In a recent published case, Visalia Retail, LP v. City of Visalia, F074118, 5th Appellate District, Jan. 30, 2018 (Visalia), the California Court of Appeal rejected a challenge brought under the California Environmental Quality Act (CEQA) to a land use policy in the City of Visalia's General Plan update that restricted tenants in a Neighborhood Commercial zone to 40,000 square feet and was adopted pursuant to a Mitigated Negative Declaration (MND). Visalia Retail (Retail) claimed unsuccessfully that the City violated CEQA by failing to analyze the potential for the policy to cause urban decay in an Environmental Impact Report (EIR). The court also rejected Retail's claims that the amended General Plan was internally inconsistent and that the City violated public notice requirements under California's Planning and Zoning Law (Government Code §65355).
Retail challenged the policy primarily on the grounds that the square footage limitation would cause other business establishments in the zoning district to close down and therefore result in abandonment and physical decay. The MND did address the subject of urban decay but did not find any potential for impacts related to such decay as a result of the policy. During the public hearings, Retail submitted a report from a local commercial broker which, among other things, opined that the 40,000-square-foot cap "creates the strong likelihood that neighborhood commercial centers will never develop in Visalia" and that he was "unaware of any grocers willing to build new stores under 40,000 square feet in size." The court held that such a report was "purely speculative" and did not constitute substantial evidence upon which a fair argument could be made that a reasonable possibility of physical urban decay would result from the new policy. The court therefore concluded that an EIR was not required.
According to the court, which relied heavily upon the holding in Joshua Tree Downtown Business Alliance v. County of San Bernardino (2016) 1 Cal.App.5th 677 (Joshua Tree), an argument that a project results in significant urban decay impacts must rely on substantial evidence showing 1) that a "cause and effect" relationship exists between the project and actual physical, not purely economic decay (e.g., abandoned buildings, graffiti, littering, homeless encampments, etc.), and 2) the "magnitude" of any such effects. The Visalia court emphasized that pure conjecture is not sufficient to show the magnitude of the alleged physical deterioration caused by urban decay.
The court distinguished Visalia, in which Retail challenged a generally applicable policy, from Bakersfield Citizens for Local Control v. City of Bakersfield (2004) 124 Cal.App.4th 1184 (Bakersfield), in which the challenge involved a quasi-judicial determination related to a particular development project. In Bakersfield, the court held that the project approvals for the development of two shopping centers on the outskirts of town needed to be set aside because the project EIR failed to consider the project's individual and cumulative potential to indirectly cause urban/suburban decay. The objectors in that case showed that the two shopping centers, which were to be located less than 5 miles apart, could have severe cumulative impacts on traffic and on air quality.
While the decision in Visalia does not provide guidance as to the precise nature of the substantial evidence required to successfully show a significant urban decay impact that would trigger the requirement for the preparation of the EIR, there are some clear takeaways from the case.