FOURTH DISTRICT HOLDS SUPPLEMENTAL EIR MAY BE REQUIRED FOR PROPOSED OFFICE COMPLEX BECAUSE GHG EMISSIONS WERE NOT WITHIN THE SCOPE OF EARLIER PROGRAM EIR; DUE TO UNUSUAL CIRCUMSTANCES, PROJECT DID NOT QUALIFY FOR INFILL EXEMPTION

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In IBC Business Owners for Sensible Development v. City of Irvine (2023) 88 Cal.App.5th 100, the Fourth District Court of Appeal held that the City of Irvine improperly relied on a CEQA addendum in approving a new office complex – the Gemdale project – on a site that is part of a larger, previously approved business complex. The court found the City’s conclusion that the project would not cause a new or substantially more severe impact related to greenhouse gas emissions than previously identified in a 2010 program EIR (PEIR) prepared for the business complex was not supported by substantial evidence. Additionally, the court held that the unusual circumstances exception precluded the application of the Class 32 Infill Exemption.

Background

The Irvine Business Park was originally developed in the 1970s. It primarily includes office uses, but also includes substantial industrial and warehouse uses and some residential uses. In 2010, the City adopted a Vision Plan for the business park, amending the City’s general plan to establish a development guide for creating a mixed-use community within the park.

The City prepared the 2010 PEIR to assess the environmental effects of the Vision Plan. The 2010 PEIR included an analysis of the buildout of the entire Vision Plan and anticipated that, so long as future site-specific development projects within the business complex would not result in new environmental effects or require additional mitigation measures, the City would approve the future project without additional environmental review. Any future projects not consistent with the assumptions made in the 2010 PEIR’s analysis, however, would potentially require additional environmental review.

In July 2019, real party in interest, Gemdale 2400 Barranca Holdings, LLC (Gemdale), applied to the City to develop an over-five-story, 275,000-square-foot office complex on a site within the Irvine Business Complex currently developed with a two-story, 70,000 square-foot office complex. Although the 2010 PEIR had assumed the project site would not be developed further, the City determined the project was within the scope of the 2010 PEIR. The City prepared an addendum to the 2010 PEIR, concluding that the potentially significant impacts of the Gemdale project had been adequately analyzed in the 2010 PEIR and that those impacts would be avoided or mitigated pursuant to mitigation measures adopted for the Vision Plan. City staff also opined that the project might be exempt from CEQA, but the City did not expressly determine that the project was exempt and did not file a notice of exemption.

The City approved the project in 2020. Petitioner sued. The trial court found in favor of petitioner and issued a writ of mandate directing the City to set aside the project approvals. The City and Gemdale appealed.

Court of Appeal’s Decision

Consistency with the 2010 PEIR

The court first considered whether the City correctly determined that the Gemdale project was consistent with the scope of the 2010 PEIR’s impact analysis, thereby avoiding the need for further environmental review. The court held that the City correctly determined that the project would not cause any new significant traffic impacts, but lacked substantial evidence to support the conclusion that the Gemdale project’s GHG emissions would not be greater than what was assumed in the 2010 PEIR.

Regarding traffic impacts, the addendum concluded that the project would not cause any new impacts because the project would not significantly increase vehicle delays – as measured by the level of service (LOS) methodology that the 2010 PEIR employed – at any of the intersections or roadway segments analyzed in the addendum traffic study. An analysis of the project’s vehicle miles traveled (VMT) was not conducted.

The petitioner argued that section 15064.3 of the CEQA Guidelines, which was added to the CEQA Guidelines in 2018, required the City to conduct a VMT analysis for the project. That Guideline section provides that VMT is the most appropriate measure of transportation impacts and that LOS impacts shall no longer be considered environmental impacts. The court concluded, however, that CEQA Guidelines section 15064.3 did not apply to the addendum. The Guidelines expressly state that agencies need not comply with section 15064.3 until July 1, 2020. Although the City approved the Gemdale project and the addendum on July 14, 2020, the City began preparing the addendum in 2019, well before the effective date of Guidelines section 15064.3.

Regarding GHG emissions, the addendum explained that the project would incorporate all of the climate change mitigation measures included in the 2010 PEIR, and would thus achieve the 2010 PEIR’s “net zero” emissions goal. Further, according to the addendum, the project would not change the overall development intensity for the Irvine Business Complex anticipated in the 2010 PEIR and would therefore not increase GHG emissions beyond what was assumed in the 2010 PEIR. When the City approved the Vision Plan, it granted each parcel within the Irvine Business Complex a “development intensity budget” and allowed parcels to transfer part of this budget to other parcels. Here, the project obtained the necessary development intensity budget from other parcels within the Irvine Business Complex. The City determined that a mere shift in the development intensity from one site in the complex to another would not result in a substantial increase in GHG emissions.

The court disagreed with the City. It explained that the City’s conclusion assumed, without substantial evidence, that transferring development intensity would merely change the source of GHG emissions without changing the total amount of emissions. But neither the 2010 PEIR nor the addendum analyzed the effect of such a transfer on the 2010 PEIR’s net zero emissions goal.  For this reason, the court concluded that substantial evidence did not support the City’s finding that the project’s emissions would be less than significant.

Additionally, the court observed that the City had prepared a draft GHG emissions analysis that indicated that the project might have significant emissions that could not be mitigated to a less-than-significant level. While the City did not ultimately include the analysis in the addendum, the court concluded that the draft analysis constituted record evidence that contradicted the City’s significance finding.

Categorical Exemption

The court rejected the City’s alternative argument that the project was exempt from CEQA review as an infill development project. Without analyzing the elements of the exemption itself, the court held that the project did not qualify for the exemption because the “unusual circumstances” exception applied to the project.

The court explained that the City’s failure to make an express finding as to whether the unusual circumstance exception applied to the project constrained the court’s ability to affirm the City’s conclusion that the project is exempt. Citing Respect Life South San Francisco v. City of South San Francisco (2017) 15 Cal.App.5th 449, the court explained that, to affirm an implied finding, a court must “assume that the entity found that the project involved unusual circumstances and then conclude that the record contains no substantial evidence to support either (1) a finding that any unusual circumstances exist … or (2) a fair argument of a reasonable possibility that any purported unusual circumstances identified by the petitioner will have a significant effect on the environment.” The court declined to affirm under either option.

First, the court concluded that there was substantial evidence to support a finding of unusual circumstances. The court explained that the project was disproportionately large in comparison to the neighboring buildings, required a massive increase in its development intensity budget, and would more than double the amount of office space originally allocated to its parcel despite occupying only a fifth of the parcel.

Second, the court determined that there was a reasonable possibility that the project would have significant environmental impacts. The court pointed to the evidence in the record that the project might have significant GHG emissions that could not be mitigated to a less-than-significant level. The court determined that this impact might be attributed to the unusual size and density of the project. Thus, according to the court, the project fell into the “unusual circumstances” exception and was not categorically exempt from CEQA review.

By Louisa I. Rogers[/vc_column_text][/vc_column][/vc_row]