:7359
25. None of the Plaintiffs attempted to obtain a position on the Wait
List at any time from its formation to its closure. Id.
26. CCSD has not accepted applications for new sewer or water
service from any property owners without a Wait List position
since December 31, 1990. Ex. 1077 at 49.
27. The PRC requires the County to adopt a Local Coastal Program
(LCP), and the Commission must approve and certify the LCP,
including any amendments. PRC § 30512.
28. In 1988, the Commission approved and certified the County’s
LCP, codified at Title 23 of the County Code, which governs
Cambria. Ex. 1217. However, the Commission has permanent
ongoing responsibilities in the Coastal Zones, including Cambria,
and it has appellate authority over specified categories of
development. PRC § 30603.
29. If anyone appeals the County’s discretionary approval of a project
involving property in the Coastal Zone, the Commission decides
whether a substantial issue exists and whether to reverse the
County’s approval. PRC § 30625.
30. Plaintiffs’ lots are located in the Coastal Zone and a sensitive
coastal resource area. Tr. 803:4-6. Therefore, Plaintiffs’ lots are
all within the jurisdiction of the Commission under PRC
§ 30603(a)(3).
31. On October 30, 1990, the County adopted a Growth Management
Ordinance (GMO), County Ordinance No. 2477, codified at Title
26 of the County Code. Ex. 1261. That ordinance “froze” the
CCSD water wait list and started a County wait list for
allocations for new dwelling units in Cambria. Id. at 12.
32. The County adopted the GMO because, among other things, the
County had experienced rapid growth over the prior decade and
the existence of the Wait List. It is uncontroverted that the Knights never
attempted to join the Wait List.
6
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 7 of 26 Page ID #:7360
the magnitude of increases “raised serious questions about
whether available resources are capable of handling the
extraordinary growth and its related problems . . . . ” Ex. 1261 at
1. The County’s Board of Supervisors (BOS) stated that if growth
continued at the rate of the prior decade, there would be
“environmental deterioration and depletion of the resources
necessary to sustain that growth such that there will be a threat
to the public health, safety and welfare.” Id. at 2.
33. The GMO initially set the growth rate County-wide as follows:
“The Maximum Annual Allocation shall be limited to an amount
sufficient to accommodate an annual increase of 2.3% in the
number of dwelling units.” The rate for Cambria was similarly
established at 2.3%. Ex. 1261 at 9, 11.
34. The GMO requires the growth rate to be reviewed annually, per
Resource Management System (RMS) Annual Reports, approved
by the County’s Board of Supervisors (BOS) at a public hearing.
Ex. 1261 at 9.
35. The GMO expressly allows the County to accept applications for
new residential projects accompanied by an intent to serve letter
for transferred water meters. County Code § 26.01.070(10)(a)(1);
Singewald Decl. ¶ 16.
36. The GMO is amended frequently. See Exs. 1261 to 1293. Each
year, the County reconsiders the growth rates set forth in the
GMO. Tr. 784:4-15. The County usually amends the GMO in
three-year cycles in accordance with the annual reports of the
County’s RMS. Singewald Decl. ¶ 14.
37. However, “if there were changes to the resource levels in
Cambria, that would be an opportunity for the (BOS) . . . to
change the growth rate for Cambria, even if it’s outside of the
three-year cycle.” Tr. 785:24-786:10.
7
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 8 of 26 Page ID #:7361
38. On January 18, 2000, the County adopted Ordinance No. 2895,
which reduced Cambria’s growth rate to 1% based on RMS
Annual Reports. Ex. 1267 at 7.
39. On November 15, 2001, CCSD declared a Cal. Water Code § 350
Emergency (Drought Emergency) and established a moratorium
on new residential water permits. Ex. 863 at 011. The Drought
Emergency and moratorium remain in effect today.
40. CCSD issued intent to serve letters to properties on the Wait List
in an amount based on the GMO, and if any property was not
ready to develop, the property owner was permitted to defer
indefinitely without losing his/her place on the wait list. See Ex.
861 at 7.
41. At some point from 1990 to 2001, every property on the Wait List
during that period was given the opportunity to obtain an intent
to serve letter from CCSD. Bland Decl. ¶ 99.
42. Therefore, had Plaintiffs obtained a spot on the Wait List when it
was open, they would have been offered water and sewer service
at some point prior to 2001.
43. On July 24, 2003, CCSD set a buildout target for the number of
connections it would be able to support at 4,650. This target
encompassed only current water users plus the potential users on
the Wait List at that time. Bland Decl. ¶¶ 155-56.
44. In setting the buildout target, CCSD prioritized providing
consistent sufficient water for present users. The buildout target
did not contemplate being able to provide service for any other
properties – other than those on the Wait List – in the
foreseeable future. Ex. 874 at 10; Bland Decl. ¶ 159.
C. Plaintiffs’ Efforts to Acquire Water and Sewer Hookups
45. In 2010, Plaintiff Jeff Schneider investigated building a home on
his vacant Cambria lot. Id. at 269:23-25.
8
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 9 of 26 Page ID #:7362
46. In support of that goal, Schneider investigated buying a water
meter. Tr. 269:2-22.
47. In 2010, water meters were selling for approximately $50,000 on
average, which was more than Schneider was willing to pay. Tr.
271:1-5, 272:6-11; Schneider Decl. ¶ 15.
48. In 2001, Plaintiff Karen Windeler investigated buying a water
meter. Tr. 1127:15-21. A realtor told Windeler that she could
buy a water meter for $70,000 and that she could later sell the
meter for double its price at $140,000. Id. at 1131:5-11.
49. Windeler decided not to buy a water meter because $70,000 was
too much money and she hoped that she would be able to obtain
an intent-to-serve letter. Id. at 1131:22-1132:1. She knew at the
time that buying a water meter was the “first step” in developing
her lot under the rules in place at the time. Id. at 1130:14-16.
50. On January 11, 2011, the Windelers requested that they be
added to the CCSD’s water wait list. Ex. 933.
51. Their request states that “[the Windelers] would like to submit a
development proposal to the County to determine the use that
can be made of their property.” Id. at 1.
D. Windeler Attempt to Acquire a Development Permit from
the County
52. In 2017, the Windelers applied to the County for a variance to
build a 2002 square foot house on a 4,000 square foot, steeply
sloped lot. Ex. 1230. In the letter accompanying the Application,
the Windelers requested a variance from three sections of the
County Code. Ex. 1229.
53. First, the Windelers requested a variance from County Code §
19.07.022 relating to septic systems. Id. Among other things,
that Code section – and related Local Agency Management
Program – prevents the installation of a water well and septic
system on a property that is less than one-acre in size, restricts
9
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 10 of 26 Page ID
#:7363
the use of septic systems on properties with slopes greater than
25%, and prohibits a septic system within 100 feet of a water
well.
54. Because the Windelers proposed using a septic system,5 the
application form required that they answer questions regarding:
(1) the results of percolation tests and piezometer tests; (2) the
separation distance between the septic tank and any water well;
and (3) whether any approvals from the Regional Water Quality
Control Board (RWQCB) were required. Ex. 1230 at 5. These
questions were not answered. Id.
55. The development proposed by the Application threatened health
and safety because “[c]onstructing a well and septic system in
close proximity to each other due to site constraints would likely
result in potable water contamination from the sewage discharge
from the septic system.” Declaration of Leslie Terry ¶ 10.
56. The Windelers also requested a variance from County Code §
19.07.040(b), which sets forth minimum standards for water
wells, including that “a domestic well shall provide a minimum
capacity of 5 gallons per minute.” Ex. 1229.
57. Plaintiffs’ water expert had no evidence that a well on any of
Plaintiffs’ properties would produce 5 gallons per minute of
water, if any at all. Tr. 986:15-18, 987:20-25.
58. Plaintiffs’ expert did not perform any investigation to determine
whether there was any water under any of their properties, e.g.,
consulting geological reports, digging test wells, or speaking with
any drilling companies. Tr. 988:1-990:23.
5 The Application to some extent contradicts the letter submitted with it. The
letter clearly indicates that the Windelers intend to use a septic system and
sought a variance to do so, but the Application itself suggests that the
Windelers intend to attach to the existing public sewer system.
10
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 11 of 26 Page ID
#:7364
59. Plaintiffs’ expert testified that it would cost approximately
$100,000 to drill one test well, just to determine if there was any
water under the lot. Tr. 1004:3-1005:22.
60. The Application also sought a variance from County Code §
19.07.041 and Planning Area Standard CW-8. Ex. 1229. These
would normally require the Windelers to obtain a CCSD intent to
serve letter in order to develop their property.
61. However, the Application did not contain any information to
enable the County to determine that “there is adequate water
and sewage disposal capacity available to serve the proposed
development” in the absence of such a connection to the CCSD
system. See County Code § 23.04.430; Exs. 1229, 1230.
62. As an alternative to a water well, the Application proposed
“trucked-in” water as a primary source of potable water. See Exs.
1229 at 4, 1230 at 5.
63. The County has not historically allowed new development if
water delivered by truck is the primary source of potable water.
Singewald Decl. ¶ 47.
64. The Windelers’ representative who applied for the variance
admitted that he did not “have any information that there was
any company that would deliver trucked in water to Cambria in
bulk” to satisfy the demands of the Windelers’ proposed
development. Id. at 338:2-339:1.
65. The Windelers’ Application was denied by the County on October
17, 2017 both because there was no basis to treat the Windelers’
property differently from other similarly situated properties and
because the proposed variances would adversely affect the public
health and safety. Ex 1250.
E. General Sources of Water for the Cambria Area
66. CCSD’s sole source of water, which must supply water to all of
CCSD’s customers and provide all water necessary for fire
11
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 12 of 26 Page ID
#:7365
suppression for the entire community of Cambria, comes from
well fields that divert groundwater from the San Simeon and
Santa Rosa Creeks (Creeks), pursuant to permanent licenses
from the State Water Quality Control Board (State Board)
Division of Water Resources (DWR). Bland Decl.¶ 25; Tr. 475:14-
18, 1089:7-15. The groundwater pumped and diverted by CCSD
percolates underground from the Creeks. Id.
67. CCSD’s licenses allow it to divert 799 acre feet per year from its
primary water source, the San Simeon Creek (limited to 270 acre
feet during the dry season), and up to 218 acre feet per year from
its secondary source, the Santa Rosa Creek (limited to 155.3 acre
feet during the dry season). Bland Decl. ¶ 38; Exs. 757, 758.
68. The total licensed amount is not necessarily available to CCSD in
a given year, as a result of a number of restraints and conditions
in the licenses themselves, as well as other physical and
regulatory constraints such as well levels, water levels in the
aquifer, rainfall, and demand from riparian and agricultural
users. Bland Decl. ¶¶ 39-41; Ex. 757 at 6.
69. The amount of water available to CCSD is reduced by the usage
of upstream users, which include agricultural riparian water
rights holders, who all have water rights senior to CCSD. Bland
Decl. ¶¶ 54-58.
70. CCSD’s appropriative water rights are junior to the water rights
of these upstream riparian and agricultural users. Bland Decl.
¶¶ 56-60.
71. The Creeks are supplied one hundred percent by rainfall and
therefore are extremely susceptible to drought conditions and
dependent on adequate annual rainfall. Tr. 543:17-22, 614:22-25;
Bland Decl. ¶ 26.
72. The Creeks are coastal creeks that flow into the Pacific Ocean in
Cambria. CCSD’s jurisdictional boundaries generally, and its
12
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 13 of 26 Page ID
#:7366
well fields specifically, are located at the “end” of the coastal
Creeks, where they flow into the Pacific Ocean. Bland Decl. ¶ 55.
73. CCSD’s ability to divert water from the Creeks is also limited by
the need for enough water to remain in the Creeks to sustain
high-quality habitat for a variety of aquatic and terrestrial
species. Bland Decl. ¶¶ 61-62.
74. The United States Fish and Wildlife Service (USFWS) designates
the Creeks as a critical habitat because they provide habitat for
federally threatened South-Central Coast Steelhead and federally
endangered Tidewater Goby. Bland Decl. ¶ 63; Tr. at 539:14-19.
75. Both Creeks are located in Environmentally Sensitive Habitat
Areas (ESHA). CCSD’s diversion from the Creeks is subject to
the requirements of the Endangered Species Act due to the
presence of sensitive species and habitat in the Santa Rosa
Creek. Bland Decl. ¶¶ 63-64; Exs. 1007, 1014.
76. CCSD has not been able to prove that its existing water supply is
an adequate and sustainable supply that can serve even existing
development in Cambria without significant resource harm.
Bland Decl. ¶ 65; Ex. 1014 at 9; Tr. 655:2-5.
77. CCSD’s water supply is not adequate to safely and sustainably
add new water connections outside existing commitments; CCSD
is therefore unable to provide water or sewer service to Plaintiffs’
properties without transfer of an existing meter. Tr. 635:19-25;
732:18-733:4; Bland Decl. ¶ 67; Hollingsworth Decl. ¶¶ 41-50.
78. The shortage of water claimed by Defendants is not a mere
pretext to prevent growth, as suggested by Plaintiffs. There are
legitimate public concerns about the ability of CCSD to continue
to provide sufficient water consistently to its current users, let
alone any significant number of new users.
13
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 14 of 26 Page ID
#:7367
F. Defendants’ Exploration of Alternative Water Sources and
Conservation Efforts
79. During the 1990s, CCSD analyzed and pursued the development
of a desalination plant to augment its existing water supply.
80. CCSD eventually received bids in response to its solicitations
relating to a proposed desalination project, which were discussed
at several public Board meetings.
81. The Board expressed concern at the costs of the facility,
particularly in light of the newly passed Proposition 218 that
placed significant new limits on CCSD’s ability to collect revenue,
both from assessments and increasing water rates. See generally
Ex. 821 at 1-9.
82. Based on the bids received, the costs of the desalination facility
would have exceeded $16,000,000 in 1997. CCSD did not have
funding for this projected cost and believed that the public in
Cambria would not support such an outlay. Ex. 429.
83. At the Board’s August 25, 1997 public meeting, the Board
rejected all bids submitted for the offshore and onshore facilities
because all of the bids were in excess of the Board’s budget for
desalination, and therefore they could not be accepted before they
expired. Exs. 429, 454.
84. In February 1999, as part of the Water Conservation and Retrofit
Program, the Board directed staff to pursue a more sharply tiered
water rate structure to induce water conservation by CCSD’s
customers. Exs. 839, 1011.
85. Around this time, Methyl tert-butyl ether (MtBE) contamination
of Santa Rosa Creek seriously disrupted pre-established CCSD
priorities, including efforts to develop a desalination project or
other water sources, because manpower was shifted to dealing
with this MtBE crisis. Exs. 841, 843.
14
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 15 of 26 Page ID
#:7368
86. The contamination forced the closure of two of CCSD’s wells in
the Santa Rosa wellfield, SR 1 and SR 3. Ex. 856 at 2.
87. The contamination created a crisis for both CCSD’s water supply
and finances and was an unbudgeted problem CCSD was forced
to handle. Id.
88. On February 10, 2000, the Board approved a consultant services
agreement with Kennedy/Jenks Consultants (Kennedy/Jenks) to
undertake a baseline water supply and available analysis as Task
2 of the update to CCSD’s Water Master Plan. Ex. 845.
89. On April 13, 2000, Kennedy/Jenks prepared a Final Project
Design Report for a “value engineered” desalination project,
estimated to cost $6,660,700, well under half the cost for the
project considered in 1997. Ex. 449 at 7.
90. In August 2000, CCSD held a public advisory referendum on
whether it should pursue the updated, value engineered
desalination project. Ex. 847. The referendum passed, with 58%
voting in favor. Id.
91. On March 30, 2001, the Board authorized staff to seek
$10,300,000 in federal funding to fund the value engineered
desalination project. Ex. 471 at 1.
92. In 2001, pursuant to authorization from the Board, CCSD began
to work with the U.S. Army Corps of Engineers (USACOE) to
complete tasks related to developing a desalination facility
proposed in the Kennedy/Jenks April 13, 2000 Final Project
Design Report. Ex. 468 at 2.
93. After several further years of planning and preparation, at an
April 17, 2004 public meeting, after receiving an “ear mark”
appropriation from the federal government in the amount of
$10,300,000 to fund a desalination project at CCSD’ s request,
the Board adopted a resolution authorizing CCSD to execute a
Project Cooperation Agreement with the USACOE for the
purposes of developing a desalination project. Ex. 471.
15
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 16 of 26 Page ID
#:7369
94. In 2004, the County approved a coastal development project
(CDP) allowing the geotechnical investigation along the San
Simeon Creek beach area that was necessary for CCSD’s
proposed desalination project. See Ex. 895 at 15.
95. The County’s approval of the CDP was appealed to the
Commission by two environmental groups as well as two
individual Commissioners. Ex. 895 at 1.
96. In 2007, after multiple hearings and alterations to the plans, the
Coastal Commission denied the requested CDP for the
geotechnical investigation necessary for the proposed
desalinization plant. This essentially ended the possibility that
such a plant could be built in the foreseeable future. See Exs.
896, 898, 901.
97. On May 25, 2000, CCSD acquired 418 acres of land known at the
East-West Ranch (Ranch), subject to conditions that it be used for
open space and recreational preservation. Exs. 843, 844.
98. The purchase of the Ranch reduced overall future water demand.
Ex. 603 at 5, 7-8.
99. In light of the above, CCSD has taken significant steps over the
past decades to both seek new sources of water, e.g.,
desalinization, and to find ways to reduce consumption, e.g.,
tiered water rates, taking agricultural land out of production. It
has not solely relied on reduced or frozen development to address
Cambria’s water situation.
G. Actions Regarding Water and Sewer Hookups for Other
Public Applicants
100. Between 2014 and 2019, the County approved applications for
discretionary permits for single family residential projects on
vacant lots if the applications were submitted with a CCSD
intent to serve letter, were accompanied by the required fees, and
otherwise conformed to applicable codes and regulations.
Singewald Decl. ¶ 32.
16
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 17 of 26 Page ID
#:7370
101. The following five single family residential projects are examples
of discretionary approvals issued by the County, after review and
decision at noticed public hearings, to build single family homes
on vacant lots in Cambria. Each of the applications was
submitted within the past eight years accompanied by CCSD
intent to serve letters: Settimi (approved by the County on
December 20, 2019); Hadian (approved by the County on
September 6, 2019); Swift (approved by the County on June 21,
2019); Orellana (approved by the County on June 16, 2017); and
Fox (approved by the County on July 18, 2014). Id.
102. All five of these projects were appealed to the Coastal
Commission. Exs. 1014, 1256- 1260.
103. The Commission staff found a “Substantial Issue” existed with all
five approvals and recommended denial on de novo review even
though the vacant and unimproved residential lots in question all
had intent to serve letters from CCSD. Id. The main stated
reason for rejection was insufficient water resources in the
Cambria area to meet even existing demand, let alone new
development.
104. All five projects ultimately were either rejected by the
Commission or withdrawn by the applicant prior to the
Commission’s final decision. Singewald Decl. ¶¶ 33-41.
105. The Commission’s decisions and the Commission’s Staff
recommendations strongly suggest that the Commission will not
approve new development in Cambria absent a significant
increase in water resources.
H. Other Coastal Commission Actions
106. As discussed above, the Commission is the ultimate decision
making body with respect to the approval or denial of CDPs
allowing development in Cambria.
17
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 18 of 26 Page ID
#:7371
107. The LCP allows development only of properties in Cambria that
had existing service commitments at the time of the moratorium.
Tr. at 634:9-16, 645:4-5.
108. The Commission has repeatedly found that new development in
Cambria cannot be accommodated absent a new water supply
and that any development potentially threatens the coastal
resource protection requirements of San Simeon and Santa Rosa
creeks, the underlying groundwater, and other coastal resources.
See Exs. 1014, 1256- 1260.
109. As mentioned above, at four separate hearings, the Commission
denied CCSD’s attempts to simply investigate the feasibility of
seawater desalination intakes at two different locations – the San
Simeon Creek beach and the Santa Rosa Creek beach – despite
significant assistance and support from the USACOE.
110. These denials make plain that obtaining the Commission’s
ultimate approval of a CDP allowing the actual development and
operation of a seawater desalination project is not likely, as the
Commission has instead refused to allow even initial feasibility
investigations in support.
111. In short, because of water shortages, the Commission appears
solidly against further development of land in Cambria, but it is
also opposed to allowing CCSD to pursue desalination – probably
the most likely possibility for providing additional water supply
to Cambria.
II. Conclusions of Law
A. Statute of Limitations
1. The applicable statute of limitations in this case is two years
from the July 24, 2019 filing. Wilson v. Garcia, 471 U.S. 261,
279-80 (1985); Canatella v. Van de Kamp, 486 F.3d 1128, 1132
(9th Cir. 2007); Knox v. Davis, 260 F.3d 1009, 1012 (9th Cir.
2001); Cal. Code Civ. Proc. § 335.1.
18
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 19 of 26 Page ID
#:7372
2. CCSD has not taken any action with respect to Plaintiffs’
properties within the applicable two-year limitations period, i.e.,
after July 24, 2017. The latest discrete action by CCSD that
might be at issue is the setting of the buildout target on July 24,
2003. As a result, all of Plaintiffs’ claims against CCSD are
barred by the statute of limitations.
3. As for the County, except for the Windelers’ claims based on the
County’s denial on October 17, 2017 of their variance appeal, all
of the County’s relevant actions occurred prior to July 24, 2017,
and those non-variance appeal claims against the County are
barred by the two-year statute of limitations.
4. Any challenges to the moratorium enacted on November 15,
2001, the closure of the Wait List on December 31, 1990, or the
setting of the buildout target on July 24, 2003, are barred by the
applicable statute of limitations even though the moratorium
remains in place and the Wait List remains closed.
5. The moratorium, the closing of the Wait List, and the setting of
the buildout target are not “continuing violations” with effectively
renewing accrual dates because “the statute of limitations runs
from the operative decision and not from its inevitable
consequences that are not separately actionable.” Ellis v. Salt
River Proj. Ag. Improv. & Power Dist., 24 F.4th 1262, 1272 (9th
Cir. 2022). The “operative decisions” that resulted in Plaintiffs’
losses, if any, were taken long before July 24, 2017, even if the
consequences of those decisions – the inability to develop their
land – are still being felt by Plaintiffs.
6. Any claim that an assessment was improperly imposed on any of
Plaintiffs’ properties, or constituted a taking, is also barred by
the statute of limitations because the last such assessment was
in 2001. See also Cal. Code Civ. Proc. §§ 526a, 860.
19
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 20 of 26 Page ID
#:7373
B. Lack of Compensable Property Right
7. Because the Constitution protects rather than creates property
interests, the existence of a property interest is the threshold
question of any takings analysis, and it is determined by
reference to existing rules or understandings that stem from an
independent source such as state law. Phillips v. Wash. Legal
Found., 524 U.S. 156, 164 (1998).
8. Potential water users do not hold a compensable right in any
potential connection to a government-controlled water supply
source. McMillan v. Goleta Water Dist., 792 F.2d 1453, 1457-
1458 (9th Cir. 1986); Gilbert v. State of California, 218
Cal.App.3d 234, 250 (1990) (“California law does not recognize
potential water use as a compensable property right.”).
9. Plaintiffs’ regulatory takings claims under both the Lucas and
Penn Central doctrines fail because at all times Plaintiffs were
merely potential water users, and they were never actual water
users.
10. In addition, Plaintiffs have no protectable property interest in a
County development permit to build a house on a waterless
vacant lot because they failed to obtain a water and sewer
connection, be placed on the CCSD wait list, or obtain a CCSD
intent to serve letter, during the times that those avenues were
available to Plaintiffs, and because they did not, and cannot,
present proof of “adequate water and sewage disposal capacity
available to serve the proposed development,” required by County
Code §§ 23.04.430, 19.07.041 and other state and local laws.
11. Plaintiffs have no protectable property interest in a variance that
seeks to bypass state variance laws, California Fire, Building and
Plumbing Codes, County Codes, and other regulations, to allow
the Windeler Plaintiffs (who applied) or the other Plaintiffs (who
did not) to obtain a development permit based on vague proposals
to drill a well or truck in and store water, with no evidence to
20
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 21 of 26 Page ID
#:7374
support the viability or legality of such proposals or even the
existence of water under any of the Plaintiffs’ vacant lots.
12. Plaintiffs’ substantive due process claims fail for the same
reasons given above.
13. The Court previously found, on a motion to dismiss, that
Plaintiffs’ claims were not barred by Gilbert and related cases
because Plaintiffs alleged that they were deprived of all
economically viable use of their properties. Dkt. 28 at 5.
14. However, the evidence demonstrates that a lack of water and
sewer connection does not completely deprive Plaintiffs’
properties of value.
15. Therefore, Plaintiffs’ status as mere potential water and sewer
users dooms their takings claims under Gilbert and related cases
because they have no compensable property right to prospective
water and sewer connections.
C. Per Se Regulatory Taking
16. A regulatory per se taking occurs when regulation deprives an
owner of all economically beneficial uses of their land. Lucas v.
S. Carolina Coastal Council, 505 U.S. 1003 (1992). A per se
taking under Lucas requires a 100% loss of value.
17. Because, as stated above, Plaintiffs did not suffer a complete
deprivation of all property value, Plaintiffs’ claims under Lucas
fail.
D. Penn Central Taking – Water and Sewer Connections
18. Even if Plaintiffs’ claims were not barred by their lack of a
property interest in a potential water or sewer connection, the
impact to their properties does not amount to a taking under
Penn Central Trans. Co. v. City of New York, 438 U.S. 104 (1978)
and its progeny.
21
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 22 of 26 Page ID
#:7375
19. Under the Penn Central doctrine, the Court must consider three
factors to determine if a regulatory action has resulted in a
taking: (1) the economic impact of the regulation on the claimant;
(2) the extent to which the regulation has interfered with distinct
investment-backed expectations; and (3) the character of the
governmental action. Bridge Aina Le’a, LLC v. Land Use
Commn., 950 F.3d 610, 630 (9th Cir. 2020); Penn Central, 438
U.S. 104, 124.
20. In considering the economic impact of an alleged taking, the
Court compares the value that has been taken from the property
with the value that remains in the property. Colony Cove Props.,
LLC v. City of Carson, 888 F.3d 445, 450 (9th Cir. 2018).
21. Assuming Plaintiffs had some property interest in potential
water and sewer connections – which, as discussed above, they do
not – the Court acknowledges that a lack of water and sewer
services greatly diminishes the value of Plaintiffs’ properties
compared to having water and sewer at the properties.
22. However, the lack of any right under California law to
prospective utility hookups means that Plaintiffs have suffered
no compensable loss from Defendants’ failure to authorize such
hookups.
23. The second factor of the Penn Central test analyzes to what
degree the alleged government action interfered with the
property owners’ distinct investment-backed expectations.
24. A court may deny a Penn Central takings claim solely on the
absence of objectively reasonable and distinct investment-backed
expectations. See Ruckelshaus v. Monsanto Co., 467 U.S. 986,
1005 (1984); Colony Cove Props., 888 F.3d at 452; Guggenheim v.
City of Goleta, 638 F.3d 1111, 1120 (9th Cir. 2010).
25. Unilateral expectations or abstract needs cannot form the basis of
a claim that the government has interfered with property rights.
Bridge, 950 F.3d at 633; Ruckelshaus, 467 U.S. at 1005.
22
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 23 of 26 Page ID
#:7376
26. The Court finds that any investment-based expectation in an
absolute right to water and sewer connections in Cambria – or to
a development permit in the absence of such connections – was
not objectively reasonable.
27. The evidence shows that water is, and has long been, limited in
the Cambria area and it was, or should have been, expected that
water supplies could become too limited to support future
services from the available water sources.
28. Further, Plaintiffs did not act to protect or further any
expectation in water and sewer hookups by signing up for the
Wait List when that was an option or by purchasing a water
meter from another property owner.
29. Additionally, the Coastal Commission has repeatedly
demonstrated that it is extremely unlikely to authorize any
further development in Cambria, other than possibly affordable
housing. This makes any expectation that Plaintiffs’ properties
could be developed for private market-rate housing objectively
unreasonable.
30. As for the nature of the government action, government action
that singles out a landowner from similarly situated landowners
raises the specter of a taking; however, a generally applicable
scheme does not weigh in favor of a takings finding. Bridge,
950 F.3d at 636.
31. A taking may more readily be found when the governmental
interference with property can be characterized as a physical
invasion by government than when interference arises from some
public program adjusting the benefits and burdens of economic
life to promote the common good. Colony Cove, 888 F.3d at 454.
32. The overwhelming evidence shows that Plaintiffs were treated
identically to all other similarly situated landowners – i.e.,
landowners with properties that are not connected to water and
23
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 24 of 26 Page ID
#:7377
sewer utilities and were never placed on the Wait List for such
connections.
33. Further, the evidence shows that any invasion of rights that
might be purported to exist was non-physical and was for the
purpose of promoting very significant public interests that
require balancing of the needs of the entire public through the
management of a scarce and necessary public good.
34. Therefore, the Court finds that, even though the alleged taking
would have reduced the value of Plaintiffs’ properties greatly,
Plaintiffs’ lack of any reasonable investment-based expectation in
development of the properties, the strong, evidence-based public
interest reasons for the regulations at issue, and the failure of
Defendants to single out Plaintiffs for special treatment in any
way means that no taking occurred under the Penn Central
standard.
E. Penn Central Taking – Windeler Variance Application
35. If there were some compensable property interest in the
variances sought, the denial of the variances – i.e., being bound
by the County codes for which variances are sought – likely
diminishes the value of the Windelers’ property substantially
compared to its value with the variances. Without the variances
or a CCSD connection – which cannot be obtained by the
Windelers – no meaningful development of the Windelers’
property is possible.
36. However, even if the first part of the test weighs in the
Windelers’ favor, the Windelers fail to establish any support in
favor of the second and third parts of the Penn Central test.
37. The Windelers did not establish that the County’s denial of their
requested variance interfered with any reasonable, investment-
backed expectations that they might have had.
38. The Windelers have not demonstrated that it would have been
reasonable to expect the significant variances that they requested
24
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 25 of 26 Page ID
#:7378
would have been granted by the County such that a reasonable
person would have depended on such variances when making
investment decisions.
39. They had little to no support for their requested variances that
would demonstrate to the County that the variances would not
harm health or safety of the community.
40. The Windelers have also not shown that they personally,
subjectively believed that they would receive such variances
before making any sort of investment decision.
41. The County also established that it had numerous legitimate
governmental reasons for its denial of the variances requested by
the Windelers.
42. The Windelers failed to show that they could provide a safe and
effective water and septic supply to support the proposed
development on their property. In the absence of this showing,
the County was acting in support of public health and welfare by
denying the requested variances.
F. Coastal Commission Role
43. The evidence further demonstrates that regardless of the actions
of Defendants, the Coastal Commission would not have
authorized any development of Plaintiffs’ properties during the
relevant time period.
44. The Commission maintains a right under California law to
regulate development within the Coastal Zone and has made
clear in numerous rulings that it will not allow further private
development in Cambria other than, perhaps, affordable housing
even if the applicant has a water connection from CCSD.
45. Therefore, any losses due to an inability to develop Plaintiffs’
properties were not caused solely by Defendants’ actions. The
Court finds that even if Defendants had done everything
Plaintiffs claim that they should have done, the Coastal
25
Case 2:19-cv-06325-DSF-JEM Document 221 Filed 09/06/22 Page 26 of 26 Page ID
#:7379
Commission would have blocked development of their properties
and is likely to continue blocking such development in Cambria
for the mid- to long-term future.
IT IS SO ORDERED.
Date: September 6, 2022 ___________________________
Dale S. Fischer
United States District Judge
26