One of the most vexing issues arising under CEQA, particularly in cases of projects involving public-private partnerships or projects requiring public agency financial assistance, is the question of when project approval occurs. Like pregnancy, project approval is an all-or-nothing condition with profound consequences – yet the law provides no “bright line” test for when project approval, and the concomitant requirement of completed CEQA review, occurs.

In the published portion of a recent opinion affirming a trial court’s judgment, which denied a writ petition challenging an EIR, the First District Court of Appeal, Division 3, applied the relevant legal framework of the Supreme Court’s decision in Save Tara v. City of West Hollywood (2008) 45 Cal.App.4th 116 (“Save Tara”) to a dispute over whether project approval had improperly occurred prior to completion of CEQA review. In doing so, it rejected a neighborhood group’s claims that the City and County of San Francisco had unlawfully “preapproved” a community center/affordable housing project prior to certifying the project EIR.  (Neighbors For Fair Planning v. City and County of San Francisco, et al. (1st Dist., Div. 3, 5/31/13) ____ Cal.App.4th ____, 2013 WL 3209381.)

The project at issue was proposed by real party Booker T. Washington Community Service Center (“Center”) and involved demolition of the Center’s existing one-story, 13,745 square foot facility on Presidio Avenue in San Francisco and replacement of that structure with a 68,206 square foot mixed-use development containing expanded community facilities and a five-story residential building. Included in the development were a new 7,506 square foot gym, a child care center, and expanded, state-of-the-art space for the Center’s at-risk youth programs. The project’s housing component included 24 low-income household studios, 24 low-to-very low income emancipated foster youth studios, and two two-bedroom units for onsite managers. A group of project neighbors, comprising plaintiff Neighbors for Fair Planning, consistently advocated throughout the planning process for reductions in the project’s size, scope and density.

As in all cases involving “the predominantly legal question whether the [lead agency] approved the Project for purposes of CEQA before it conducted the requisite environmental review[,]” the applicable legal standards address the issue of the proper timing of CEQA review, and call for a searching examination of the surrounding factual circumstances as revealed by the administrative record. Fundamentally, local agencies must prepare, certify, “and consider a final EIR before approving… any project they propose to ‘carry out or approve,’ if the project may have significant environmental effects.” (Neighbors for Fair Planning, supra, at ____, 2013 WL 3209381, *3.) (Note: While the Court’s opinion adds “or disapproving” where the ellipsis appears in the quote above, that phrase is inadvertent and inaccurate dicta, and should not be relied on, since (1) the project at issue was approved and (2) it is well established, in any event, that CEQA review is not required as a precondition of a public agency’s disapproval of a project. (See Pub. Resources Code § 21080(b)(5); 14Cal. Code Regs. § 15270(a) [“CEQA does not apply to projects which a public agency rejects or disapproves.”].)

The CEQA Guidelines define “approval” as “the decision by a public agency which commits the agency to a definite course of action in regard to a project” (14 Cal.Code Regs., § 15352(a)), and, moreover, as the agency’s “earliest commitment” to the project. (Id., § 15352(b), emph. added.) As the Supreme Court observed in Save Tara, it “has… recognized two [relevant] considerations of legislative policy… (1) that CEQA not be interpreted to require an EIR before the project is well enough defined to allow for meaningful environmental evaluation; and (2) that CEQA not be interpreted as allowing an EIR to be delayed beyond the time when it can, as a practical matter, serve its intended function of informing and guiding decision makers.… The problem is to determine when an agency’s favoring of and assistance to a project ripens into a ‘commit[ment].’ To be consistent with CEQA’s purposes, the line must be drawn neither so early that the burden of environmental review impedes the exploration and formulation of potentially meritorious projects, nor so late that such review loses its power to influence key public decisions about those projects.” (Save Tara, supra, at p. 130.)

The Supreme Court in Save Tara rejected both (1) the project proponents’ position that only “unconditional agreements irrevocably vesting development rights” sufficed as “commitments” to project approval, and (2) the project opponents’ view that “any agreement, conditional or unconditional” would require CEQA review “if at the time it was made the project was sufficiently well defined to provide ‘“meaningful information for environmental assessment.”’” The Neighbors for Fair Planning Court of Appeal colorfully described the Supreme Court’s resolution of these competing positions as “[s]teering between the project proponent’s Scylla and its opponent’s Charybdis[.]” It noted: “The critical question is “‘whether, as a practical matter, the agency has committed itself to the project as a whole or to any particular features, so as to effectively preclude any alternatives or mitigation measures that CEQA would otherwise require to be considered, including the alternative of not going forward with the project.’”

Applying these principles to the case before it, the Court of Appeal rejected Appellants’ argument “that the City preapproved the Project ‘through its many forms of bureaucratic and political endorsements’ long before it certified the EIR.” Specifically, it held that:

• An impermissible commitment was not shown by a predevelopment loan agreement whereby the Mayor’s Office of Housing (“MOH”) agreed to loan the Center $788,484 for architectural and engineering design, survey and appraisal preparation, environmental studies, CEQA/NEPA review, legal expenses, loan fees, cost estimates and administrative work. Unlike in Save Tara, where the developer was not required to repay a nearly half-million dollar predevelopment loan unless the project were approved, the Center was required to repay its loan in 55 years with 3 percent interest if the project received approval, and immediately if the project were not approved by a specific date.
• Appellants’ contention that the Center lacked sufficient assets to repay the loan was unsupported by the record; it was also significant that “the predevelopment loan is secured by a deed of trust against the Center’s property, which apparently is not otherwise encumbered.”
• While Appellants forfeited (by failing to raise it in their opening brief) the argument that a deed of trust requirement that the site be used for affordable housing for 55 years showed improper commitment, the argument was meritless anyway: “Save Tara does not hold that a city’s requirement that a public private redevelopment project provide a specific public service, such as senior or low-income housing, is tantamount to project approval.”
• Also significantly, unlike the agreement in Save Tara which “forthrightly” stated its purpose was to cause reuse and redevelopment of the project property, the City’s loan agreement with the Center stated: “By entering into this Agreement, MOH and Borrower intend to preserve the possibility of developing the Project as affordable housing by lending funds to Borrower for the Predevelopment Activities. The City does not, however, commit to or otherwise endorse the Project by entering into this Agreement. The Project remains subject to review by City agencies and City discretion to disapprove or modify the Project.”
• A supervisor’s introduction of a special use district ordinance to increase allowed height and density to facilitate a state-mandated density bonus if the project were to be approved also was not unlawful “commitment.” Proposal of such legislation was not the same as approval, since the City could only take approval action as a body by resolution or ordinance, and it only did so two months after the EIR was certified.
• Appellants’ remaining contentions, including that a Supervisor’s advocacy for the project and MOH’s “significant involvement and input in the Project’s design” demonstrated impermissible commitment, were also meritless. According to the Court: “[O]ne supervisor’s advocacy for the Center’s expansion is not equivalent to action, let alone approval, by the City” and the MOH’s staff’s involvement was “neither unusual, suspicious, nor demonstrative of preapproval.” Unlike the unequivocal public statements of project approval from “highly authoritative sources” in Save Tara, none of the “public statements” relied on by Appellants indicated the City had improperly committed to approve the Project prior to completing required CEQA review.