Real Estate and Land Use

Using Project Objectives to Select a Reasonable Range of Alternatives

North Coast Rivers Alliance v. A.G. Kawamura (January 4, 2016) Third District Court of Appeal Case No. C072067

Author: Christopher Burt

Why It Matters: This opinion reconfirms the importance of project objectives in selecting a reasonable range of alternatives for consideration in an EIR. The relationship between the underlying purpose of a project, the statement of project objectives, and the alternatives in an EIR is examined in this case where the Department of Agriculture narrowly crafted its project objectives in a manner that not only limited the range of alternatives considered but also failed to reflect the fundamental purpose of the project.

Facts: The California Department of Food and Agriculture (Department) prepared and certified a programmatic environmental impact report (EIR) for a seven-year program with a stated goal to eradicate an invasive pest: the light brown apple moth. After the Department circulated the Draft EIR, but before it approved the program, it received new information from the U.S. Department of Agriculture (USDA) that because the moth had already spread to such an extent in California, eradication was no longer feasible. The USDA advocated a control and suppression strategy to avoid the moth spreading to other states. Shortly thereafter the Department certified the EIR, and approved a seven-year control program rather than the originally proposed eradication program. Although the EIR had stated that eradication was "fundamentally different" than control, in adopting findings to support its approval, the Department found that the control objectives merely "differed somewhat" from the eradication objectives in the EIR. The Department did not conduct supplemental environmental review in connection with the change from eradication to control, and the EIR, as certified, did not evaluate control as an alternative to eradication. Petitioners alleged that the change from eradication to control rendered the EIR deficient for failing to provide an accurate and stable project description, failing to analyze a reasonable range of alternatives and cumulative impacts, and improperly segmenting the project because the approved control program would extend beyond the seven years analyzed in the EIR for the eradication program.

The Decision: In a section titled "Last-Minute Change," the court discussed the Department's attempts to bolster its environmental analysis to support the last-minute change from eradication to control. Putting aside issues as to whether this change violated CEQA by creating an unstable project description or improperly segmenting the project by analyzing a seven-year program that could go on indefinitely, the court concluded that the EIR violated CEQA because the alternatives analysis was inadequate.

The court held that the EIR failed to consider a reasonable range of alternatives to the eradication program. The EIR's alternatives discussion focused entirely on achieving eradication—the stated objective of the project—and summarily rejected anything that would not accomplish complete eradication, including a control program. The court found this to be improper, and that the objective of eradication was improperly narrow, especially given the purpose of the program was protection of crops and native plants. According to the court, the statement of objectives must include the underlying purpose of the project. Here, however, the underlying purpose was protection of species, not eradication of the moth, and the Department confused the CEQA project, objectives and purposes. Thus the project objective of complete eradication improperly narrowed the alternatives analysis, which should have included a control program alternative.

The court then addressed whether the EIR's failure to evaluate a control program was prejudicial. The Department argued that its ultimate adoption of a control program eliminated any prejudice and that the approval of a control program actually reduced the scope of the project, and thus was adequately covered by the EIR. In conducting its analysis, the court discussed prior situations where an agency selected an alternative that was not analyzed in the EIR based on new information and the court upheld the approval without requiring a revised project description or recirculation of the environmental document. In that case, however, the court noted that there was substantial evidence in the record demonstrating that the change was not significant new information requiring new analysis or recirculation. Here, however, there was no evidence to support the Department's assertion that the change from eradication to control was insignificant. Because the EIR did not analyze a control alternative, and there was no substantial evidence in the record to support this conclusion, the court held that the EIR and the Department's approval was defective.

Petitioners also alleged that the EIR failed to appropriately consider site-specific impacts associated with the program. The court rejected this contention, noting that such analysis was beyond the programmatic nature of the EIR. The EIR identified a number of areas that would likely be subject to the program, stated that it was impossible to determine exactly where the program would be implemented, and promised that notification procedures would be followed prior to deploying treatments at specific locations. According to the court, CEQA does not require identification of every possible treatment site and that only if future, site-specific activity will create unanalyzed impacts or require mitigation measures not previously discussed would a site-specific document be required.

Finally, the court addressed the contention that the cumulative impacts analysis failed to consider impacts that would result from the project's continuance beyond the program's defined seven years. The Department argued that it was speculative as to whether the program would actually continue beyond seven years. The court found this argument disingenuous because the EIR specifically acknowledged that the eradication program was originally chosen because a control program would be unending in nature. The court concluded the cumulative impacts analysis must include consideration of "reasonably foreseeable" impacts.

Practice Pointers:

  • When preparing project objectives, the objectives must be consistent with the project purpose to ensure the alternatives analysis considers a reasonable range of alternatives that would meet the project objectives.
  • When a project has an undefined term, the EIR need not speculate but must consider all "reasonably foreseeable" impacts.

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Court Upholds San Diego's Creative Financing for Public Infrastructure

San Diegans for Open Government v. City of San Diego (2015) 242 Cal.App.4th 416

Author: Bryan LeRoy

Why It Matters: Since the dissolution of redevelopment agencies, cities have been scrambling to find alternative ways to finance the enormous costs of public infrastructure improvements without violating the State's constitutional debt limitation. The Fourth District Court of Appeal recently affirmed that a lease-back financing plan adopted by the City of San Diego to fund infrastructure improvements does not run afoul of the constitutional debt limitation because the bonds were issued by a separate Joint Powers Agency (JPA), of which the City was a member, and because the City had no obligation to pay the outstanding balance upon a default.

Facts: When the Redevelopment Agency of the City of San Diego was dissolved in 2011, the City established a Successor Agency made up of the nine members of the San Diego City Council. In 2013 the City, the Successor Agency, and the City's Housing Agency renewed a Joint Exercise of Powers Agreement to collectively operate a separate Financing Authority as a JPA. Under State law the JPA is a separate public entity.

The Financing Authority then issued $130 million in lease revenue bonds to finance various public capital improvements such as fire stations, lifeguard stations, libraries, storm drains, and the like. The lease revenue bonds were based on lease-leaseback where the City would lease property to the Financing Authority for nominal rent and the Financing Authority leases the improved facilities back to the City for a rent equal to the annual debt service on the bonds.

San Diegans for Open Government (SDOG) brought a reverse validation action claiming the financing plan was an "artifice" designed to circumvent the debt limitation in the California Constitution. The constitutional debt limitation is a constitutional provision that prohibits a county, city and other specified agencies from incurring indebtedness exceeding, in any year, the income and revenue provided for such year unless it is approved by a two-thirds vote of the public.

SDOG's main argument was that because the Financing Authority was created by the City and two other agencies that are subordinate to the City, it was the alter ego of the City and therefore subject to the constitutional debt limitation. SDOG also argued that the Housing Authority was not authorized to participate because the bonds were not for housing projects.

The Decision: The Court of Appeal concluded that the Financing Authority is an independent agency, and because it is not one of the agencies enumerated in the constitutional debt limitation, it is not subject to the limitation or the voter approval requirement. The court noted that various legislation specifies that all three of the agencies involved in the JPA are legally separate entities regardless of the fact that there are overlapping decision makers between them.

As to the debt limitation on the City, the court found that the City did not assume the liability of the Financing Authority. There was no ability to accelerate the base rent upon default, and, according to the court, bond holders understood the risk. Consequently, any obligation by the City to make payments was contingent upon its annual budget, even if it meant that a default on the payments could sacrifice the property.

As to the Successor Agency, the court held that although the Successor Agency stepped into the shoes of the redevelopment agency as a preexisting member of the JPA, the legislation that required the dissolution of redevelopment agencies specifically authorizes successor agencies to enter into contracts, unlike a redevelopment agency.

With regard to SDOG's argument that the Housing Authority could not participate because the bonds were not for housing projects, the court held that because the Financing Authority could someday issue housing bonds, the Housing Authority was authorized to join in the JPA. Moreover, because the Financing Authority was a separate legal entity, the Housing Authority did not issue the bonds or authorize the issuance of the bonds.

Practice Pointers: Generally, courts will not treat separate governmental agencies as an alter ego of each other, even if the agencies share the same decision makers. Accordingly, cities and counties can participate in JPAs that issue lease revenue bonds without implicating the constitutional debt limitation. However, in a lease-leaseback arrangement where a city or county is required to pay the debt service on the bonds as rent payment, a clause in the lease that permits the acceleration of the base rent in the event of a default may violate the constitutional debt limitation for the agency making the payments.

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Legislative Update

AB 1303—Subdivision Map Extension for Certain County-Approved Maps

Author: Roger Grable

To the surprise of many, the Legislature enacted AB 1303 (2015 Cal. Stats. Ch. 751), which amends the Subdivision Map Act to extend certain tentative maps approved by a county meeting certain criteria. New Government Code Section 66452.25 provides for a 24-month extension of tentative maps approved on or after January 1, 2002, and not later than July 13, 2013, by a county that meets certain criteria and that has not expired on or before October 10, 2015, the effective date of the legislation. In addition, a map approved on or before December 31, 2001, by a county meeting the criteria, on application from a subdivider filed at least 90 days prior to the expiration of the map, shall also be extended for 24 months upon a determination that the map is consistent with the applicable zoning and general plan requirements in effect when the application is filed. If the map is determined not to be consistent with applicable zoning and general plan requirements in effect when the application is filed, the legislative body or advisory agency may deny or conditionally approve an extension for a period of 24 months.

The extension applies only to counties that satisfy the following criteria:

(1) The annual mean household income within the county is less than 80 percent of the statewide annual mean income, as determined by the most recent American Community Survey 5-year Estimates.

(2) The annual non-seasonal unemployment rate is at least 2.75 percent higher than the statewide annual non-seasonal unemployment rate, as defined.

(3) The population for whom poverty status is determined is at least 4 percent higher than the statewide median poverty rate, as determined by the most recent American Community Survey 5-year Estimates.

The extension is in addition to the previous statutory extensions.

Given the specificity of the criteria, it is likely that this legislation was directed at a specific county and most likely a specific project or projects.

AB 1303 also amends Government Code Section 65961 of the Permit Streamlining Act to limit the application of the "one bite of the apple"1 rules to three years rather than the standard five years for maps extended by this new section.

1The "one bite of the apple rule" is codified as Government Code Section 65961. Section 65961 generally provides that upon approval of a tentative map for a residential subdivision a local agency may not impose a condition on the issuance of a building permit that could have been imposed at the time of tentative map approval within the five (or three) year period following recordation of the final map.

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