Trial to decide future of 2,400-acre Wild Cherry Canyon has ended. Here’s what’s next
After a month of viewing countless documents, maps and development plans, and listening to more than 50 hours of witness testimony, the trial over the lease on the expansive Wild Cherry Canyon lands ended on Wednesday with closing arguments.
The trial gave Eureka Energy Corp., a subsidiary of PG&E that owns the land, and the Pacho and San Luis Bay limited partnerships, which are largely owned by HomeFed Corp. and hold the lease, a chance to show San Luis Obispo Superior Court presiding Judge Rita Federman whether they believe the 1968 lease for the land is legally valid until 2166.
The lease in question is for about 2,400 acres of land, dubbed Wild Cherry Canyon, just west of Avila Beach. It’s considered to be part of the 12,000 PG&E-owned acres surrounding Diablo Canyon nuclear power plant as a buffer, free from major development.
HomeFed argued during the case — which was first filed in 2019 — that the lease is valid for what it’s written as: 99 years, plus an option to renew for another 99 years. That would mean the home developer could hold the lease until 2166.
PG&E, on the other hand, argued that the lease term was valid for only 51 years because it is considered a lease for agricultural purposes. California civil code section 717 notes that “no lease or grant of land for agricultural ... purposes for a longer period than 51 years ... shall be valid.”
Judge must decide if lease is for agricultural purpose
Cattle graze on the 2,400 acres of Wild Cherry Canyon, and have done so for as long as people can remember, attorneys for both parties acknowledged. According to San Luis Obispo County Agricultural Commissioner Martin Settevendemie, who testified in court on Monday, cattle grazing equates to an agricultural use.
Even so, attorneys for HomeFed argued that the use of the land does not necessarily dictate the purpose of the land. Instead, the judge should focus on what the intended purpose of the land is, which they say is development.
Their client has drawn up large development plans for the property, including everything from a dude ranch concept to 2,500 housing units as an “urban village,” according to witness testimony.
“There are a small number of cattle on the property, serving the purpose of keeping the grass down,” said HomeFed attorney Daniel Murphy in his closing arguments Wednesday. “It’s an incidental use; incidental use does not arise to ‘purpose.’”
Bill Shiber, an attorney for PG&E, argued that the judge shouldn’t separate the land’s use from its purpose.
“The plaintiffs have focused almost exclusively on the purposes of the tenant in this case, and said that these are the plans and dreams that we have for the property,” Shiber said in court on Wednesday. “That’s not how the statute is written. The statute talks about purposes in the overall sense, which would include both the purposes of the landlord and tenant.”
Shiber added that “the only purpose that both the landlord and the tenant have agreed to in this case ... is the use of the land for agricultural purposes.”
Both parties in the case have until Jan. 20, 2023, to submit written briefs to Judge Federman essentially describing how they think she should decide the case. Then, Federman has up to 90 days to issue her ruling.
The result of the case could have lasting impacts on the San Luis Obispo County community.
Two different visions for Wild Cherry Canyon
Should HomeFed win, it may “fight with the world to get a (development) project entitled,” testified Joseph Steinberg, chairman of Jefferies Financial Group, a New York-based investment banking firm that owns 90% of HomeFed’s Wild Cherry Canyon leasehold.
That could mean leveling off the tops of the towering coastal mountains to make way for vacation and second homes for out-of-towners, Steinberg said in his testimony.
Should PG&E win, residents of the area will likely see little to no change to the land. It’s currently closed to the public and used solely for cattle grazing.
“Any development there could be quite complex from an emergency planning standpoint” with regards to Diablo Canyon nuclear power plant, testified Tom Jones, director of government relations at PG&E. “It (development) wouldn’t be tolerable for us.”
Shiber also alleged during the case that the development plans by HomeFed could just be a ruse to drum up more money from conservation groups wanting to buy the property out of fear that it will be developed. The land has recently been appraised at $39 million should HomeFed continue to hold the lease until 2166.
Throughout the years, The Nature Conservancy and American Land Conservancy both attempted to acquire the land to set it aside for conservation and perhaps connect it with the Montaña de Oro State Park to the north. Those attempts failed, however, after both groups were unable to raise enough money.
Is development a sure thing if HomeFed wins?
If HomeFed wins the lease, it doesn’t necessarily guarantee there will be development at Wild Cherry Canyon.
For example, Senate Bill 856, which was signed by Gov. Gavin Newsom in September and allows the state to loan PG&E up to $1.4 billion to ensure the continued operation of the Diablo Canyon nuclear power plant (five years past its previously scheduled closure date of 2025), also denotes how the land around the power plant should be handled.
The law loosely notes that access, use, conservation and management of Diablo Canyon power plant lands — which likely include Wild Cherry Canyon — should be considered with the wishes of local Native American tribes who historically occupied the land.
Additionally, the law indicates that the California Public Utilities Commission has jurisdiction over the future of the Diablo lands.
“The commission, in consultation with the relevant federal and state agencies and appropriate California Native American tribes, shall, in a new or existing proceeding, determine the disposition of the Diablo Canyon power plant real property and its surrounding real properties owned by the applicable public utility or any legally related, affiliated or associated companies, in a manner that best serves the interests of the local community, ratepayers, California Native American tribes and the state,” the legislation says.
The legislation also states that any transfer of the Diablo lands that was to begin after the plant decommissioned in 2025 should not be impeded by the continued operation of the nuclear plant. The decommissioning engagement panel drawing up those future plans for the Diablo lands has expressed that the land should be “conserved in perpetuity while allowing for managed-public access and use.”
