SB 743 was enacted in 2013 to further California’s efforts to reduce GHG emissions by encouraging transit-oriented, infill development – a strategy announced in SB 375, the “Sustainable Communities and Climate Protection Act of 2008.”  As part of SB 743, the Legislature enacted Public Resources Code § 21099(d)(1), which provides:  “Aesthetic and parking impacts of a residential, mixed-use residential, or employment center project on an infill site within a transit priority area shall not be considered significant impacts on the environment.”  In an opinion filed February 28, and subsequently certified for publication on March 22, 2018, the Second District Court of Appeal (Division 7) applied § 21099(d)(1) and held that it exempted from CEQA review alleged parking impacts of a 68-acre, mixed-use, infill project, located a quarter-mile from the Covina Metrolink commuter rail station, which the City approved via Mitigated Negative Declaration (MND) three months after the statute’s effective date.  Covina Residents for Responsible Development v. City of Covina (City Ventures, Inc., et al., Real Parties in Interest) (2018) ___Cal.App.5th ______.  In addition to rejecting plaintiff/appellant CRRD’s CEQA challenges to the project, the Court of Appeal rejected its Subdivision Map Act (SMA) arguments and affirmed the trial court’s judgment denying its writ petition.

The project’s 3.4-acre infill site consisted of 27 parcels comprising a completely paved, deteriorating, and underutilized city block within the City of Covina’s 2004 Town Center Specific Plan (TCSP) area.  The site was surrounded by developed residential and commercial parcels with fully improved infrastructure, and contained 25,000 square feet of vacant single-story buildings previously used by a car dealership.  The originally proposed 72-unit, 12,800 square-foot retail/gallery project fell 61 parking spaces short of City’s standard requirements  (and 84 spaces short if assumed available street parking was not counted).  Because the project was a transit-oriented mixed use development within ¼ mile of the Metrolink station, however, it would be eligible for parking credits under the TCSP under certain conditions.

Downtown business owners and the former owner of the car dealership (who stilled owned a few remaining parcels in the block) opposed any parking credits and complained about the project’s inadequate parking.  Between its late 2012 application and early 2014 approval, the project underwent CEQA review, and its design was revised several times to address parking issues.  Thus, it reduced its total number of residential units and its retail square footage, reduced the number of bedrooms in its units, and added onsite parking, ultimately obtaining the City Council’s approval in a redesigned form that met all City parking requirements without the need for applying any public transit parking credits.

CRRD (interestingly represented by the former car dealer’s attorney) nonetheless filed suit challenging the City’s MND, claiming an EIR should have been prepared, that the City improperly tiered the MND from the TCSP EIR, and that the City failed to make required project approval findings under the SMA.  The trial court rejected CRRD’s CEQA challenge, which continued to focus principally on allegedly inadequate project parking, finding (a) no substantial evidence supported the claim that the parking shortage would cause environmental impacts, (b) any parking impacts were exempt from CEQA review under § 21099, and (c) the City’s MND was properly tiered from its 2004 TCSP EIR; as noted above, the trial court also rejected CRRD’s SMA (and other) claims.

Some of the key principles and holdings set forth in the Court of Appeal’s published opinion affirming the judgment denying the writ Petition, along with some of my own observations regarding them, follow.

• If substantial evidence shows a project may have a significant environmental effect, but revisions in project plans would avoid or mitigate any such effects to a point where clearly no significant effect would occur, and there is no substantial evidence that the revised project may have a significant effect, the lead agency may use an MND. (Citing Pub. Resources, § 21064.5; Parker Shattuck Neighbors v. Berkeley City Council (2013) 222 Cal.App.4th 768, 776; Friends of the College of San Mateo Gardens v. San Mateo Community College Dist. (2016) 1 Cal.5th 937, 945.)
• If after preliminary review a public agency determines a proposed project is exempt from further CEQA review, it may prepare a notice of exemption (NOE) citing the relevant Guidelines section and containing a brief statement of reasons supporting the finding. (Citing Concerned Dublin Citizens v. City of Dublin (2013) 214 Cal.App.4th 1301, 1309-1310; Guidelines, § 15062(b) [“[a] notice of exemption may be filled out and may accompany the project application through the approval process”].)  The City here filed both an NOE (based on a Class 32 categorical infill project exemption) and a Notice of Determination (NOD) for the project following its approval.  (Its lack of reliance in the NOE on § 21099(d)(1)’s partial statutory exemption is probably explained by the fact that the statute took effect only shortly before the Project was finally approved.)
• A negative declaration is not appropriate if it can be “fairly argued” that the project to be approved may have a significant environmental impact, and failing to prepare an EIR in that event is an abuse of the agency’s discretion and failure to proceed in the manner required by law. The Court held the deferential “substantial evidence” standard of review did not apply to the City of Covina’s actions here because it did not proceed under CEQA’s “subsequent review” provisions for modified projects, but instead “structured” its CEQA review as applying to a new project under CEQA’s tiering provisions (Pub. Resources Code, §§ 21093, 21094; Guidelines § 15152).  (Citing Friends of the College, supra, 1 Cal.5th at 950.)  This holding illustrates that counsel handling entitlement processing within an area covered by an approved specific plan for which an EIR was previously certified should carefully consider and decide early in the CEQA process whether the discretionary approvals required for the site-specific project can properly be characterized as merely a modification of the existing plan (rather than a wholly new project), so as to obtain the more favorable “substantial evidence” standard of review under CEQA’s “subsequent review” rules.  Properly framing the CEQA review from the outset – i.e., in the application and initial study – could avoid later judicial application of the “fair argument” standard and consequently avoid increased litigation risk to the MND and project approvals.
• The Court of Appeal held Public Resources Code § 21099(d)(1) applied to the project and statutorily exempted its alleged “parking impacts” from CEQA review. The project fit the statutory definition of an “infill site” as “a lot located within an urban area that has been previously developed, or on a vacant site where at least 75 percent of the perimeter of the site adjoins, or is separated only by an improved right-of-way from, parcels that are developed with qualified urban uses.”  (Quoting § 21099(a)(4).)  It also met the statutory exemption’s requirement of location within a “transit priority area,” defined as “an area within one-half mile of a major transit stop that is existing or planned[.]”  (Quoting § 21099(a)(7).)  While § 21099(b) “does not relieve a public agency of the requirement to analyze a project’s potentially significant transportation impacts related to air quality, noise[,] safety, or any other impact associated with transportation,” it clarifies that “the adequacy of parking for a project shall not support a finding of significance pursuant to this section.”  (Quoting § 21099(b)(3).)
• The Court held CRRD’s arguments that the project’s “transportation-linked environmental impacts” stemming from allegedly inadequate parking required CEQA analysis lacked merit on the record before it. CRRD misplaced reliance on an inapposite case predating § 21099, Taxpayers for Accountable School Bond Spending v. San Diego Unified School Dist. (2013) 216 Cal.App.4th 1013 (my blog post on which can be found here), failing to appreciate the significantly different factual context of the project there involved, as well as the import of § 21099(b)(3)’s statutory exemption “for urban, infill projects near transit hubs[.]”  The Court opined that the statutory exemption “endorsed the approach of the First District” in another CEQA “parking impacts” case, San Francisco Upholding the Downtown Plan v. City and County of San Francisco (2002) 102 Cal.App.4th 656, which essentially treated the failure of an urban redevelopment project located at a transit hub to “self-park” and the consequent need for project users to “hunt for scarce parking spaces” as a “social inconvenience,” rather than a significant environmental impact subject to CEQA review in its own right.  In sum:  “While secondary parking impacts caused by ensuing traffic congestion (“air quality, noise, safety, or any other impact associated with transportation”) must be addressed [under CEQA], parking impacts, in and of themselves, are exempted from CEQA review [under § 21099(b)(3)] for these projects.”  Per the Court:  “CRRD failed to submit any evidence of secondary impacts associated with the project’s allegedly inadequate parking” and its concerns about the lack of parking for downtown businesses were simply not cognizable under CEQA.
• The Court also held the City properly tiered its project MND from the TCSP EIR. “Tiering” refers to using the analysis of general matters in a broad “first tier” EIR with later EIR’s and negative declarations on narrower projects; this process helps to focus analysis on ripe issues and avoid duplicative analysis of matters previously examined.  While CRRD’s challenge to the City’s tiered traffic impact analysis was likely forfeited by failure to raise it in the trial court, it lacked merit in any event.  The City performed a project-specific trip analysis and imposed mitigation based on its findings, and CRRD failed to identify any deficiencies in the City’s analysis or substantial evidence that the project had traffic impacts not contemplated by the TCSP EIR.
• Finally, the Court rejected CRRD’s SMA challenges. The City’s findings that the tentative map was consistent with the TCSP, including full compliance with its parking standards, were supported by substantial evidence and entitled to considerable deference under the applicable standard of review, under which “courts must defer to a procedurally proper consistency finding unless no reasonable person could have reached the same conclusion.”  (Quoting Orange Citizens for Parks & Recreation v. Superior Court (2016) 2 Cal.5th 141, 155.)  CRRD failed to identify any evidence of inconsistency with any TCSP circulation policies, and the record refuted its contentions in that regard and showed “the project’s map was fully consistent with the TCSP.”

In my opinion, the most interesting “take away” from this case is not that it applies a specific new (partial) statutory CEQA exemption to an urban TOD project.  Rather, it is that the case reaffirms as a generally applicable rule that “parking impacts” – i.e., the failure of a project site to “self park” or to meet local code parking requirements – in and of themselves are treated by courts as a mere “social inconvenience,” rather than as an environmental impact that must be analyzed and mitigated under CEQA.  This makes sense, and aligns with CEQA’s general disregard of social or economic impacts unless they are shown to cause – as “secondary” impacts – actual adverse changes in the physical environment, which changes are then cognizable under CEQA.  So understood, Public Resources Code § 21099(d)(1), while clearly useful to some infill developers, is not a radical new CEQA reform, but merely provides statutory confirmation of the general rule in the form of an express CEQA exemption for “parking impacts” in the particular context of certain transit-oriented infill projects.  An attentive reading of the Court’s opinion and prior relevant case law makes clear that § 21099(d)(1)’s express exemption should not be misconstrued to imply that outside of that context “parking impacts” are per se subject to CEQA analysis and mitigation – absent evidence of cognizable secondary impacts, they emphatically are not.