Author Archives: Laura Harris

Fourth District Court of Appeal upholds determination that one group of utilities undergrounding projects is exempt from CEQA because of petitioner’s failure to exhaust, but remands for further consideration of GHG impacts from second group of utilities undergrounding projects

In a procedurally complicated holding, the Fourth District Court of Appeal upheld the trial court’s ruling on the City of San Diego’s determination that one set of utilities undergrounding districts is exempt from CEQA, but remanded for further analysis of another set of utilities undergrounding districts to determine whether the project’s greenhouse gas (GHG) emissions are consistent with the City’s Climate Action Plan (CAP). (McCann v. City of San Diego (2021) ___ Cal.App.5th ___ (Case No. D077568).)

Background

The City of San Diego adopted a Utilities Undergrounding Program Master Plan in 2017, which sets out a process by which the City is converting overhead utility wires to an underground system. Undergrounding includes digging tunnels or trenches, installing underground conduit, filling in the soil, and pulling cable through the conduit. In addition, the City installs new above-ground transformers, three-foot cube-shaped cable boxes, and pedestals. The Master Plan and the City’s Municipal Code divide the larger effort to convert the entire above-ground utility system into smaller “districts,” each of which the City considers and approves separately.

Margaret McCann, a property owner, challenged the City’s approval of two sets of districts. The first set, City staff determined, was exempt from CEQA pursuant to Guidelines section 15302, subdivision (d). For the second set, the City adopted a mitigated negative declaration (MND).

The exempt districts

City staff determined that the first set of districts is exempt from CEQA. The City posted a Notice of Right to Appeal Environmental Determination in its City Development Services Department Office and on its website, and emailed the notice to City Councilmembers and local community planning groups. The notice stated that the exemption determination was appealable to the City Council within ten days. No one appealed. The City Council subsequently mailed notice of a public hearing regarding the districts to affected property owners, including McCann. McCann emailed the City and indicated that she had not seen the Notice of Right to Appeal, and that she believed the environmental review was inadequate. Her attorney also spoke at the Council hearing. The City Council subsequently approved the projects and the City filed a Notice of Exemption.

The MND districts

Separately, the City published a draft MND for another set of undergrounding districts, because some of them included sites with cultural significance. The MND also considered potential aesthetic and GHG effects from the projects. McCann and her attorney submitted written comments disputing the adequacy of the MND, and McCann’s attorney spoke at the public hearing. The City Council adopted the MND and approved the undergrounding districts.

Trial court decision

McCann filed a petition challenging both the exempt districts and the MND districts. The trial court denied the petition in its entirety. With respect to the exempt projects, the trial court found that McCann failed to exhaust administrative remedies, and in the alternative, denied her claims outright. Regarding the MND projects, the trial court found that McCann failed to demonstrate that substantial evidence supported a fair argument that the projects may have a significant effect on the environment.

The Court of Appeal’s Decision

The Court of Appeal agreed with the trial court, with one exception. First, with respect to the exempt projects, the court explained that CEQA does not prescribe a specific appeal process following a determination that a project is exempt. But, the court said, CEQA does require that if a nonelected official or decisionmaking body determines that a project is exempt, the agency must allow for an appeal of that determination to the decisionmaking body. Here, the City provided an administrative appeal process, but McCann did not file a timely appeal pursuant to the City’s procedures. McCann argued that City staff’s exemption determination did not comply with due process principles, but the court disagreed because the determination was not a land use decision and did not deprive McCann of any significant property interest. As a result, the court concluded, McCann failed to exhaust her administrative remedies, barring her claims with respect to the exempt projects.

Second, with respect to the MND projects, the Court of Appeal rejected all but one of McCann’s arguments. McCann argued that the City improperly segmented the projects; the court disagreed because each utility underground district is independently functional and does not rely on other districts to operate, and no set of districts is the “first step” toward any other projects. McCann argued that the project description was inadequate because it did not identify the precise locations of above-ground transformer boxes; the court disagreed because regardless of the precise location of each transformer, the environmental impacts of the project are the same. McCann argued that the MND projects will have significant aesthetic effects on the environment; the court disagreed because McCann failed to meet her burden to identify substantial evidence in the record that the project might have significant impacts. Most of McCann’s arguments, the court said, revolved around her neighborhood, which falls under the exempt projects, not the MND projects. McCann also cited to testimony of a person who commented on the project, but the court concluded that stray comments or expressions of concern related to aesthetic impacts are not enough to constitute substantial evidence.

The Court of Appeal remanded to the trial court on one narrow issue–the City’s determination that GHG impacts are not significant. Interestingly, the court explained that it was not holding that McCann proved that substantial evidence supported a fair argument that the project might have significant GHG impacts, which is usually the standard of review applied by the courts when considering an MND. Instead, the court said that because the City relied on an inapplicable checklist to conclude that the project was consistent with the City’s CAP, the City’s conclusions were not supported by substantial evidence.

To determine whether the project is consistent with the CAP, the City looked to its “Climate Action Plan Consistency Checklist.” The checklist directs staff to first consider whether a project is consistent with the City’s land use and zoning regulations. If yes, staff must then move to step two. But the checklist explains that step two does not apply to projects that, like this one, do not require a certificate of occupancy. Because step two does not apply, the City concluded that the project was consistent with the CAP. The court found, though, that the City could not rely on a checklist which expressly states that it does not apply to projects like this one to make a consistency determination. Thus, the court concluded, the City never considered whether the MND projects are consistent with the CAP. The court clarified that the use of a checklist to determine consistency might still be appropriate; the City could amend the checklist to include a step for assessing infrastructure projects, or it could create a separate checklist entirely. Without such a checklist though, the City was required to consider whether the projects comply with each individual action identified in the CAP if it wished to rely on streamlined review of GHG impacts.

The Court of Appeal reversed the trial court’s judgment on this limited issue, with directions to the trial court to enter a new judgment granting the petition in part, and to issue a peremptory writ of mandate directing the City to set aside its adoption of the MND and approval of the project.

COURT HOLDS DENSITY BONUS LAW PROHIBITS CITIES AND COUNTIES FROM REQUIRING PROOF THAT PROJECTS WILL BE “ECONOMICALLY” INFEASIBLE WITHOUT REQUESTED CONCESSIONS AND WAIVERS

The density bonus law (Gov. Code, § 65915) requires cities and counties to allow increased building density, and development incentives and waivers of permit requirements, in exchange for the applicant’s agreement to dedicate a specified number of dwelling units to low or very-low income households. In Schreiber et al. v. City of Los Angeles (Sept. 28, 2021, B303642) __Cal.5th__, the Second District Court of Appeal held that the City of Los Angeles’ municipal code is preempted by the state density bonus law to the extent that the city’s code requires an applicant to prove that the concessions it requests under the density bonus law are needed to make the affordable-housing component of the project financially feasible.

The case involves a mixed-use development in the City of Los Angeles, with retail uses on the ground floor and residential units above. Absent concessions and waivers, the city’s zoning code would limit the site’s development to three stories, a height of 45 feet, and a maximum of 40 units. Under the density bonus law, however, the applicant proposed to develop a seven-story building, with 54 units, including five very-low income units and five moderate income units.

Prior to the city planning commission’s first hearing on the project, the California Legislature passed Assembly Bill No. 2501 (AB 2501), which amended the density bonus law to prohibit local governments from conditioning their review or approval of an application under the density bonus law “on the preparation of an additional report or study that is not otherwise required by law.” (Gov. Code, § 65915, subd. (a)(2).) AB 2501 clarified, however, that local agencies are not prohibited from “requiring an applicant to provide reasonable documentation to establish eligibility for a requested density bonus, incentives, or concessions.” (Ibid.) It also clarified that the term “study” does not include “reasonable documentation to establish eligibility for the concession or incentive or to demonstrate that the incentive or concession meets the definitions” set forth in the density bonus law. (Gov. Code, § 65915, subd. (k).)

Based on AB 2501, the city’s planning department advised that financial pro formas and third-party reviews can no longer be required. Although the applicant had provided financial information regarding the project, in response to city staff’s interpretation of AB 2501, the applicant stated that he would not be providing a pro forma for the project.

Following a hearing, the city planning commission approved the project, including the requested density bonus. The planning commission also approved two “off menu” incentives (increased floor area and maximum height) and two waivers (transitional height and rear yard set back requirements).

The plaintiffs, residents of a nearby single-family home, filed a petition for writ of mandate alleging that the city misinterpreted the density bonus law. In particular, the plaintiffs argued that the city erred in granting the off-menu incentives because the applicant had not submitted financial information showing that the incentives were needed to make the project economically feasible—information that, the plaintiffs observed, was required under the city’s municipal code. The trial court denied the petition and the court of appeal affirmed.

The appellate court explained that under AB 2501’s amendments to the density bonus law, a local government cannot condition its approval of incentives on the preparation of a report that is not otherwise required by law. The city’s municipal code, however, provided that a request for an off-menu incentive must include a pro forma or other documentation showing that the incentive is needed to make the affordable-housing component of the project economically feasible. The court held that the city may not require information that an incentive is necessary to make the project economically feasible because that information is not needed to show that the project is eligible for the incentive. Rather, the “economically feasible” language in the city’s municipal code was based on a prior version of the statute, which required applicants to show that an incentive was necessary to render the affordable units economically feasible. That requirement, however, had been removed from the statute in 2008. Because the city code conflicted with state density bonus law, the court held that the city code is preempted to the extent that it requires an applicant to demonstrate that a requested incentive is needed to make the project economically feasible.

The case provides helpful guidance regarding the documentation that local agencies may require in processing a request for incentives and waivers under the density bonus law. The case clarifies that an agency may not require an applicant to prove that the requested incentives and waivers are necessary to make the affordable-housing component of a project economically feasible. The court’s reasoning in the case is consistent with the requirement that the density bonus law be “interpreted liberally in favor of producing the maximum number of total housing units.” (Gov. Code, § 65915, subd. (r).)

California Supreme Court Holds that Stanislaus County Well Permits Are Not Categorically Ministerial

Well construction permits in Stanislaus County are issued under an ordinance that incorporates the California Department of Water Resources’ (DWR’s) well construction standards. Prior to the Supreme Court’s recent decision in Protecting Our Water and Environmental Resources v. County of Stanislaus (2020) 10 Cal.5th 479, the County categorically classified well construction projects that did not require a variance as ministerial, rather than discretionary. Ministerial projects—i.e., projects that involve no agency discretion—are exempt from CEQA. The plaintiffs, challenged the County’s categorization, alleging that all County well construction permits are discretionary projects requiring CEQA review. The Supreme Court held that the County’s “blanket classification” that all nonvariance permits are ministerial violated CEQA. Rather, CEQA requires the County to determine whether the issuance of a well permit is ministerial on a case-by-case basis.

Legal Background

CEQA does not apply to “[m]insterial projects proposed to be carried out or approved by public agencies.” (Pub. Resources Code, § 21080, subd. (b)(1).) “A ministerial decision involves only the use of fixed standards or objective measurements, and the public official cannot use personal, subjective judgment in deciding whether or how the project should be carried out.” (14 Cal. Code Regs. (“CEQA Guidelines”), § 15369, italics added.) Rather than exercise judgment, for ministerial approvals, “[t]he public official merely applies the laws to the facts as presented but uses no special discretion or judgment in reaching a decision.” (Ibid.)

A a project is discretionary, in contrast, if the approval requires exercise of judgment or deliberation. “The key question is whether the public agency can use its subjective judgment to decide whether and how to carry out or approve [the] project.” (CEQA Guidelines, § 15357.)

Factual Background

DWR has issued Water Resources Bulletin No. 74, Water Well Standards: State of California, described as “‘a 90-page document filled with technical specifications for water wells.’” The California Water Code requires counties to adopt well construction ordinances that meet or exceed the standards in Bulletin No. 74. Many counties have incorporated the bulletin’s standards into their well-permitting ordinances.

Stanislaus County’s groundwater ordinance, which regulates the location, construction, maintenance, abandonment, and destruction of wells, incorporates many of the standards set forth in Bulletin No. 74, including:

    • Standard 8.A (re well distance from contamination sources): All wells must “‘be located an adequate horizontal distance’” from potential sources of contamination. For example, a well should be located at least 50 feet from any sewer line, and 150 feet from any cesspool or seepage pit. Agencies may increase or decrease the suggested distances, however, depending on circumstances. Determining “‘the safe separate distance for individual wells requires detailed evaluation of existing and future site conditions.’”
    • Standard 8.B: “‘[W]here possible, a well shall be located up the ground water gradient from potential sources of pollution or contamination.’”
    • Standard 8.C: “‘[I]f possible, a well should be located outside areas of flooding.’”
    • Standard 9: A well’s “annular space” must be “‘effectively sealed’” and the well must be located at established minimum surface seal depths.

The County’s ordinance also allowed the county health officer to waive these and other requirements when, in his or her opinion, the provisions were unnecessary. When authorizing such a variance, the health officer could prescribe additional conditions that the health officer deemed necessary to protect water resources.

In 1983, the County adopted CEQA regulations which, broadly-speaking, classified well construction permits as ministerial projects, except for well construction projects that required a variance. Permits requiring a variance were designated discretionary, and thus triggered environmental review. In practice, the County treated all nonvariance permits as ministerial.

Plaintiffs sued the County, alleging “a pattern and practice” of approving well permits without CEQA review. Plaintiffs asserted that all well permits issued under the County’s groundwater ordinance are discretionary because the County may “deny [a] permit or require changes to the project as a condition of permit approval to address concerns relating to the environmental impacts.”

The Supreme Court’s Decision

The Court explained that in determining whether the County’s issuance of well permits is discretionary, it is guided by the principle that CEQA must be interpreted “‘to afford the fullest possible protection to the environment within the reasonable scope of the statutory language.’” Additionally, the Court observed, one purpose of CEQA is to reduce or avoid environmental damage by requiring project’s changes when feasible. Against this backdrop, the Court held the County violated CEQA by categorically classifying nonvariance well permits as ministerial. Instead, held the Court, the County must decide whether a well permit is ministerial on a case-by-case basis.

The Court reasoned that the plain language of Bulletin No. 74’s standards incorporated into the County’s groundwater ordinance required the exercise of judgment. For instance, Standard 8.A requires the health officer to determine the “‘adequate horizontal distance,’”—a judgment that may depend on “‘[m]any variables.’” Further, Standard 8.A states that “‘[n]o separation distance is adequate and reasonable for all conditions.’” And, although the standard provides a list of minimum suggested distances, the standard also states that ‘[l]ocal conditions may require greater distances.’” Moreover, the standard allows for lesser distances which may be approved “‘on a case-by-case-basis.’”

The Court found Standard 8.A “confers significant discretion on the county health officer to deviate from the general standards,” depending on the proposed permit’s unique circumstances. It is clear from the County’s ordinance, which incorporates Bulletin 74’s standards, that the County “may shape a construction project in response to concerns that could be identified by an environmental review.” Thus, held the Court, a permit that required the County to exercise its independent judgment under Standard 8.A. is not properly classified as ministerial.

The County argued that Standard 8.A is part of a much larger regulatory scheme, which, when read as a whole, allows little or no judgment in determining whether a well permit may be issued. The Court rejected this argument as inconsistent with the CEQA Guidelines, which provide that when a project “‘involves an approval that contains elements of both a ministerial action and a discretionary action, the project will be deemed to be discretionary.’ (CEQA Guidelines, § 15268, subd. (d).)” Further, noted the Court, when there is doubt, an approval should be treated as discretionary, in service to CEQA’s environmental protection goals.

The County further argued that the issuance of well permits is ministerial because the County’s ability to mitigate potential environmental damage under the ordinance is highly constrained. The County posited, for instance, that Standard 8.A only allows the health officer to adjust the location of the well to prevent groundwater contamination. The ordinance does not allow the County to address other environmental concerns, such as groundwater depletion, or to impose other measures to prevent contamination, such as regulating the use of pesticides or fertilizers. Unpersuaded, the Court explained that “[j]ust because the agency is not empowered to do everything does not mean it lacks discretion to do anything.” Although the groundwater ordinance does not authorize the County to impose other mitigation measures, that does not mean the permit is ministerial.

The Court also rejected the County’s argument that the Court should hold the permits are ministerial in deference to the County’s determination. The Court explained that although case law suggests a local agency’s interpretation of its own ordinance may be entitled to deference, here, the relevant standards come from DWR’s Bulletin No. 74, not just a local ordinance. Furthermore, although the courts will defer to an agency’s factual determinations supporting a conclusion that a given approval is ministerial, the County’s determination in this case was based solely on the County’s legal interpretation of Bulletin No. 74’s requirements. The Court need not defer to a local agency’s interpretation of state law.

The Court was also unpersuaded by the County’s argument that a decision in plaintiffs’ favor will increase costs and delays in the issuance of well permits. The Court explained that “CEQA cannot be read to authorize the categorical misclassification of well construction permits simply for the sake of alacrity and economy.” Furthermore, observed the Court, even though CEQA review may be required for some well permits, this does not mean that an EIR would necessarily be required. Rather, the County may be able to approve a well permit by relying on another categorical exemption or preparing a negative declaration or mitigated negative declaration.

Lastly, although the Court disagreed that the County’s well permits are categorically ministerial, the Court also rejected plaintiffs’ claim that the permits are always discretionary. In some circumstances, the Court reasoned, the County’s issuance of a well permit might not require the exercise of judgment. For example, Standard 8.A only applies when there is nearby contamination. If no contamination source is identified during the permit approval process, the discretion conferred by Standard 8.A would not come into play. This, in turn, would mean that the permit may be ministerial.

In First Opinion Addressing a Sustainable Communities Environmental Assessment, the Third District Upholds the City of Sacramento’s Approval of an Infill Project

In Sacramentans for Fair Planning v. City of Sacramento (2019) 37 Cal.App.5th 698, the Third District Court of Appeal upheld the City of Sacramento’s reliance on a Sustainable Communities Environmental Assessment (SCEA), a relatively new method for conducting streamlined CEQA review for certain projects that help the state meet its greenhouse gas (GHG) reduction targets. (See Pub. Resources Code, § 21155.2, subd. (b).) The decision is the first published opinion addressing the propriety of an SCEA. The court held that the transit priority project at issue was consistent with the region’s sustainable communities strategy and therefore the City’s reliance on the SCEA complied with CEQA.

The court also upheld the City’s reliance on a unique provision in its general plan that allows the City to approve projects that are inconsistent with the City height and density limits if the projects offer significant community benefits.

Background

The Sustainable Communities and Climate Protection Act (SB 375) was created to integrate transportation and land use planning to reduce GHG emissions. SB 375 directed the California Air Resources Board to develop regional targets for automobiles and light trucks to reduce emissions. In turn, federally designated metropolitan planning organizations (MPOs) must now include a “sustainable communities strategy” (SCS) in their regional transportation plans/ metropolitan transportation plan (MTP). (Gov. Code, § 65080, subd. (b)(2)(B).) MTP/SCSs direct the location and intensity of future land use developments on a regional scale to reduce vehicle emissions. The Sacramento Area Council of Governments (SACOG) is the MPO for the Sacramento area. SACOG adopted an MTP/SCS for the region in 2012 and certified an EIR for the MTP/SCS at that time.

Under SB 375, the mandated reductions may be achieved through a variety of methods, including “smart growth planning.” The Legislature determined that one type of development that can help reduce vehicular GHG emissions is a “transit priority project.” This type of project contains at least 50% residential use, has a minimum density of 20 units per acre, and is located within one-half mile of a major transit stop.

To boost development of transit priority projects, SB 375 allows for streamlined CEQA review through an SCEA if the project: (1) is consistent with the general use designation, density, building intensity, and applicable policies specified for the project area’ in the strategy; and (2) incorporates all feasible mitigation measures, performance standards, and criteria set forth in the prior applicable environmental impact reports’ and which were adopted as findings. (Pub. Resources Code, §§ 21155, subd. (a), 21155.2, subds. (a), (b).)

The “Yamanee” project at issue in Sacramentans is a proposed 15-story multi-use building made up of one floor of commercial space, three levels of parking, residential condominiums on 10 floors, and one floor of residential amenities. The building is proposed to be located near public transit in Sacramento’s growing “Midtown” area, adjacent to the City’s downtown. The project is located in the MTP/SCS’s central city subarea of a “Center and Corridor Community.” Under the MTP/SCS, Center and Corridor Communities are typically higher density and more mixed than surrounding land uses. SAGOG organized the MTP/SCS in such a way that policies for reducing GHG emissions were embedded in the MTP/SCS’s growth forecast assumptions. Thus, projects that are consistent with the MTP/SCS’s growth forecasts are automatically consistent with the MTP/SCS’s emission-reduction policies.

The City determined that the Yamanee project qualified as a transit priority project and that the project was consistent with the general land use designation, density, building intensity, and applicable policies in the MTP/SCS. Therefore, the City used an SCEA to review the project under CEQA. The SCEA explained that, as a transit priority project, the Yamanee project would increase housing options near high quality transit and reduce vehicle miles traveled. It also explained that the project is consistent with the MTP/SCS’s forecast of low to high-density residential and mixed uses in the center subarea of the Center and Corridor Community.

The City Council upheld the City planning and design commission’s approval of the project and rejected the petitioner’s appeal of that decision. The petitioner sought a writ of mandate in the superior court, claiming that the City’s approval of the project violated CEQA and the planning and zoning law. The superior court denied the petition and the Court of Appeal affirmed.

CEQA

The Court of Appeal rejected the petitioner’s claim that the City erred by relying on SACOG’s MTP/SCS to justify using an SCEA. The petitioner argued that because the MTP/SCS lacked specific density and building intensity standards, the City could not rely on it as a basis for an SCEA. Further, claimed the petitioner, the MTP/SCS undermines the City’s general plan because it treats the City’s center as “higher density,” whereas the general plan sets forth a more nuanced approach under which building intensities and densities increase the closer a development gets to the downtown. These arguments, concluded the court, were premised on a misunderstanding of the MTP/SCS’s role. An MTP/SCS does not regulate land use. The purpose of an MTP/SCS is to establish a regional development pattern, not site-specific zoning. SB 375 authorized the City to review the project in an SCEA if the project was consistent with the regional strategy. Because it was, the city was allowed to rely on an SCEA. Although, as the petitioner contended, reliance on an SCEA could mean that certain projects receive less environmental review than traditionally required under CEQA, the court advised that the petitioner should take this concern to the Legislature, not the courts.

The court also rejected the petitioner’s claim that the City erred by relying on previous EIRs for the general plan and MTP/SCS to avoid analyzing the project’s cumulative impacts. In particular, the petitioner claimed that streamlined review was inappropriate in this case because no prior environmental analysis had considered the cumulative impacts of high-rise development in Sacramento’s midtown. The court explained that CEQA required the City to prepare an initial study (IS) before drafting the SCEA. The City’s IS for the project concluded that cumulative effects had, in fact, been adequately addressed and mitigated, and therefore did not need to be analyzed further in the SCEA. Additionally, the project included all applicable mitigation measures recommended in the prior EIRs. The petitioner failed to show that the City’s analysis was not factually supported. Accordingly, the City did not err by relying on prior cumulative impact analyses.

Planning and Zoning Law

The development proposed by the project is denser and more intense than what would ordinarily be allowed under the City’s general plan and zoning code. The City approved the project, however, under a provision in its general plan that allows the City to approve more intensive development when a project’s “significant community benefits” outweigh strict adherence to the density and intensity requirements. The City determined that the project would have several significant community benefits, including helping the City to achieve its goal of building 10,000 new residential units in the central city by 2025, and reducing dependency on personal vehicles. These, and other benefits, outweighed strict adherence to the City’s density and intensity limits.

The petitioner argued that the City’s decision to allow the Project to exceed the general plan and zoning code’s intensity and density standards constituted unlawful “spot zoning.” The court explained that spot zoning occurs where a small parcel is restricted and given fewer rights than the surrounding property (e.g., when a lot is restricted to residential uses even though it is surrounded by exclusively commercial uses). This case, explained the court, is not a spot-zoning case in that the property was not given lesser development rights than its neighboring parcels. The petitioner argued that the neighboring parcels had, in fact, been given lesser development rights through the City’s approval of the project, but there was no evidence in the record that any neighboring owner sought and was denied permission to develop at a greater intensity or that the City would arbitrarily refuse to consider an application for such development.

The petitioner also argued that the phrase “significant community benefit” as used in the City’s general plan was unconstitutionally vague. The court disagreed, explaining that zoning standards in California are required to be made “‘in accord with the general health, safety, and welfare standard,’” and that the phrase “significant community benefit” was no less vague than the phrase “general welfare.” Additionally, held the court, the phrase “significant community benefit” provides sufficient direction to implement the policy in accordance with the general plan.

The court also held that the City had articulated a rational basis for the policy allowing the City to waive the density and intensity standards for projects that provide significant community benefits, which is all that the Constitution required.

Conclusion

In this case, the City of Sacramento successfully employed CEQA’s streamlined provisions for transit priority projects to expedite and simplify its environmental review of an infill project that will help the City meet its aggressive new housing goal and reduce greenhouse gas emissions. The City’s general plan allowed the City to approve the project because the project would provide significant public benefits, even though the project is inconsistent with the general plan and zoning code’s density and intensity standards. As California continues to combat the dual threats of a housing shortage and climate change, cities and counties are likely to increasingly rely on streamlined approaches to the approval process for mixed-use projects near public transit.

The Fourth District Court of Appeal Rejects Community Service District’s Attempt to Exempt Itself from City’s Zoning Ordinance

In City of Hesperia v. Lake Arrowhead Community Services District (2019) 37 Cal.App.5th 734, the Fourth District Court of Appeal upheld the trial court’s conclusion that the Lake Arrowhead Community Services District’s (“District”) Solar Project is not exempt from – and must comply with – the City of Hesperia’s (“City”) zoning ordinances.

The District, which is only authorized to provide water and wastewater treatment services within its boundaries, planned to develop a solar energy project on property zoned as “Rural Residential” that it owns within the City. The City’s Municipal Code dictates that solar farms are only permitted in nonresidential and nonagricultural areas with the approval of a conditional use permit by the City’s planning commission.

Pursuant to CEQA, the District prepared and circulated an Initial Study and Mitigated Negative Declaration for comments on the Solar Project in May 2015. The City commented that the Project required a general plan amendment and zone change to be filed with the City and that the Project would violate the City’s Municipal Code, which prohibits solar farms within 660 feet of agriculturally designated property. Government Code section 53091 requires that local agencies comply with the building and zoning ordinances of the county or city in which they are located.

On December 15, 2015, the District’s Board adopted a resolution that purported to render the City’s zoning ordinances inapplicable to the Solar Project. In passing this resolution, the District relied on Government Code section 53091, subdivision (e), an absolute zoning exemption for electrical energy generation facilities, and Government Code section 53096, a qualified zoning exemption for projects with no feasible alternative location.

The City subsequently filed a lawsuit contending that the Solar Project is beyond the scope of the District’s authority and is subject to the City’s zoning ordinances. The court agreed with the City and held that the Project was not exempt under either of these sections.

Section 53091, subdivision (e)

Section 53091, subdivision (e), of the Government Code states that the “[z]oning ordinances of a county or city shall not apply to the location or construction of facilities . . . for the production or generation of electrical energy.” The court explained that while the section 53091, subdivision (e), exemption does apply to the Project, the same section also includes an exception to the exemption that applies to the Project and negates the exemption. The exception to the exemption provides that “[z]oning ordinances of a county or city shall apply to the location or construction of facilities for storage or transmission of electrical energy by a local agency, if the zoning ordinances make provision for those facilities.” Here, the court agreed with the City that the Solar Project involves the transmission of electrical energy and is therefore not exempt from the City’s zoning ordinances under section 53091, subdivision (e).

In reaching this conclusion, the court was influenced by the fact that the District had earlier entered into an agreement with Southern California Edison Company, which stated that the District “will export electrical energy to the grid” and be responsible for “delivery of electricity.” The dictionary definitions for “export” and “delivery” are consistent with the “transmit” terminology in the exception. The court rejected the District’s argument that using the plain meaning of the word “transmission” would prohibit any electrical energy facility from qualifying for a zoning exemption because section 53096, subdivision (a) (discussed below), provides a qualified exemption for energy facilities under certain conditions.

Section 53096, subdivision (a)

Government Code section 53096, subdivision (a), provides a qualified exemption from zoning ordinances for facilities related to the transmission of electrical energy upon a four-fifths vote by the agency’s board that there is no feasible alternative to the proposed use. Here, the District’s Board determined that it was not feasible to install the Solar Project at any alternative locations, as doing so “would result in a significant cost increase, measurable power loss, and project delay.”

The court concluded that while the Board followed the proper procedural requirements of the qualified exemption, the administrative record did not contain substantial evidence to support the District’s findings. The City successfully demonstrated to the court that the administrative record did not include evidence of “economic, environmental, social, or technological factors associated with an alternative location.” The court was persuaded by the fact that the Board failed to consider any alternative location for the Solar Project in reaching its discretionary determination under section 53096, subdivision (a).

In determining the definition of “feasible” for purposes of this exemption, the court relied on case law related to CEQA’s definition for feasible alternatives and mitigation measures. The court cited Citizens of Goleta Valley v. Board of Supervisors (1988) 197 Cal.App.3d 1167, which dictates that the consideration of feasible alternatives is governed by the “rule of reason” – where alternatives must be analyzed if doing so is “necessary to permit a reasoned choice.” Here, the court concluded that the “any ‘rule of reason’ requires consideration of alternatives.” (Italics original.) The District therefore needed to provide evidence that it considered an alternative location and “economic, environmental, social, and technological factors” related to the alternative, but it merely provided evidence that the site was a “good location” for the Project. Thus, the court held that the section 53096, subdivision (a), exemption also does not apply to the Solar Project.

Second District Upholds City of Los Angeles’ Determination That EIR Not Required to Assess Population or Housing Impacts for Hotel Project on Site of Vacant Former Apartment Building

In an opinion certified for partial publication on July 22, 2019, the Second District Court of Appeal affirmed the trial court’s decision and held that the City of Los Angeles was not required to prepare an EIR to assess housing-related impacts for a boutique hotel project on the site of a now-vacant former apartment building. Hollywoodians Encouraging Rental Opportunities (HERO) v. City of Los Angeles (B285552; filed 6/28/19, ordered published 7/22/19) ___ Cal.App.5th___ (“HERO”).

The project at issue in HERO is a proposed 24-room boutique hotel in the Hollywood area of Los Angeles. Prior to 2013, the project site was occupied by an 18-unit apartment building that was subject to the city’s Rent Stabilization Ordinance. In 2013, the owner filed a notice of intent to withdraw all 18 units from the rental housing market pursuant to the Ellis Act in order to pursue construction of a condominium project on the site. While the condo project was later abandoned due to a lack of financing, the building never returned to the rental market and remained uninhabited for nearly two years.

In July 2015, the owner of the property submitted a new application to the city, this time seeking to convert the site into a 24-room hotel. The city prepared an initial study for the hotel project. The initial study concluded that, with mitigation, the project would have no significant environmental impacts. With respect to population and housing impacts specifically, the initial study concluded that the project would not displace housing units or residents because the apartments had been withdrawn from the rental market and the building was uninhabited. Accordingly, the zoning administrator adopted a mitigated negative declaration (MND) and approved the project. The zoning administrator’s decision was subsequently affirmed following appeals to the area planning commission and city council.
Following the city council’s approval of the project, three petitioners, including a resident of a nearby building, a former tenant of the apartments, and HERO, filed a petition for writ of mandate challenging the approval. The thrust of the petitioners’ CEQA claims was that the city was required to prepare an EIR to analyze the project’s direct, indirect, and cumulative impacts on the supply of rent-stabilized housing and the displacement of tenants. The trial court denied the petition in full, holding that the city properly concluded the project would have no impact on housing or population because the rental units had been removed from the market and vacated long before the hotel project was proposed. The trial court further ruled that, aside from the baseline issue, the petitioners failed to demonstrate that the project would have a significant effect on the physical environment, and not just socioeconomic impacts.

On appeal, the petitioners’ primary argument was that the city was required to prepare EIR because substantial evidence supported a fair argument that the cumulative effect of the project and other similar projects would be to eliminate rent-stabilized housing units in Hollywood and displace residents that depend on such housing. The Court of Appeal rejected the petitioners’ argument, holding that the proper baseline against which the project’s impact must be assessed is a vacant building, not a tenant-occupied rental property. As the court explained, at the time the environmental analysis for the project commenced in 2015, the property did not include rent-stabilized apartments. Rather, as noted above, the all units had been withdrawn from the rental market in 2013 and the building sat uninhabited since that time. Because these events occurred prior to the project proposal and initial study, the court explained, they were not attributable to the project. Thus, the city properly determined an EIR was not required to analyze such impacts on housing and population. Moreover, the court added, there was nothing in the record to suggest that the 2015 hotel project was a reasonably foreseeable consequence of the initial condominium project for which the apartments were originally removed from the rental market, and there was no evidence that the city was attempting to chop up or evade CEQA review.

Turning to the issue of cumulative impacts, the court held that the city was not required to prepare an EIR to inquire into the cumulative impact of the project on housing and population. Because there was no substantial evidence of a project-specific potentially significant impact, the court explained, the city properly determined that the effects of the project would not be cumulatively considerable and no further analysis was required.

Remy Moose Manley partner Sabrina Teller and associate Christina Berglund represented the Real Parties in Interest in this matter.

The First District Court of Appeal Finds That Possible Earthquake or Landslide Zone Is Not an “Environmental Resource” Under Location Exception to Categorical Exemptions

In Berkeley Hills Watershed Coalition v. City of Berkeley (2019) 31 Cal.App.5th 880, the First District Court of Appeal affirmed the trial court’s decision upholding the city’s determination that the construction of three new single-family homes in the Berkeley hills fell within the scope of the Class 3 categorical exemption.

The project is located in the Alquist-Priolo Earthquake Fault Zone (APEFZ). Petitioners contended that the project was subject to the location exception to the Class 3 categorical exemption. That exception provides that the exemption does not apply in instances “where a project may impact on an environmental resource of hazardous or critical concern,” which must be “designated, precisely mapped, and officially adopted pursuant to law” (CEQA Guidelines, § 15300.2, subd. (a).) Petitioners argued that the exception applied because the APEFZ is an environmental resource of hazardous concern. The First District disagreed.

The court held that the plain language in the location exception reflects concern with the effect of the project on the environment—not the impact of existing environmental conditions (seismic and landslide risks) on the project. The court found support for its interpretation in the plain meaning of the term “environmental resource,” as well as existing statutes. Citing the dictionary definition of “resource,” the court concluded that earthquakes and landslides are geologic events, not environmental resources, as contemplated by the location exception. Furthermore, while the APEFZ is “officially mapped” in accordance with the Seismic Hazards Mapping Act, that statute was enacted for the purpose of preventing economic loss and protecting health and safety, not to identify the locations of environmental resources. Similarly, as the California Supreme Court affirmed in California Building Industry Association v. Bay Area Air Quality Management District (2015) 62 Cal.4th 369, CEQA is concerned with a project’s significant effects on the environment, not the significant effects of the environment on the project. Finally, the court rejected petitioners’ argument that the trial court’s interpretation of the location exception is inconsistent with Public Resources Code sections 21169.21, subdivisions (h)(4) and (5)—which set forth exceptions to a specific statutory exemption for housing projects located in seismic and landslide hazard areas—reasoning that it cannot extrapolate from that specific exception an intent to apply to a general exception like the location exception.

– Christina Berglund

The Fourth District Court of Appeal Rejects Challenges to Amended Lease Agreement for San Diego Amusement Park

In San Diegans for Open Government v. City of San Diego (2018) 31 Cal.App.5th 349, the Fourth District Court of Appeal affirmed a judgment rejecting CEQA arguments and other challenges to an amended lease agreement between the City of San Diego and Symphony Asset Pool XVI, LLC for the historic Belmont Park amusement park.

In 1987, the City of San Diego entered into a lease and development plan to revitalize the historic amusement park in the city’s Mission Beach area. Under the agreement, Symphony’s predecessor in interest was authorized to demolish and renovate certain existing facilities, and to construct various new facilities including restaurants, shops, and other visitor-serving commercial uses. The original lease agreement was for a 50-year term, but also included a right of first refusal to enter into a new agreement on terms determined by the city.

In response to the 1987 lease, the city’s electorate passed Proposition G to restrict future commercial development in Mission Beach. Under Prop. G, future development is restricted to park and recreational uses, and the preservation of historical amusement park facilities. Prop. G also includes an exemption for projects that had obtained vested rights as of the effective date of the measure. In 1988, the city council passed an ordinance providing that the 1987 lease and development plan provided a vested right under Prop. G and the use and redevelopment of Belmont Park could continue as planned.

In 2012, Real Party in Interest Symphony took over the 1987 lease. In 2015, the city council authorized the mayor to enter into an amended and restated lease with Symphony for the use and operation of Belmont Park. The basis for the amended lease was in part to support the approximately $18 million Symphony had invested improving the property since taking over. Among other things, the lease required Symphony to pay rent for its use of the property. The lease also gave Symphony the opportunity to extend the lease beyond the original 50-year term. If Symphony completes ongoing improvements and planned improvements, makes additional capital improvements, and pays the city a lump sum payment, the amended lease may be extended up to 50 years.

At the time the amended lease was approved, the city council also adopted a resolution finding that the amended lease agreement was categorically exempt from CEQA under the existing facilities exemption in CEQA Guidelines section 15301.

Following the adoption of the amended lease, San Diegans for Open Government (SDOG) filed a lawsuit challenging the amended lease on three grounds. First, the complaint alleged that the amended lease violated Prop. G by authorizing new uses in excess of the vested rights conferred under the 1987 lease. Second, the complaint alleged that the city violated CEQA because it improperly concluded the amended lease was exempt from environmental review. Third, the complaint alleged that the approval of the amended lease violated a provision of the city charter which required certain agreements lasting more than five years to be adopted by ordinance after a public hearing.

With regard to the first claim, SDOG argued that (1) the amended lease allows new uses that were not authorized under the 1987 lease, and (2) the 1987 lease provided a vested right only for the original 50-year term. The court rejected these arguments, holding that the amended lease did not violate Prop. G., relying primarily on the language of the 1987 lease. First, the court noted that the original lease included a long list of specifically authorized uses. According to the court, all of the uses SDOG argued were not authorized were encompassed within the original permissible uses. Next, the court held that the extension did not violate Prop. G because the 1987 lease contemplated the possibility of extension, and neither Prop. G nor the city’s ordinance finding a vested right contained any time limit on the rights vested.

The second issue was whether the city violated CEQA by incorrectly determining that the amended lease was exempt from environmental review under the existing facilities exemption. CEQA Guidelines section 15301 provides an exemption from environmental review for the “operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination.” SDOG argued that the amended lease contemplates improvements including construction of a new restaurant and bar, food court venues, and a new arcade, and thus did not qualify as involving negligible or no expansion of the existing use.

The court rejected SDOG’s argument and found that the construction activities the appellants referenced, including the new restaurant, food court venues, and arcade, were all projects that had already been completed at the time the amended lease was entered and, accordingly, were existing facilities. The parties acknowledged in the lease that Symphony had already expended $18 million to improve and upgrade the property, and those improvements were listed in an exhibit to the agreement. The court added that while the amended lease did contemplate Symphony would invest an additional $5.9 million in the pool facility in the future, SDOG did not argue those activities were outside the scope of the exemption. Moreover, the court added, those activities involved only refurbishment of existing facilities and not new construction, thus, they fall squarely within the existing facilities exemption.

In addition to arguing that the amended lease did not qualify for the existing facilities exemption, SDOG argued that the unusual circumstances exception in CEQA Guidelines section 15003.2, subdivision (c) applied in this case. Under that section, “[a] categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” Furthermore, the court explained, “it is not alone enough that there is a reasonable possibility the project will have a significant environmental effect, instead . . . there must be a reasonable possibility that the activity will have a significant effect on the environment due to the unusual circumstances.” (Quoting Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1097-98.)

Here, SDOG argued that the existence of the voter-passed Proposition G constituted an unusual circumstance because the voters had used the initiative power to declare a distinct interest in minimizing the environmental impacts of development in Mission Beach. SDOG also argued that there is a fair argument the project will result in severe traffic and noise impacts. SDOG cited a statement by a Symphony representative that the project would generate an additional $100 million in revenue over the term of the lease, which SDOG argued could only occur with significantly more visitors and therefore more traffic and other resulting impacts. The court rejected SDOG arguments, finding its argument that impacts would occur to be based on speculation. Furthermore, SDOG failed to establish how the increased traffic or noise would be due to the unusual circumstances that it cited, i.e., the existence of Proposition G. In sum, the court held that the city properly determined the amended lease was exempt from CEQA review under the existing facilities exemption and that the unusual circumstance exception did not apply.

The final issue in the case was whether the approval of the amended lease violated a provision of the city charter. The provision at issue consisted of two sentences. The first sentence referred to the city incurring “indebtedness or liability.” The second sentence more broadly stated “no contract” lasting for a period of more than five years may be authorized except by ordinance after notice and a public hearing. The issue was whether the first sentence limited the second, or if the second sentence was independent. While the court found the language of the provision was ambiguous, rules of statutory interpretation provide that the city’s interpretation of its own charter is entitled to deference unless shown to be clearly erroneous. The city’s longstanding interpretation of the provision was that it applied solely to agreements requiring the city to expend funds. The court found this interpretation to be reasonable and consistent with the legislative history, and held that the city did not violate the charter by approving the amended lease by resolution.

– Collin McCarthy

The First District Court of Appeal Affirmed a Judgment Holding that CEQA Review Was Not Required for a Multifamily Residential Project Subject Only to Design Review

In a decision published on January 10, 2019, the First District Court of Appeal affirmed a judgment denying two local groups’ petition for writ of mandate seeking to overturn the City of St. Helena’s approval of a multifamily residential project. McCorkle Eastside Neighborhood Group, et al. v. City of St. Helena, et al. (2019) 31 Cal.App.5th 80. In this case, the city’s approval authority for the project was limited to design review under the local zoning ordinance. The court held that because the city lacked any discretion to address the project’s environmental effects, the city properly determined CEQA review was not required.

Between 2015 and 2016, the City of St. Helena amended its general plan and zoning ordinance to eliminate the requirement to obtain a conditional use permit for multifamily projects in High Density Residential (HDR) districts. Since this change, multifamily residential projects are a permitted use in HDR districts and require only design review approval. Real Party in Interest Joe McGrath applied for design review approval to construct an 8-unit residential project within an HDR district. McGrath also applied for a demolition permit to demolish an existing single family home on the site.

In October 2016, the city’s planning staff prepared a report that concluded (1) the project was exempt from CEQA under the Class 32 infill exemption (CEQA Guidelines § 15332); and (2) the project met the design review criteria. At the planning commission hearing for the project, several neighbors and community members opposed the project on various environmental grounds, including that the project site is contaminated, the street has inadequate drainage, the area lacks open space, and the project would cause cumulative impacts with another proposed development. Opponents of the project also contended that the project design was inconsistent with the design of the neighboring historical homes.

During the planning commission hearing, the city attorney advised the members of the commission that, under the city’s zoning ordinance, the commission was required to approve the project if it met the city’s design review criteria. The city attorney added that while he was confident the Class 32 infill exemption applied, CEQA also did not apply because it was a non-discretionary project. The planning commission approved the project, and adopted findings that the project was exempt from CEQA and would not cause any significant environmental effects.

At the city council appeal hearing, the city attorney similarly advised the members of the council that the project was exempt from CEQA under the Class 32 infill exemption, but at any rate their review was limited to the project design. The council voted 3-2 to deny the appeal and uphold the planning commission’s approval. The council adopted a resolution containing numerous detailed findings to support the design review approval. The council also found that the Class 32 infill exemption applied, but, even if some level of CEQA review was required, the city was limited to reviewing design-related issues and not the use-related environmental impacts the project opponents had raised.

The McCorkle Eastside Neighborhood Group and St. Helena Residents for an Equitable General Plan filed a petition for writ of mandate challenging the city council’s approval as a violation of CEQA and local zoning laws. The trial court denied the petition. The groups’ appeal followed.

The primary issue on appeal was whether the city abused its discretion by approving the project without requiring an environmental impact report (EIR). The appellants argued that the Class 32 infill exemption requires the city council to determine that the project would not result in any significant environmental effects relating to traffic, noise, air quality, and water quality. According to the appellants, the city council could not properly have done so because it reviewed only the project design.

The court disagreed and held that, irrespective of the Class 32 exemption, the city council correctly determined that the scope of its discretion was limited to design review and no CEQA review was required. As the court explained, under the city’s design review ordinance, the city council could not disapprove the project for non-design related reasons. In this case, the court found that substantial evidence supported the city council’s findings that the project met the design review criteria and would not result in any design-related impacts.

With regard to the Appellants’ design-related concerns, the court rejected the notion that CEQA review was required for those concerns alone, at least for the project at issue. Quoting from the First District’s decision in Bowman v. City of Berkeley (2004) 122 Cal.App.4th 572, 592 (Bowman), the court stated, “[W]e do not believe that our Legislature in enacting CEQA . . . intended to require an EIR where the sole environmental impact is aesthetic merit of a building in a highly developed area.” Furthermore, the court added, “[w]hile local laws do not preempt CEQA, ‘aesthetic issues like the one raised here are ordinarily the province of local design review, not CEQA.’ ‘Where a project must undergo design review under local law, that process itself can be found to mitigate purely aesthetic impacts to insignificance . . . .’” (Quoting Bowman at p. 594.) While the court recognized that St. Helena is not as urban as Berkeley, the location of the Bowman project, it nonetheless found that “the principles of that case apply to the design review in this case, which cannot be used to impose environmental conditions.”

The court next rejected the appellants’ argument that the mere fact the city had some discretionary authority in the design review process made the project subject to CEQA. According to the court, the rule that a project will be deemed discretionary for purposes of CEQA if it requires both discretionary and ministerial approvals “applies only when the discretionary component of the project gives the agency the authority to mitigate environmental impacts.”
Finally, the court found that it was unnecessary for the city to rely on the Class 32 infill exemption because the city lacked any discretion to address the project’s non-design related environmental effects. The court also found it was unnecessary to address the appellants’ argument that the Class 32 exemption did not apply based on the “unusual circumstances” exception. According to the court, “[b]ecause CEQA was limited in scope to design review whether or not the Class 32 exemption applied, any exception to the exemption was irrelevant.”

-Collin McCarthy