Housing Development With Optional Retail Component Qualifies For CEQA Exemption For Residential Projects Consistent With Previously Approved Specific Plan

A group of citizens challenged a city’s determination that a proposed residential development qualifies for an exemption under the California Environmental Quality Act (“CEQA”) as a residential project that is consistent with a specific plan for which an EIR has been certified.  The citizens asserted the project did not qualify for the exemption because it retains the option to convert residential units to retail space.  The court of appeal held that the residential development qualifies for an exemption because any future commercial use will require further review.  (Concerned Dublin Citizens v. City of Dublin (--- Cal.Rptr.3d ----, Cal.App. 1 Dist., March 7, 2013).

Facts

In 2002, the City of Dublin (“City”) approved the Eastern Dublin Specific Plan for the Dublin Transit Village Center (“Transit Center”).  City certified an environmental impact report (“EIR”) in compliance with CEQA.  The specific plan included a stage 1 development plan, which established development standards and permitted land uses for future projects within the Transit Center.  The EIR stated that prior to final approval for individual projects within the Transit Center, “applicants must submit Stage 2 Planned Development Rezoning requests to the City of Dublin,” which will include specific information regarding development proposals and land uses.

Pursuant to the stage 1 development plan, a parcel that AvalonBay Communities, Inc. (“AvalonBay”) sought to develop was designated as site C.  Site C would consist of 405 high density residential dwellings and up to 25,000 square feet of retail space.  AvalonBay did not immediately move forward with its proposal but in 2010 it submitted a revised proposal for 486 apartment units, 4,192 square feet of commercial development, a leasing center, a fitness center, and a parking garage.  Prior to project approval, AvalonBay withdrew its plan to further revise it.  In March 2011, AvalonBay proposed a project that included 505 apartment units, a leasing center, a fitness center, two parking structures, and on-street parking.  AvalonBay planned to develop the ground floor units as residential units but the plan would allow the units to be returned to retail space in the future.  The change was made because AvalonBay contended that the Transit Center had 12,000 square feet of retail space that had not been leased after 4 years.  AvalonBay sought approval from City of a stage 2 development plan, a site development review permit, and an amendment to the stage 1 plan that would reallocate 100 residential units from site A to site C.

The Planning Commission (1) “approved the site development review and map,” (2) recommended that the City Council “approve the stage 1 development plan amendment, the stage 2 development plan, and the development agreement,” (3) found “the project is exempt from CEQA pursuant to Government Code section 65457 for residential projects that are consistent with a specific plan for which an EIR was certified,” and (4) concluded that “[n]o further environmental review is required.”  The City Council affirmed the Planning Commission’s approval of the site development review permit and map; approved the stage 1 development plan, the stage 2 development plan, and the development agreement; and found that the plans and agreement are exempt from CEQA pursuant to Government Code section 65457.

Concerned Dublin Citizens, Robert Klein, and Carpenters Local Union No. 713 (collectively, “Concerned Citizens”) filed a petition for writ of mandate to challenge the City’s finding that the project is exempt from environmental review.  The trial court entered judgment in favor of the City.

Decision

Government Code section 65457, subdivision (a), provides:  “Any residential development project, including any subdivision, or any zoning change that is undertaken to implement and is consistent with a specific plan for which an environmental impact report has been certified after January 1, 1980, is exempt from [CEQA].   However, if after adoption of the specific plan, an event as specified in Section 21166 of the Public Resources Code occurs, the exemption provided by this subdivision does not apply unless and until a supplemental environmental impact report for the specific plan is prepared and certified in accordance with [CEQA].”

The court summarized these requirements as follows:  “Thus, to qualify for the section 65457 exemption, the project must be for residential development, it must implement and be consistent with a specific plan for which an environmental impact report previously has been certified, and the qualification contained in the final sentence must not apply, i.e., either a supplemental EIR must not be required by Public Resources Code section 21166 or such a supplemental EIR must already have been prepared and certified.”

Concerned Citizens asserted that while the substantial evidence rule usually applies to the determination of a local agency that a project is statutorily exempt from CEQA review, “there is an exception to this general rule when application of the exemption depends on whether the project will have significant environmental impacts.”  Concerned Citizens argued that in such cases, the fair argument standard should apply.  The court of appeal found that it “need not decide whether there is merit to this suggestion because the section 65457 exemption does not require a determination of whether the proposed project will have significant environmental effects.”

Concerned Citizens asserted that because AvalonBay retained the option to convert residential units to retail space, the project is not a residential project and therefore falls outside the exemption found in section 65457.  The court held that the AvalonBay project is a residential project.  The only project City has approved for site C is development of 505 residential units plus features that are ancillary to the residential units.  If AvalonBay desires to convert some of the residential units to commercial space at a future date, the commercial use would be subject to site development review under Dublin Municipal Code section 8.104.040. 

The fact that the property is zoned for mixed use does not convert the project from a residential project to a mixed-use project.  AvalonBay cannot automatically develop commercial property just because a mixed-use would comply with zoning requirements.  Instead, “the specific plan anticipates that before any use of the property is approved, there will be compliance with the site development review process, which includes compliance with applicable environmental review.” City’s approval of the project as presently proposed by AvalonBay “does not constitute approval of commercial usage within site C.”

The court found that the AvalonBay project is consistent with the Transit Center Specific Plan.  Although the Transit Center was designed to combine commercial and residential use, it did not require site C to have commercial development.  The court concluded the Transit Center “retains its mixed-use character whether or not each of the several sites within the center includes mixed usage.”  Also, the specific plan does not state that retail space is required but instead merely encourages retail use. 

The court noted that nothing in CEQA Guideline 15168 “or any other provision mandates a particular level of environmental review in evaluating later projects within the scope of a certified program EIR.”  Also, the EIR did not prescribe the scope of environmental review necessary for subsequent projects in the Transit Center. 

The court concluded the qualification to the section 65457 exemption does not apply.  The qualification “turns on whether, subsequent to the certification of the EIR, circumstances have changed to the extent that reliance on the EIR was unwarranted.”  City concluded there were no circumstances that warranted additional environmental review for the transit project.  The court found that shifting 100 residential units to a different location within the Transit Center is not a significant change because the total number of residential units was not increased.

The court rejected Concerned Citizen’s argument that supplemental environmental review is necessary “because significant and new information regarding greenhouse gas (GHG) emissions has come to light since the EIR was certified in 2002.”  Although the EIR did not analyze the impacts of GHG emissions, “the impacts of the project on air quality were considered in the EIR and substantial evidence supports the City’s finding that the potential effects of GHGs were known and could have been addressed in conjunction with the certification of the EIR in 2002.”  The court concluded, “Therefore, the City properly concluded that the issuance of new threshold guidelines was not new information that requires the preparation of a supplemental environmental report under Public Resources Code section 21166.”  

The court of appeal found that substantial evidence supports the determination of City that AvalonBay’s proposed development of site C is a residential development that is exempt from further environmental review pursuant to section 65457.  The court of appeal held that the trial court properly denied Concerned Citizens’ petition for a writ of mandate. 

Questions

If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Jeffrey L. Massey or Leslie Z. Walker | 916.321.4500

Jon E. Goetz | 805.786.4302

Published In: Civil Procedure Updates, Energy & Utilities Updates, Environmental Updates, Residential Real Estate Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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