Joe and Dan,
Don't get too attached to those overlays. I assumed that the google early historical images would be properly aligned. Because the placement seemed strange and not what many (including me) remember, I went back and checked the google earth alignment and it looks like my assumption was wrong. I will redo the overlays and try to better align them. My guess is that the original 7th green was actually to the right of where I have it marked in the shaded overlay, closer to the 8th tee, but we will see.
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Sean,
I don't know how to exactly classify a floodplain. Rustic is built in a canyon much like Riviera Country Club and many other courses in Southern California. (Rustic's namesake is either the canyon in which Riviera sits or the one immediately adjacent to it. Rustic Canyon GC is actually in Happy Camp Canyon.) In almost any mountain canyon in a usually arid environment there is a possibility of water erosion given enough precipitation. Riviera and many other courses were severely damaged - some were completely destroyed - in the catastrophic flooding of 1938. But I am not sure that means every canyon qualifies as a floodplain, or that golf courses ought not to be built in southern California. Dan mentions damage at Angeles National, but many golf courses - especially those below burn areas - were severely damaged in the 2004 -2005 storms. As recovery goes, Rustic had a tremendous comparative advantage to many of these because it was relatively cheap and easy to put back together again.
As for the long term geology of Happy Camp Canyon in particular, there had obviously been some water running down the canyon at some point in the past. A small channel had obviously cut been by water, but it was so small and narrow that one could jump across it in parts. And even during and after heavy rainfall there was never water running down this channel. The real game changer with Rustic was the fire. The fire laid bare the mountains and side canyons above, and where you have barren, burned mountains you have a potential for erosion. Without the fire or some other severe alteration of the drainage characteristics of the higher ground (like the decades of unchecked development preceding the 1938 catastrophe) it just doesn't happen.