2006-2007 Merced County Grand Jury Final Report

From the 2006 2007 Merced County Grand Jury Final Report

Complaint 06-07-15: City of Livingston

Sewer Trunk line


The complainant stated that the City of Livingston, with the knowledge of Merced County, entered into an agreement with a developer, Ranchwood Homes, to design and construct a 42 Inch sewer trunk line of over a mile in length plus additional miles of sewer lines to facilitate future urbanization of thousands of acres of agricultural land. The complainant further stated that since the land, on which the construction of the sewer trunk line took place, is outside the Livingston city limits and the Livingston sphere of influence, the City of Livingston had no jurisdiction over the project. In addition, the project was initiated without the required environmental reviews as spelled out in the California Environmental Quality Act. (CEQA).

Method of Investigation/Background Information

The Grand Jury interviewed the complainant to clarify the issues raised in the complaint. In addition, interviews were conducted with the Livingston city manager, city attorney, and the planning and public works staff. The grand jury also interviewed the planning and public works staff of Merced County, and the President of Ranchwood Homes. Each of the entities involved provided large volumes of documentation related to the Livingston sewer trunk line project.

These documents were extensively reviewed by the Grand Jury, including minutes from city council meetings, which were generally very brief and made it almost impossible to determine what occurred during the meetings. In addition, staff turnover during the period in question made finding answers difficult.

Members of the Grand Jury also visited the project site to observe the work that had been done.

In 2004, Ranchwood Homes proposed to the City of Livingston, to install 24 Inch sewer lines from the Livingston sewage treatment plant on Vinewood Dr. south to Magnolia Ave.and east to Lincoln Ave., and at some future point beyond Lincoln Ave.During the discussions with Livingston city officials, the size of the line was increased to 42 inches at the sewer plant and gradually reduced in stages along (72) the length of the project. The Ranchwood proposal was intended to serve future development of Ranchwood property located along Magnolia Ave.and the project would also serve the long-term development interest of the City.

In the early stages of the development of this project there was extensive discussion among the Livingston contract planning staff and Ranchwood management on whether the project would have to follow the requirements of the CEQA or whether the project was exempt. The Ranchwood Homes Director of Land Acquisition and Development requested a consultant study the issue and make a recommendation. In a memo dated August 26, 2004, the consultant quoted Public Resource Code Section 21080.21 saying “This section does not apply to any project of less than one mile in length within a public street or highway or any other public right-of-way for the installation of a new pipeline or the maintenance, repair, restoration, reconditioning, relocation, replacement, removal, or demolition of an existing pipeline. For the purpose of this section, “pipeline” includes subsurface facilities but does not include any surface facility related to the operation of the underground facility”. Based on the above CEQA interpretation, it was decided to limit the sewer trunk line to 5115 ft. even though the total length of the project was much longer. The consultant stated that if the pipeline was longer than a mile, the project could be done with “minimal environmental review” and he ended his memo with “If for some reason, substantial public controversy arises relative to the project, the City can always decide to expand the level of environmental review in response to those concerns, but it seems reasonable at this stage to proceed with a streamlined environmental review process, most likely an exemption, or an initial study and Negative Declaration”.

The second significant issue relates to the status of the City as the “lead agency”.The city planning staff did consult with county planning staff on this issue and county staff did agree that Livingston could be the lead agency, but also stated that the CEQA requirements must be followed. In addition, there was discussion with county staff over whether the Local Agency Formation Commission (LAFCO) would serve as the lead agency because the Livingston city attorney stated that could be done. However, county planning staff discounted that possibility because, as a “dry” pipe, it would not extend sewer services. The City Council also appointed two of its members to serve on a committee to study and expedite the implementation of the sewer project.

On December 7, 2004, city staff presented the staff report on the “Ranchwood Sewer Trunk Line” to the City Council. (73) The following significant issues were discussed:

1.     Was the project exempt under Public Resources Code Section 21080.21?

2.     Was the installation of the 5115 ft. of sewer line a whole action or a piecemeal attempt to avoid CEQA?

3.     Was the project "growth inducing”?

4.     Could the city serve as the “lead agency”?

5.     City Waste Water Master Plan update.

6.     City General Plan and Urban Growth.

7.     Make a finding that the installation of the 5115 Ft. line is completely separate from any future actions related to Ranchwood development in Livingston.

According to the City Council meeting minutes dated December 7, 2004, following extensive discussion the following action was taken. “The Council, by consensus, authorized the staff to proceed on determining support for the proposed CEQA exemption and status of a lead agency”.

On December 14, 2004 the City Council found that a CEQA exemption could be utilized and that the city could serve as the lead agency.

On December 21, 2004 the parties signed, “ Agreement to design, construct and dedicate section of sewer pipeline by and between City of Livingston and Ranchwood Homes Corp.”. In the Recitals section of the agreement it states, “Whereas, City has determined that the New Section project is categorically exempt under the California Environmental Quality Act (CEQA)”.

In December of 2005, after the necessary planning, permit processing and obtaining easement rights from affected property owners, construction began.

The timing of the construction was such as to take advantage of the low activity levels on the farmland and the need to cross a Merced Irrigation District (MID) canal during the non-irrigation season. Almost immediately after the construction of the sewer trunk line started, the controversy over the project erupted.

There were accusations that Ranchwood failed to obtain permission from the landowners, trespassed on private property, failed to comply with OSHA standards for excavation and that Ranchwood Homes exceeded the 5115 ft of sewer pipe the City of Livingston authorized the contractor to install.

On February 16, 2006 Merced County Counsel transmitted to the Livingston City Attorney a lengthy legal analysis on the sewer line extension and listing the reasons why the City of Livingston failed to comply with California law.

On February 24, 2006 the Merced County Planning Department Director issued a STOP ORDER to Hostetler Investments, LLC and Ranchwood Homes (74) Corporation, and the City of Livingston per authority of Title 18 (Zoning) Chapter 18.53, Section 18.53.02C of the Merced County Code: “to prohibit further construction or use of structures or land on property which is in violation of the provisions of Titles 17 and 18 of this code”. The order further states that to correct the illegal activity, "you must obtain the proper approvals and permits." As of the date of the stop order no further action has been taken on the sewer trunk line project.


1. The City of Livingston, faced with a rapidly growing population and a need for expanding its sewer system, accepted a proposal from Ranchwood Homes to design and construct a sewer trunk line extension that would clearly serve the financial interest of the developer, but would also serve the long-term interest of the city.

2. The City of Livingston violated the California Environmental Quality Act (CEQA) by accepting a dubious interpretation of Public Resource Code Section 21080.21 as provided by Ranchwood Homes.

3. The City of Livingston failed to consider the implications to future development by installing the sewer trunk line.

4. The City of Livingston approved the installation of 5115 ft of sewer line to circumvent CEQA. even though the entire sewer line extension project was nearly 6 miles.

5. The City of Livingston approved the construction of the sewer line on land that, according to the City General Plan of 1999, was neither within the city limits nor within the city’s sphere of influence.

6. The minutes from the city council meetings are so brief that finding information is extremely difficult.

7. The management of Ranchwood Homes failed to adhere to the approved length of the pipeline and exceeded the approved length by approximately 1,400 linear feet.

8. The City of Livingston failed to properly coordinate its activities on county land with county officials.

9. County planning officials, when asked by the city planners about being the lead agency for the project, should have intervened when it was clear that the sewer line was on land under county jurisdiction.

10. County Public Works Department should have realized that when encroachment permits were issued to cross county roads, that a private contractor was working on a major project requiring environmental review.

11. The Livingston City Council placed two of its members on a committee working with developers and city staff on the implementation of the sewer trunk line project.

12. The Grand Jury also finds that even though the city and the permit process was poorly followed and violated CEQA law, no attempt should be made to force the removal of the currently installed sewer line. (75)


1. The City of Livingston must improve the records of council meetings. The City of Livingston must update the city’s General Plan; conduct extensive public hearings on the updated plan and how the sewer trunk line fits into future plans.

2. The city must ensure that all environmental laws are complied with and permit procedures are adhered to.

3. City and county officials must coordinate their efforts to ensure that projects that cross City/County boundaries are fully coordinated.

4. The city council should avoid placing its members on committees that work with city staff and developers, since that puts unnecessary pressure on staff and makes the council members advocates for projects that they have to pass judgment on in the future.

Complaint 06-07-23: City of Livingston, Brown Act Violations.

The Grand Jury will refer this complaint to next years Grand Jury due to the complexity of the issues and the lack of time in the current term.





Can be found on the Grand Jury Report Pages 86-90


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