'Urban Decay' Still Plagues Calif. Big-Box Retail Plans

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Originally Published on Law360 - April 22, 2014.

The California Environmental Quality Act has long been a key weapon in the ongoing war over development in California. In the last few years, the front line of the war has shifted to big-box retail projects. In these not infrequent skirmishes, opponents will often allege that the projects contribute to decay of urban centers, are auto-dependent and result in increased greenhouse gas emissions. See, for example, Bakersfield Citizens for Local Control v. City of Bakersfield (2004).

In the latest decision in the big-box retail battle, on Feb. 28, 2014, the California Court of Appeal reversed the decision of a trial court in California Clean Energy Committee v. City of Woodland and invalidated the approval of a retail project in Woodland, Calif., finding that: (1) four-out-of-five urban decay mitigation measures were too speculative, vague or noncommittal to comply with CEQA; (2) the final environmental impact report failed to properly assess the merits of the mixed-use alternative; and (3) the city's reliance on California Building Standards and California Green Building Standards did not suffice to address issues of transportation, construction and operations energy impacts.

Facts

In 2006, Woodland, Calif., approved the development of 49 acres of agricultural land for retail and commercial uses on the edge of its limits. In 2007, after completing construction of this first phase, the developer filed an application with the city for the second phase of development. The draft environmental impact report described the second phase as a regional commercial center with approximately 808,000 square feet of retail space, three hotels with 100 rooms each, a 20,000 square foot sit-down restaurant, three fast food restaurants, an 80,000 square foot auto mall and 100,000 square feet of office space.

In 2011, the city published the final environmental impact report for the project. While the report concluded that the project would likely have a deleterious impact on the health and physical integrity of Woodland's downtown area, it also identified five urban decay mitigation measures and concluded that, with implementation of the mitigation measures, the project would not result in a significant impact. The report also concluded that a mixed-use alternative was economically infeasible, and the project would have a less-than-significant impact regarding the consumption of energy because the project would comply with or exceed the requirements in the California Building Standards Code and California Green Building Standards Code.

After making some relatively minor modifications to the scope of the project, Woodland's City Council certified the environmental impact report by a vote of 3-2. Notably, while the report concluded that the mixed-use alternative was economically infeasible, in the resolution approving the project and certifying it, Woodland rejected the mixed-use alternative on the grounds that it "would have greater environmental impacts than the proposed project."

Inadequate Mitigation for Urban Decay

The California Court of Appeal found fault with Woodland's mitigation of the urban decay impacts on its downtown area, concluding that the following urban decay mitigation measures were deficient and required the applicant to: (1) submit a market study and urban decay analysis at the time of future applications for site-specific development; (2) contribute funds toward the development of a "Retail Strategic Plan" prior to the issuance of building permits; (3) contribute funds toward the preparation of an "Implementation Strategy for the Downtown Specific Plan" prior to the issuance of building permits; and, lastly, (4) required Woodland to coordinate with the current owner of the county fair mall to prepare a strategic land use plan for the mall to analyze potential viable land uses for the site.

The California Court of Appeal found that the market study mitigation measure failed to comply with CEQA, because it improperly ceded responsibility for studying an environmental impact to the developer and it failed to require any specific mitigation actions to alleviate urban decay. As to the second point, the appeals court explained that "the questions of whether mitigation measures will be required, of what they might consist and how effective they will be are left unanswered."

The California Court of Appeal next found that the contribution requirements failed to comply with CEQA, as they did not obligate Woodland to undertake any actual mitigation of urban decay. The appeals court explained that under the two contribution mitigation measures Woodland was only required to prepare plans. "[T]he [c]ity does not estimate how much the mitigation measures or strategies called for in these plans will cost or how they might be implemented. Consequently, these are the sort of speculative mitigation measures that do not comply with CEQA."

Lastly, the California Court of Appeal found that the coordination requirement failed to comply with CEQA, as it did not require an actual study of urban decay, or require any action by Woodland to mitigate for any urban decay it may discover.

Improper Rejection of Mixed-Use Alternative

The California Court of Appeal also found that Woodland violated CEQA because, by changing its rationale for rejecting the mixed-use alternative from the reasoning in the environmental impact report, the city failed to satisfy the act's requirement of disclosing the analytical route the agency traveled from evidence to action.

The appeals court explained: "[T]he [c]ity's administrative process sheds no light on how it came to reject the mixed-use alternative based on environmental inferiority instead of economic infeasibility in the draft and final [environmental impact reports]. Consequently, the [c]ity has failed to comply with CEQA in rejecting the mixed-use alternative on grounds of environmental inferiority to the project as approved."

Inappropriate Reliance on Building Codes

Under Appendix F to the CEQA Guidelines, an environmental impact report must include a detailed statement setting forth the mitigation measures proposed to reduce wasteful, inefficient, and unnecessary consumption of energy. The California Court of Appeal found that by merely requiring the project to comply with the energy conservation requirements of the California Building Standards Code and California Green Building Standards Code, Woodland failed to comply with CEQA.

After finding that Woodland failed to analyze or mitigate for the transportation energy impacts of the project — a flaw it acknowledged — the California Court of Appeal found that the city failed to analyze or mitigate for the project's construction and operation energy impacts. Woodland had concluded in the environmental impact report that, as a result of requiring the developer to comply with California Building Standards and California Green Building Standards, although the project would result in an increased demand for energy, the project impacts would be less-than-significant.

The California Court of Appeal rejected this conclusion, however, explaining that because the building codes do not address many of the considerations required under Appendix F, such as "whether a building should be constructed at all, how large it should be, where it should be located, whether it should incorporate renewable energy resources or anything else external to the building's envelope," the requirement that the project "comply with the [b]uilding [c]odes does not, by itself, constitute an adequate assessment of mitigation measures that can be taken to address the energy impacts during construction and operation of the project." Finally, the appeals court found that Woodland violated CEQA because the environmental impact report did "not indicate any investigation into renewable energy options that might be available for the project," as required by Appendix F.

Takeaway

The California Court of Appeal's decision highlights the following important CEQA compliance issues: (1) mitigation measures should be specific, enforceable and directly address the impacts at issue; (2) the California Building Code and Green Building Standards may not sufficiently mitigate a project's energy impacts; (3) to the extent applicable, an environmental impact report should incorporate the energy analysis called for in Appendix F to the CEQA Guidelines; and (4) the lead agency should document the reasons for rejecting an alternative as infeasible in the EIR.

Topics:  Automotive Industry, CEQA, Mitigation, Retailers, Urban Planning & Development

Published In: Civil Procedure Updates, Environmental Updates, Commercial 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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