LUCE FORWARD
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LUCE, FORWARD, HAMILTON & SCRIPPS LLP

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San Francisco, CA 94105

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May 25, 2004


Mr. Larry Badiner, Acting Director
Planning Department
1660 Mission Street, Fifth Floor
San Francisco, CA 94103

Mr. Frank Chiu, Director
Department of Building Inspection
1660 Mission Street, Sixth Floor
San Francisco, CA 94103

RE: Request for Stop Work Orders 80 Natoma Street (Natoma Mews)

Dear Messr. Badiner and Chiu:

Our office represents Transportation Solution Defense & Education Fund ("TRANSDEF"). TRANSDEF is an environmental organization advocating Smart Growth and cost-effective transit as strategies for the protection of the Bay Area's quality of life. The downtown extension of Caltrain and High Speed Rail to an expanded Transbay Terminal has been a top priority for TRANSDEF, because it will create a convenient way for passengers to transfer between the region's major transit systems, as well as become a premier example of transit–oriented development. TRANSDEF is requesting that Stop Work Orders be issued for 80 Natoma Street. Based on a review of the approval actions taken by the Planning Commission ("Commission"), Planning Department ("Department") and the Department of Building Inspection ("DBI"), it is TRANSDEF's opinion that all of the approvals by the Commission, the Department and DBI subsequent to December 1999, which was the effective date of Proposition H, were invalid because these approval actions were prohibited by Section 1 and Section 9 of Proposition H, and/or invalid for failure to undertake additional environmental review for the 80 Natoma Street due to changed circumstances.

Inasmuch as all approvals granted for the development of the proposed project at 80 Natoma Street (being Block 3721, Lots 45A, 46, 53 and 54) after the effective date of Proposition H were in error, Stop Work Orders should be immediately issued and the issued permits revoked.

BACKGROUND


All approval actions of the Commission, Department, DBI and the Board of Supervisors pertaining to land use must undergo appropriate environmental review pursuant to the requirements of the California Environmental Quality Act ("CEQA"). Additionally, Proposition H, an initiative ordinance adopted by the voters of San Francisco in November, 1999, limited the actions and approvals by City officer and Agencies, which included the Commission, Department and DBI. CEQA and Proposition H provide the legal framework for an analysis of the City's actions, approvals and authorizations for the 80 Natoma project and its impact on the Transbay Terminal and Caltrain Downtown Extension Project.

A. Proposition H

The Caltrain extension to the Transbay Terminal was under consideration in 1994. Consideration was halted in 1997 by then Mayor Willie Brown. In December of 1998, a campaign to revive the Caltrain extension collected the required number of valid registered voter signatures to place an initiative ordinance on the November 1999 ballot. This initiative ordinance was and is referred to as Proposition H. The voters of San Francisco overwhelming adopted Proposition H by a margin of 69% to 31%. As an initiative ordinance, the provisions of Proposition H can only be repealed by a vote of the people of San Francisco.

Three sections of Proposition H governing the actions of City officers and Agencies are relevant to the analysis of the validity of the City actions and approvals for the 80 Natoma project.

Section 1 of Proposition H provides in relevant part as follows:

It shall be the law of the City and County that the Caltrain commuter rail line, operated by the Peninsula Corridor Joint Powers Board or any successor agency thereto, be extended downtown to a regional intermodal transit station. To implement such law, the Mayor, the Board of Supervisors, and all city officers and agencies, including Redevelopment Commissioners, with any authority over any aspect of the Caltrain downtown or the Transbay land use planning and redevelopment ... shall adopt such further ordinances and resolutions and take all actions as necessary to effectuate the prompt extension of Caltrain downtown to said station, and to protect right-of-way as identified in the Joint Powers Board draft Downtown Extension Environmental Impact Report from any development that could preclude the extension or increase its costs. (Emphasis added.)

Section 2 of Proposition H provides as in relevant part follows:

As part of the extension of Caltrain downtown, a new or rebuilt terminal shall be constructed on the present site of the Transbay Transit Terminal serving Caltrain, regional and intercity bus lines, MUNI, and high speed rail, and having a convenient connection to BART and MUNI Metro.

Section 9 of Proposition H provides as follows:

The Mayor, , the Board of Supervisors, and all city officers and agencies are hereby forbidden from taking any action that would conflict with the extension of Caltrain to downtown San Francisco, including, but not limited to, pursuing any uses for the present Transbay Terminal site that conflict with Section 2, or undertaking any other land use planing or development efforts that would conflict with the intent of this legislation.

To ascertain the legislative intent of the voters, the City's Attorney prepared a summary of the chief purpose and points of Proposition H, the ballot arguments and public debates surrounding Proposition H. The City Attorney's summary of Proposition H in the voters' pamphlet read in relevant part as follows:

... The City would be prohibited from taking any actions that would conflict with extending Caltrain to downtown San Francisco, including allowing conflicting use or development of the Transbay Terminal or the proposed extension right-of-way. (Emphasis added.)

Therefore, it is clearly the legislative intent of Proposition H to prohibit the City from taking any action that would conflict with the implementation of the Transbay Terminal project and the Caltrain Downtown Extension Project, including any development that would conflict with the Caltrain extension along the proposed extension right-of-way. The Department, the Commission and DBI are City agencies within the meaning of Proposition H. Therefore, the Department and the Commission are prohibited from approving and DBI is prohibited from issuing any permits that would conflict with the Transbay Terminal and Caltrain Downtown Extension Project, including the lots along the proposed extension right-of-way.

B. Environmental Review of The 80 Natoma Project and The Transbay Terminal and Caltrain Downtown Extension Project.

CEQA requires the City to perform environmental review before approving any project. Both the 80 Natoma project and the Transbay Terminal and Caltrain Downtown Extension Project are subject to CEQA review.

80 Natoma Project

The environmental review process for the 80 Natoma project is summarized below.

1. March 2, 1990: PCI Development Corporation LP submitted an environmental review application for the development of a 48 story, 475' high building, containing 624,370 gsf, of which 444,430 gsf would be devoted to residential use with 509 dwelling units, 509 offstreet parking spaces in up to five underground parking levels and 10,000 gsf of retail spaces. The project site consists of Lots 45A, 46, 53 and 54 of Block 3721.

2. December 26, 1991: A Draft Environmental Impact Report ("DEIR") was issued and the Commission held a public hearing on the DEIR on January 30, 1992.

3. December 3, 1992: The Commission adopted Motion No. 13440 certifying the Final Environmental Impact Report ("FEIR").

4. April 9, 1998: The Office of Environmental Review ("OER") prepared a memorandum stating that the conditional use application seeking an extension of time to obtain a site permit for the 80 Natoma project has been re-evaluated and concluded that no new significant impacts would result from the project in addition to those analyzed in the 1992 FEIR. Therefore, no additional environmental review would be required.

5. April 14,1999: The OER Review prepared a memorandum on a revised 80 Natoma project design, which would reduce the number of off-street parking spaces from 509 cars in 5 underground parking levels to 406 cars in 4 underground parking levels, and which included other revisions to the use of the interior spaces and the types of residential units. OER concluded that the design changes would not change the environmental effects of the project analyzed in the 1992 FEIR.

6. No additional environmental analysis was performed, whether by an addendum to the 1992 FEIR or any other environmental review documents, for the conditional use applications or the site or building permit applications submitted after December 1999.

Transbay Terminal and Caltrain Downtown Extension Project

1. Environmental Review of the Transbay Terminal and Caltrain Downtown Extension Project that would implement Proposition H began in 2000.1

2. October 4, 2002: A draft EIS/EIR for the Transbay Terminal and
Caltrain Downtown Extension Project was published and released for public review and comments. Notice of the availability of this DEIR was published as required in the San Francisco Independent newspaper and posted at the Department. Five hundred and fifty newsletters were sent to the mailing list announcing the availability of the draft EIS/EIR. Letters were sent directly to property owners whose properties that could be affected by the Transbay Terminal and Caltrain Downtown Extension Project. As one of the affected properties, the owners of the 80 Natoma project (Block 3721, Lots 45A, 46, 53 and 54) received notification of the publication of the Draft EIS/EIR. Additionally, fifty (50) 11"x17" posters were posted throughout the project area and along Second Street. 352 copies of the draft EIR/EIS, both printed and compact disc versions were mailed to public agencies and interested individuals.

3. November 12, 2002: A public hearing on the draft EIR/EIS was held at the San Francisco Redevelopment Agency.

4. November 26, 2002: The Commission held a public hearing on the draft EIR/EIS. At the urging of the public, the Commission extended the public comment period from November 26, 2002 to December 20, 2002.

5. March 2004: The responses to public comments on the draft EIS/EIR were published and made available to public agencies and interested individuals.

6. April 22, 2004: The Commission and the Peninsula Corridor Joint Powers Board held a public hearing and certified the draft EIS/EIR.

D. Commission/Department Actions on Use Permits

1. October 28, 1992: PCI Development Corporation submitted a conditional use application for the development of 48-story residential building with 509 dwelling units, underground parking and ground floor retail space for 80 Natoma Street (Block 3721, Lots 45A, 46, 53 and 54).

2. October 28, 1992: PCI Development Corporation submitted a Section 309 Application requesting exceptions from Planning Code Sections 132.1 (Separation of Towers/Set Back Requirement), 134 (rear yard) and 155(d) (Truck Loading).

3. December 3 and 17, 1992, and on January 14 and 28, 1993: The Commission held public hearing on the conditional use and Section 309 Exception Applications for proposed project.

4. January 28, 1993, the Commission adopted a motion to approve the proposed project.

5. February 25, 1993: The Commission adopted Motion No. 13469 authorizing conditional use for the proposed project. One of the conditions of approval required the applicant to obtain a site permit by February 25, 1996.

6. February 25, 1993: The Commission adopted Motion No. 13470 granting the requested exceptions for the proposed project. One of the conditions of approval required the applicant to obtain a site permit by February 25, 1996.

7. February 1, 1995: KSW Properties LP submitted a conditional use application seeking to modify the condition of approval requiring the issuance of a site permit by February 25, 1996 to 2001.

8. March 23, October 26, and November 16,1995: The Commission held public hearings on the conditional use application requesting an extension of time to obtain the site permit. The Commission adopted Motion No. 14015 and approved the extension of time to obtain a site permit to February 25, 1998.

9. January 14, 1998: KSW Properties LP submitted another conditional use application and Section 309 application seeking another extension of time to obtain a site permit to February 25, 2001.

10. April 16, 1998: After a duly noticed public hearing, the Commission adopted Motion Nos. 14619 and 14615 approving the conditional use application and the Section 309 application respectively and extending the time to obtain a site permit to February 25, 2001.

11. February 24, 1999: KSW Properties LP submitted an application to purchase 160,000 sf of transferable development rights ("TDR") from various properties.

12. March 23, 1999: The TDR transfer was recorded.

13. March 9, 2000: the Department found the tentative map application to be consistent with the San Francisco General Plan.

14. June 12, 2002: A conditional use application to use the property as temporary parking was submitted and withdrawn.

F. Department of Public Works Approvals

1. Subdivision Map Application: A tentative map application to create 17 air parcels was submitted in November 1999 and approved on March 28, 2000 and returned to the Applicant on March 28, 2000.

2. Minor Sidewalk Encroachment Permit #99M5E-362: This encroachment permit was submitted on March 26, 1999 to allow installation of shoring in the public sidewalk to facilitate excavation and issued on March 29, 1999. Under the San Francisco Municipal Code, this is a revocable permit. All work under this encroachment permit should be stopped until the City can determine if the project is in conflict with the implementation of the Transbay Terminal and Caltrain Downtown Extension Project.

3. Parcel Map for Lot Line Adjustment: On April 20, 2004, a parcel map for lot line adjustment to merge the four lots into one was submitted. This applicant was circulated to City Agencies and neighbors. DBI approved the parcel map on May 10, 2004. This application is pending before the Department for findings of consistency with the City's General Plan.

F. Approval Actions by the Department and DBI 2

1. Application #9817951 S: This site permit application was submitted by Swig Burns Equities, LLC on September 9, 1998. The Department approved the application on February 1, 1999 and references "Approved Per Motions 14615, 14619 and Section 128(H)". The Central Permit Bureau of DBI ("CPB") issued the permit on February 6, 1999. Issuance of a site permit does not authorize an applicant to proceed with construction.

2. Application #9821707: A temporary shoring permit was submitted by Swig Burns Equities, LLC on October 23, 1998 and approved on November 10, 1998. This permit expired on November 10, 1999.

3. Application #9904253S: This alteration permit application to revise the
issued site permit (Application 99817951S) was submitted by Swig Burns Equities, LLC on March 5, 1999, approved by the Department on May 4, 1999 and issued by CPB on June 2, 1999. This permit expired on November 25, 2003.

On May 25, 1999, the consultant for the permit applicant submitted an addenda schedule for approval. DBI approved a revised addenda schedule for the site permit that included (1) Addendum # 1 for the foundation, (2) Addendum #2 for structural steel [not for erection of the structural frame], (3) Addendum #3 for site architectural and layout of the building; (4) Addendum #4 for foundation, curtain structural wall systems, including the exterior skin, (5) Addendum #5 for superstructure, and (6) Addendum #6 for all remaining work, including mechanical, electrical, and plumbing, with the fire prevention system (fire alarm and sprinkler systems) to be submitted under a separate permit.

4. Addenda to Application #9904253S: Issuance of a site permit by DBI does not allow the permit holder to proceed with construction, until an addendum authorizing specific work is approved. The San Francisco Building Code allows up to seven (7) addenda to be issued for a site permit.

Addendum #1: This foundation addendum was submitted on May 25, 1999. DBI approved this addendum on June 22, 1999 and this addendum was issued on June 22, 1999.

Addendum #2: This addendum submitted was for structural steel (not for erection of the structural frame) was submitted on May 25, 1999 and approved by DBI on March 3, 2000.

Addendum #3: This addendum was for superstructure and submitted on September 9, 2000, and approved by various divisions of DBI between October 24, 2003 and January 16, 2004. The addendum was also routed to the Department on December 10, 2003. This addendum was approved by the Department on May 1999. This addendum has not yet been issued.

5. Application #9916015: This permit is a revision to Application #9817951S and issued to revise BMR units, elevations and BMR tabulations. The Department approved the permit on September 20, 1999 and the permit was issued on
September 21, 1999.

6. Application #200005200540: The application was submitted by Swig Burns Equities, LLC to identify open space. This permit application was reviewed by the Department on May 23, 2000 and approved on May 25, 2000. The permit was issued on May 26, 2000.

7. Application #200310319088: This application for indicator piles was submitted on October 31, 2003. DBI approved this application on October 31, 2003 and CPB issued the permit on October 31, 2003. A notice of completion certifying that the indicator piles were completed was issued on April 23, 2004. This permit was not routed to the Department for review.

8. Application 200312162431: The applicant submitted this alteration permit application on December 16, 2003 to revise the previously issued site permits. The Department reviewed and approved this permit application on February 9, 2004. Various divisions of DBI approved the permit application between December 19, 2003 and April 8, 2004. CPB issued this permit on April 8, 2004. This permit application was approved after the effective date of Proposition H.

Addendum #1: This addendum was submitted on March 23, 2004 and issued on April 8, 2004. This addendum was not routed to the Department for review.

Addendum #2: This addendum was submitted on April 23, 2004 for the foundation. This addendum was not routed to the Department for review.

9. Application #200403118413: This is an application to inspect the temporary shoring work performed under permit application #9821707 which had expired on November 10, 1999. It is unclear whether work was performed after expiration of Permit #9821707.

10. Application #200403168800: This application was submitted on March 16, 2004 to revise "Application #9821707 and #20040318413 for shoring and excavation to 12' below grade". DBI approved this application and issued the permit on March 25, 2004. This permit was not routed to the Department for review.

G. Other Actions By DBI

Pursuant to the request of the project structural engineer on November 30, 2003 to begin peer review, DBI solicited resumes from different structural engineers that might be selected as members of the Structural Peer Review Panel ("SPRP"). On January 7, 2004, DBI informed Professor Jack Peter Moehle, Mr. Leonard Joseph and Dr. Shahriar Vahdani as members of the SPRP. The letter informing the SPRP members of their selection also included a brief description of the proposed 80 Natoma project and the reasons for the peer review. The project structural engineer was responsible for distributing the project materials. There was no communication between DBI and the SPRP members, nor between the project engineer and the SPRR members that the foundation of the project may have to be designed to accommodate the Transbay Terminal and Caltrain Downtown Extension Project. The SPRP held its first meeting on January 20, 2004, a second meeting on February 3, 2004, a third meeting on March 4, 2004 and a fourth meeting on March 27, 2004. On March 31, 2004, the project engineer informed DBI in writing acknowledging that the conditional pile installation permit in Addendum #1 would include modifications required to gain final approvals. On April 1, members of the SPRP discussed the project via a conference call.

The Panel drafted a letter setting forth their recommendations in early April. However, the final copy of the letter is not DBI's files.

ANALYSIS


It is settled law that issuance of building permits or land use entitlement approvals are governed by the law in effect at the time of their approvals or issuance. In this case, the effective date of Proposition H governs all City actions in regards to development projects along the proposed right-of-way for the Caltrain Downtown Extension and Transbay Terminal Project. Construction of the 80 Natoma Project would conflict with the Caltrain Downtown Extension and Transbay Terminal Project and its construction as currently approved is prohibited by Proposition H, notwithstanding that the project received conditional use approval from the Commission in 1992, 1995 and 1998 and have obtained other issued permits from DBI. In addition, all permit applications approved after December 1999 are invalid because the Department failed to conduct lawfully required environmental review under CEQA. TRANSDEF requests that the Department and DBI immediately issue Stop Work Orders on the following issued permits for the reasons discussed below.

A. Stop Work Orders or Revocation of Permits Requested

1. Minor Sidewalk Encroachment Permit #99MSE-362

Under the San Francisco Municipal Code, this sidewalk encroachment permit is revocable. All work under this encroachment permit should be stopped until the City determines if revocation of this encroachment permit is necessary for the implementation of the Transbay Terminal and Caltrain Downtown Extension Project.

2. Addenda to Application #9904253S

Addendum #2: This application for structural steel (not for erection of the structural frame) was submitted on May 25, 1999 and approved by DBI on March 3, 2000, four months after adoption of Proposition H. Approval of this addendum was a City action is within the scope of and prohibited by Proposition H.

Addendum #3: This application for superstructure was submitted on September 9, 2000, and approved by various divisions of DBI between October 24, 2003 and January 16, 2004. The addendum was routed to the Department on December 10, 2003. This addendum has not yet been issued.

3. Application #200005200540

This permit expired on February 29, 2004 and should be cancelled by DBI. The Department should request that the Applicant submit a new application to identify its open space.

This application to identify open space was submitted on May 20, 2000, six months after the effective date of Proposition H. The Department should have conducted additional environmental review to ascertain if this permit application would conflict with the Transbay Terminal and Caltrain Downtown Extension Project before approving this permit. Moreover, The Department should have tracked the approval process of this permit by DBI and requested that the permit be routed back to the Department for final review prior to its issuance. Such a request is a normal practice of the Department. By the time this permit was issued on May 26, 2000, the project description for the draft EIS/EIR for the Transbay Terminal and Caltrain Downtown Extension Project would have been in existence. The Transbay Terminal and Caltrain Downtown Extension Project clearly constituted a changed circumstance that would mandate additional environmental review in the form of either a mitigated negative declaration or a supplemental EIS/EIR before issuance of this permit. Additionally, Proposition H precludes approval of this permit application because the 80 Natoma Street project would conflict with the proposed right-of-way for the Caltrain Downtown Extension to the new Transbay Terminal. The Department and DBI have a legal obligation to make certain that the 80 Natoma project would not conflict with or impair the City's ability to implement the Caltrain Downtown Extension Project.

4. Application #200310319088

This application for indicator piles was submitted on March 10, 2003. The draft EIS/EIR for the Caltrain Downtown Extension to the new Transbay Terminal was published on October 4, 2002, five months before this application was submitted. This application should not have been approved until DBI can determine that this application would not conflict with implementation of the Caltrain Downtown Extension to the new Transbay Terminal. Approval of the permit application should have also required additional environmental review pursuant to CEQA.

5. Application #200312162431

This alteration permit application was submitted on March 12, 2003 to revise the previously issued site permit. The Department reviewed and approved this permit application on February 9, 2004 one–year and four–months after publication of the draft EIS/EIR for the Transbay Terminal and Caltrain Downtown Extension Project, and three–years and four–months after adoption of Proposition H. The Department's failure to require additional environmental review resulted in the erroneous issuance of this revised site permit. Various divisions of DBI approved the permit application between December 19, 2003 and April 8, 2004. CPB issued this permit on April 8, 2004. Approval by the Department and issuance of this permit some three and one half years after adoption of Proposition H was in error.

6. Application #200403118413

This is an application to inspect the temporary shoring work authorized under permit application #9821707 that has expired on November 10, 1999. Inasmuch as the work to be performed was under a permit that has expired four and one–half year ago, additional environmental review should have been undertaken by the City prior to its issuance. Therefore, this permit was erroneously issued for lack of environmental review to analyze its impact on the Transbay Terminal and Caltrain Downtown Extension Project.

7. Application #200403168800

This application was submitted on April 31, 2004 to revise the approved shoring and excavation plans. Any shoring and excavation work on the 80 Natoma site will affect the Transbay Terminal and Caltrain Downtown Extension Project. This permit must be routed to the Department for review to determine if there are any conflicts under Proposition H.

8. Structural Peer Review Panel

The structural peer review panel should be reconvened to reconsider their recommendations after being provided with all relevant information regarding the proposed Transbay Terminal and Caltrain Downtown Extension Project. The Peer Review Panel's scope of work should include alternative design of the project foundation to accommodate a tunnel for the Caltrain Downtown Extension Project and to evaluate appropriateness of the foundation of the project, as modified by the Peer Review Panel, if the Transbay Terminal and Caltrain Downtown Extension Project (both the project and project alternatives) as described in the Final Environmental Impact Report proceeds.

B. Commission and Department Approvals

On March 9, 2000, the Department's finding that the tentative map application submitted November 1999 was consistent with the City's General Plan was flawed. Section 101(b)(4) of the Planning Code (one of the City's eight General Plan priority policies) requires a finding that a project will not impede MUNI services or add to commuter traffic. The multi-modal transit terminal to be created by the Transbay Terminal and Caltrain Downtown Extension project promotes this priority policy. The 80 Natoma project is inconsistent with and conflicts with this priority policy.

C. The Doctrine of Equitable Estoppel Does Not Apply To The Stop Work Orders Or Revocation of the Issued Permits Mentioned Above.

It is anticipated that the permit holder, Myers Natoma Venture LLC will assert that it has a vested right to proceed with the project and that the City is precluded from issuing any Stop Work Orders or to revoke its permits. The correct legal analysis is whether the City is precluded from issuing any Stop Work Orders or from revoking any of the issued permit under the Doctrine of Equitable Estoppel.3

The California Courts have consistently held that the Doctrine of Equitable Estoppel will not apply to a public entity if to do so would nullify the effective operation of a policy adopted for the benefit of the public.4 Proposition H contains lengthy factual findings supporting a declaration of a public policy promoting the development of a world-class regional public transit station that would connect Caltrain, MUNI, AC Transit, Golden Gate Transit, and other intercity bus lines with high-speed rail as well as direct connections to BART and MUNI Metro. The requested Stop Work Orders will allow the City sufficient time to explore alternative foundation design for the 80 Natoma Project that could accommodate the future construction of the Caltrain Downtown Extension.

CONCLUSION


Based on the foregoing, it is respectfully submitted that the City has the right, and, indeed, the legal obligation to its citizens to issue the requested Stop Work Orders because those permits were issued either without proper environmental review or are in violation of Proposition H, or both. Time is of the essence, issuance of the requested Stop Work Orders should be immediate, so that the foundation of the 80 Natoma Project can be redesigned as soon as possible to eliminate any potential conflict with the Transbay Terminal and Caltrain Downtown Extension Project.

If please call me if you have any questions.

Very truly yours,

Alice Suet Yee Barkley


cc: Dennis Herrera, Esq., City Attorney
John Malamut, Esq., Deputy City Attorney
Mr. William Wong
Mr. Hanson Tom
David Schonbrunn, TRANSDEF
Allan E. Low, Esq.

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1. In 1997, a draft environmental impact report was prepared for an earlier version of the Transbay Terminal project.

2. Permits withdrawn are not listed.

3. This letter will not analyze of the Doctrine of Equitable Estoppel in detail. Rather, the Department and DBI should consult the City Attorney's office on its applicability to the requested stop-work orders and revocation of issued permits.

4. The seminal case is City of Long Beach v. Mansell (1970) 3 Cal3d 462. The City of Long Beach case set forth five pre-requisites that must be met before the Doctrine of Equitable Estoppel may be applied.