Ninth Circuit Holds that Rent Control Board’s Denial of a Mobile Home Owner’s Request for Rent Increase Is Not an Unconstitutional Taking 

The Ninth Circuit held that the City of Carson’s mobile home rent control board’s decision not to factor in debt service increases in its adjustment of a rental rate for a mobile home park did not result in a regulatory taking of the mobile home park owner’s property. Colony Cove Props., LLC v. City of Carson, 888 F.3d 445 (9th Cir. 2018)

The plaintiff purchased a $23 million rent-controlled mobile home park in the City of Carson, $18 million of which was financed through a loan.  When the plaintiff acquired the property, the City Rent Review Board’s application review guidelines required the Board to consider certain expenses submitted by property owners against the property’s income to determine what rents would give the owner a fair return on their investment. At the time the plaintiff purchased the property, these expenses included debt service, which are interest payments made on a loan to purchase the rent-controlled property.  Subsequently, the City revised its guidelines for considering rent increases and the City’s new rent control formula no longer factored in debt service expenses.

The plaintiff twice petitioned the city’s Rent Review Board for a several hundred-dollar rent adjustment, per space. Applying the new guidelines, the City only granted a rent increase of $36.74.  The plaintiff sued the City, contending the Board’s decision was an unconstitutional taking. The jury awarded the plaintiff over $3 million in damages and the City appealed the decision. Continue Reading

Court Upholds the City of Los Angeles’s General Plan Amendment for Mixed Use Development Project

The Second District Court of Appeal upheld the City of Los Angeles’s General Plan amendment, which changed the land use designation of a proposed project site for a mixed-use development against challenges the decision was prohibited by the City Charter. Westsiders Opposed v. City of Los Angeles, 27 Cal. App. 5th 1079 (2018).

The developers filed a permit application with the City for the project, which consisted of the demolition of an automobile dealership and construction of an 800,000 square foot mixed-use project on a five-acre site in West Los Angeles that would include 516 residential units, 99,000 square feet of retail floor area, and 200,000 square feet of office floor area.  Project approval required a General Plan amendment, a zoning amendment, multiple conditional use permits, a development agreement, and an environmental impact report. The City Council adopted ordinances approving the General Plan amendment and the project.

Plaintiffs challenged the approvals, alleging 1) the City Charter bars amending the General Plan for a single project site or single parcel, 2) the Charter bars the City from allowing a member of the public to initiate a General Plan amendment, and 3) the City failed to make the required findings.

Under the Charter, the General Plan may be amended by “geographic areas” that have a “significant social, economic or physical identity.”  The plaintiffs contended that a “geographic area” must be larger than a single lot and the Project site therefore did not qualify as a geographic area with significant or special identity.  Relying on principles of statutory construction, the court rejected the plaintiffs’ argument and concluded that the Charter did not limit the amendment process to a minimum area or number of parcels and that the court was “prohibited from implying any such limitation or restriction on the City’s exercise of its power to govern municipal matters.”  The court concluded the City did not violate the Charter by amending the General Plan designation for a single parcel because the Charter did not clearly restrict the City’s power to do so. Continue Reading

Court of Appeal Holds that Petition Challenging Wal-Mart Project is Barred by Earlier Lawsuit Raising the Same Issues

The court of appeal held that the plaintiff’s challenge to the City of Rohnert Park’s reapproval of a Wal-Mart grocery store was barred by the doctrine of res judicata because a prior proceeding had raised the same issues.  Atwell v. City of Rohnert Park (Wal-Mart Stores, Inc.), 27 Cal. App. 5th 692 (2018).

In 2010, the City approved the Wal-Mart project.  Following the City’s approval, the Sierra Club and Sonoma County Conservation Action (SCCA) filed a petition challenging the project on grounds that it violated CEQA and conflicted with the City’s General Plan Policy LU-7.  Policy LU-7 sought to “encourage new neighborhood commercial facilities and supermarkets to be located to maximize accessibility to all residential areas. … to ensure that convenient shopping facilities such as supermarkets and drugstores are located close to where people live and facilitate access to these on foot or on bicycles … this policy will encourage dispersion of supermarkets rather than their clustering in a few locations.”

While the plaintiffs in the 2010 proceeding alleged that the project conflicted with Policy LU-7 in their petition, the plaintiffs did not pursue the claim during the proceeding.  The trial court ultimately granted the petition on the CEQA claims and ordered that the resolutions approving the Project be vacated, and that the Project be remanded for additional environmental review with respect to traffic and noise impacts.

The City prepared a revised EIR;  however, the EIR did not alter the original EIR’s analysis of the project’s consistency with the General Plan.  Following the City’s reapproval of the project in 2015, the plaintiffs filed this current proceeding challenging the project’s consistency with Policy LU-7.  The trial court denied the petition finding that the petition was barred by the 2010 proceeding under the doctrine of res judicata.

The doctrine of res judicata applies where a claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding, the prior proceeding resulted in a final judgment on the merits, and the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceedings. Continue Reading

Supreme Court To Decide If CEQA Review Is Required For Well Permits.

The Supreme Court of California has granted review of two cases to resolve a split among courts of appeal over whether the issuance of well permits pursuant to state standards is subject to CEQA. California Water Impact Network v. County of San Luis Obispo and Protecting Our Water & Environmental Resources v. Stanislaus County.

At the forefront of these cases is whether the standards issued by the Department of Water Resources for well construction give local agencies any discretion when issuing well permits. Water is a critical resource in the state and with enactment of the Sustainable Groundwater Management Act in 2014, groundwater, particularly its sustainable withdrawal and quality, are issues receiving more attention. Consequently, the practice of ministerial approval of well construction permits by local agencies without discretionary environmental review have come under increasing scrutiny.

In both California Water Impact Network and Protecting Our Water & Environmental Resources, plaintiffs alleged that the counties’ practice of treating approval of well construction permits as a ministerial action results in hundreds of permits being issued each year without CEQA review. The plaintiffs assert that this practice, and the counties’ respective ordinances, violate CEQA because the state standards are not entirely objective, rather, they give the counties discretion to consider local environmental factors when issuing a permit. It is against this backdrop that the Court will consider both cases. The Court’s decision will likely affect how well construction permits are reviewed and issued by local agencies throughout the state.

Water Code Section 13801 requires local agencies to adopt the minimum standards established by DWR for well construction. These standards, in DWR Bulletins No. 74-81 and 74-90, provide guidance on well construction, location, surface features, seals, casing materials and so forth with the goal of preventing groundwater contamination and pollution. Stanislaus County’s well ordinance incorporates both DWR Bulletins, while San Luis Obispo County’s ordinance only incorporates DWR Bulletin 74-81, though in practice, the county also applies the standards in DWR Bulletin 74-90. Continue Reading

Further Environmental Review Required for Fracking Off California Coast

A federal court has prohibited the U.S. Department of the Interior from approving any plans or permits for hydraulic fracturing off the California coast until it complies with the Coastal Zone Management Act and the Endangered Species Act. Environmental Defense Center v. Bureau of Ocean Energy Management, No. 16-cv-8418, 2018 WL 5919096 (C.D. Cal. Nov. 9, 2018).  The court determined that two bureaus of the Department had violated the Coastal Zone Management Act by failing to prepare a determination as to whether the proposed fracking was consistent with California’s coastal management program, and the Endangered Species Act by failing to consult adequately with the Fish and Wildlife Service before issuing the final Environmental Assessment. Our full Update on the case, by Laura Godfrey Zagar and Jacob E. Aronson, is available here.

New Guidelines for Assessing Transportation Impacts Under CEQA Finalized

The California Natural Resources Agency has adopted new CEQA Guidelines that will leave behind level of service in favor of vehicle miles traveled.

Following years of development and public comment, the Office of Planning and Research (OPR) and the Natural Resources Agency have issued new CEQA Guidelines for analyzing transportation impacts.  These new regulations represent a significant shift in analyzing transportation impacts under CEQA.  By July 1, 2020, all CEQA lead agencies must analyze a project’s transportation impacts using vehicle miles traveled (VMT).  VMT measures the per capita number of car trips generated by a project and distances cars will travel to and from a project, rather than congestion levels at intersections (level of service or “LOS,” graded on a scale of A – F).  California’s largest cities have already adopted VMT standards and abandoned LOS, but many other jurisdictions will continue to require LOS analysis — not for CEQA purposes, but because their general plans or other policies require LOS analysis.

In this update, we highlight key aspects of the VMT guidelines and how projects could be impacted by this important change in conducting transportation impacts analysis.


Background

In 2013, the California legislature enacted SB 743, which required, among other things, that OPR adopt new guidelines for assessing transportation impacts and that when enacted, traffic congestion would no longer be considered in assessing a significant impact under CEQA.  The purpose was to better align transportation impacts analysis under CEQA with the state’s goals of reducing greenhouse gas emissions and traffic-related air pollution and promoting multimodal transportation networks and a diversity of land uses.  Under the existing framework of congestion-based analysis using LOS, infill and transit-oriented development is often discouraged because such projects are in areas of existing traffic congestion.  As policymakers and legislators have recognized, congestion-based analysis does not necessarily improve the time spent commuting and is often at odds with state goals of reducing vehicle usage and promoting public transit.  Indeed, a frequent solution to reducing level of service at intersections is to increase roadway capacity, which studies have found can actually lead to an increase in system-wide congestion and an increase in travel time.  It is also now better understood that LOS does not accurately reflect vehicle travel as it only focuses on individual local intersections and roadway segments and not on the entire vehicle trip.

VMT is not a new tool for assessing environmental impacts under CEQA.  It is used to assess a project’s impact on greenhouse gas emissions, air quality, and energy.  Using VMT for analyzing transportation impacts will emphasize reducing the number of trips and distances vehicles are used to travel to, from, or within a development project.  Projects located near transit and/or within infill areas generally have lower VMT than projects in rural or undeveloped areas.  The shift to VMT analysis under CEQA is intended to encourage the development of jobs, housing, and commercial uses in closer proximity to each other and to transit. Continue Reading

Agency May Take Over Preparation of the Record in a CEQA Case if the Petitioners Unreasonable Delays Preparing It

Where a petitioner in a CEQA case has elected to prepare the administrative record but unreasonably delays such preparation, the defendant agency may prepare the record itself and be awarded costs for doing so.  LandWatch San Luis Obispo Co. v. Cambria Comm. Serv. Dist., 25 Cal. App. 5th 638 (2018).

LandWatch, a nonprofit organization, filed a petition for writ of mandate alleging that the Cambria Community Services District failed to comply with CEQA when it approved an emergency water supply project.  LandWatch elected to prepare the administrative record, subject to the District’s certification of its accuracy.

LandWatch did not present a draft administrative record index until ten months after filing its petition.  There were disagreements over the scope of the index, and the District quickly prepared a revised version of the record.   LandWatch then further delayed the production of supplemental documents that it had argued were necessary.  With trial nearing, the District prepared the supplemental index for LandWatch. The trial court noted that these delays in litigation put the District in financial distress because the county would not release $4.3 million in grant funds for the project while litigation was pending.

Ultimately, the District prevailed in the CEQA lawsuit and was awarded costs for preparing the record and appendix.  LandWatch appealed.

The court held that the District properly took over preparation of the record and appendix after unreasonable delay on LandWatch’s part.  LandWatch had the right to prepare the record, but within the time limit specified by CEQA,  which is 60 days from the date of the petitioner gives notice it has elected to prepare it.  Because LandWatch did not present the documents to the District for certification until far beyond the time limit, the court found that LandWatch had unreasonably delayed, and thereby forfeited, its right to prepare the record.

New State Density Bonus for Student Housing Takes Effect

As of January 1, State law offers a new density bonus to qualifying student housing developments. The legislation (Senate Bill 1227) is one of several bills the Legislature has passed over the last two years to address California’s unprecedented shortage of affordable housing.

As explained by Senator Skinner, the sponsor of SB 1227, the bill is intended to allow student housing projects to become eligible for a density bonus regardless of whether they include apartment-style units or dormitory-style bedrooms. The State Density Bonus Law previously was written to apply only to “units.”

SB 1227 amends the Density Bonus Law by adding a bonus for eligible student housing developments in which at least 20 percent of units, or rental beds, are restricted to lower-income students for 55 years. For purposes of calculating a student housing density bonus, the legislation provides that the term “unit” is equivalent to one rental bed and its pro rata share of associated common area facilities.

To qualify, a project must meet these requirements:

  • All student housing units must be used exclusively for students enrolled full time at an accredited institution of higher education. The developer must enter into an operating agreement or master lease with one or more institutions to occupy all the student housing units.
  • Qualifying “lower-income students” must have a verified household income and asset level that does not exceed the level for “Cal Grant A” or “Cal Grant B” award recipients.
  • Rent in the units restricted to lower-income students may not exceed 30 percent of 65 percent of the area median income for a single-room occupancy unit type.
  • The development must provide a priority for its affordable units for lower-income students experiencing homelessness.

Cities and counties are required to grant qualifying projects a “density bonus” of 35 percent of the student housing units — in other words, a density increase of 35 percent over the otherwise maximum allowable gross residential density. These projects also can become eligible for the several other benefits already available under the Density Bonus Law, including incentives or concessions, waivers or reductions of development standards, and limitations on parking requirements.

Aesthetic and Traffic Issues in Historic Overlay District Necessitate EIR

A court of appeal has overturned a city’s mitigated negative declaration for a small mixed-use development in a historic overlay district, holding that aesthetic and traffic issues require the preparation of an environmental impact report. Protect Niles v. City of Fremont, 25 Cal. App. 5th 1129 (2018).

The proposed project, comprising 98 housing units and 3,500 square feet of commercial uses, was to be located in the Niles Historic Overlay District within the City of Fremont. The city approved a mitigated negative declaration for the project, finding that with mitigation incorporated, the project would cause no significant environmental impacts necessitating an EIR.

Residents sued, alleging that an environmental impact report was required because substantial evidence supported a fair argument that the project would cause significant impacts: due to 1) aesthetic incompatibility with the historic district; and 2) traffic impacts that were not acknowledged in the expert traffic report prepared for the city’s analysis. The court of appeal upheld both challenges and required that an EIR be prepared.

Aesthetics. With respect to aesthetics, the court cited CEQA’s express concern for aesthetic and historic environmental qualities, as well as case law holding that a project’s context is vital to assessment of its aesthetic impacts. Here, members of both the public and the city’s Historical Architectural Review Board had cited the project’s “siting, massing, scale, size, materials, textures and colors” as inconsistent with the historic district’s “small town feeling.”

The court first held that a project’s visual impact on a surrounding officially-designated historical district is an appropriate topic for aesthetic review under CEQA, and that such an aesthetic analysis does not undermine the separate scheme for CEQA review of environmental impacts on historical resources. Next, recognizing that aesthetic judgments are inherently subjective, the court observed that objections raised by HARB members and others “were not solely based on vague notions of beauty or personal preference, but were grounded in inconsistencies with the prevailing building heights and architectural styles of the Niles HOD.” The court found that these personal observations constituted substantial evidence that the project would cause a significant aesthetic impact in the context of the historic district.

Traffic. The court next concluded that the city’s expert traffic report could not prevail over individuals’ observations of existing traffic conditions and predictions of hazards. The traffic report concluded that a new left-turn pocket in front of the project, while recommended, was not necessary, based in part on the posted speed limit. Commenters stated, however, that the posted speed limit was often ignored, and that without a left-turn pocket, the combination of high speeds, queued drivers waiting to turn left into the project, and a blind curve would result in dangerous conditions. The court identified these comments as substantial evidence supporting a fair argument that the project would create a traffic safety hazard.

Nor did the city’s established significance threshold for deterioration in traffic level of service protect it from the need to prepare an EIR. The city acknowledged that with the proposed project, the level of service nearby would deteriorate from an unacceptable LOS E to a still worse LOS F, but under the city’s significance thresholds, this did not constitute a significant impact. The court, citing residents’ and officials’ reports of extreme traffic backups under existing conditions, concluded that these comments “supported a fair argument that unusual circumstances in Niles might render the thresholds inadequate to capture the impacts….”

Conclusion

The Protect Niles decision highlights the importance courts can attach to comments by the public – on both non-technical and technical issues – where an agency proposes to rely on a negative declaration rather than an EIR. Because CEQA is designed to favor EIRs over negative declarations, plausible fact-based comments (as opposed to generalized complaints) can, depending on the circumstances, prevail over both expert reports and agency significance thresholds, leading to the need for an EIR.

School District’s Fee Study Did Not Contain the Information Necessary to Lawfully Impose Development Fees

The Sixth District Court of Appeal invalidated a school district’s Level 1 development fee because the underlying fee study did not properly calculate anticipated growth and included the cost of hypothetical new schools that the district had no plans to build.  Summerhill Winchester v Campbell Union School District, No. H043253 (6th Dist., Dec. 4, 2018).

The Campbell Union School District adopted a Level 1 development fee based on a fee study that concluded the District had no capacity to accommodate new students and calculated an average cost of $22,039 to house each additional student in new school facilities. This figure was based on the projected cost of building a new, 600-student elementary school and a 1,000-student middle school.

Petitioner paid the development fees under protest and sued to recover them, contending that the fee study had failed to calculate anticipated growth from new development or to identify any new facilities that were necessary to accommodate such growth. The court of appeal agreed on both counts and ordered a full refund of the fees.

The court found that although the fee study determined the District was already over capacity (and hence would be impacted by any new students from development), the study had failed to calculate the “total amount of new housing projected to be built within the District.” Instead, the study simply stated that the amount of new development “would be in excess of 133 residential units.” This was inadequate, the court said, because it did not provide the information needed “to determine whether new school facilities are needed due to anticipated development.”  While the Board did not need to identify “specific facilities that would be built,” it did need “to decide whether or not new school facilities were needed and, if so, what type of facilities were needed.”

The court also decided that the Board had improperly assessed the fee based on the cost of new school facilities that were not shown to be necessary to accommodate students from new development. While the fee study based its calculations on the cost of building new elementary and middle schools, there was insufficient evidence either that such schools would be needed to accommodate students from new development or that the District actually planned to build such schools.

The District argued that because its enrollment already exceeded its capacity, every additional student generated by new development would necessarily result in a financial impact on the District. The court accepted the validity of this statement but found it did not satisfy the statutory requirement that the “Board demonstrate a reasonable relationship between the amount of the fee and the impact of development on the need for new or reconstructed school facilities.”  (Emphasis added.) The court concluded that the “fee study’s use of hypothetical new schools that [the District] was not going to build as the financial premise for calculating the fee was not a reasonable alternative methodology that could legally support the fee imposed by the Board.”

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