Crazy Quilt of Unbuildable Lots Stands in Way of Development

Sometimes it’s that special lot, the one that overlooks the sea in Laguna Beach where a couple plans to build their dream retirement home. Or an investment that has been passed from owner to owner until--on paper--it is worth so much it is time to try to build on it.

And that is when the trouble begins. Property owners sometimes learn at that point that their lots were carved out under old subdivision standards and no longer comply with zoning laws or environmental restrictions governing construction.

It is estimated that there are more than 400,000 such “substandard” lots in California. Tens of thousands of them are in the Santa Monica Mountains and in the Lake Tahoe area.

Laguna Beach was one of the many cities that supported legislation by Sen. Marian Bergeson (R-Newport Beach) to help at least some of these property owners recoup their investments. The bill, SB 442, would have helped landowners combine parcels and readjust boundaries to allow for development. But the bill died after an eminent domain provision attracted heavy opposition.

The city of Lancaster is involved in a worldwide search for landowners who in 1910 were deeded 25-by-100-foot lots if they would subscribe to the now-defunct Los Angeles Morning Herald. Then, the lots were valued in pennies. Today, the city is buying them for about $5,000 each to assemble land for municipal facilities.

Belmont, in the San Francisco Bay Area, has a serious problem with substandard lots, some of which were purchased to make their owners eligible for membership in a local country club. Many of the lots have bay views on extremely steep terrain in active landslide areas.

“You can also get a great view of the bay if you had a lot on the moon, but you can’t get to it,” Belmont senior planner Dan Vanderpriem deadpanned.

The problem of substandard lots--sometimes called “paper subdivisions” because many were mapped out by people who had never even seen the land--is not limited to California.

In Florida, huge subdivisions of small lots were sold to people throughout the United States and abroad. For years, the lots generated much more property tax revenue than was required to pay for public services. But as the demand to build on them increases, local governments are faced with the high cost of building streets, schools and other facilities.

In Orange County, Huntington Beach was once dotted with “encylopedia lots,” small pieces of land that were given away decades ago as bonuses for buying sets of encyclopedias. Most of these parcels have been consolidated and developed, but the city still is trying to assemble many of them for its Central Park.

“They are just pieces of dirt,” said Rich Barnard, assistant to the city administrator of Huntington Beach. “There are no streets. There is no water. There are no sewers.”

The City of Laguna Beach estimates that there are upward of 1,000 privately owned lots located on steep slopes or in fire hazard areas that could never be safely developed under current configurations.

Madelyn Glickfeld, a land use consultant who worked with Bergeson on the legislation, said the popular myth--”If you can buy it, you can build on it”--keeps unbuildable lots circulating in the land market. She tracked one piece of property that jumped from a few hundred dollars to $37,000 as it changed hands.

“By that time, they have so much invested they don’t want to walk away,” she said. “So they try to put pressure on local government to grant them permits.”

Bergeson’s legislative effort failed in this year’s session, and the problem of substandard lots remains.

“We need to give landowners some way to solve problems local government can’t solve for them,” Glickfeld said. “Without resolution, I think this continues to be one of the thorniest issues in local control.”

EMINENT DOMAIN

How it began: Compensation for property taken by the government can be traced to 1215, when King John of England signed the Magna Charta. In the U.S. Bill of Rights, there is reference to eminent domain in the Fifth Amendment.

Who can exercise it: Federal, state and local governments have the power of eminent domain. In addition to acquiring land for highways, schools and other public facilities, it has been used for urban renewal and redevelopment projects.

How it is done: In practice, eminent domain is used when negotiations between the government and a property owner fail. By state law, property owners must be given notice of a hearing to determine whether their property is needed for a project and whether taking the property would be compatible with the greatest public good and the least private injury. The property owner has 15 days to respond to the notice of the hearing. Two-thirds of all members of the governmental body involved then must vote to take the property, through a lawsuit if necessary.

Citizen recourse: Once a lawsuit is filed, property owners who do not agree with the amount of money being offered to them may file an answer and have a trial, with a jury if they choose, to determine how much they should be paid.