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"Residential Use on Tidelands"

California Real Estate Journal
By: Howard D. Coleman

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Things always change over time. The residential timeshare portion of the Woodfin Suites hotel project along the San Diego coast has been in the news recently as a result of the State Lands Commission finding in December that such residential shares are not an appropriate use of tidelands.

But tidelands have been permitted for hotels and other transient uses as being compatible with the Public Trust because such facilities allow people to enjoy and use the coast for commercial and recreational purposes. Proponents of timeshares argue that their "interval ownership" should be treated like a publicly available hotel.

When did the battle for areas designated as tidelands begin? Ideas about how best to utilize California's coastal lands date to the 1800s, during Spanish and Mexican colonization of the region. At that time, coastal location was considered undesirable because crops did not grow in saline-saturated soil, and cattle did not graze by the ocean.

Ranch houses were not located along the seashore because only through agricultural use could a rancho grant be perfected and its title confirmed. In fact, so sparse was the use of coastal lands that an early captain's log from a ship anchored in San Pedro reported having to fire its cannon to attract the attention of those onshore to the vessel's arrival.

Today, a coastal location reflects the ultimate in residential ownership. The problem, though, is that residential use of tidelands may be restricted by a doctrine - the Public Trust for commerce, navigation and fisheries - imported from England, which restricted the rights of its kings to convey tidelands into private, exclusive usage.

In order to understand the problem of sitting homes on tidelands, one must factor into the equation not only the Public Trust but also the rather elastic definition of tidelands and the underappreciated State Lands Commission.

When California was admitted into the union in 1850, the state acquired ownership of ungranted tide and submerged land within its jurisdiction, subject to the Public Trust. The Public Trust originated under English common law as a doctrine to protect tidal rivers and coastal shores from exclusive, private control, which would affect and materially interfere with the use of such lands for water-based commercial purposes.

Thus, though the powerful English Crown could convey the foreshore into private ownership, the sovereign English nation kept a property right that trumped landowner rights in order to have such lands available for the pursuit of business endeavors. Even the king could not transfer the Public Trust.

In California, the State Lands Commission has jurisdiction over ungranted tidelands within its boundaries and is the guardian of the Public Trust. The commission comprises the lieutenant governor, the state controller and the director of finance, who is appointed by the governor. It is an institution with a colorful history, where ancient doctrine and modern trends converge and sometimes conflict.

Over time, the purposes of the Public Trust in California have been broadened by case law to cover not only commercial maritime uses but also recreational and environmental protection, including wetlands restoration.

Tidelands normally are thought of as the area covered and uncovered by daily tides, but California case law provides a broader definition that goes well beyond that visual determination. For purposes of defining tidelands in this state, one looks not only at the tide's ebb and flow but also at the coast in its last natural condition, unaffected by dredging, breakwater construction and the like.

When artificial conditions initially affect a California coastal area, the boundary demarcating tidelands is fixed permanently.

For example, areas once covered and uncovered by tidal waters as a result of a revetment, which are completely dry and no longer affected by tidal waters, are technically and legally tidelands, subject to the Public Trust.

In many cases, these dry or filled tidelands make ideal sites for housing. The problem is that residential uses may not be compatible with the Public Trust. As mentioned previously, tidelands have been permitted for hotels and other transient uses as being compatible with the Public Trust, and timeshare proponents would like to see their "interval ownership" properties treated like publicly available hotels.

"The commission seeks to protect lands for water-oriented purposes, and residential is certainly not such a purpose," said Paul D. Thayer, executive officer of the State Lands Commission.

The tension between promoting public-visiting-servicing facilities and exclusive, private residential use is the focus of the commission's attention in determining when long-term uses no longer are considered transient for purposes of the Public Trust.

Few would argue that hotels are, by their nature, visiting-servicing or transient uses, but are monthlong hotel stays permitted and two-week-interval stays for 50 years prohibited?

Added to the mix is a 1996 opinion issued by the state attorney general which reached the conclusion that residential-timeshare arrangements on tidelands are Public Trust-compliant. But that opinion is open to questioning and recently was rebuffed by the commission in reviewing a timeshare proposal as part of the Woodfin Suites project.

The staff report, adopted by the commission, determined that such a project is "not a water-dependent use, nor does it enhance or facilitate the general public's enjoyment of trust lands, nor is timeshare development necessary or incidental to accomplish or promote such uses."

"The commission is following nearly 70 years of precedent by its predecessors in seeking to preserve these important public lands for the public's use and enjoyment," said Curtis L. Fossum, the commission's assistant chief counsel.

Looking to the future, as developers attempt to determine what is possible on tidelands, the State Lands Commission will be involved in balancing increased demand for coastal living with requirements of the Public Trust. Developers are expected to push the envelope by tinkering with the duration of residential uses and the nature of amenities in an attempt to test the commission on what, if not timeshares, will be permitted.
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