Citizens for the Restoration of L Street v. City of Fresno, et al., No. F066498,(Cal. Ct. App. 5th Dist., August 28, 2014)

In a two-part opinion, the Fifth District Court of Appeal affirmed the trial court’s judgment and writ of mandate, finding that the City of Fresno’s Municipal Code did not delegate authority to its Historic Preservation Commission (HPC) to approve CEQA documents, including the Mitigated Negative Declaration (MND) at issue. The Fifth District also upheld the trial court’s holding that the substantial evidence standard, not the fair argument standard, governs review of decisions regarding designation of historic resources.

The Project, a small 1.29 acre residential infill development in downtown Fresno, required demolition of two homes—one of which was previously designated a “Heritage Property” under the Municipal Code—necessitating a demolition permit from the HPC. In concert with its approval of the demolition permits, the HPC also reviewed and approved the Project MND, concluding that demolition of the two homes would not cause a substantial adverse change in the significance of an historical resource. Citizens for the Restoration of L Street (“Citizens”), a local association, appealed the HPC’s adoption of the MND. The City Council heard Citizens’ appeal, and passed a motion: (1) upholding the HPC’s finding that neither of the two homes was an historical resource under CEQA; (2) electing not to exercise its discretion to designate the homes historical, or the Project area an historical district; and (3) upholding the HPC’s approval of the CEQA findings and MND. Shortly thereafter, both homes were demolished.

Citizens filed a petition for writ of mandate alleging that the administrative record supported a fair argument that the Project may have significant impacts on historical resources, thus requiring an EIR. The trial court issued a writ of mandate on the grounds that the HPC was not expressly authorized to approve the MND, and the City Council’s decision on appeal did not cure the CEQA defects in the HPC proceeding. The court also held that the substantial evidence test, not the fair argument test, governed the question of whether the Project would significantly impact historical resources, and found such substantial evidence existed in the record. The City filed an appeal challenging the court’s ruling on the absence of delegated authority to the HPC. Citizens filed a cross-appeal to challenge the trial court’s decision not to require the preparation of an EIR.

In denying the City’s appeal, the Fifth District started by acknowledging that, pursuant to CEQA, lead agencies, such as the City, may delegate to non-elected, subordinate bodies the authority to both adopt environmental documents, such as MND’s, and approve projects. The appellate court then recognized that the HPC had authority to approve the demolition permits under the Municipal Code. The appellate court continued on to evaluate whether the Municipal Code provided similar authority to the HPC to approve or disapprove the MND.

As an initial matter, the appellate court determined that the Municipal Code did not designate the HPC as the “decisionmaking body” for projects involving demolition of heritage properties, nor explicitly authorize the HPC to approve environmental review documents. Instead, the Municipal Code provided that the HPC could “participate in environmental review procedures” and “review and comment” upon planning and programs as they relate to designated historic resources, historic districts, and heritage properties. The appellate court found that this language did not grant explicit or implied authority to the HPC for completing environmental review. Instead, the City must amend its municipal code to expressly grant approval authority or otherwise adopt compliant implementing procedures.

The appellate court went on to evaluate the City Council’s review of the HPC decision, holding that the Council did not act as the final, independent decisionmaking body for both the Project and the environmental documents. Specifically, the record reflected that in the administrative appeal, the Council approved only the MND and not the demolition permit, the Council did not provide the requisite 20-day CEQA notice period, and the Council did not make independent findings. Thus, the Council’s subsequent review did not stand alone to cure the defects of the HPC proceedings. Interestingly, the Council’s reason for not reviewing the demolition permits had nothing to do with any restrictions on jurisdiction or authority, but simply because the permits themselves were never actually appealed by Citizens, which brought forward only the MND for the Council’s consideration.

In rejecting Citizens’ argument for application of the fair argument standard to the designation of historic resources, the Fifth District upheld its prior decision in Valley Advocates v. City of Fresno (2008) 160 Cal.App.4th 1039. The appellate court affirmed its finding that the legislature intended lead agencies to exercise discretion in deciding the historic significance of certain resources, which is inconsistent with application of the fair argument standard. Ultimately, the administrative record demonstrated extensive consideration of the question of historicity, satisfying the required environmental review through the initial study and MND.

While the second part of this decision largely affirms existing case law, the Fifth District’s comments on the City’s municipal code and administrative processes does call for larger review of the regulations pursuant to which cities approve projects and complete environmental review.