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An EIR that did not squarely respond to detailed comments recommending additional mitigation measures has been held not to comply with CEQA. Covington v. Great Basin Unified Air Pollution Control District, 3d Dist. Court of Appeal Case No. C080342 (certified for publication 12/23/2019). The court of appeal emphasized that where an EIR identifies certain impacts as significant and unavoidable, it is not commenters’ responsibility to provide substantial evidence that their proposed additional mitigation measures are feasible; instead it is the lead agency’s responsibility to provide substantial evidence that the commenter-proposed measures are not feasible.

The Covington case arose from a labor union challenge to a geothermal project that would use normal pentane, which is a reactive organic gas (ROG). Although the gas would be in a closed-loop piping system, some of it would leak from the valves, connections, seals, and tubes of the system. The local air district, which was the CEQA lead agency for the project, set a significance threshold of 55 pounds per day of ROG emissions, but concluded that the project would emit up to 410 pounds per day, and set that amount as the project’s permit limit. Opponents commented that additional mitigation measures were available to reduce ROG emissions.

In its Final EIR, the air district rejected the commenters’ proposed measures and stated that all feasible mitigation measures were already included in the EIR. The air district then approved the geothermal project and issued a statement of overriding considerations stating that the project’s greenhouse gas reduction and other benefits outweighed its significant and unavoidable environmental impacts.

The court of appeal first found that the EIR did not adequately respond to commenters’ arguments for a stronger leak detection and repair program. Commenters claimed that stricter programs, setting a smaller leak rate to trigger repair requirements as well as specific deadlines for repair, were used for petroleum refineries and chemical plants and would be feasible for the geothermal project. Finding that the air district made no attempt to show that such measures would be infeasible for the project, the court held that the district had not met CEQA’s requirement to give a good faith, reasoned analysis explaining why it was not adopting the proposed measures.

Commenters also submitted evidence that low-leak or leakless technology had been used in refineries and chemical plants, and claimed that such technology would be equally feasible for a geothermal facility. The air district responded that the project included limited leakless technology such as welded connections, but that some connections could not be welded: “For example, valves would need to be flanged in case they would ever need to be replaced and instrumentation would need to be threaded to allow for calibration and/or replacement.” The court held that this explanation was inadequate because it addressed only welding as a means of leakless operation and did not address other technologies cited by the commenters, such as graphite-packed control valves, bellows-sealed valves, and hermetically sealed valves and flanges. The court directed the superior court to order the air district “to provide a reasoned analysis supported by factual information in response to the mitigation measures proposed by the petitioners.”

In other notable sections of the opinion, the court rejected claims that the EIR’s maximum fugitive emissions estimate of 410 pounds per day was unsupported and that Mono County rather than the air district was required to act as the CEQA lead agency.

The Covington case is an important reminder that reviewing courts are willing to dig deep into the record to assess whether a lead agency has truly analyzed all suggested mitigation measures before declaring an impact to be significant and unavoidable and before issuing a statement of overriding considerations.

If a referendum petition includes the full text of the subject land use measure, documents referenced in such measure need not be attached to the petition unless they are attached to the measure or expressly incorporated into it by reference. Molloy v. Vu, No. D075593 (4th Dist., Oct. 31, 2019).

The San Diego Board of Supervisors adopted a general plan amendment, new specific plan, and a rezoning ordinance to allow for the development of a mixed-use project in a formerly rural area of the County. The resolution adopting the general plan amendment contained a two-page narrative and five attached exhibits, totaling 66 pages. Two exhibits were sub-regional plan land use maps depicting “rural” and “semi-rural” land use designations. Project opponents circulated a referendum petition to prevent the resolution and other project approvals from taking effect. The petition included a certified copy of the 66-page document.

In counties, each section of a referendum petition must contain the title and text of the resolution or the portion of the resolution that is the subject of the referendum, commonly referred to as the “full text requirement.” Plaintiff filed a mandamus action arguing the referendum petition violated the full text requirement because it should have included the land use designation descriptions from the land use element of the general plan in addition to the resolution itself.

Relying on established precedent, the Court of Appeal found that the petition complied with the full text requirement because it clearly contained the entire resolution and all five exhibits. The court rejected plaintiff’s argument that the general plan “rural” and “semi-rural” land use designations must be included because the sub-regional plan expressly adopted the designations by reference. The “adopted by reference” language plaintiff relied on was adopted by the County during a 2011 general plan update, not during the 2018 general plan amendment. Thus, the challenged resolution did not expressly incorporate the land use designations by reference. Further, the central purpose in adopting the resolution was not to amend or enact the “rural” and “semi-rural” land use designations.

Additionally, failure to include the meanings of the land use designations would not inherently confuse voters because the land use designations had long been in force. While some voters might have to review the general plan land use designations, the full text requirement did not require inclusion of all “additional information a conscientious voter might want to know before signing the petition.”

Plaintiff also challenged the referendum petition on grounds that the petition was required to challenge not just the general plan amendment, but also the specific plan and rezoning ordinance the County adopted in furtherance of approving the development project. The Court of Appeal rejected this argument, finding no support for this requirement in the Elections Code or case law.

SB 359

Earlier this year, California enacted SB 359. The bill changes the law to allow referendum proponents in cities to attach a summary of the challenged measure rather than its full text. While SB 359 substantially changes the full text requirement for cities, Molloy is still relevant for state, county and district referenda, and in cities where proponents choose to attach the full text rather than a summary.

When imposing a school impact fee on residential development, a district need not separately analyze particular subtypes of projects; the authorizing statutes simply require a reasonable relationship between the need for the school facilities and the type of development project — in this case, residential. Tanimura & Antle Fresh Foods v. Salinas Union High School Dist., 34 Cal. App. 5th 775 (2019).

Agricultural employer Tanimura & Antle Fresh Foods, Inc. (“T&A”) developed a 100-unit employee housing complex designed to accommodate between 200 and 800 of the company’s seasonal and migrant farmworker employees in two-bedroom, dormitory-like apartment units during the approximately seven-month growing season. The County’s permit conditions described the development to be for “agricultural employees only without dependents.” The school district determined the project was subject to a Level 2 school impact fee. T&A paid the fees under protest and filed suit, arguing that because the project was designed and approved solely for adult employees, it did not burden schools, and to impose a fee on such a project was contrary to the Mitigation Fee Act’s “reasonable relationship” requirement.

The Mitigation Fee Act requires a reasonable relationship between the “type” of development and the fee’s use and need for the facility. In the context of school impact fees, the court found that the School Facilities Act (Gov’t Code §§ 65995 et seq.) differentiates between residential, commercial and industrial development and establishes different fee rates based on those classifications. Beyond that, however, the court concluded that nothing in the statutory scheme requires districts to review individual projects or “to anticipate and analyze unique subtypes of residential development” such as that proposed by T&A. To construe the designation of agricultural employee-only housing as a distinct “type,” the court said, would contravene the Legislature’s intent “to include virtually all construction except that [expressly] exempted” under the School Facilities Act.

The court also found that an “adult-only restriction on the employee housing complex does not alter or expand the range of housing defined as ‘residential’” under the School Facilities Act. The district properly determined a reasonable relationship between the fee imposed and “new residential construction” as the type of development covered by the fee, and no further inquiry was required.

Editors’ Note: On January 2, 2019, the California Supreme Court granted a request for depublication of this decision. A Supreme Court order to depublish means the case can no longer be cited or relied upon as precedent but does not reflect the court’s opinion of the correctness of the result of the decision or of any law stated in the opinion.

Unsubstantiated opinions from purported experts are not enough to require preparation of an EIR, the court of appeal recently held in Maacama Watershed Alliance v. County of Sonoma, 40 Cal. App. 5th 1007 (2019), a case in which it upheld Sonoma County’s adoption of a mitigated negative declaration for a winery.

The court’s application of the fair argument standard provides several noteworthy takeaways for CEQA practitioners.

First, the mere presence of conflicting opinions from purported experts is not enough to require preparation of an EIR. To constitute substantial evidence of a fair argument of a significant impact, an expert opinion must amount to more than unsubstantiated speculation by explaining why a significant impact may occur. The opponents cited comments from purported experts that criticized the geology impact analysis in the MND and asserted that the project may cause soil erosion and negatively affect water quality in a nearby creek. The court found that these expert opinions did not explain how the project features and mitigation measures would be inadequate to protect slope stability and prevent soil erosion. In addition, despite assertions from opponents’ experts that the project’s groundwater pumping might impact a nearby creek, the court found the evidence showed that the aquifer underlying the project was not in contact with the aquifer underlying the creek, and even if a geologic connection was assumed, there was no evidence the project would have any perceptible effect on the water flowing from one aquifer to the other, and from there to the creek.

Second, requiring monitoring and adjustments in the event of unanticipated conditions is not improper deferred mitigation. A condition of approval required monitoring during construction and implementing any additional recommended measures based on actual observed conditions. The court explained: “We see nothing improper in adopting measures that reduce the project’s expected environmental effects to a level of insignificance, but require monitoring and adjustments in the event of unanticipated conditions.”

Third, while non-expert opinion may constitute substantial evidence of a significant visual impact, such assertions must be supported by accurate descriptions of the project and its potential impacts. In support of their argument that the project would have a significant visual impact, the opponents largely relied on photographs showing that an existing residence on the property was visible from a nearby road. The court held that these lay opinions, based largely on the visibility of an existing structure located on a different part of the property, did not constitute substantial evidence of a fair argument that the project may have a significant visual impact.

Finally, locating a project in a very high fire hazard severity zone is not a significant environmental impact. Citing the various fire safety project features and conditions of approval, the court explained that there was no credible evidence that the project would exacerbate fire risk, and any need for additional fire protection services that might exist is not an environmental impact.

Perkins Coie LLP represented Knights Bridge Vineyards in this matter, including securing entitlements for the winery from Sonoma County and successfully defending those entitlements in Sonoma County Superior Court and the Court of Appeal.

The County of San Diego violated the Subdivision Map Act by approving residential development of land restricted to agricultural use under the Williamson Act when the development was neither closely related to nor necessary for agricultural use. Cleveland Nat. Forest Foundation v. County of San Diego, 37 Cal. App. 5th 1021 (2019).

Genesee Properties, Inc., sought tentative map approval for a 24-lot residential subdivision on nearly 1,500 acres of land in San Diego County. Most of the property was subject to a Williamson Act contract restricting the land to agricultural and compatible uses and was within a County-designated agricultural preserve. The Final Environmental Impact Report for the project described 40-acre lot sizes, with each lot including a residence and “active agriculture” involving managed cattle grazing and breeding. Though Genesee sought to rely on a presumption that 40-acre lots are adequate for agricultural use, the EIR described Williamson Act compliance as “areas of controversy” to be resolved by the County.

Land subject to a Williamson Act contract may not be developed for residential use unless the use is “incidental to agricultural uses.” The California Department of Conservation reviewed the project and concluded that allowing at least one home site on each new parcel would likely make commercial viability of livestock use impractical; subdivision would thus result in residential development not incidental to the agricultural use of the land. The Board of Supervisors nonetheless approved the tentative map, finding in part that the subdivision would “not result in residential development not incidental to the commercial agricultural use of the land” pursuant to the Subdivision Map Act.

The Court of Appeal identified the key issue as the meaning of the statutory phrase “residential development not incidental to the commercial agricultural use of the land.” The court found that “incidental” meant the residential use must not merely be subordinate or minor, it must be “naturally used with or functionally necessary to the agricultural use.” Under this standard, the record was insufficient to support the Board’s finding that a 24-lot residential development would be “incidental” to agricultural use. The subdivision proposed rural residential development unrelated to the only presently viable agricultural use of the property: managed low-density cattle grazing and breeding. Future residents were permitted, but not required, to engage in agriculture. The ranchers who managed the grazing and breeding operation would live elsewhere; the residential infrastructure for the homes would convert portions of the land from protected agricultural to urban use; and the limited number of cattle proposed to be onsite did not amount to a viable commercial operation. The County Board therefore abused its discretion in approving the project.

The court rejected the claim that inclusion of a substantial amount of open space within the subdivision required a different outcome. The Williamson Act’s definition of agricultural use does not include open space, only production of agricultural commodities. Even though the Williamson Act equates agricultural and open space, the court refused to rewrite section 66474 to substitute “open space” for “commercial agricultural use.”

Continuing a trend toward stricter application of the administrative exhaustion doctrine, an appellate court held that plaintiffs could not bring a takings claims against the Coastal Commission because they did not “present the exact issue” during the administrative proceedings. Greene v. California Coastal Commission, 40 Cal.App.5th 1227 (2019).

Plaintiffs’ beachfront duplex bordered the designated location for Los Angeles’ public walkway to the beach. Plaintiffs proposed to expand their home, diminishing the beachfront setback from 15 feet to 1.5 feet on the ground level, with no setback on the second level. The property was under dual jurisdiction, requiring both City and Coastal Commission approvals. The City approved the proposed development.

At the Coastal Commission hearing, petitioners’ representative (who was not a lawyer) objected to the setback on several grounds but never expressly asserted that the condition resulted in an unconstitutional taking. Instead, the representative’s presentation was about the Coastal Commission’s historical reliance on the City’s zoning to approve a one-foot setback on similar properties. The Coastal Commission approved the permit with the five-foot setback condition.

Plaintiffs filed a mandamus action, arguing the Coastal Commission abused its discretion imposing the setback requirement and that the condition resulted in a taking. The court held that the claim was barred for failure to exhaust administrative remedies. The court rejected plaintiffs’ argument that the issue was adequately raised through their consultant’s general objections regarding the City’s legislative action establishing a one-foot setback requirement and the unfairness of imposing a greater requirement in this case. These objections, the court said, did not meet the requirement that plaintiffs must “present the exact issue” to the agency in order properly to exhaust administrative remedies.

The San Francisco Jobs Housing Linkage Fee (JHLF) is set to more than double under the “Housing for SF Workers” ordinance recently passed by the San Francisco Board of Supervisors (Ordinance). Mayor London Breed refused to sign the Ordinance, but even without the Mayor’s signature, Housing for SF Workers becomes effective on December 15, 2019.

Increase in Jobs Housing Linkage Fee and Inclusionary Housing

 The City creates seven jobs for every one unit of housing, causing a crucial jobs/housing imbalance. The JHLF impact fee was established in 1996 and applies to certain new commercial spaces in an effort to solve this issue. The JHLF is supported by a Jobs Housing Nexus Analysis showing that non-residential uses create a potential demand for affordable housing.

On October 29, 2019, the Board unanimously passed the Ordinance, which more than doubles the JHLF and applies to construction or expansion of more than 25,000 square feet of entertainment, hotel, integrated PDR, office, research and development, retail, and/or small enterprise workspace development. The new rates approved by the Board impose a $52.20 fee for office projects of 50,000 square feet and above that submitted a complete Preliminary Project Assessment (PPA) to the Planning Department before September 10, 2019. A PPA is an initial evaluation process that the Planning Department requires for certain projects, including construction of a new non-residential building or an addition of at least 10,000 square feet. The PPA process is separate from the primary Development Application procedure. The fee increases to $60.90 for projects that submitted a complete Development Application between September 11, 2019 and January 1, 2021. Starting January 1, 2021, the fee increases to $69.60. Projects in the application pipeline are not grandfathered into the current JHLF. Thus, projects must obtain a building or site permit prior to the effective date of the Ordinance in order to avoid the JHLF increase. There is a lower rate for projects under 50,000 square feet. A summary of the JHLF increases for office construction is below:

Current JHLF Projects that submitted a PPA on or before September 10, 2019 Projects that submit a Development Application between September 11, 2019 and January 1, 2021 Projects that submit a Development Application on and after January 1, 2021
Large Office Project

(≥ 50,000 gross square feet.)

$28.57 per gsf $52.50 per gsf $60.90 per gsf $69.60 per gsf
Small Office Project

(< 50,000 gross square feet)

$28.57 per gsf $46.98 per gsf $54.81 per gsf $62.62 per gsf

The JHLF fee for laboratory development will increase to $46.43 per gsf. Developers may elect to donate land to the City in-lieu of the fee.

Additionally, projects that were approved by the Planning Commission or Planning Department before September 10, 2019, with the condition that they would be subject to the JHLF increase if enacted prior to issuance of a certificate of occupancy for the project, will be required to pay the difference between any fee assessed at site permit issuance and the higher fee effective when the certificate of occupancy is issued.

Allocation of the JHLF

The JHLF collected will be deposited into the San Francisco Citywide Affordable Housing Fund. 10% of the fees received will be allocated for the preservation and acquisition of rent restricted affordable housing, and 30% for permanent supportive housing. Proponents estimate that the increased fees will generate $400 million for affordable housing projects.

Potential Negative Implications of the Fee Increase

As the Mayor noted in her statement opposing the Ordinance, the Feasibility Analysis prepared for the City in anticipation of the JHLF increase shows that developers could afford $38.57 per gsf before construction becomes infeasible. The fee increase approved by the Board of Supervisors goes above and beyond this threshold. A report prepared by the Office of the Controller also warns that the increase in the JHLF could decrease the feasibility of office construction.  This report estimates a reduction of 125,000 – 140,000 square feet per year, on average, or the annual decline in office construction spending is estimated at $61 million – $87 million per year.

 Mayor’s Opposition to the Ordinance

The Mayor did not sign the Ordinance within the statutory time period. While the Ordinance still became law, this enabled her to go on the record against the JHLF increase. In a letter to the San Francisco Board of Supervisors, the Mayor wrote “if projects become infeasible to build, the result is less funding for affordable housing.” The letter indicates that the Mayor’s opposition to the fee increase is based, in part, on concerns that it will lead to smaller businesses being priced out of an already expensive office market.

In response, Supervisor Haney, the author of the Ordinance responded, “San Francisco has the worst jobs-housing ratio in the Bay Area, the highest cost of housing nationally, and an out-of-control homeless crisis. There is tremendous urgency for the city to act.  It is disappointing that the mayor is so strongly opposed to a policy that has such wide support from labor and the community.”

The debate on the best way to solve the City’s job/housing imbalance is likely to continue as politicians and other stakeholders advocate for competing proposals.

The Third District Court of Appeal held that a suit for refund of developer fees based on failure to make findings required under the Mitigation Fee Act was an action for a “penalty or forfeiture” subject to the one-year limitations period under Code of Civil Procedure section 340(a). County of El Dorado v. Superior Court (Austin), No. C088409 (3rd Dist. Oct. 30, 2019).

Government Code section 66001 — part of the Mitigation Fee Act — requires local agencies that collect development impact fees to make findings every five years justifying the ongoing retention of those fees, including specifying the timing of the planned use of the fees. If the required findings are not timely made, “the local agency shall refund the moneys in the account . . . to the then current record owner … of the [property]” for which it was collected. Gov’t Code § 66001 (e), emphasis added.

Plaintiffs sued the County alleging that, as current property owners, they were entitled to a refund of eight development fees assessed by the County and its special districts because the County had not made the findings required under Section 66001 within the prescribed five-year period.

The issue on appeal involved the applicable statute of limitations. Section 66001 does not specify a limitations period. The appellate court concluded that the action was effectively one for a statutory penalty or forfeiture and was therefore subject to a one-year deadline under Code of Civil Procedure section 340(a).

The court relied on established law under which statutory damages recoverable regardless of actual fault or actual injury are considered a penalty or forfeiture. It reasoned that a refund of fees under Section 66001 met both criteria: the refund was mandated regardless of whether the local agency could in fact have made the nexus findings at the time they were due and was payable to the current property owner regardless of whether that owner had actually paid any fees.

Because Section 66001 thereby imposed liability regardless of substantive fault by the local agency and regardless of actual injury to the plaintiff, it amounted to a penalty or forfeiture subject to the one-year statute of limitations.

Operators of an unlicensed alcohol and drug treatment facility in violation of a city’s zoning ordinance could not avail themselves of the California Health and Safety Code’s safe harbor provisions. City of Dana Point v. New Method Wellness, 39 Cal. App. 5th 985 (2019).

New Methods Wellness is licensed to offer mental health and substance abuse services and residential treatment centers. New Methods housed patients in homes in residential zones in the City of Dana Point. The properties were owned and operated by a different corporate entity, NMW Beds, which imposed 24-hour supervision and provided patients with transportation to New Method’s treatment center. The City zoning ordinance allows only residential uses at each of the properties. The City filed a complaint against New Methods, seeking to abate a nuisance on the grounds that the properties were being operated as unlicensed drug treatment centers in violation of the City zoning ordinance.

Section 9.09.020 of the City’s zoning ordinance declares any non-permitted use in a residential zone a nuisance per se. This means that no proof is required, beyond the fact of the existence of the use, to establish a nuisance. The zoning ordinance enumerates the permitted uses in a residential zone and “any use not expressly allowed is prohibited.” A drug treatment facility is not listed as a permitted use. Thus, the only issue for the appellate court was whether substantial evidence supported the trial court’s finding that the properties were being operated as a part of a drug treatment facility.

However, New Methods attempted to find safe harbor under California Health & Safety Code section 11834.23, which preempts local zoning regulations. Section 11834.23 permits operators of licensed alcohol or drug abuse recovery or treatment facilities that service six or fewer persons to qualify as a residential use of the property. The court did not find this argument compelling. There was no evidence the properties housed six or fewer people. More importantly, while NMW Beds was licensed to operate in other locations in Orange County, it was not licensed to operate on the Dana Point properties.

New Methods also argued that the properties constituted “recovery houses,” which do not require a license. A recovery house is defined as “group living arrangements for adults recovering from alcoholism or drug addiction where the facility provides no care or supervision.” The court also rejected this argument because residents’ lives were highly regulated and subject to a code of conduct. Also, New Methods’ website advertised that patients would receive treatment at the properties.

New Methods also claimed that the zoning ordinance provisions violated its patients’ rights under the ADA and that the City’s abatement action constituted a taking. The court summarily rejected both arguments and concluded there was sufficient evidence to find that New Methods operation of the property was a nuisance per se and subject to an injunction.

One key reform under SB 330 is its amendment of the Housing Accountability Act. The legislation establishes a new rule that housing projects statewide generally are subject only to the ordinances, policies, development standards and fees (except automatic annual adjustments) that are in effect when the developer submits a “preliminary application.” This newly-defined submission must contain certain information about the project as specified by statute. The legislation’s new protection applies to projects where at least two-thirds of square footage is designated for residential use.

SB 330 also prohibits nearly all cities in urban areas, as well as counties with respect to certain urbanized places, from taking the following actions:

  • Parcels of land where housing is an allowable use may not be downzoned, and general or specific plan land use designations may not be changed to a less intensive use as compared to what was allowed as of January 1, 2018. This provision includes reductions in height, density or floor area ratio, or other types of increased requirements. (However, cities and counties may limit a property to less intensive uses if changes in land use designations or zoning elsewhere ensure no net loss in residential capacity.)
  • Moratoriums or similar restrictions may not be imposed, with certain exceptions, on housing or mixed-use development.
  • Design standards established on or after January 1, 2020 that do not qualify as “objective” standards may not be imposed or enforced.
  • The number of housing units may not be capped, and limitations may not be set on population or how many approvals or permits will be issued for housing, except in predominantly agricultural counties.
  • Housing projects may not be approved that either fail to replace any dwelling units lost to demolition or that will require demolishing units recently occupied by low-income households or other “protected” units, unless specified criteria are met.

Finally, among several additional provisions, SB 330 prohibits cities and counties from holding more than five hearings on a proposed housing project, including any continuances, if the project complies with the applicable, objective general plan and zoning standards in effect when an application is deemed complete.

While SB 330 will limit the ability of cities and counties to restrict housing projects by deviating from established zoning and development standards, many legislators also have expressed interest in more far-reaching reform that would force local agencies to accept housing at higher densities. Any such reform will have to wait until the legislature returns next year.